A Pittsburgh-area conservative think-tank is beginning to wonder if Pennsylvania’s 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 institute’s 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 state’s 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. That’s $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 state’s 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.

Contents
1 No timeline for online gambling
2 PA Lottery ready to go online as soon as March
3 Adding to existing lottery revenues Online slots, table games, and poker are coming to Pennsylvania. However, it now appears the PA Lottery will get there first. Pennsylvania became the fourth US state to legalize online gambling in 2017. State lawmakers passed a comprehensive gambling expansion bill in the fall of last year. Additionally, the new law regulates video gaming terminals (VGTs) at approved truck stops and tablet gaming in approved airports. It also authorizes the construction of up to ten satellite casinos at locations a specified distance from one of Pennsylvania’s 12 existing casinos. Plus, it allows the state to start online lottery sales. No timeline for online gambling The Pennsylvania Gaming Control Board is going about the business of setting up regulations and licensing online gambling operators. But there is no set timeline for when the process will conclude and the online gambling market will open up. However, a PA Lottery spokesperson told the local press online lottery games that can be played online, on a computer or mobile device, will likely hit the market this spring. A spokesperson for the gaming board told Trib Total Media it is currently talking with PA casinos interested in applying for the three types of online gaming licenses it will ultimately offer. This includes individual licenses for online slots, online poker, and online table games at a cost of $4 million each. Although, PA casinos will be able apply for all three at once at a reduced licensing fee of $10 million. However, the board says it has yet to put together the regulations that will guide the licensing process and the games themselves. In fact, the board has admitted it has no time frame for when this regulatory process will begin, or end. PA Lottery ready to go online as soon as March In the meantime, the PA Lottery appears ready to start online lottery ticket sales on its website, a newly designed mobile app, and lottery retail monitors, as early as late March. According to the state, lottery sales have helped put more than $1 billion a year for the past six years into programs designed to serve Pennsylvania seniors. However, coming off a 35 percent increase in sales between 2010 and 2016, lottery sales dipped 3 percent last year. As a result, a PA Lottery spokesperson said the lottery wants to go online in an effort to modernize its business model. It’s also hoping to better compete in the face of growing competition from other forms of entertainment. No decision has been made as to which games will be for sale online. However, PA Lottery officials have confirmed the online games will also be available on monitors at lottery retailers across the state. Adding to existing lottery revenues Hopes are the new games will add to lottery revenues rather than cannibalize traditional ticket sales. In fact, PA Lottery officials say the new games could generate up to $250 million in new profits over the first five years. Illinois, Michigan, Georgia, Kentucky, North Dakota, and North Carolina are the only other states that currently offer online lottery sales. The Illinois Lottery was the first to go online in 2012. It generated close to $20 million in online sales last year. Michigan reported more than $90 million in online lottery sales last year, helping overall lottery sales increase seven percent.

Contents
1 Boyd buying Valley Forge
2 Valley Forge slot expansion Las Vegas, Nevada’s Boyd Gaming Corporation ended 2017 with a flurry of casino acquisition activity. Activity that included buying its first-ever casino property in Pennsylvania: Valley Forge Casino Resort. Wyomissing, PA’s Penn National Gaming announced the week before Christmas it is buying competitor Pinnacle Entertainment Inc. The acquisition is a cash-and-stock deal worth close to $2.8 billion. However, in order to meet regulatory requirements, Penn National is being forced to sell the gaming operations of four existing Pinnacle properties it will acquire through the purchase. Boyd Gaming has stepped in to buy the casinos for $575 million in cash. The properties are:
