Only a select few people know presently whether anyone believes it’s worth a minimum $7.5 million bid, plus construction cost, to build a fifth mini-casino in Pennsylvania, but everyone will know the answer shortly after 10 a.m. Wednesday.
That morning’s monthly meeting of the Pennsylvania Gaming Control Board, held remotely by an audio-visual conference call, will start with an announcement of whether any mini-casino bids were submitted at an auction mandated by the legislature.
Those who may have submitted bids know that answer already, because they had a deadline to submit them to the board’s Bureau of Licensing by Monday.
The board is withholding any information on how the process turned out, however, until the meeting itself, when the high bidder (if there is one) will be announced. The bidder’s general geographic location for the mini-casino will also be revealed, though not a specific site.
There’s suspense, but possibly over nothing
Prior to the board meeting, there’s mystery surrounding whether things will be any different with this auction from one held almost exactly a year ago, when no bidders emerged from a similar process last Sept. 4.
Procedures outlined by the gaming board on its website explain that the new bidding, with the same $7.5 million minimum as in the past, was open to any Pennsylvania casino operator “as well as a person with an ownership interest” in one of those existing licenses. If there is no bidder, the process will simply end, with the mini-casino number capped at the four currently planned.
Following that failed auction last September, a previous mini-casino project planned in western Pennsylvania by Mount Airy Casino Resort was scuttled. Could that open the door to interest that didn’t exist before, by opening new possibilities for a location?
Or could all of the financial uncertainties surrounding the casino industry’s future in the COVID-19 era dampen any willingness that might have existed to invest in yet another gambling hall?
“We would have no idea,” gaming board spokesman Doug Harbach told Penn Bets when asked whether bidding was deemed likely this time around.
“This was a provision that was placed in the fiscal code by the legislature to have us hold one single auction, and we are administering that auction, and we’ll see where the chips fall.”
With the state reeling in revenue shortfalls stemming from COVID impact, lawmakers included the auction in budget-related legislation passed in May.
After all, 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 back when financing difficulties for its casino construction planned in northern Beaver County led the gaming board last November to reject a license for the project.
First mini-casino opening is months away
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. That same measure has already added legalized sports betting and online casino wagering in the state.
It also authorized up to 10 mini-casinos through auctions, though the number peaked at five in 2018 when no bidders emerged at a sixth auction, as operators quit finding potential revenue worth the cost.
A mini-casino — also known as a satellite or (officially) Category 4 casino — is roughly one-fourth to one-half the size of most of Pennsylvania’s casinos. It can have up to 750 slot machines and 30 to 40 table games, plus a sportsbook, restaurants, entertainment venue, and other amenities.
The mini-casinos provided revenue initially from those substantial auction fees, though nothing yet from operations since the first won’t open until months from now. 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 (pictured above) 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.
Possible locations are limited
Casino operators must think hard about investing in a mini-casino bid and construction cost because of restrictions on where the new facility can be built.
To protect the 12 existing casinos and the four mini-casinos already envisioned, the law allows no new facility to be placed within 40 miles of any of those. In any submission, a bidder must identify a latitude-longitude centerpoint for its potential location, with the eventual site required to be within 15 miles of that point.
The final location also may not be within any of the more than 1,000 municipalities that acted in late 2017 to “opt out” of hosting any mini-casino.
The restrictions rule out most of the state’s larger population centers — particularly in the casino-saturated southeastern part of the state. Existing or already-planned facilities are, naturally, close to where most Pennsylvanians live.
It is generally presumed that any bidders would be most interested in locating somewhere roughly midway between the casinos in Pittsburgh and Erie, which are a little more than 100 miles apart, or possibly in the State College-Altoona area.
Though many municipalities are on record stating they don’t want the facilities, it’s different for county-level government, economic development, and tourism officials who eye potential jobs and tax benefits.
The Sharon Herald reported recently, for instance, on a joint effort by officials in Mercer County this summer to entice casino operators. Mercer County was previously targeted in a 2018 bid by the Sands Casino Bethlehem for a mini-casino, but the bid was rejected by the gaming board for encroaching — ironically, now — upon the territory mapped out by Mount Airy for its since-dismissed site.
The casinos themselves, for competitive reasons, have had no interest in publicly disclosing their level of interest in any site or in the process itself. If they want a mini-casino, they want it for the lowest bid price possible, and divulging any plans doesn’t aid that goal.
The closest any has come to any public statement was from officials of Baltimore-based Cordish Gaming Group, who operate the Live! brand and already have the one mini-casino coming in Westmoreland County. They acknowledged potential interest in every growth opportunity, with this one no exception.
As to a bid, the company’s president, Rob Norton, told Penn Bets last week, “We’re holding our cards a little close to the vest right now.”
The cards — if there are any held by anyone — will all be on the table Wednesday morning.
Photo provided by Pennsylvania Gaming Control Board