It wasnt quite Buckner-esque, but it was close. This past Wednesday, Sands Casino won the Pennsylvania Gaming Control Boards (PGCB) fourth lottery for a satellite casino license or so they thought. The PGCB announced that Sands winning bid was invalid because the casinos proposed satellite site was too close to Mount Airys satellite casino near the Ohio border. The day following the error, the PGCB award the fourth license to Parx. The casinos victory came by default since they were the only other casino bidding on the license.. Their winning bid of $8.11 million was rather paltry considering the first three auctions earned the state $112 million. Parx will build near Penn Nationals Yoe County satellite As per the PGCBs regulations for the satellite auctions, Parx submitted their bid along with the coordinates of where they will build their satellite. Greenwood Gaming Entertainment, the group who owns Parx, selected South Newton Township (Cumberland County) as the site of their mini-casino. The location is about 50 miles due west of Yoe, where Penn National will build their satellite. The two casinos will capture, presumably, PA gambling traffic headed south across the Maryland border to gamble at Hollywood Casino Perryville and Hollywood Casino at Charles Town. South Newton lies near Interstate 81 while Yoe is on Interstate 83. Both casinos, therefore, will cover a lot of southern traffic headed in and out of Harrisburg. According to traffic volume figures from the Pennsylvania Department of Transportation (DOT), about 45,000 vehicles travel along the section of Interstate 81 that passes through South Newton. The department estimates that 51,000 vehicles pass by Yoe via Interstate 83 each day, with an additional 11,000 driving through on Route 74. Parx fortuitous win pushes auction revenue past $120 million The states first four lotteries have been a revenue success, netting $121 million. Penn National won the first license for $51 million. Stadium Gaming LLC, whose Philly Live! will be the fourth Philly-area casino, won the second license for $41 million. Then, Mount Airy snagged the third one for $21 million. The trend among these winning bids is noticeable, as the price for a satellite dropped significantly after each lottery. Even Sands original winning bid of $9.89 million was well below the first three but well within the downward trend. Sands win is considered a steal because the minimum bid amount for the licenses is $7.5 million. Six licenses are still available for Category 1 and 2 casinos. Should any of those remaining six licenses go unpurchased, the PGCB will open up a second round of auctions. That auction will include Category 3 casinos Valley Forge and Lady Luck Nemacolin. Wed expect SugarHouse Casino to make a bid for one of the licenses at some point. Parx owned 17.6 percent of the states gambling revenue in 2016. SugarHouse was second with 9.6 percent. While its not a guarantee that SugarHouse will make a play for a satellite license, theres a good chance they will. Harrahs is nipping at their heels with a 7.6-percent share. It will most likely want a satellite so they can keep pace with Parx and the forthcoming Philly Live!.
The Mashantucket Pequot Indians were on top of the world less than 20 years ago. Today, theyre hurting. This past week the Connecticut Indian tribe and its partners when, according to New London (CT) newspaper The Day reported the consortium achieved a small victory when the Third U.S. Circuit Court of Appeals reversed the decision of a bankruptcy court who said the tribes development group wasnt entitled to $50 million they invested in a failed plan to build a casino in Philadelphia. Should the development group win the appeal, it is unclear how the partners will divide the money. The Foxwoods-Philly saga started in 2006 The name of the tribes development group was Philadelphia Entertainment and Development Partners. The faction included Philadelphia businessmen who joined the tribe in their efforts to bring Philly its first casino. The development bought one of two available casino licenses for $50 million back in 2006. Over the next three years, numerous delays and mistakes tanked the casino development. The Pennsylvania Gaming Control Board (PGCB) revoked the groups license in Dec. 2010, ending four years of frustration. The failed casino venture compounded the Pequot tribes financial issues. Dissension among tribal leaders and a costly casino expansion with MGM dragged the tribe into dark days. A 2007 article from the New York Times talks about the tribes extensive wealth and how a group of less than 100 Native Americans created one of the most profitable casinos in the world and bring unprecedented wealth to its people. However, by 2014 the tribe was on the hook for $1.7 billion in debt. The tribe accrued much of that debt when it expanded its casino property. Not long after, competing casinos in the state and across state lines siphoned away gamblers. Downtown Phillys second casino is on its way