Ameristar Kansas City
Ameristar St. Charles
Belterra Park
Belterra Casino Resort At the time, Boyd Gaming said it expects the four-casino deal to close in the second half of 2018. Boyd buying Valley Forge Just a few days later, Boyd Gaming announced it has also entered into an agreement with Valley Forge Convention Center Partners, L.P., to acquire Valley Forge Casino Resort in King of Prussia, PA. The purchase price is listed as $280.5 million. Before these transactions, Boyd Gaming already owned and operated two dozen gambling operations across the country. This includes a dozen in the Las Vegas-area alone. Its flagship property is the Orleans Hotel and Casino in Las Vegas. Valley Forge Casino Resort is just 20 miles west of downtown Philadelphia. It will be Boyd Gaming’s first Pennsylvania casino. The Keystone State is the second-largest commercial gaming state in the nation behind Nevada. Boyd Gaming’s President and Chief Executive Officer Keith Smith said in a press release the acquisition represented a growth opportunity for both Boyd and Valley Forge: Valley Forge currently boasts a 40,000-square foot casino with 600 slot machines and 50 table games. Plus, the property also includes nearly 500 hotel rooms, eight restaurants and bars, and more than 100,000 square feet of convention space. It sits just two miles north of King of Prussia Mall, the largest shopping mall in the country. Valley Forge slot expansion In November, Valley Forge paid the state to have its customer admission fee abolished, and made plans to add 250 more slot machines, in accordance with new laws governing gambling expansion. However, the new laws also allow the property to offer online gambling within the state, as well as sports betting, should it ultimately be permitted under federal law. Smith said Boyd is considering jumping in both sectors in PA. He also said the recent acquisitions bring Boyd Gaming’s casino portfolio up to 29 casino properties operating across 10 states. Additionally, Smith said the acquisitions give the company direct access to four of the nation’s largest gaming markets in Philadelphia, St. Louis, Kansas City, and Cincinnati. Boyd expects the Valley Forge transaction will close in the third quarter of 2018.

Contents
1 The when and where of the satellite auctions
2 Bidding on satellites: Two envelopes, one winner The satellites are getting ready to land. Earlier this month the Pennsylvania Gaming Control Board (PGCB) announced the parameters for the forthcoming auctions that will take place for the licenses required to operate satellite casinos. These casinos are just one of the many provisions included in Pennsylvania’s landmark gambling expansion bill passed in late October. A Dec. 13 press release from PGCB detailed how the auction process will work. Here’s an excerpt: The when and where of the satellite auctions According to the press release, the auctions will take place in 10 rounds. The first two will happen on Jan. 10 and Jan. 24. Then there will be two each month through May 16. The auctions will happen in Harrisburg’s Strawberry Square in a public hearing room. They are currently scheduled to start at 10 a.m. The goal is to have all licenses auctioned off by May. However, if that doesn’t happen, PGCB will extend the deadline until July 31. If any licenses still remain, Category 3 casinos (resorts) can join in additional auctions until Aug. 31. Should there still be leftover licenses at that point, the PGCB may add more auctions. Additionally, it could allow casinos who successfully bid on licenses to win more. Bidding on satellites: Two envelopes, one winner According to the recently passed gambling bill, satellite casinos can have between 300 and 750 slot machines and 40 table games (max of 30 the first year). The presence of these two types of games requires two separate licenses in addition to the Category 4 license. The actual bidding process will be a Vickery auction. This means casinos will submit bids in sealed envelopes. Each bidder will also have to provide a second envelope that contains the location where the bidder wants to build the satellite. Once all the envelopes are submitted, a PGCB board member will open all the bid envelopes in random order. PCGB will announce winners on its website. The losing bidders and their bids will be kept confidential to, the PBCB said, “assure the competitiveness of the future auctions and minimize the potential for collusion.”

