Sands is Out, Parx is In; Satellite Casino Bid Invalidated

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The fourth auction for a Category 4 (satellite casino) Gaming license appeared to be a pretty drab event Wednesday, as Sands Bethlehem won the auction for just $9.885 million – peanuts compared to the $50.1 million spent by Penn National in the first such auction. There were only two bidders in attendance, and clearly none of the eight-figure bids we’ve grown accustomed to seeing over the last couple months.

There was some unexpected drama later, however, as the Pennsylvania Gaming Control Board announced that the bid had been invalidated due to the proposed location being too close to the location already locked up by Mount Airy in the previous auction. Given that Greenwood Gaming and Entertainment, Inc., parent company of Parx Casino, was the only other bidder in attendance, it was expected that they would carry the day.

On Thursday the PGCB made it official.

A lack of clarity on location rules

The location of each casino isn’t exact when the bid is made, and a winning bid locks up a 15-mile radius in which the company can build their new venue.

According to Google Maps, Hempfield Township is a 31.3 mile drive from New Castle, but the route isn’t a straight line. Several media organizations including ours were unsure if there’d be an issue with the two proposed locations being so close to each other, but now we know.

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While there’s still some lack of clarity into where the overlap was, the PGCB announced that the 15-mile radius location with a center point in Hempfield Township intruded into the 15-mile radius that had been won two weeks earlier by Mount Airy, centered in New Castle.

The new winner

Sands’ loss is Parx’s gain, and it didn’t take long for the PGCB to hand over the fourth Category 4 license to their parent company. Their bid of $8,111,000 was the only other bid placed in the auction, and thereby the winning bid by default.

Unlike the location chosen by Sands, Parx’s chosen landing spot in Cumberland County isn’t near, well, anything. About 40 miles southwest of Harrisburg, South Newton Township is basically just a highway exit off I-81. The township has a population, according to the 2010 census, of 1,383.

Meanwhile, the state of Pennsylvania, which had already picked up $111,388,893.88 in the first three auctions, will have to settle for $1,774,000 less than they thought they’d be getting.

What’s the next move for Sands?

Given that there are still six auctions remaining, and that interest has clearly begun to wane among the remaining Pennsylvania land based casino operators, it’s a near certainty that Sands will be back next week in a repeat attempt to get their spot. The only question is where their mini casino will ultimately land.

Mercer County has lobbied heavily for a satellite casino, and if Sands can find a proper location within that county, that’s probably where they’ll end up. Greenville is just a little bit further northwest and might be far enough away from Mount Airy’s location, and Jamestown is at the very northwestern corner of the county. Sands could be back in a couple weeks with a proposal for one of those two locations, neither of which are on the PGCB’s opt-out list.

If nobody else shows up for the auction, Sands could be getting their Category 4 License on the cheap – well, cheap by Pennsylvania standards. The minimum bid is still $7.5 million, even if they’re the only ones there. If it’s only them in attendance, we can assume this whole charade will actually save them $2.385 million, as strange as that is.

We’ll see in a couple of weeks.

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Adam Small has been an entrepreneur in the online gambling space since 2004. He is a cofounder of PocketFives.com and owner of several businesses in the industry.

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