Centre County is to get Pennsylvania’s fifth mini-casino, with the new gambling hall near Penn State University to be headed by a Philadelphia businessman who bid $10 million for the right to build it.
Ira M. Lubert, who once headed an investment group that owned Valley Forge Casino Resort and who currently has a minority stake in Rivers Casino Pittsburgh, submitted the higher of two bids that were provided by Monday to the Pennsylvania Gaming Control Board. The sealed bids were opened by the agency’s chief counsel, as shown via a live audio-visual feed, at the start of the board’s monthly meeting Wednesday morning.
Lubert may build the mini-casino within 15 miles of a centerpoint that his bid identified inside the small borough of Unionville, Centre County, which is located just north of State College.
The other four mini-casinos planned in Pennsylvania are affiliated with existing casino operators in Pennsylvania, and in all prior auctions only those operators — in most cases large gaming companies — could submit bids. Lubert was able to bid this time because the May legislation mandating Wednesday’s auction added a provision that bids were also open to any individual already licensed by the board who is “a person with an ownership interest in a slot machine licensee.”
Auction suspense ends with two bidders
The opening of the two bids Wednesday, with the announcement of Lubert’s bid price and location, ended some intrigue surrounding whether any entity would be interested in adding another operation to Pennsylvania’s widespread gaming industry. There are 12 existing casinos, another large one near completion in Philadelphia by Cordish Gaming Group, and four mini-casinos at various stages of development after winning bids for them in 2018.
At the last two auctions that were held by the gaming board, with a $7.5 million bid required, no bids were submitted. The legislature, as part of its budget process in dealing with revenue shortfalls stemming from COVID-19’s economic impact, in May mandated a new auction to see if there would be new interest and a possible infusion of cash for the state from the bid.
The newest mini-casino license will replace one that was originally to be awarded to Mount Airy Casino Resort after it submitted a winning bid in 2018 to develop a satellite operation in northern Beaver County. That plan was squelched by the project’s financing problems last year, with the gaming board rejecting the license in November.
Among casino operators, only Cordish, which plans to open the state’s first mini-casino in Westmoreland County late this year, gave any public indication that it had potential interest in the new bidding. It may have been the losing bidder Wednesday, although only details of the winning bid were publicized.
Potential bidders were limited in their choice of locations, as no new facility could be built within 40 miles of an existing or planned casino. That eliminated most of the state’s population centers, including all of southeastern Pennsylvania. It left the State College-Altoona area and a section of the Interstate 79 corridor between Pittsburgh and Erie as the most likely locations a bidder would select.
Specific site to be revealed within six months
Lubert will have to pay his bid price, formally $10,000,101, to the commonwealth within two business days. He will then have six months to submit what is known as a Category 4 Slot Machine License application, which will need to include the precise site for the project and details relating to the building, employment, amenities, and more. A public hearing in the chosen municipality would need to follow before formal license approval is granted.
While Lubert is a Philadelphian, he knows the State College area well. He is a Penn State graduate and member of its board of trustees who formerly served as chairman of the trustees.
The Philadelphia Inquirer also reported that he was listed in 2018 as a member of Nittany Gaming LLC, which had a lease option on a former department store in the Nittany Mall outside of State College. That site in College Township is within the radius of where a mini-casino could be located under the bid’s geographic guidelines.
The Inquirer reported that Lubert, chairman and co-founder of Independence Capital Partners and Lubert Adler Partners, was part of an ownership group that sold that Valley Forge casino for $280 million in 2018 to Boyd Gaming Corp. of Nevada.
The Centre County location will be able to take advantage of the heavy influx of visitors each year to Penn State, the largest university in the state. It also will be near the intersection of interstates 99 and 80.
Auction bid fees now total $121 million
Pennsylvania netted some $111 million in fees from casino operators making prior bids in 2018. That figure was initially $127 million, but Mount Airy received 75% of its $21.2 million bid back when it ran into the financial difficulties and could not proceed.
The concept of the mini-casino — an outlier of unusual size when it comes to most commercial casinos around the U.S. — was birthed in broad October 2017 legislation that expanded legalized gambling in Pennsylvania to raise revenue for the state. It authorized up to 10 of the facilities with a maximum of 750 slot machines and 40 table games, although the number will apparently be capped at five by the industry’s financial considerations of what makes sense.
A mini-casino is roughly one-fourth to one-half the size of most of Pennsylvania’s casinos. In addition to slots and table games, it can have a sportsbook, restaurants, entertainment, and other amenities.
Here’s where the four existing projects currently stand, with operators generally saying they plan to invest $100 million or more in them, including the auction fees, while providing several hundred permanent jobs at each location:
- The Live! Casino Pittsburgh project of Cordish Gaming Group is under construction in a former department store at Westmoreland Mall, about 30 miles east of Pittsburgh, and is to open by year’s end. It is a satellite of the Live! Casino & Hotel Philadelphia, which is to open in that city in 2021. Bid price: $40.1 million.
- Penn National Gaming’s mini-casino at the York Galleria mall in York County is on a construction hold that stemmed from the spread of COVID-19, but the company says it will resume work this year. It is a satellite of Hollywood Casino in suburban Harrisburg and is to open in 2021. Bid: $50.1 million.
- Penn National is also constructing a Berks County mini-casino as a satellite of Hollywood, with the same temporary hold and finish planned next year. Bid: $7.8 million.
- Parx Casino has plans for a mini-casino in Cumberland County as a satellite of the Bucks County casino that is the biggest revenue generator in the state, but it has yet to settle on a specific site that is workable. No opening date is thus scheduled. Bid: $8.1 million.
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