Contents
1 Boyd Gaming buying the Ameristar casinos
2 Wyomissing’s Penn National Gaming
3 Nevada’s Pinnacle Entertainment Pennsylvania’s largest casino company is getting even bigger.Penn National Gaming announced Monday it is planning to buy competitor Pinnacle Entertainment Inc. in a cash-and-stock deal worth close to $2.8 billion. Once the deal jumps through the usual regulatory hoops, Pinnacle shareholders are going to receive $20 in cash and 0.420 shares of Penn National stock per share. After the deal is complete, Penn National Gaming shareholders will own 78 percent of the company. Pinnacle shareholders will hold the other 22 percent. The combined company will be one of the largest casino companies in the entire country. There is no indication Penn National plans to leave its Pennsylvania home. Boyd Gaming buying the Ameristar casinos As a part of the transaction, Penn will sell the gaming operations of four existing Pinnacle properties to Boyd Gaming Corp. for $575 million in cash. The selloff is reportedly in order to meet regulatory requirements in the areas where these casinos operate. The casinos include:
Ameristar Kansas City
Ameristar St. Charles
Belterra Park
Belterra Casino Resort There is also a leaseback deal in the works involving Belterra, Boyd Gaming, and Penn National real-estate spin-off Gaming and Leisure Properties. However, Boyd Gaming says its end of the entire deal is not likely to close until the second half of 2018. Boyd Gaming operates more than two dozen gambling operations across the country, including a dozen in the Las Vegas, Nevada area. Its flagship property is arguably the Orleans Hotel and Casino in Las Vegas. Wyomissing’s Penn National Gaming Wyomissing, PA is home to Penn National Gaming’s headquarters. Prior to this Pinnacle deal, the company owned and operated 26 casino properties in the US and managed one in Canada. Of course, this includes the Hollywood Casino at Penn National Race Course in Grantville, PA. The Hollywood Casino brand is Penn National Gaming’s largest. In fact, it owns and operates Hollywood Casino properties in seven other states:
California
Illinois
Indiana
Kansas
Mississippi
Missouri
Ohio It also owns the M Resort in Henderson, Nevada and Tropicana Las Vegas on the Las Vegas Strip. Reutersreported that once the Pinnacle deal is done, Penn National Gaming will operate a combined 41 casino properties. These properties include more than 53,000 slot machines and 1,300 table games. They also include more than 8,300 hotel rooms. Nevada’s Pinnacle Entertainment Pinnacle Entertainment is headquartered in Spring Valley, Nevada. The company operates 16 casinos in nine states as well as a horse track in Texas. This included The Meadows Racetrack and Casino in Washington County, PA. The casino and racetrack property was bought by Penn National Gaming real-estate spin-off Gaming and Leisure Properties in 2015. However, Pinnacle inked a $138 million deal with Gaming and Leisure to run the casino at the property in 2016. Pinnacle Entertainment’s largest casino brand is Ameristar. Ameristar properties can be found in:
Colorado
Iowa
Indiana
Mississippi
Missouri Rumors of a Penn National-Pinnacle merger began to surface in October of this year when the Wall Street Journal reported both sides were in discussions. Both companies refused to comment as stock prices soared.

Contents
1 Fear is VGT’s will be contagious
2 Satellites a no-go, too
3 Satellites, VGT’s present interesting problem for counties, municipalities Philadelphia’s civic leaders aren’t showing a lot of brotherly love toward video gambling terminals (VGTs) and satellite casinos. This past week, eight members of the Philadelphia city council said they’d support local legislation to reject VGTs and satellite casinos. The former needs approved by Philadelphia County before truck stops can install any machines. The move comes as Pennsylvania’s gambling expansion bill legalized VGTs at truck stops and up to 10 satellite casinos. The law does give municipalities the choice to opt-out of satellites and counties to opt-out of VGTs. Philadelphia Councilman Bobby Henon was pretty clear about why he and his seven colleagues indicated their distaste for expansion in their county. “We want to send a strong message,” he was quoted as saying in the Inquirer. “We don’t want this kind of gaming expansion here in the city of Philadelphia.” A final vote on the matter will take place this week. Fear is VGT’s will be contagious Pennsylvania’s gambling law now allows for VGTs at truck stops that meet certain requirements: at least 50,000 gallons of diesel sold each of the past 12 months, at least 20 commercial parking spots, and a few other requirements. Henon said that his main concern is that VGTs in truck stops today means VGTs in bars and other locations tomorrow. Ironically, Philly.com reports that not a single truck stop or gas station in the city meets the requirements needed to install VGTs. Other arguments from the councilman include the fact that 26 percent of Philadelphia’s population is in poverty. In his mind, VGTs would only exacerbate the problem. At the time of publishing, though, only three counties had officially filed their VGT opt-outs with the Pennsylvania Gaming Control Board (PGCB). Satellites a no-go, too The city will also opt-out of satellite casinos, which are smaller versions of their full-fledged cousins. The law allows for up to 10 satellites with a max of 750 slots and 40 table games at each location. As mentioned earlier, municipalities have the choice to opt-out of satellites. The list of more than 200 municipalities who’ve opted out is available on the PGCB‘s website. SugarHouse Casino, Parx, and Harrah’s can breathe a sigh of relief; for the time being, satellites and VGT’s won’t steal customers away from their casino floor. Satellites, VGT’s present interesting problem for counties, municipalities The gambling expansion bill was a bit of a free-for-all in the sense it opened up multiple gambling avenues. Some of those will directly benefit existing brick-and-mortar casinos: online gambling and satellite casinos. However, VGT’s don’t work in the favor of casinos, the thinking goes. Opponents worry they pull customers away from casino floors and into truck-stop gambling nooks. Truckers, however, are split on the matter. Some believe it will keep truckers awake and jeopardize their safety as well as the safety of other drivers, while others welcome the chance to do some gambling during their mandatory 10-hour rest time.

