Penn National Gaming has entered into a battle with the state of Pennsylvania over satellite casinos. The company is defending its Hollywood Casino at Penn National Race Course on at least two fronts.

First off, the Pennsylvania-based gaming and hospitality giant filed a lawsuit in federal court in Harrisburg this past Tuesday. The suit alleges the state’s plan to allow the construction of up to 10 satellite casinos will cause “significant and unique harm” to Hollywood Casino.

Secondly, Penn National Gaming outbid other PA casino owners and operators for the right to develop the state’s first satellite casino. The company bid a whopping $50.1 million for the right to go ahead with a satellite casino of its own in York County.

The radius around the new site, and the number of area municipalities opting out of hosting a satellite casino prior to the bidding process, would essentially give Penn National Gaming exclusive casino gambling rights in a large portion of south central Pennsylvania.

The satellite casino buffer zones

State lawmakers passed a comprehensive gambling expansion bill in October 2017. Alongside the authorization of online gambling, the new laws allow for the construction of up to ten satellite casinos, each with up to 750 slot machines.

The plan created a 25-mile buffer zone around existing casino properties so these new satellite gambling operations wouldn’t draw business away from them.

Municipalities who don’t want a satellite casino were invited to opt out of hosting one. Then, the bidding process opened up to owners and operators of Pennsylvania’s 12 existing casinos. The minimum bid is $7.5 million, plus $2.5 million for a gaming license. Auction winners can also buy a separate certificate to operate up to 30 table games for $2.5 million.

Penn National Gaming cries foul

However, Penn National Gaming has been crying foul from the start.

Company executives claim Hollywood Casino faces more competition from satellite casinos than any other Pennsylvania casino operation. It maintains these satellite casinos will poach its statewide customer base. Plus, it says other casino properties are being better protected by the law.

Penn National Gaming says casinos built closer together in other parts of the state help create larger buffer zones. In effect, that gives these properties more protection than Hollywood Casino enjoys.

Plus, the company claims most of its customers come from outside of 25 miles around the property, exacerbating the issue.

The state responded to Penn National Gaming’s complaints by claiming it would be unfair to change the law to create a larger buffer zone only benefiting one casino.

Mount Airy gets a bigger buffer

However, it may have already done that for Mount Airy Casino Resort. The new law prohibits satellite casinos in sixth-class counties. That nearly triples the buffer around Mount Airy Casino Resort. However, it does nothing for any other PA casino.

The lawsuit claims there was no rational basis for the decision leading to the creation of the buffer zones. It also claims Penn National Gaming is being treated in an arbitrary and inequitable fashion. Plus, Penn National Gaming is claiming its constitutional rights to equal protection and due process have been violated.

State Sen. Mario Scavello, chair of the Senate committee that handled the gambling expansion legislation, has maintained the buffer zones were created based on previous state gambling laws.

Mount Airy Casino Resort is in Scavello’s district. However, he maintains the protection afforded Mount Airy is fair because it provides a cut of revenues to the counties around it.

Penn National Gaming claims it will withdraw its $50.1 million satellite casino bid if it wins the lawsuit.

In the meantime, the satellite casino bidding process continues. The other nine licenses are set to be auctioned off bi-weekly. The next one is scheduled for Jan. 24.

Martin Derbyshire

Martin Derbyshire

Martin Derbyshire has more than ten years of experience reporting on the poker, online gambling, and land-based casino industries for a variety of publications including Bluff Magazine, PokerNews, and PokerListings. He has traveled extensively, attending tournaments and interviewing major players in the gambling world.