Penn National Gaming Wins First Mini Casino Bid

Penn National, Mini Casino owner

On Wednesday, the winner of the first Pennsylvania mini casino license was awarded to Penn National Gaming at a price tag just over $50 million. The license is the first of ten that will be auctioned over the next few months.

In making the winning bid Penn National outbid three companies, which were not named. The $50 million bid accounts for roughly half the state needs to fund part of the state budget.

What to expect from the new casino

The new Penn National casino will go in south central Pennsylvania. Although a specific location is not known at this time, the casino is marked to be built within a 30 mile radius that includes York, near the Maryland border. The dead center of the potential location is located in Yoe. Many Pennsylvania towns and municipalities choose to opt-out in the weeks leading up to the auction.

Area of Penn National Gaming Casinos

As part of the license requirements, a mini casino can have up to 750 slot machines and 30 table games — with an opportunity to increase to 40 at a later date. The $50 million price tag enables the mini-casino to offer slots; however, Penn National is also expected to pay an additional $2.5 million for the ability to offer table games. Penn National will need to meet a variety of additional license requirements to go forward with the mini casino, including paying $50.1 million to the state by January 12th.

Penn National suing Pennsylvania over mini casinos

In a interesting part of the story, Penn National is currently suing the state of Pennsylvania over the expansion of mini-casinos in the state, which they say will hurt the Penn National-owned Hollywood Casino. By making the bid, the company is hedging its bets should its lawsuit fail. If the lawsuit wins, Penn National will withdraw their bid.

As part of the October gambling expansion, a mini-casino may not go up within 25 miles of an existing casino or within 15 miles of another mini-casino. Due to the fact that Hollywood Casino sits in relative isolation compared to most PA casinos — most of which are in groups — they could be uniquely impacted by the new mini casinos.

Penn National Vice President Eric Schippers said the company is attempting to protect Hollywood Casino. “Frankly, it was an investment we felt like we had to make to protect a major market area for our casino. That cannibalization would have been, in our view, very significant, which is why we filed our federal lawsuit against the law.”

Penn National Gaming currently operates a casino in Harrisburg Pennsylvania. The company also has 26 facilities in 18 states. Penn National Gaming’s stock was mostly unchanged on the news.

Whats next?

Mini casino auctions will take place every two weeks up until May 16th, when out of state operators could join the mix. The next auction will be held on January 24th at 10 AM ET.

With a starting bid of $7.5 million, the $50 million bid vastly exceeded expectations. Ten years ago, Pennsylvania casinos paid around $50 million to operate up to 5,000 slot machines. The high price tag could impact the bids for future mini casinos. In two weeks time, we shall see.

Boyd Gaming Acquires Valley Forge Casino For $280 Million

Valley Forge Casino Purchased by Boyd Las Vegas

Las Vegas’s Boyd Gaming has announced that they are set to acquire the Valley Forge Casino Resort for a price tag of $280 million.

Upon completion of the deal, the property will become Boyd Gaming’s first property in Pennsylvania. The deal is expected to be completed sometime between the middle to later part 2018.

Boyd Gaming’s acquisition of Valley Forge comes less than two months after Pennsylvania passed a wide ranging expansion of gambling that includes online gambling, additional brick and mortar operations as well as daily fantasy sports.

The company has already planted their feet in the regulated online gambling market, which operates the Borgata online casino and poker room in New Jersey. Pennsylvania is expected to become the 4th state to go live with online gambling by the middle of 2018.

Boyd Gaming chief executive Keith Said said that Boyd has high hopes for the company’s entry into the country’s second largest casino market

“The acquisition of Valley Forge Casino Resort is another excellent opportunity to further grow and diversify our nationwide portfolio. With this acquisition, we will expand into the second-largest gaming state in the country, establishing a presence in a densely populated, high-traffic area just west of Philadelphia.”

Valley Forge Casino shows large growth during 2017

The Valley Forge Casino Resort is located in the Upper Merion Township near King of Prussia. Currently owned by an ownership group that includes investor Ira Lubert, the casino features over 600 slot machines and 50 table games, with a table game lineup that includes blackjack, craps, roulette and other games. An additional 250 slot machines are planned for 2018.

The casino opened in March of 2012 and offers guests nearly 500 hotel rooms. They were ranked 11th on the list of top PA casinos during the month of November with over $9.5 million in total gaming revenue with $3.3 million coming from table games, representing an increase of nearly 34%.

Up To 200 Pennsylvania Cities And Towns Have Opted Out Of New Mini Casinos

Pennsylvania mini casinos

Although online gambling got a lot of the attention when Pennsylvania passed a large gambling expansion in late October, there were also other gambling initiatives included that will impact Pennsylvania for the years to come. One of the most notable parts of the comprehensive gambling reform was the establishment of so called “mini casinos” or satellite casinos.

As part of the new law, cities and towns have the opportunity of opting out of hosting a mini casino within their borders. If they don’t want to host a mini-casino, the governing body of the town or city must opt-out by December 31st and inform the Pennsylvania Gaming Control Board.

And many Pennsylvania towns are doing just that. Since legislation was passed over a month ago, nearly 200 municipalities have informed the PGCB that they will not allow a satellite casino in their jurisdiction. Many of the locations to opt-out of the casinos are located in Eastern Pennsylvania, but some are coming from Western Pennsylvania as well.

Some are just not seeing a benefit of allowing new brick and mortar gambling in their communities. We’re not geographically suited to that business,” said council member of the town of North Irwin. Others cited the potential impact on the local economy.

