If You Can’t Beat ‘Em, Join ‘Em: Penn National Drops Suit To Focus On Satellite Casinos

After protecting its turf on multiple fronts, Penn National is dropping its lawsuit challenging the legality of mini-casinos, opting instead to focus on its two mini-casinos.

The lawsuit filed by Penn National against Gov. Tom Wolf and the Pennsylvania Gaming Control Board (PGCB) is no more.

The suit focused on the new Category 4 casino licenses for mini-casinos in Pennsylvania. With two of its own mini-casinos of its own to worry about, however, Penn National pulled the lawsuit. Instead, it is plugging forward on its two satellite properties.

More on the Penn National lawsuit

For months, Penn National fought against the new Category 4 provisions. The company feared cannibalization of existing businesses.

The Cat 4 licenses authorized a 25-mile buffer zone. Penn National used its Hollywood Casino as its prime example. The suit claimed the casino enjoyed a wide geographic reach for potential customers and the buffer zone would affect Hollywood’s business.

Penn National’s case implored the federal courts to block the new Cat 4 provisions because they use “unconstitutional” language. The company alleged that mini-casinos pit Penn National in a worse position than any other casino in the Keystone State.

And to top it all off, Penn National claimed that Mount Airy Casino received special treatment by the PGCB prohibiting new casinos within three counties surrounding Mount Airy.

There’s more to the dropped suit

Despite its initial — and then ongoing — objections to the new licenses, Penn National still jumped on board.

The company dropped $50.1 million for the state’s first Cat 4 license, then purchased a second license for another $7.5 million. So while Penn National fought against mini-casinos, it held ownership of two mini-casinos: one near York, the other between Lancaster and Reading.

In an interview with PennLive, spokesman Eric Schippers said Penn National “made a business decision to withdraw our lawsuits against the Category 4 (casino) law.”

“While we continue to believe in the merits of our arguments, we have chosen to focus entirely on our development efforts for our two new casinos, rather than pursue what is likely to be a lengthy and costly legal battle.

“As previously stated, our goal in pursuing our Cat4 licenses is both defensive, in terms of protecting our existing investment at Hollywood Casino from new competition, and offensive in terms of penetrating more deeply into more populous market areas to our south and east, in order to drive incremental value for our shareholders.”

Boiled down, Schippers said the suit was dropped so that Penn National can move forward with its mini-casinos, even if they were initially purchased as a “defensive” move.

Regulation stipulations could explain Penn’s decision

That said, it appears Penn National were forced to choose between lawsuit or mini-casino. From the PGCB rules:

Notwithstanding any law to the contrary, the board and the commissions shall not consider any application for a license if the applicant or any person affiliated with or directly related to the applicant is a party in any ongoing civil proceeding in which the party is seeking to overturn or otherwise challenge a decision or order of the board or commissions pertaining to the approval, denial or conditioning of a license to conduct thoroughbred or harness horse race meetings respectively with pari-mutuel wagering or to operate slot machines.

PA not out of the woods yet

Yes, Penn National has withdrawn its suit. But Sands Bethlehem continues to press on.

The casino also filed a lawsuit late last year, alleging that the new gambling law is in violation of state and federal constitutional law by requiring high-revenue casinos to pay a special tax. That tax is moved into a marketing fund that benefits smaller casinos.

Sands Bethlehem does not seem to be as willing to pull its suit as Penn National.

Slot Machine Revenue May Not Be Down But Definitely Is Flat

After a year of declines, Pennsylvnaia slot revenue for the fiscal year managed to stay flat, but that is about all it managed to do.

It’s not much of an increase, but it’s an increase nonetheless. And after a down fiscal year, Pennsylvania will certainly take any kind of upward trend in slot machine gross revenue.

According to figures released by the Pennsylvania Gaming Control Board (PGCB) on Tuesday, slots in the Keystone State generated $2,352,320,936 in gross revenue during the 2017-18 fiscal year. That reflects a bump of just more than $16 million from 2016-17.

While it is an increase of only 0.7 percent, all that matters is that slots are back on the rise.

