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.

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.