A broad budget bill passed by the Pennsylvania legislature in late May quietly included two gambling-related provisions that will lead to another mini-casino auction in addition to a sportsbook at the future Westmoreland County mini-casino.
The Pennsylvania Gaming Control Board announced Wednesday morning that bids for a fifth possible mini-casino — or Category 4 casino, as they’re formally known — will be accepted the morning of its regular meeting scheduled for Sept. 2.
No bidders emerged at the last such auction, on Sept. 4, 2019, and the state was apparently to max out at five of the satellite casinos. In November, however, Mount Airy Casino Resort scuttled its plans for one of the five — a Category 4 casino north of Pittsburgh in Beaver County — after encountering difficulty raising sufficient funds.
The lack of that additional western Pennsylvania gambling venue could make it more likely bidding will take place at the new auction on Sept. 2.
That could have been the thinking of lawmakers in inserting in recent legislation the requirement that the board hold another auction, which has the potential to raise millions of dollars to help fill the state’s COVID-19-related budget hole.
Cordish can avoid second sportsbook fee
That same bill had language specifically addressing a complaint by The Cordish Companies and its subsidiary, Stadium Casino LLC, that the gaming board unfairly expected a $10 million fee for a sportsbook at its mini-casino under construction at a mall east of Pittsburgh. The legislation allows the $10 million sportsbook fee for its main Philadelphia casino, also under construction, to cover the satellite casino as well.
The fee issue came up in late 2019 and early this year before the gaming board. The board determined that 2017 gaming expansion legislation enabled satellite casinos attached to racetrack casinos, such as two mini-casinos under development by Penn National Gaming’s Hollywood Casino, to operate sportsbooks through their off-track betting parlors without paying any additional licensing fee.
The board ruled that casinos without racetracks and affiliated OTB parlors, such as Cordish’s Philadelphia Live! project, had no option under the law to avoid paying $10 million for a sportsbook license at their own mini-casino, if they wanted to operate one. The regulators’ decision came after Cordish officials told the board the limited profitability from a small retail sportsbook would not justify paying such a hefty fee.
The nature of the board’s April 1 vote concerning the fee contained a hint that Cordish’s concern could be addressed by new legislation. The board actually voted in favor of waiving the fee by a 4-3 majority, with all four of the supporting votes coming from legislative appointees to the seven-member board.
A quirk of Pennsylvania’s law covering the gaming board, however, requires at least one of three gubernatorial appointees to side with the legislative appointees for a vote to carry, which did not occur April 1.
That board decision is effectively negated by the new legislation, as gaming board spokesman Doug Harbach said the $10 million paid by Cordish Companies for its Philadelphia sportsbook will also cover the Westmoreland facility as well as its online sportsbook expected to start this year.
Will there be a fifth mini-casino?
The 2017 gaming expansion authorized an auction process by which up to 10 mini-casinos might be affiliated with existing casinos in the state. They could have up to 750 slot machines and as many as 40 table games.
Considering concerns about casino saturation in the state and a distance requirement from existing casinos, bids were submitted for just the five Category 4 venues instead of 10.
With Mount Airy having backed out, that leaves plans still alive for four: the Cordish development at Westmoreland Mall, Penn National mini-casinos in York and Berks counties, and a Parx Casino project in Cumberland County.
Opening dates remain uncertain for those, however. Penn National put construction at its two sites on hold due to the impact of COVID-19, and the Parx effort in Cumberland County has had difficulty identifying a suitable location. Cordish’s development was interrupted by a COVID-19 construction shutdown, but it could be the first to be completed.
A press release from the gaming board Wednesday stated that any site proposed by a bidder on Sept. 2 cannot be within 40 miles of any existing casino or a planned mini-casino.
That rules out most of eastern Pennsylvania and the state’s other major population centers, leaving potential bidders to focus on possible sites in central or western Pennsylvania, such as in the State College-Altoona region or between the casinos in Pittsburgh and Erie.
As to whether the gaming board expects to have bidders Sept. 2 when it didn’t have any at the auction a year earlier, Harbach declined to speculate.
“We will carry out the law in holding the auction,” was all the board spokesman would say.
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