When the Pequots development group won the bid for one of two Philly casino licenses in 2006, the City of Brotherly Love looked poised to burst onto the gambling scene. SugarHouse also won a license that year. Only one casino survived. Fast forward to 2018. Twelve years later, downtown Philly is getting its second casino. Stadium Casino LLC has plans to start development this year on Philly Live!, a property that will provide some serious competition for old-guard casino SugarHouse. In addition to securing the permits to start demo on the site of their future casino, Stadium Gaming upped the proverbial ante when it was announced this past month they won the second satellite casino license auction in Harrisburg. Both of these projects, however, arent scheduled to be completed anytime soon. Philly Live! has a 2020 target date and theres still no word on when the satellite casino is scheduled to start. Stadium Casinos play for the satellite was a significant one because the group will build just 40 miles east of Pittsburgh in Westmoreland County. What makes this move interesting is that Pittsburgh has been the home turf for Rivers Casino, whose owners, Rush Street Gaming, also own SugarHouse. Photo by Boston Globe / Getty Images
Pennsylvania Gov. Tom Wolf says online lottery sales should help turn around the fortunes of the states declining PA Lottery program. According to Department of Revenue financial statements, the PA lottery posted $1.04 billion in revenue in the last fiscal year. However, that number was down more than $75 million from the previous fiscal year. Now, in his budget for the 2018/19 fiscal year laid out earlier this month, Wolf claims new lottery games will bring in an additional $71 million. The new games include online lottery and Monitor Games games including Virtual Sports and Keno. Wolf announced a plan to launch Monitor Games at PA lottery retailers, bars, and taverns in October 2017. Later that month, state lawmakers also passed a comprehensive gambling expansion bill authorizing the launch of online lottery sales, online slots, online poker, and online table games. Improving the fiscal condition of the PA Lottery The Governors Budget in Brief document says the government is taking steps to improve the fiscal condition of the Lottery: The PA lottery plans to launch online lottery games this spring. Pennsylvania Lottery spokesperson Gary Miller told the Capitolwire news and information service (subscription) this week it is all a part of a plan to update an aging lottery program: PA Lottery proceeds go to elderly residents The Pennsylvania Lottery first launched 1972. All proceeds have gone to programs for elderly residents as mandated by the government since that time. This includes underwriting tax and rent rebates as well as prescription drug subsidies for eligible senior citizens. In January, PA Lottery spokesperson Jeffrey A. Johnson told TribLive.com online lottery sales will generate up to $250 million in new profits over the first five years. Other major initiatives in the Governors $33 billion budget for the 2018/19 fiscal year include increasing funding for public schools and raising the minimum wage. Plus, Wolf plans to place a new tax on natural gas drillers. The budget takes effect July 1 if approved by the state legislature. Photo by George Sheldon / Shutterstock.com
A pair of Pennsylvania casinos is pushing for a limit on the number of online gambling websites licensees can launch. However, industry insiders say limits on skins also puts a limit on competition, innovation, and revenue. For both operators and the state. Pennsylvania lawmakers passed a comprehensive gambling expansion bill in October 2017. The new law authorizes the Pennsylvania Gaming Control Board to issue licenses for online slots, online table games, and online poker operations. Existing casinos in the state will get the first crack at them. Casinos can purchase all three licenses at once for $10 million. Individual licenses for any of the three online gambling categories will then be available at $4 million each. Outside entities can apply for whats left of the 39 total licenses. If any of the states 12 casinos, or owners of the under-construction Stadium Casino project in Philadelphia, pass. The gaming control board is currently in the process of putting together regulations. This includes clarifying exactly what the licenses will allow and defining the application process. Parx Casino says one skin is enough Last week, gambling legislation watchdog GamblingCompliance (paywall) released a letter from Parx Casino to the board. The letter details Parx preferences for state regulations. It also includes the idea that skins be limited to just one: Parx also wants the board to ensure all online gambling operators and license holders share the same branding: Penn National Gaming, owner and operator of the Hollywood Casino at Penn National Race Course in Grantville, PA, has previously stated it wants the number of skins limited as well. Protecting