Bouncing back

Since the opening of Pennsylvania’s first casino in November 2006, only three other time periods were more substantial than the 2017-18 fiscal year.

  • 2011-12: $2.48 billion
  • 2012-13: $2.43 billion
  • 2015-16: $2.39 billion
  • 2017-18: $2.35 billion

The slight uptick from 2016-17, which generated just under $2.34 billion, coincides with an equally small uptick in the total number of slot machines in the state. The 25,737 slots in Pennsylvania is up from 25,685 the previous year.

Tax revenue from slots equaled $1.19 billion, which is actually down from the 2016-17 total of $1.24 billion and is the lowest tax revenue from slots since 2009-10.

Since 2006, casinos have generated $24.8 billion in slot revenue. The state has collected $13.3 billion from slot tax revenue. Most of that tax revenue is used for property tax reduction to Pennsylvania homeowners.

Parx leads the pack

No property in Pennsylvania performed better in slots than Parx Casino, which totaled more than $400 million over the past fiscal year for an uptick of 3.66 percent.

In June alone, Parx posted just under $35 million –  10.37 percent more than June 2017 and more than $10 million more than second-place Sands Casino Resort Bethlehem.

For 2017-18, Sands pulled in $302 million, which is down slightly (0.69 percent) from the 2016-17 fiscal year, while Rivers Casino reported $274 million for a 3.35 percent increase. Rivers Casino, with $22.9 milion, was the only other PA property to exceed $20 million from slot revenue in June.

Below is the listing of Pennsylvania casinos with their 2017-18 fiscal year gross revenue, percentage change from 2016-17, and June gross revenue.

The PGCB, according to its release, will post total gaming revenue when it reports the same figures for June later this month.

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PA Online Lottery Touring Pittsburgh This Weekend

If you’re out on the town in Pittsburgh this weekend, don’t be surprised to see the Pennsylvania Lottery promoting its new online product.

The Pennsylvania Lottery is in the midst of a barnstorming tour in Steel City.

The state lottery organization on Tuesday kicked off a one-week, four-stop tour through Pittsburgh, a series of events that will conclude Sunday, in an attempt to promote its new form of  online gamblingiLottery.

PA Lottery takes to The ‘Burgh

As part of a 2017 gambling expansion bill, PA Lottery soft-launched PA iLottery last month. Now, those games are being taken to a handful of stadiums in Pittsburgh.

The tour began with a stop at an alt-J concert at Stage AE on Tuesday and continues this weekend with visits to PNC Park for a pair of Pirates baseball games Friday and Sunday sandwiching a trip to Highmark Stadium for a Riverhounds match of the United Soccer League.

Kiosks for iLottery will be open from 4:30 p.m. to 7 p.m. Friday at PNC Park, 5 p.m. to 7:30 p.m. Saturday at Highmark, and 10 a.m. t0 12:30 p.m. Sunday back at PNC.

The public is invited to play demo versions of the 11 iLottery games. You can sign up to play online and receive $5 in free plays. Games include:

  • Big Money Slingo
  • Big Foot Reveal
  • Cash in the Lamp
  • CashBuster Towers
  • Crossword Cash
  • Foxin’ Wins Reveal
  • Monster Wins Reveal
  • Robin Hood Reveal
  • Super CashBuster
  • Super Gems
  • Volcano Reveal

All 11 iLottery games, which offer up to $250,000 in winnings, are available for play online via computer or tablet and on the PA Lottery app.

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Keystone State continues to move forward

As the seventh state in the country to offer online lottery games, Pennsylvania has been actively trying to attract a younger audience through its games. The goal is to generate another $30 million for the PA Lottery.

“As we reflect on 46 great years, we’re hard at work to build the Pennsylvania Lottery of the future,” Drew Svitko, executive director of PA Lottery, said in a March release. “In coming months, we’ll launch an iLottery online gaming platform and new types of draw games that will help us to modernize our business and generate new funds to benefit older Pennsylvanians.”

