Pennsylvania gaming officials recently announced a process, which included a raffle, to be followed in the event that they received a deluge of outside applicants for the state’s remaining online casino licenses.
As it turns out, none of it will be necessary. This week, regulators revealed that only two qualified gaming entities, MGM Resorts and Golden Nugget, had submitted petitions to offer online gaming in the Commonwealth.
The licensing frenzy
PA’s 13 land-based casinos got first crack at purchasing licenses to offer one of three types of online gambling: virtual slots, table games, and peer-to-peer poker. The PA Gaming Control Board (PGCB) first opened up the proceedings by allowing properties to purchase a permit to offer all three verticals for the “discounted” price of $10 million.
After that window closed, operators could buy licenses piecemeal, for $4 million a pop.
During the first phase, nine state casinos dropped the eight-figure fee to offer the trio of online games, with only Lady Luck Nemacolin, The Meadows, Mohegan Sun, and Presque Isle Downs opting out.
When regulators put the remaining licenses up for grabs à la carte, Mohegan Sun jumped back in, paying an inflated $12 million for all three verticals (due to its indecisiveness), with Presque Isle Downs paying $8 million for a table games and slots license.
Rivers Casino, one of the initial nine to purchase a $10 million package, later decided to relinquish its licenses, likely looking to promote its sister property, SugarHouse, instead.
In a recent hearing, Stadium Casino also had a minor change of heart, deciding to relinquish its online poker license, while keeping its slots and table games permits.
When it was all said and done, 11 licenses remained up for grabs for outside entities:
- Three online slots licenses
- Three online table games licenses
- Five online poker licenses
Golden Nugget’s Midas Touch
Golden Nugget, a major player in New Jersey online gambling, seeks to purchase a slots license and a table games license at a cost of $4 million each.
It’s no surprise that the Atlantic City casino is looking to enter the PA market. In NJ, Golden Nugget emerged to become an unexpected force through its own branded site and via partnerships with premier brands Betfair and Play SugarHouse.
The trio of sites dominates the market in terms of revenue, and has taken in nearly $76 million total this year, over $35 million more than Borgata, its closest competitor.
Due to its partnership with Play SugarHouse, an online gambling site run by the parent company of Philadelphia’s land-based SugarHouse Casino, some surmised that Golden Nugget would enter the PA market as a skin under its NJ partner — a much cheaper route to be sure.
Indeed, PA allows core licensees to partner with an unlimited number of third-party skins. However, regulators have thrown up some strange restrictions that could limit Golden Nugget’s potential in that scenario. For example, skins may not open up shop on their own branded domains; they must operate on a subdomain of their licensee, while prominently displaying their host’s logo as well.
By purchasing its own license, GN can maximize its brand potential, without being overshadowed by its partner. But the same rule could hurt Golden Nugget if it decides to partner with skins of its own. Betfair, one of its current NJ partners, would be a prime candidate to operate under the GN license. But with the aforementioned branding restrictions in place, the situation could be less than optimal.
Either way, Golden Nugget already has years of experience operating a legal U.S. online casino, and could prove a major threat to local PA operators, who might stumble in getting their offerings off the ground.
MGM makes inroads
Between PA online gaming and U.S. sports betting, MGM has been quite busy as of late. The casino behemoth, which owns more than a dozen properties in Las Vegas, along with the Borgata in New Jersey and many other casinos scattered throughout the U.S., recently struck sports betting partnerships with both the NBA and NHL.
It has also partnered with Boyd Gaming, which owns the Valley Forge casino in PA.
The company is another unsurprising candidate when it comes to opening up shop in the Keystone State market. In New Jersey, MGM is heavily involved in iGaming through Borgata, which serves as the umbrella for playMGM, Borgata Casino, Party Casino, and their respective networked poker sites.
Borgata is the second highest earning online gambling licensee in the state, and hopes to transfer that success across the border to PA.
MGM has reportedly been looking for ways to make its Keystone State entrance for some time, and was rumored to be on the cusp of acquiring Sands Bethlehem, which later sold to Wind Creek Hospitality. It was also thought to be interested in the yet-to-be-built Stadium Casino project.
Now, with the online casino licensing process opened up to outside entities, MGM has purchased licenses to offer all three online verticals, and will be able to quickly set up shop in the state. Like Golden Nugget, it could prove a serious threat to local competitors that don’t have the years of experience that MGM has accumulated in NJ.
The PGCB will now take to reviewing the two suitors’ applications. We could learn more about their plans at the next Board hearing on November 28.