its own interests Parx is the top-grossing brick-and-mortar casino in PA. Throughout the legislative process leading to the new online gambling laws, Parx executives expressed fear opening an online gambling market in PA would cannibalize the existing casino industry. Parx pushed for tax rate equity and in-person registration to try to protect its own interests. Parx effort to limit the number of skins appears to be part of a similar strategy. However, a gambling industry trade group says limiting skins is anti-competitive. Plus, its says allowing multiple skins will be good for the industry as a whole. The iDevelopment and Economic Association (iDEA) wrote a letter to the board pushing for no limit on the number of skins. Or, limiting the number to five skins per licensee like New Jersey does: Limiting skins limits competition The iDEA letter also says limiting operators to a single skin would act as a limit on competition. The organization claims smaller casino operations may not be able to afford to get in the market. Unless they can subsidize the expense through revenue sharing skin agreements: The letter also says PA lawmakers considered a skins limit in drafting the legislation. However, they chose not to insert one. Therefore, it was never their intention. Finally, iDEA points to the New Jersey online casino industry and the $20 million in monthly revenue it is generating. It says New Jersey is a successful model with a five skin per operator limit PA can easily follow:
The state of Pennsylvania is $112 million richer, thanks to its third satellite casino auction. Mount Airy won the bigging for a license with a $21 million bid. The casino plans to build their satellite in Lawrence County. According to the Morning Call, Lawrence County leaders sent out letters to the states existing casino trying to convince them of the countys readiness to welcome a satellite to their area. County commissioner chairman Dan Vogler said he and his colleagues were waiting on the results of the lottery to find out who won and where the winner would build their property. We watched it here this morning, and we were very pleased with how it transpired, Vogler said. Mount Airy became the third casino in three auctions to win a license. Penn National scored the first one with a $51 million bid, while Stadium Gaming LLC snagged the second one for $41 million. Mount Airy beat out two other casinos Per the Pennsylvania Gaming Control Boards rules, the auctions take place at 10 a.m. Bidders provide the auction board with two envelopes one contains the casinos bid and one contains the coordinates of where the casino plans on building their satellite. After the auction was over, the board released the results: Sands and Parxs bids lagged behind Mount Airys offer. Satellite site just a few miles from 500,000 people What makes the satellite casino auctions so fascinating isnt just the bidding; its the strategy. For example, Penn National won the first satellite license. Its mini-casino will pop up in Yoe County, which gives it access to Maryland residents driving up the interstate to gamble in Pennsylvania. However, there arent any major cities near the Maryland-Pennsylvania border. Stadium Gaming LLC, the group who will soon break ground on Philadelphias second casino, won the second satellite license auction. Their site is just outside Pittsburgh, a move that will capture coming from the east of the metropolis and will, it seems, cut into Rivers revenue. Mount Airys Lawrence County location may be the most ingenious of all of them because their site will be a 30-minute drive from Youngstown, OH, a city whose urban and surrounding area is home to more than 500,000 people. The city does have a racino Hollywood Gaming at Mahoning Valley Racetrack but the property has no slot machines or table games, two things the satellite property will offer. A look into the future of the remaining seven satellite licenses There are two factors that stand at the forefront of the discussion about Pennsylvanias remaining seven satellite licenses. First, theres a good chance prices may decline as each new license comes up for auction. The first license went for around $50 million, the second for $41 and third for $21 million. The minimum bid is $7.5 million. The downward trend points to the next license selling for less than $20 million, but its no guarantee. Second, strategy may dictate who bids and when. For example, Stadium Gamings plans to build just a few miles east of Pittsburgh may push Rivers to make a move for a satellite and capture some of the revenue theyll inevitably lose from the Stadium property. SugarHouse, the original Philadelphia casino, may also feel pressure from Stadium Gamings satellite. While the satellite wont cut into SugarHouses revenue, the money Stadium earns from that second location could be leveraged to strengthen their soon-to-be-constructed Philadelphia location through better marketing, expanded entertainment venues, and other avenues of growth.
