Wait Continues For Action On Pennsylvania’s Fifth Mini-Casino Near State College

Losing bidder Cordish has sued to try to stop state board from awarding license
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Three of Pennsylvania’s mini-casinos are operating, drawing about $20 million monthly in gaming revenue among them from gamblers a long drive from bigger venues, and a fourth is slated to open by year’s end. The big question now concerns the timetable for the fifth, which is designed to make use of the heavy flow of visitors to Penn State University and the State College area.

The Pennsylvania Gaming Control Board held a local input public hearing in August for a development planned by private investor Ira Lubert, in partnership with Bally’s Corp., replacing a former Macy’s at the Nittany Mall in College Township, Centre County. No major hurdle was apparent at the hearing for the gaming facility — known formally as a Category 4 casino — that would become the 18th in the state if Parx Casino fulfills plans for its satellite in Shippensburg to open late this year as the 17th.

Yet nothing has been made public since August indicating progress on the Lubert-Bally’s project is imminent. The gaming board must first hold a followup hearing in Harrisburg and take a vote to officially award the license.

Board spokesman Doug Harbach said the regulatory agency’s staff is continuing its background work on the license application and he could provide no timetable for when formal action is expected. He declined comment, meanwhile, on any impact from one wrinkle that has developed: a Commonwealth Court lawsuit by a losing bidder trying to thwart issuance of the license.

New provision gave Lubert chance to bid

When the legislature in 2017 enabled the mini-casinos as part of broad gaming expansion legislation that also authorized sports betting and online casinos, it created an auction process allowing existing casinos to bid for the rights to the additional facilities. The idea was they would be smaller than other casinos by containing no more than 750 slot machines, but attract customers who didn’t want to travel to metropolitan areas and would bring more revenue to the state through both auction prices and gaming taxes.

Residents of the State College area, as well as the many visitors the university draws to it, would fit that description, being well more than an hour’s drive from any existing casino. When the gaming board held a special auction for a potential fifth mini-casino on Sept. 2, 2020, Philadelphia businessman Lubert latched onto the opportunity to create one near the Penn State campus and was announced as submitting the winning $10 million bid.

In prior auctions, which were only open to existing casino operators, Lubert would not have been able to bid. In this case, however, new legislation in 2020 opened bidding to any person “with an ownership interest in an existing licensee.” Lubert holds an ownership stake in Rush Street Gaming’s Rivers Casino in Pittsburgh, in addition to previously leading a group that developed Valley Forge Casino Resort before selling it.

When announcing Lubert as the highest bidder, the gaming board revealed that one other bid was submitted, but without identifying the source. With its lawsuit trying to throw out the Lubert award, The Cordish Companies has ended any mystery about that.

Fair complainant or sore loser?

Baltimore-based Cordish, which operates in Pennsylvania as Stadium Gaming LLC, has become a major player in the state’s casino industry since 2020 by opening both the Live! Philadelphia hotel-casino and Live! Pittsburgh mini-casino in Westmoreland County. Its officials were also the only ones from any company prior to September 2020 to acknowledge that they might submit a bid at the upcoming auction.

They were silent after Lubert’s bid won, but then spoke loudly in July 2021 by suing him and his new company, SC Gaming OpCo LLC, as well as the gaming board. The petition to Commonwealth Court claims Lubert’s bid and means of payment of the $10 million connected to it violated what was permissible. The filing acknowledges Stadium Gaming as the losing bidder without specifying the size of its bid or where it wanted to site what would be its second mini-casino, although it is believed to have been eyeing the same vacant space at Nittany Mall.

The suit filed on Cordish’s behalf by attorney Mark Aronchick asserted Lubert’s bid should be voided because he partnered with other private individuals who themselves would have been ineligible to bid, and he used money from them to help pay the $10 million he owed the state.

“This fact alone requires the board to set aside Lubert’s bid and award the right to apply for a Category 4 license to Stadium Casino,” the suit claimed, while contending that, at the very least, the Lubert award should be set aside and a new auction conducted.

The gaming board and Lubert have rejected the assertions, with Aronchick’s own filing to the Commonwealth Court revealing an exchange of correspondence in which the defendants maintained there was nothing wrong with Lubert having partners in the project. In a copy of a letter included as part of the lawsuit, Lubert’s own attorney, Adrian King, wrote on April 2, 2021, to PGCB Executive Director Kevin O’Toole that the Stadium Casino complaints are “nothing more than a disgruntled losing bidder clearly attempting to cause delay for another casino project for anticompetitive and other self-serving reasons.”

The other individuals identified as Lubert’s partners in SC Gaming are Robert Poole and Richard Sokolov, whom he would be working with in addition to Bally’s. The latter company was announced in January 2021 as a business partner that would take control of sports betting and iGaming connected to the project, which it would also help manage overall. It is not named as a defendant in the suit.

A Commonwealth Court hearing was scheduled for March 7, but neither Aronchick nor King responded to queries from Penn Bets on the present status. There is no known timetable for when the court might rule.

Eight months since first hearing, but no action

For the Shippensburg mini-casino project under development by Parx owner Greenwood Gaming and Entertainment at a former Lowe’s home supply store, eight months’ time elapsed between a local input hearing last May and a followup board hearing with licensing approval this January.

For the Lubert project, it is now eight months since its own local input hearing took place last August, with no indication of when that second hearing and board vote will occur. Harbach, on behalf of the gaming board, said the necessary background work by the board’s licensing staff continues, with no deadline for completion.

While Harbach would not comment on the litigation, a representative for Lubert suggested the suit itself is not holding up the project.

“We are still waiting or the PGCB to schedule the hearing to review our application,” Eric Pearson, a Las  Vegas consultant who has been announced as CEO of the future mini-casino, told Penn Bets in an email. “It is my understanding that the Stadium Casino case has had no impact on the PGCB’s timing or process for reviewing the State College application, but I cannot speak for them.”

In the meantime, the PGCB has received dozens of letters since its first public hearing — where there was virtually no opposition expressed by local residents to the project — from those now pronouncing themselves opponents.

“We certainly have enough issues with the thousands of Penn State college students and their excess drinking and drug problems,” read one example, from resident Judith Dorman and her husband. “We do not need to add gambling addiction to their drinking and drug problems. … This will only spell disaster for Centre County.”

Such expressions are typically part of public comment on gaming expansion proposals, as was also seen with the Parx project in Shippensburg, and they have done nothing thus far to prevent the PGCB from granting approvals.

The Live! Pittsburgh mini-casino and two by Penn National Gaming, in York and Berks counties, have all opened in the past 18 months. With their smaller number of slots and table games than most casinos, they each have been generating anywhere from $4.6 million to $9.1 monthly in gaming revenue. Combined in February, their revenue totaled $21.7 million, about the equivalent of one of the state’s large casinos.

Photo: Shutterstock

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