Sands Bethlehem Pays Near The Minimum For Rights To Build Fourth Mini-Casino

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Editor’s update: The bid by Sands has been invalidated by the PA Gaming Control Board. It was reasoned that the location chosen “intruded upon the reserved area of a previously secured Category 4 location held by Mount Airy #1 LLC.” There will be meeting tomorrow at 10:00 am for the board to look at the only other bid, from Greenwood Gaming and Entertainment, Inc, owners of Parx Casino. More here

The price of mini-casinos in Pennsylvania keeps going down, down, down. On Wednesday, Sands Bethlehem won the state’s fourth satellite casino auction, paying a mere $9.885 million for the rights to build a facility near Hempfield in Mercer County. There was only one other bidder.

The minimum bid for a satellite casino is $7.5 million, plus $2.5 million should the license holder wish to tack on table games. Previous winners have bid as much as $50.1 million.

Go west, young Sands

Sands Bethlehem, the second biggest revenue generating casino in Pennsylvania, is located in the far east portion of the state, well-positioned to capture the northern New Jersey and NYC markets. The mini-casino will target a completely different crowd, as Hempfield is pinned close to the northwestern corner of the state against the Ohio border, close to the smallish city of Youngstown, Ohio and within striking distance of Cleveland.

By Pennsylvania law, Sands must submit its application and exact plans for the mini-casino within a six-month period. The precise location must be within a 15-mile radius of the chosen center point.

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The chosen location does strike as a bit curious, as it’s just 35 miles north of the spot (New Castle, Lawrence County) chosen by Mount Airy Casino in the previous auction. The law dictates that the two “locations”, presumably the 15-mile radiuses, cannot overlap. And they don’t appear to, but just barely.

However, it does call into question exactly how far apart Category IV casinos must be. To clarify, if one location’s radius kisses another, then theoretically the two casinos could occupy the same city street. The law appears vague on this nuance.

With Sands’ bid the western portion of Pennsylvania is effectively locked up. Rivers Casino and Meadows Casino occupy the southwestern portion of the state near Pittsburgh. Two satellite casinos will occupy the central western and northwestern areas of the map, and Presque Isle is located in the northwest corner of the state, in Erie.

Mercer County is home to a population of approximately 115k residents, slightly more than Lawrence.

And the winners are…

Here’s a quick recap of winning mini-casino bids thus far:

  • January 10th:  Penn National – $50.1 million (Yoe, York County)
  • January 24th:  Stadium Casino LLC – $40.1 million (Derry, Westmoreland County)
  • February 8th:  Mount Airy #1 LLC – $21.19 million (New Castle, Lawrence County)
  • February 22th: Las Vegas Sands — $9.885 million (Hempfield, Mercer County)

So what now?

The fifth auction will be held on Wednesday, March 7 in Harrisburg. Casinos that have already won a previous auction are forbidden from placing a bid, as are Category 3 casinos. That leaves just seven qualifying properties.

Given that there was only two bidders for today’s auction, it’s plausible that only a single casino rep (likely one from Parx Casino) will show up at the next auction. Then again, the low price point at which Sands was able to win may attract some holdouts.

In total there are 10 scheduled Round 1 auctions, running biweekly from now until mid-May. If any licenses remain at the end of that period, additional auctions can be held for Category 3 casinos Valley Forge and Lady Luck Nemacolin, and also for casinos that have already won the right to construct a mini-casino.

So far, mini-casinos have raised a staggering amount for the state, approximately $121.3 million. This figure isn’t likely to balloon much higher, as the appetite for satellite casinos has begun to wane, but could possibly tick up over $150 million. That would be enough to fulfill 75% of the $200 million earmarked for expanded gambling in fiscal 2017-18, which comes to an end on June 30.

The rest will likely be accounted for by early online lottery sales, and online gambling license fees. The PA Gaming Control Board will begin accepting license applications for iGaming manufacturers on April 2.

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Robert is a veteran writer and analyst for the gambling industry, with a particular focus on the emergent US online gambling market. An avid poker and gambling enthusiast, Robert offers unique perspectives from both the vantage point of the player and industry professional, and is fit to cover a broad spectrum of topics.

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