The regulatory and licensing process for online gambling in Pennsylvania is finally beginning. However, potential operators are still waiting for word regarding when the Pennsylvania Gaming Control Board (PGCB) will begin accepting applications for iGaming operator licenses. This week, the board announced it will begin accepting license applications for manufacturers and suppliers to iGaming operators on April. Additionally, the board will start accepting applications from truck stop Video Gaming Terminal (VGTs) manufacturers and suppliers on the same day. Truck stops wanting to offer VGTs can start turning applications in on May 7. The board also says the acceptance date for applications for iGaming operators or platform providers will be announced later. Internet gambling in PA The state passed new gaming expansion laws in October 2017 that legalized three categories of online gambling. These categories include:
Non-banking table games, like poker
Banking games which simulate casino table games
Games which simulate slot machines PGCB is developing the regulations and licensing process for internet gaming. However, a frequently asked questions document on the boards website claims it is still in the first phases of a roll-out of internet gaming. There is no specific date when internet gambling will launch yet.. In fact, this announcement regarding license applications from internet gambling manufacturers and suppliers is the first sign the regulatory and licensing process is moving forward. The applications have been made available on the PGCB website at gamingcontrolboard.pa.gov. The application is nearly 60 pages. Additionally, there are supporting documents some applicants must fill out. Manufacturers currently licensed by PGCB are able to submit an abbreviated application. The new gambling expansion legislation clearly states Pennsylvanias existing casinos will get the first crack at applying for iGaming operator licenses. There are 13 licenses available. In fact, PA casinos will have 90 days following the acceptance date for applications to apply for a discounted license to operate all three categories of online gambling. The discounted price is $10 million. After the 90 days is up the price will increase to $4 million per license. Entities from outside the local casino industry can apply for any licenses that are available after the existing PA casinos get their shot. Online gambling tax In addition to the upfront licensing fees, the state is in line to collect a percentage of online gambling revenue once the market gets up and running. The law specifies the following taxes on internet gambling operators and distribution of those funds:
14 percent of internet table game revenues will go to the Pennsylvania General Fund.
34 percent of internet slot machine revenues will go the Property Tax Relief Fund.
13 percent of internet slot machine revenues will go the to the Commonwealth Finance Agency for county grants.
5 percent of internet slot machine revenues will go to counties that see a decrease in local share assessment funds.
A local share tax of 1 percent of all internet gambling revenue will go to the license holders host county.
1 percent of all internet gambling revenue will go the Commonwealth Finance Agency for county grants.
Video gaming terminals (VGTs) were on the ropes several times over the past two years of failed legislation among Pennsylvania lawmakers. VGTs, however, roared back from many legislative deaths and found its own nook among the states gambling expansion bill. The legislation allows the terminals to operate in truck stops that meet certain sales and size requirements. And, this past week, the Pennsylvania Gaming Control Board (PGCB) announced that applications are available for download on the PGCB site. According to a press release, applicants will have to fill out the necessary paperwork, provide fingerprints, and fix any errors. From there, the PGCB will conduct a background check. Applications will be accepted starting May 7. VGT history and current regulations VGTs have long been the bane of casinos because these gaming terminals represent a competitor that can show up in just about any truck stop that meets the requirements the PGCB lists:
Has diesel islands for commercial vehicles
Sells 50K gallons of diesel or biodiesel fuel in past 12 months or is projected to do so in the next 12 months
At least 20 parking spots for big rigs
Has a convenience store that sells PA lottery games
Property is at least 3 acres In other words, the state wants VGTs to appear in legitimate trucks stops with steady sales, trucker traffic, and an existing relationship with the PA Lottery. The new law was not intended to put VGTs in 7-11s and mom-and-pop gas stations across the state. What is perhaps most interesting about the new legislation is that it allows for up to five terminals to be placed in a truck stop. There was no explanation from lawmakers as to why such a small number of terminals will be allowed. Possible theories include an anticipation that hundreds of truck stops would participate and thus five terminals per station was enough or that five terminals are all anti-VGT lawmakers would accept. All 10 opt-out counties have casinos The law also gave counties an opt-out clause, which means they can decide if they want VGTs within their borders. The deadline for those opt-outs was Dec. 29. The PGCBs most recent list shows that 10 counties opted out, all 10 of which are home to casinos:
Bucks County: Parx Casino
Dauphin County: Penn National
Delaware County: Harrahs
Erie County: Presque Isle
Luzerne County: Mohegan Sun
Monroe County: Mount Airy
Montgomery County: Valley Forge
Northampton County: Sands
Philadelphia City/County: SugarHouse
Washington County: The Meadows Additional VGT facts, trucker reactions As for the actual VGT terminals, what we know so far is that they will be cash-only. Credit and debit cards cant be used. Max bets on these machines will be $5 and the max payouts will be $1,000. According to the PGCBs FAQ sheet about VGTs, payout percentages will be around 85 percent, just like they are in the states brick-and-mortar casinos. Reactions from truckers about VGTs has been mixed. Some have said they welcome the machines because it gives them something interesting to do during their mandated rest periods. Others, however, say that the terminals pose a safety risk because they will keep truckers awake when they should be sleeping.
