Penn National Gaming Snags Second Mini-Casino License

Penn National Wins Second Mini-Casino License

On Wednesday, Pennsylvania’s fifth mini-casino license was awarded to the owners of Penn National Gaming, who bid $7,500,003 , the lone bid for the day’s auction.

With their bid, the company has selected a 15-mile radius near West Cocalico Township, located in Lancaster Country. The mini-casino represents the second mini-casino license that Penn National Gaming has acquired since bidding began earlier this year.

Details of Mini Casino #5

Penn National’s bid today was the first time the company was eligible to bid in a “Category 4,” or mini-casino auction, since they won the first mini casino auction on January 10th with a bid of $50 million. The first four licenses were awarded between January 10th and February 22nd, before the statefailed to attract any bids on March 10th.

The $7.5 million bid by Penn National was the minimum amount needed to secure a mini-casino license.

The location of the casino was selected to be within a 15 mile radius that is centered around West Cocalico Township. In choosing the location, Penn National looks to further protect the Hollywood Casino located in Harrisburg. On January 10th, Penn National strategically selected a their first mini casino location to be placed south of Harrisburg on the way to Baltimore, Maryland in Yoe Pennsylvania.

Below is a map of mini-casino locations determined thus far:

Mini Casino Locations in Pennsylvania

Penn National Quickly Expanding In Pennsylvania

Penn National has been extremely active in Pennsylvania’s gambling expansion despite filing a lawsuit earlier this year protesting mini-casino placement rules.

In addition to the two mini casino locations, last December Penn National agreed to acquire Pinnacle Entertainment, which operates 16 casinos across the country including the The Meadows Casino and Racetrack. That deal was approved by Pennsylvania regulators last week as well as shareholders from both companies over the last two weeks.

Penn National’s auction win today means the company will operate four major properties in the state including a couple of off-track wagering locations in York and Lancaster County.

What’s Next

With five of the ten mini-casino licenses claimed thus far, five more licenses remain. The next mini casino auction will be held on April 18th at 10 AM. Given that the fifth mini-casino license went for just over the $7.5 million minimum bid and Penn National was the only bidder on the day, it will be interesting to see if there is any bid on April 18th. The second phase of the mini-casino auction process could be nearing an end.

Will Penn National bid for yet another license or will a casino that abstained from bidding on Wednesday decide to jump into the fray? If there are no bids later this month, the mini-casino auction process will be opened up to other entities.

Although it is safe to assume that the days of bids into the tens of millions of dollars could be over, we will have to stay tuned over the next few weeks to see if Pennsylvania casinos continue to bid to keep other entities out.

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.