Contents
1 College Township not opting out
2 Satellite casino could reinvigorate Nittany Mall
3 Disaster for Penn State students? A struggling Penn State University-area mall could potentially be the site of one of the state’s new satellite casinos. At the very least, College Township, PA where the decades-old Nittany Mall is located, is not one of more than 200 municipalities currently opting out of hosting a satellite casino inside its borders. State lawmakers passed a comprehensive gambling expansion bill on October. The new laws authorize the construction of up to ten satellite casinos across the state. However, none of these mini casinos can be built within a 25-mile radius of one of Pennsylvania’s 12 casinos. Plus, municipalities are able to opt out, prohibiting the opening of a satellite casino near them. The satellite casinos could potentially house anywhere from 300 to 750 slot machines and start with 30 table games. Plus, that number could go up to as many as 50 over time. College Township not opting out A number of Centre County municipalities have already opted out of hosting one of the satellite casinos. The deadline to do so is Dec. 31. However, College Township appears to be standing pat. In fact, council members agreed to take no action last week. College Township already has city ordinances on the books that restrict where gambling businesses can be located. Moreover, College Township Manager Adam Brumbaugh says the Nittany Mall is really the only feasible location where a satellite casino could go. The Nittany Mall first opened in 1968. It has expanded through the years to include several anchor stores. However, it was announced in November the Nittany Mall Sears location is closing. In fact, it is one of 18 Sears stores and 45 Kmart locations around the country scheduled to close in late January 2018. Satellite casino could reinvigorate Nittany Mall Given the ongoing economic struggles of the mall, the fact it is the only viable location in College Township, and the number of other Centre County municipalities opting out of hosting a satellite casino, Brumbaugh wrote a memo to College Township council saying he strongly believes a satellite casino presents a real opportunity to redevelop the Nittany Mall and surrounding commercially zoned properties. Pennsylvania State University is partially located in College Township. However, every other municipality in and around the school has opted out of hosting a satellite casino, including State College. Disaster for Penn State students? Council President Tom Daubert told the local press a casino could be disastrous for the Penn State student body. Council member Theresa Lafer said gambling could pose the same addiction risk to students as alcohol. Existing PA casinos will begin the bidding process for potential satellite casino locations in January 2018. Under the new laws, satellite casino host municipalities will collect half of the local assessment paid by the operation. This includes two percent of gross revenue from table games and four percent of gross revenue from slot machines. Photo by Richard Paul Kane / Shutterstock.com

The future of the Lawrence Downs Casino and Racing Resort project outside of Pittsburgh is again in doubt, according to a report by The Pittsburgh Tribune-Review. The problems for Lawrence Downs Joseph Procacci, the main investor in Lawrence Downs, has said through his attorney, John O’Riordan, that his plans for the casino and track could be scuttled. From the Trib-Review: Among the deadlines put in place? The first race at Lawrence Downs must be hosted by October of 2017. Seeing as the project is still not close to having ground broken, getting the track complete in less than two years seems like an unlikely timeframe. The Trib-Review also noted that “losing the project would cost the state hundreds of millions of dollars in revenue,” according to O’Riordan. Procacci is the sixth investor to attempt to complete a racino in Lawrence County since 2004, the T-R reported. The appeal is expected to be considered before the end of the year. The lay of the land in Western PA for gambling Lawrence Downs, if and when it is completed, would become the second racino and fourth overall gambling establishment in that part of Pennsylvania — fifth if you count Presque Isle Downs and Casino near Erie. There have been some concerns about market saturation for gaming in that part of the state; that’s part of the reason why Penn National reportedly backed out of plans to develop Lawrence Downs. Given the problems over the past decade with bringing Lawrence Downs to fruition, it’s fair to wonder if Procacci is truly the last hope for getting the project done. Racino issues come amid possible giant gaming expansion in PA As the Lawrence Downs racino faces an uncertain future, a possible gambling expansion could drastically change the landscape in Pennsylvania. A bill that once was simply an online poker and gambling regulation bill has been turned into a catch-all expansion bill that recently passed a House committee vote. That bill would, as written, make a number of changes to state gaming law. For example:
Racinos could offer slot machines at up to four off-track betting locations.