A Pittsburgh-area conservative think-tank is beginning to wonder if Pennsylvanias gambling expansion will help fill state coffers, or if ongoing trends will ensure just the status quo is maintained. The Allegheny Institute for Public Policy released a new policy briefing last week. It was penned by the institutes president, Jake Haulk, and Senior Research Associate Frank Gamrat. In the briefing, Haulk and Gamrat outline how 2017 gaming revenues were up only slightly over 2016 numbers. Plus, the increase actually led to a decrease in state tax collected. The increase in overall gaming revenues was led by an increase in table game revenues. This offset a small decline in slot machine revenues. However, it all led to a drop in state tax receipts from casino gaming. Pennsylvania Gaming Control Board figures show table game revenues in the state rose 4.4 percent over 2016, from $853.2 million to $890.6 million. They also show a one percent drop in slot machine revenues, from $2.36 billion in 2016 to $2.33 billion last year, a decrease of almost $24 million. Revenues up, taxes down Table game revenues are taxed at a 16 percent rate in PA Slots at 54 percent. As a result, the increase in overall gaming revenue still meant a decrease for the states end. In fact, the $24 million drop in slot machine revenues meant the state collected $13 million less in taxes. Of course, the rise in table game revenues brought the state $6 million more in taxes than it had collected in 2016. However, it still left state tax receipts from casino gaming $7 million short of 2016 figures. Haulk and Gamrat say the numbers can be deceiving: Table games up, slots down Plus, Haulk and Gamrat say the situation is getting worse every year. The pair point out that the number of slot machines operating in PA is down 2.2 percent since 2012. Additionally, gross revenue per machine has fallen from a high of $7,753 in 2012 to $7,497 last year. Thats $256 per machine, representing a 3.3-percent dip. In the meantime, the number of table games available is climbing. In 2013, the average monthly number of table games hit 1,058. Last year it was 1,243. Plus, the revenue per table has stayed relatively flat. It went from $59,610 in 2015 to $59,737 in 2017. In October 2017, the state legislature passed new gaming laws. This included several expansion initiatives, including internet gambling and the authorization of up to 10 satellite casinos. Each can operate from 300 to 750 machines and up to 40 table games. Two licenses have already been won through the bidding process, including one from Hollywood Casino owner and operator Penn National Gaming. Should all 10 satellite casinos open, it could add another 7,500 slots and 400 table games to the states total. Will gambling expansion help? However, Haulk and Gamrat wonder if the increased number of games will actually boost tax revenues from gaming, considering recent trends. Haulk and Gamrat conclude saying that economic reliance on gaming can be very risky. Particularly with all the competition surrounding the state. They say the majority of casino gaming revenue is money Pennsylvanians would otherwise be spending on other recreational pursuits, luxuries or even necessities. Plus, while casinos create jobs, they claim they cannot replace manufacturing and gas industry jobs in terms of total boost for the local economy. Finally, Haulk and Gamrat suggest gambling expansion is a poor economic stimulus substitute for creating a friendlier business climate that attracts manufacturing firms or encourages companies already operating in the state to expand.