Along with iLottery, the state lottery also offers Keno. On the way is virtual sports sports, which is expected to launch this month to make PA Lottery the first state entity to make it available. Virtual sports games would include fictional sports events, such as horse racing, with odds and bets resembling those found and made at real sportsbooks.

In October, Gov. Tom Wolf noted that virtual sports alone could result in $75 million to the Pennsylvania Lottery over the next five years.

On top of it all is implementation of legalized sports betting, which Pennsylvania has been ahead of, as the 2017 gambling expansion bill included single-game wagering.

Which State Will Win The Race To Take Bets–PA or NJ?

Both Pennsylvania and New Jersey are trying to rush sports betting to market. Which state will go live first and take advantage of the massive Philadelphia sports market.

The path is now clear for legalized sports betting. Pennsylvania prepared itself for such a situation. In fact, the Keystone State should be one of the first to offer legalized sports wagering.

Nearby, New Jersey has been at the forefront of the legalization battle for years. Last week’s decision by the US Supreme Court to strike down the Professional and Amateur Sports Protection Act (PASPA) of 1992 happened because New Jersey fought for states’ rights to legalize and regulate sports betting independently.

So, the question remains for Pennsylvania sports bettors: Where to first?

First of all, betting is still a waiting game

Over the past few years, several states began laying the groundwork in order to hit the ground running if SCOTUS lifted PASPA.

In 2014, for example, New Jersey passed legislation that eliminated provisions banning sports betting at its casinos and racetracks. Last October, Pennsylvania Gov. Tom Wolf signed a bill that authorized expanded gaming options in the state, including setting up Pennsylvania to offer legalized sports betting.

Both moves, however, needed one piece to fall into place. That piece came last week when SCOTUS struck down the 26-year-old federal ban.

That said, just because the high court ruled in the states’ favor, it did not make sports betting available right away. At the moment, New Jersey is racing to pass legislation on a regulatory framework to allow casinos and racetracks in the state to offer sports betting. Pennsylvania, meanwhile, is still reviewing the SCOTUS opinion. Currently, the state is “unable to provide a timetable” on legalizing sports betting, according to Pennsylvania Gaming Control Board (PGCB) spokesman Doug Harbach.

Soon, however, there will be options for sports bettors. So, again: Where to first?

The case for Pennsylvania

Four states prepared for what ultimately became inevitable: SCOTUS clearing the way for states to offer legalized sports betting.

One of them, obviously, was Pennsylvania. The Keystone State boasts 12 casinos that are authorized to accept wagers and a 13th on the way. The new property will be close to the home stadiums of the Philadelphia Phillies, Eagles, 76ers, and Flyers. There should be a natural draw to its sportsbooks. The state’s 2017 bill also provides avenues for mobile and online sports betting, eliminating bettors’ trips to a brick-and-mortar casino.

Still, Pennsylvania’s requirements for offering sports betting are lofty. Any casino that is interested in opening a sportsbook must pay a $10 million licensing fee. On top of that, each casino’s sports wagering revenue would be taxed at a jaw-dropping 36-percent rate. For comparison, New Jersey’s current bill would tax eight percent of gross revenue and 12.5 percent from online betting.

As a result, several companies are hesitating, including Penn National Gaming which runs Hollywood Casino in Grantville.

Naturally, there is still work, collaboration and compromise needed before Pennsylvania can get its sports betting market rolling.

The case for New Jersey

For some seven years, the Garden State did the heavy lifting for states’ rights to offer legalized sports betting. New Jersey spent millions of dollars in legal fees before SCOTUS ultimately ruled in its favor last week. If any state is ready to get in on the wagering action, it’s New Jersey.

Monmouth Park, a racetrack on the Jersey Shore, constructed a sports bar in 2013 with plans on converting it to a sportsbook should this day come. Dennis Drazin, CEO of the company that operates the track, said the venue could start taking bets in a couple weeks, if not sooner. To give Monmouth Park some credibility, it brought in European and Nevada sportsbook operator William Hill to run the sportsbook.