Despite the decision of dozens of Pennsylvania municipalities, towns are able to reverse their decision at a later date should they change their minds after researching the matter.

What is a Pennsylvania mini casino?

With the passage of Pennsylvania’s online gambling expansion, up to 10 licenses for satellite or mini casinos throughout the state were allowed. Despite the name, these casinos are not exactly tiny. While not as large as the 12 existing casinos in the state, these casinos can run up to 50 table games as well as operate between 300 and 750 slot machines.

Pennsylvania’s mini casinos are likely to be owned by existing Pennsylvania casinos. Still, the requirement of the new legislation mandates that a satellite casino can not be within 25 miles of an existing large casino.

Initial bids to operate the mini-casinos will start at $7.5 million in January.

Pennsylvania Casino Revenue Slightly Down in October

Pennsylvania online gambling revenue flat

Revenue for Pennsylvania’s twelve brick and mortar casinos was down slightly from last October. During the month, casinos took in $261.9 million from gamblers in the state, down from $263 million last year, representing a 0.4% loss. The downturn over the last year is after PA casinos saw a 3.8% increase during September from the previous year.

While the down month was not particularly significant, Pennsylvania’s recent expansion of online gambling in October will only reinforce the eagerness to roll out Pennsylvania’s major expansion of gambling.

Table games strong, slots continue to weaken

Of the nearly $262 million that was won by Pennsylvania casinos in October, $72.4 of that number comes from table games (for example, blackjack) while $189.5 million was pulled from slot machines. Table games actually held their own with a 1.7% increase over the month while slot gaming revenue was down 1.2%, the 12th such decline over the last 13 months.

During 2016, Pennsylvania casinos won a total $3.2 billion, marking its best year ever. But despite the big month during September, the yearly revenue number represents an increase of just 1.7% since 2012. Overall gaming revenue in Pennsylvania has largely been flat since 2011 with the state hovering around the $3 billion mark.

With the passage of online gambling in Pennsylvania, the state could add another $300 in yearly revenue for casinos. The passage of the bill signed last month also authorizes mini casinos as well as daily fantasy sports and in the future — sports betting legalization.

Pennsylvania winners and losers

Eight of the twelve Pennsylvania casinos saw declines during October with Mohegan Sun Pocono seeing the largest loss (8.92%).

The winners on the month included Monty Airy Casino Resort with a 12.53% gain followed by Lady Lucky Casino at 5.98%, Sands Bethlehem at 3.83% and Parx Casino with a 1.61% increase.

Parx remains the largest casino in Pennsylvania with a 17.3% market share generating $45 million in revenue during October. Parx is followed by Sands with 16.6% market share on approximately $43 million in revenue. Rivers Casino is a distant third with 10.2%, representing $27 million in revenue.

Philadelphia Live! Approval Means More Online Gambling Licenses

Philly Live Casino

The proposed Philadelphia Live! Hotel and Casino has been in a holding pattern the last three years due to legal challenges. But with the passage of HB 271, it is now expected to begin construction next year and finish sometime in 2020.

Why Now?

Since 2014, Philadelphia’s SugarHouse Casino had a major objection to the project, citing Pennsylvania gambling regulations limiting ownership of multiple properties. SugarHouse dropped their lawsuit against Live earlier this month.

Among the many aspects of HB 271 – the bill that will officially many forms of online gambling – the legislation will expedite approval of the long-delayed project

Notably, the repeal of this passage of makes the opposition of SugarHouse Casino a moot point with the removal of this passage:

“No slot machine licensee, its affiliate, intermediary, subsidiary or holding company may possess an ownership or financial interest that is greater than 33.3% of another slot machine licensee or person eligible to apply for a category 1 license, its affiliate, intermediary, subsidiary or holding company.”

Pennsylvania has a lot to gain through the approval as well. The state will receive $50 million from Philly Live in exchange for their lucrative slots license.

What is Philadelphia Live?

Philadelphia Live! is a proposed project owned by Cordish Companies and Greenwood Racing, the same group that launched Maryland Live, a popular casino in that state that started accepting bets in 2013. Philadelphia Live is currently scheduled to go live in South Philadelphia near Lincoln Financial Field, Citizens Bank Park and the Wells Fargo Center.

Other Pennsylvania casinos had balked at Philly Live due to the fact that Watche “Bob” Manoukian owns 85% of the Parx Casinos. Manoukian also would own about a third of the Live! Casino

Live!, which will cost $600 million, is expected to launch in 2020 and feature over 2,000 slots, 30 poker tables and 100 table games. It is anticipated to generate $300 million in gaming revenue annually. It will be located in South Philadelphia

What does Philly Live mean for online gambling in Pennsylvania?

The decision to approve Philadelphia Live has ramifications for online gambling in Pennsylvania as well. Because the passed bill authorizes a number of comprehensive online gambling license equal to the number of brick and mortar casinos in the state, the number of online casinos in the state will also increase by one.

There are currently twelve casinos in Pennsylvania before this bill passed in late October. With the approval of Philadelphia Live!, that number will increase to 13. The 13th license will become official once Philly Live! pays the $50 million for its slot license.

As for which casinos ultimately offer online gambling, it is widely expected that most of the 12 casinos + Philly Live! will apply for some version of the license. The one likely abstainer – Sands Bethlehem – is likely to decline a license. Sands owner Sheldon Adelson has been a vocal opponent – in fact the biggest opponent – to online gambling over the last half decade.

The decline of an online gambling license by Sands Bethlehem will free up a license for a non-Pennsylvania company in early 2018.