Theres a war brewing in Philadelphia. Earlier this week, Stadium Casino LLC obtained the permit they need to begin demo on a lot in South Philadelphias sports district that is currently home to a Holiday Inn hotel. According to Philly.com, the development will clear the land and build a casino, making it the second casino within the city limits. SugarHouse is and was none too pleased about the plans. The existing Pennsylvania casino even launching an appeal to block the permit from being awarded to their new competitors. The permit was issued a little more than two months after the operator of a rival venue, SugarHouse Casino, dropped an appeal of the gaming license granted to Cordish and Greenwoods group following the enactment of a new state law that undercut the challenge, Philly.com reported. New casino will be name Live! Hotel & Casino Cordish Cos and Greenwood Gaming & Entertainment are the two firms which comprise Stadium Casino LLC. Earlier this week, Cordish released details about the project. The statement revealed both specifics on the property as well as conceptual drawings of the casino. According to the companys project page for the property, Live! is a $600 million development that will include:
Up to five restaurants and nightclubs. The project will create the first comprehensive gaming, resort, entertainment and sports destination in the United States, making it a true regional destination, the site said. The plans for Live! have been listed on the site for several months, but it wasnt until they obtained the permit that the project went from concept to concrete. Barring any setbacks over funding or permits, the project should be ready to open in 2020. SugarHouses reign over Philly coming to an end Philadelphia has been SugarHouse territory since casinos were first allowed in the state in 2006. In 2017, Sugarhouse held a solid third place in Pennsylvanias table games revenue. It was middle-of-the-pack in slots revenue. In both of those categories together, SugarHouse brought in more than $296 million in gross revenue. All this to say that SugarHouse is one of the states major players. It is certainly the reigning king of Philly. Exactly how much of that revenue will walk into the competing casino is yet to be seen. After all, predictions are tenuous, at best, but theres a good chance their numbers will drop. Hence, the appeal to block the license. As far as revenue predictions go, the states 12 casinos will be competing for the biggest portion from the dinner table. While Sands and Parx are the states biggest revenue-earners and SugarHouse has formidable numbers, the launch of a new flagship casino as well as the possibility of up to 10 satellite casinos could do some damage to their yearly gross revenue. That possibility became more of a reality when Stadium Gaming was the highest bidder for a satellite casino theyll build just 40 miles away from Pittsburgh in Westmoreland County. It remains to be seen if and when SugarHouse will make a move for one of the eight remaining satellite licenses.
The Pennsylvania Lottery was just as excited about the recent Pennsylvania gambling expansion bill as any casino. The new legislation pushed the states lottery system into another echelon of gambling accessibility when it allowed gamblers to play the lottery online. A lottery spokesperson spoke with TribLive earlier this month, noting that the PA lottery plans on launching at least some of its online games this spring In an interview with TribLive.com, Pennsylvania newsstand owner Al Lydic said he believes his lottery sales will skyrocket. How the new laws will affect the current setup For the past 45 years, Pennsylvanias lottery has offered, at one time or another a variety of games. The current lineup includes:
Virtual sports The thought of these games going live on mobile devices and on monitors is tantalizing but, unfortunately, TribLIves source didnt say which games would be available for purchase when the platform launches. However, theres a good chance that theyll offer a full slate of games. The more revenue for the state, the better. And you can certainly bet on the fact they want to boost their revenue last year after seeing a dip in 2017 after seven-straight years of growth. How Pennsylvania online lottery would compare to other states There are currently four states who have functional online lotteries operating in their state:
Kentucky Of those four, Michigan is the most similar to Pennsylvania because theyre running draw, instant win, and keno. In the second quarter of 2017, the state pulled in $20 million from online lottery sales. Michigan is well known for the vigor with which they push their online lottery sales, and theres nothing that would lead us to believe that Pennsylvania would be any different. The state is trying to overcome a considerable deficit, which is part of the reason the gambling bill went through. Tens of millions of dollars will flow into the state via taxes and licensing fees. While the state lottery doesnt pour its money into the same state coffers that casinos do, the states senior citizens benefit from lottery donations to rent rebates and prescription drug subsidies, among other benefits. Lottery will also oversee virtual sports, too While online gambling is the state lotterys biggest win, dont forget that it also won the right to oversee virtual sports betting. Virtual sports are fictional sporting events football games, horse races, etc. upon which gamblers bet on the outcome. This type of sports gambling doesnt offer quite the same thrill of live competitions but theyve proven in other states to scratch the itch of those looking for action during downtime in the U.S. professional sports calendar.