Several casinos in Atlantic City are primed to get into the game, as well. These casinos and casino companies are all taking steps toward offering sports betting:

  • MGM Resorts/Borgata
  • Caesars
  • Golden Nugget 

A recent provision to a New Jersey Senate bill, however, could put a damper on those plans. The provision would prevent casino operators who also own sports franchises from being authorized to accept wagers. MGM, which also runs Borgata, owns the Las Vegas Aces of the WNBA. Caesars is owned by a company whose founder has a stake in the 76ers and the New Jersey Devils. Finally,Golden Nugget’s owner also owns the Houston Rockets.

It is only a proposal, however. Theoretically, those four casinos, as well as incoming Ocean Resort Casino, will offer sports betting some time this summer.

So, where to first?

For the eager sports bettor, keep your eyes on New Jersey. At the forefront of legalized sports betting from the get-go, Pennsylvania’s neighbor to the east is primed to roll out a regulatory framework potentially within the next few weeks. The Garden State is eager to breathe new life into Atlantic City. Certainly, New Jersey wants to get the ball rolling lickety-split.

Pennsylvania, meanwhile, may not be far behind. Though there is still plenty of work to do. Consider, though, that when table games were approved to be implemented within Pennsylvania’s slots-only casinos in 2010, it took six months for the games to go live. The state also feels a sense of urgency to offer legalized sports betting, mostly in part due to the zeal of its casinos to get into the action as soon as possible.

After SCOTUS Decision, Next Step For PA Sports Betting Is Regulations

Now that the Supreme Court decision reversed the federal ban on sports betting, the next step for Pennsylvania is to establish a framework for the regulated sports betting market.

At long last, the game is afoot for legalized sports betting.

But when that game tips off in Pennsylvania is still up in the air.

In a landmark decision handed down Monday in Murphy vs. NCAA, the US Supreme Court lifted the Professional and Amateur Sports Protection Act (PASPA) of 1992. The majority of the nine-member court ruled that PASPA, which federally prohibited sports wagering, was unconstitutional. The high court ruled that individual states should be allowed to legalize and regulate sports betting at their own discretion.

With legislation already in place, Pennsylvania is on the verge of doing just that.

Opinion of SCOTUS

The case in question dated back nearly seven years. New Jersey spent more than $8 million in legal fees throughout that time. Additionally, it passed several bills to legalize sports betting. Yet each step of the way professional sports leagues and the NCAA filed legal challenges.

That is, until 2016, when New Jersey appealed to SCOTUS. The court heard oral arguments in December 2017. And on Monday, the high court announced its decision.

The idea behind PASPA was that a ban on sports betting would alleviate concerns that those involved in sporting events could be bribed to influence single-game results. In his 31-page opinion, however, Justice Samuel Alito, writing for the majority, noted that “Congress lacks the power to order a state legislature not to enact a law authorizing sports gambling, it may not order a state legislature to refrain from enacting a law licensing sports gambling.”

The US Constitution, Alito wrote, does not empower Congress to issue orders to state governments. The result was a striking down of PASPA. Now sports betting can be legalized on a state-by-state basis.

What it means for Pennsylvania

Six states are at the forefront of being the first to legalize sports betting. New Jersey will likely be first. Pennsylvania could be next in line. One research firm estimated that 32 states could be offering sports betting within five years.

Pennsylvania got ahead of the game late in 2017 as the state legalized sports betting as part of its comprehensive gaming expansion. Monday’s SCOTUS ruling activates that part of the law. Now Pennsylvanians can wager on professional and collegiate events in person, online, or on a mobile device. But first the state needs to greenlight a regulatory framework.

The Pennsylvania Gaming Control Board (PGCB) will oversee sports betting. The group is already reviewing the SCOTUS opinion. According to spokesman Doug Harbach, however “we cannot provide a timetable on the completion and approval of these regulations or the launch of sports wagering in Pennsylvania.”

As a reference, though, consider that when table games were approved to be implemented within the state’s slots-only casinos in 2010, it took six months for the games to be rolled out.

Many casinos in the state have expressed a desire to get the industry rolling as soon as possible.

