Why grant more casino licenses when you can open up new properties under existing licenses?

That’s the thought behind a crucial piece of satellite casino legislation in Pennsylvania’s current gambling bill. It also includes provisions for online gambling via handheld devices.

“Satellite casinos” are smaller locations that existing license holders can build throughout the state. The current proposed legislation allows for up to 10 satellite casinos.

The first few paragraphs of a recent Penn Live article about the legislation sum up the law itself and the implications on various communities throughout the Keystone State:

“To help balance the still-unfinished, $32 billion state budget, lawmakers have proposed establishment of up to 10 new ‘satellite’ casinos to be scattered around Pennsylvania. Are you all ready for intentionally small casinos in places like Reading? York County? State College? Altoona? The Lake Erie shoreline?”

Satellite casinos are a novel idea and could boost revenue for PA

This concept of opening up smaller casinos under pre-existing licenses is a unique concept that has yet to be tested in American casino markets.

Lawmakers believe the satellite casinos will be a revenue boost in a state facing continued financial woes. There’s a projected $3 billion deficit through next summer.

Opponents say cannibalization is likely

On the other side of the argument are lawmakers who oppose satellites because of specific nuances in the legislation.

One of their biggest beefs pertains to the 25-mile rule. The legislation doesn’t permit for the construction of satellite casinos within a 25-mile radius of an existing casino. That’s a great idea, lawmakers say, minus the fact that it makes satellites impossible to build in a 500-square-mile block in the eastern part of the state.

Another complaint is that lawmakers removed a provision for market studies from later versions of the bill.

Opponents say a casino with a customer base that comes from beyond 25 miles could lose revenue if a competing satellite opens in that area.

Penn National stands to lose part of its customer base. This is because secondary markets like Reading, Lancaster, York, and Gettysburg are nearby. They’re prime candidates for a satellite casino.

Special licenses needed for satellite casinos in PA

According to the bill, casino operators would bid on licenses for these satellite casinos. The minimum bid would be $10 million.

Satellites could be a checks-and-balances measure

Another intriguing angle here is that the bill would allow VGTs at various non-casino locations around the state.

Adding satellites, the reasoning goes, would help casinos recuperate some of the revenue lost to these VGT locations. Why go to a bar to gamble when a mini-casino requires the same amount of travel time?