In 2014 online gambling expansion is a hot topic in a number of state legislatures.

With states looking to find new ways to bring in revenue – and with Sheldon Adelson waging an all out war to halt further online gambling expansion and roll back the online gambling gains that have already been made – Internet gambling has gone from a back burner issue to one of the larger political fights.

One of the states where a battle is likely to be fought is Pennsylvania.

2014 was expected to be a slow year on the legislative front as states took a wait and see approach to online gambling, preferring to let the markets in New Jersey, Nevada, and Delaware mature. And despite all the posturing, you would have been hard-pressed to find any industry insiders in early 2014 who thought a state would pass online gambling legislation this year.

My advice is a bit different. Don’t sleep on Pennsylvania, something I first said back in January, and here is why.

Reason #1: Gaming revenues decline

For the first time since the state expanded land-based gambling, Pennsylvania revenues are on the decline, a drop that first started late in 2013.

An article that appeared on LehighValleyLive.com recently posited whether online gaming in New Jersey was responsible (at least in part) for the drop in Pennsylvania casino revenue:

“Pennsylvania gaming revenues have been largely on the decline since New Jersey’s online gambling debuted Nov. 21. But New Jersey’s online gambling is likely far from the only reason, said Richard McGarvey, a spokesman with the Pennsylvania Gaming Control Board.”

While it may not be the only reason (McGarvey pointed out that December, January, and February were months with extremely inclement weather) it could be enough of a reason for pro-online gambling forces in the state to sway enough lawmakers – especially those representing eastern parts of the state – to push for online poker legislation.

Working against the above hypothesis would be the simple matter that the major casino that lies in eastern Pennsylvania, the Sands Bethlehem, is owned by Sheldon Adelson, who is vehemently against online gambling.

Adelson will likely pour money into the campaign coffers of “like-minded” state representatives, and fight gambling expansion in the state tooth and nail.

So why am I so hung up on the eastern part of Pennsylvania? The answer is competition, and specifically competition from the east.

Reason #2: Competition

During a panel discussion at the recent iGaming North America Conference, John Forelli, the Vice President of the Borgata, made remarks that likely pricked up a few ears of lawmakers and casino executives in the Keystone State.

On the subject of marketing, Forelli stated that since launching their online gambling site, the Borgata has been able to target customers they had lost to Pennsylvania casinos (customers in the western part of New Jersey) and have been successful at bringing them back through online gambling, which means keeping them out of Pennsylvania casinos.

But New Jersey is not the only competition Pennsylvania needs to be worried about.

In addition to New Jersey, Pennsylvania’s brick and mortar casino industry is also dealing with stiff competition from neighboring Maryland and Ohio, as well as the aforementioned gambling expansion talk in New York.

Maryland has also been hinting at possible online gaming expansion, so for Pennsylvania it may not be a matter of increasing revenues through online gambling, but one of staving off the poaching of their players by surrounding states.

The current climate in PA

As mentioned above, Sheldon Adelson looms large in Pennsylvania, and it’s certainly one of the states he will be willing to invest the most time and energy in if his designs on federal legislation prohibiting online gambling fall through – which they likely will.

But Adelson isn’t alone in his willingness to spend some dollars on this issue. According to a tweet by Joe Brennan Jr. on Wednesday, Caesars has upped the ante in Pennsylvania. The company has hired a lobbying firm to push for online legislation in 2014, just weeks ahead of a very important study being due.

The highly anticipated study

Pennsylvania’s online gambling hopes (at least in the short-term) will likely hinge on a study due on May 1. The study was initiated by the state senate last year, and is designed to examine the “current condition and future viability of gaming” in the state, particularly online gambling.

The reason the study has the potential to be so important is because there currently seem to be two small camps in the state, one for and one against online gambling, and then a larger contingent of fence-sitters.

The findings in the upcoming study will likely determine if there is an appetite for online gambling expansion in PA this year.