Impact on Pennsylvania

Harbach also said that the state legislature perceived sports betting as a “key element of overall gaming expansion.” Pennsylvania lawmakers leaped at the opportunity to legalize sports betting. And it could certainly boost the state’s economy.

“We have been eagerly anticipating and preparing for this decision,” said Greg Carlin, CEO of Rush Street Gaming, which owns the both Rivers Casino and SugarHouse Casino.

“It’s exciting news for the consumer, the industry and the states. In addition to providing sports enthusiasts with a better, safer environment, today’s Supreme Court decision will redirect revenue previously lost to the black market and instead generate much-needed tax revenue at state and local levels.”

Previously, Nevada monopolized single-game sports betting. Last year, sports betting revenue in the state was a record $248.8 million out of $4.87 billion wagered.

Once regulations are finalized, the PGCB can begin accepting applications for operators. The initial applicants will be the 13 existing Pennsylvania casino licensees. Those who want a license will pay $10 million up front to provide sports betting. Then it will pay a state tax rate of 34 percent of revenue. Additionally, casinos will pay a .25 percent fee on handle and a two percent tax that serves as a local revenue share.

So, in the near future, expect to be able to place bets at Rivers Casino near Pittsburgh, or at SugarHouse, Parx, and Harrah’s in Philadelphia. But for now, patience is key for sports bettors as a regulatory framework is developed.

Keno Just The First Step In Historic PA Lottery Expansion

Keno is just the first step in the largest expansion in Pennsylvania Lottery history. The game is now available in over 500 restaurants and bars in the Keystone State.

The wave of gambling expansion is underway in Pennsylvania. When all is said and done, it will be the largest additions in the 46-year history of the state’s lottery system.

Keno, a fast-paced, bingo-style game, went on sale last Tuesday at approved Pennsylvania Lottery retailers. The expansion is possible under Pennsylvania’s 2017 gambling law. Keno is the first step in a two-month strategy that is designed to increase state revenue that already nets $1 billion annually for senior programs.

What is available now for PA player

With wagers beginning at $1, Keno involves players ages 18 and older choosing up to 10 numbers between 1 and 80. A computer randomly draws 20 winning numbers. The more matches players have, the more they can win.

Players will be able to watch the drawing results on big-screen monitors at about 500 locations across the state. There are more on the way in the coming weeks. The state expects to reach 2,000 or even 3,000 within the next two years.

Additionally, numbers display on animated screens on the Keno page at palottery.com. lThe website also includes a list of locations offering the game. Keno results are also available using the lottery’s mobile app.

Keno expected to set off a chain reaction

Within the next few months, the gaming landscape of the Pennsylvania Lottery will be vastly different than it has been for decades.

Lottery Executive Director Drew Svitko expects consumers to be able to use their smartphone and computers to wager through animated games in a month. And by late June, they will be able to place bets on Xpress Sports. These types of bets include simulated football games and auto races that will air on restaurant screens. According to Svitko, Pennsylvania will be the first state to offer such a game, which has been popular in Europe.

The state lottery will soon afford players the opportunity to set up online accounts and place wagers on 10 to 15 online games. These will be unique titles not offered in brick and mortar retailers.

Lotto revenue expected to spike

The lottery is not axing any of its existing games. Nor is it eliminating any of its 9,200 retailers that people use to play them. This wave of expansion, Svitko said, will only pad the dollars raked in by the state.

After a decrease in lottery revenue last year, this year’s numbers are already ahead of the curve. Lottery officials expect $4.2 billion in sales and $1.1 billion in profits for the fiscal year. This money goes toward helping seniors with costs of things like:

  • Prescription drugs
  • Rent and property taxes
  • Transportation services
  • In-home assistance

As part of that growth, Keno is expected to add about $27 million to profits in its first year. Meanwhile, Xpress Sports will chip in $13 million. Online games should contribute $30 million.

Why are these games being rolled out

The short-term plan is part of the state’s ongoing effort to modernize and attract new players while also bolstering state revenue.

“These games are meant to appeal to a new audience,” Svitko said. “These are a lot closer to a game like Candy Crush than what people are accustomed to in a game like Powerball. These are meant to be engaging, entertaining, relevant games. … We have fewer young people playing now than we would like.”

