Golden Nugget Applies For PA Online Gaming License

Just a few weeks ago, MGM Resorts became the first casino operator from out-of-state to apply for a casino gaming license in Pennsylvania. Now we can add Golden Nugget to this list.

Shortly before the deadline on Wednesday, Golden Nugget submitted an application as a Qualified Gaming Entity (QGE) to the Pennsylvania Gaming Control Board (PGCB). While MGM opted for all three online gaming licenses (slots, table games, and poker) for a price tag of $10 million, Golden Nugget opted for just two of the licenses (slots and table games) for a price tag of $8 million ($4 million each – all three can be had for a $2 million discount).

Eleven available, only five sought

Of the 39 total online gaming licenses available, PA’s land-based casinos (who were first in line) only opted to take 28 of them. That leaves eleven. They are broken down as follows:

  • Three online slots licenses
  • Three online table games licenses
  • Five online peer-to-peer gaming (poker) licenses

Although the PGCB has set in place a lottery system to pick between multiple QGEs who may apply for one (or more) of Pennsylvania’s eleven available online gaming licenses, that elaborate process may be completely unnecessary. As the clock counted down, only MGM and Golden Nugget stepped up to take advantage of this opportunity.

Given their long track record as successful casino operators, it seems more than likely that both MGM and Golden Nugget will be approved by the PGCB. That means Pennsylvania’s coffers will soon increase by $18 million and that six online gaming licenses might remain unused – one each for online slots and table games and four for online poker.

The unused online poker licenses aren’t particularly unexpected. Not only are the license fees and tax rates quite high, it can be difficult for too many poker sites to compete in one state and all find success. For example, online poker has been struggling in New Jersey. Returns have diminished since initial launch, with sites collecting less than $2 million in revenue each month in total.

The New Jersey online poker market currently consists of seven sites, none of which is massively successful. Pennsylvania is a much more populous state, but even so, eight competing sites seems more sustainable than the thirteen that were allowed for.

 Golden Nugget leads the online gaming market in next door NJ

While online poker struggles somewhat in the Garden State, online casino gaming in general is a big business in New Jersey. Although Golden Nugget was a late entrant to the state, it has since increased its volume until it is now the top operator in the market. This is due in part to its high-quality gaming partner, Scientific Games (NYX), a huge library of casino games, and of course its popular brand name.

As an example of their dominance, last month Golden Nugget took in $9.3 million of the total $24.1 million New Jersey online gaming revenue pie. That’s an impressive market share of over one-third. Perhaps even more impressive, Golden Nugget accomplishes this without an online poker presence of any kind.

Golden Nugget had more than one path to operate in PA

Rush Street Gaming (owner of SugarHouse casino) also operates in New Jersey and they have a relationship with Golden Nugget. As one aspect of that partnership, the PlaySugarHouse online casino brand operates under Golden Nuggets’ New Jersey license (as does Betfair Online Casino).

It was suspected early on that their relationship with Rush Street (and SugarHouse specifically) would be Golden Nugget’s pathway to operating in the Pennsylvania online gaming market. It has the option of operating as a skin under an existing PA online gaming license. This path is a thorny and expensive one, however. Operating as a skin comes with a somewhat onerous number of rules and stipulations as well as an additional fee.

Once it became possible for Golden Nugget to bypass these annoyances and just operate independently as a QGE, that option must have been much too good to pass up.

What’s the next step for these QGEs?

As it appears that only MGM and Golden Nugget will be vying for the available PA online gaming licenses, the next step in the process is for the PGCB to vet these applications and decide whether to approve them or not.

While both casino operators are well known and well established, and can be expected to gain approval, this process is far from being just a “rubber stamp”. For example, MGM’s application was 139 pages long and included extremely detailed operating info about Borgata Casino’s New Jersey gaming license. Clearly there’s a lot of paperwork to go over. Industry leaders don’t expect any movement on this process until the PGCB’s next meeting on November 28.