Airports could add slots if partnered with casinos.
Liquor service could be offered around the clock at casinos, with an additional fee. The desire to implement these and other gaming expansions — and the impetus to actually get Lawrence Downs up and running — are both open questions at this point.

Contents
1 Penn National Gaming
2 Pinnacle Entertainment Rumor has it one Pennsylvania casino giant is in talks to take over one of its competitors. The Wall Street Journal reported last week that Penn National Gaming was in discussions with Pinnacle Entertainment regarding a possible merger. Representatives from both companies refused to comment. However, stock prices for both companies went up in the wake of the rumors. Penn National Gaming Penn National Gaming has its headquarters in Wyomissing, Pennsylvania. However, the company has its roots in the Penn National Race Course in the Harrisburg suburb of Grantville. Also, the company owns and operates some 26 gaming properties in the US and manages one in Canada. In Pennsylvania, it owns and operates the Hollywood Casino at Penn National Race Course in Grantville. This property includes the Penn National Race Course that opened in 1972 with a one-mile dirt course and seven-furlong turf course. Also, the track hosts thoroughbred racing 52 weeks per year. Additionally, the Hollywood Casino opened at the property in February 2008. Table games were added in accordance with state laws in July 2010. The casino now boasts almost 2,500 slot machines and more than 50 tables. Also, there is a live poker room on site. The Hollywood Casino brand is Penn National Gaming’s largest. In fact, Hollywood Casino has properties in seven other states, including:
Illinois
Ohio
Mississippi
California
Kansas
Indiana
Missouri Some of Penn National Gaming’s highest profile casino properties include M Resort in Henderson, Nevada and Tropicana Las Vegas on the Las Vegas Strip. Pinnacle Entertainment Pinnacle Entertainment has its headquarters in Spring Valley, Nevada. However, the company traces its roots back to the Hollywood Park Turf Club racetrack in Inglewood, California. It now operates 16 casinos in nine states and a horse track in Texas. States with Pinnacle Entertainment-run casinos include:
Colorado
Indiana
Iowa
Louisiana
Missouri
Nevada
Pennsylvania
Ohio Pinnacle Entertainment’s Pennsylvania casino is the Meadows Racetrack and Casino. The Meadows Racetrack and Casino is a standardbred harness racing track and casino just outside of Pittsburgh. A temporary casino opened at the track in 2007. However, it was replaced by a permanent casino facility in April 2009. Also, table games were added in July 2010. Additionally, there are more than 3,000 slots, 65 table games and a 14-table poker room at Meadows. Pinnacle purchased Meadows for $138 million in September 2016. Pinnacle Entertainment’s largest casino brand is Ameristar. Plus, Ameristar properties can be found in:
Iowa
Indiana
Mississippi
Missouri
Colorado The rumors persists the two companies have held on-again, off again talks with Penn National Gaming interested in buying Pinnacle Entertainment. However, the two sides have not agreed on terms so far.