Svitko said Keno, iLottery, and Xspress Sports will carry the Pennsylvania Lottery into the “modern gaming era while generating essential new funds to benefit older Pennsylvanians.”

PA Might Want To Cut And Run After Five Mini-Casino Licenses

After awarding just a single mini-casino license, interest in the subsequent round of satellite casinos dried up. Is it time to stop trying to make mini-casinos happen?

It now seems the Pennsylvania Gaming Control Board (PGCB) needs to make some important decision.

Last week’s round of mini-casino auctioning went without a bidder, and now it appears that the state may not sell all 10 of these licenses. As a result, the PGCB faces two roads diverged in a wood.

What is a mini-casino?

A scaled-down version of traditional casinos, mini-casinos feature 300 to 750 slot machines. Some may include up to 30 table games.

This subsect of the PA gaming industry became an option after Pennsylvania passed a satellite casino law last October that allowed for 10 new casinos to fall into a new category of the gambling establishment: Category 4. Licenses for these properties would cost $7.5 million. Adding 30 table games would cost an additional $2.5 million.

However, these satellite properties cannot be located within 25 miles of existing Category 1, 2, or 3 properties.

Timeline leading up to latest no-show bids

As the first rounds of auctions neared, over 40 percent of the 2,560 municipalities in Pennsylvania opted not to participate. That included most of Philadelphia and all of Lancaster County. The consensus, particularly in Philadelphia, was a fear of oversaturation of casinos.

In January’s first two auctions, Penn National ($50.1 million) and Stadium Casino ($40.1 million) beat out a combined six other bidders to obtain mini-casinos. Three bidders participated in the Feb. 8 auction, with Mount Airy Casino coming away with the license for just shy of $21.9 million. Parx Casino ($8.1 million) landed a mini-casino during the Feb. 22 auction, followed again by Penn National, which spent $7.5 million as the only bidder April 4. That was a subsequent auction as the state attempted to sell off the remaining licenses.

Interestingly, Penn National has been the most vocal opponent of mini-casino expansion. As the only casino in the central area of Pennsylvania, Penn National was steadfast in its claim that the satellite properties would result in “significant and unique” damage to its Hollywood Casino, according to a 57-page lawsuit against the state that was filed in federal court in January.

Yet while the company is continuing to fight to get the satellite casino law overturned, Penn National figured it would still participate in the auctions as a backstop in case its lawsuit is dismissed. Devil you know, right?

What happens to the auctions now?

The likelihood is high that the auction process stops with five licenses still up for grabs. The PGCB may decide to hold a third and final round of bidding for approved non-casino license holders. Then again, there is strong outside interest to land a mini-casino site.  Note that Category 4 licensees are not eligible to participate in online gambling, so that is not an option for mini-casino license holders.

Now it is time for the PGCB to assess the situation. The next round of auctions, if they took place, would be open to groups outside of existing casino license holders, in which case the PGCB would predetermine eligibility requirements.

Buying out Pennsylvania casinos is becoming a hot ticket. It affords outside companies the opportunity to get in on the ground floor as the world of gaming is due to expand.

Still, purchasing these Category 4 licenses will not provide owners to offer such experiences. The logic goes that casinos with higher-category licenses could provide sports betting, et al., but a mini-casino on its own would not have that kind of freedom. To boot, a Cat 4 casino would not have access to any of the available interactive gaming licenses.

Basically, if an outside group invested in a mini-casino, that would be all it was investing in.

The other option for the PGCB is to shut down the auctions altogether. Half of the 10 mini-casino licenses are still available, and the last auction went without a bidder. Expectations have already been met. Large bids from the first few rounds generated over $120 million. Consider that, had all 10 licenses sold for the base cost of $7.5 million, the result would be $75 million in revenue.

The ideal locations for mini-casinos, allowing for buffer zones from existing casinos, have already been taken. And over 1,000 municipalities in the state have opted out of hosting a mini-casino. Available options are slim for the PGCB. Perhaps it is time for it to take the money and run.