Penn National Strikes A Deal With Barstool Sports For Sportsbook, Casino Products

In a somewhat surprising move, Penn National Gaming bought a large stake of Barstool Sports, with plans to use the brand for online sportsbook and casino.

Penn National Gaming (Penn), based in Pennsylvania, recently closed a deal with digital sports media brand Barstool Sports.

According to the company’s press release, Penn agreed to the valuation of Barstool at $450 million. The casino operator will shell out $163 million for a 36% stake in Barstool.

In another three years, another $62 million will increase the stake to 50%. Once that transaction is complete, Penn National will be the controlling owner.

Penn to use Barstool branding with major growth potential

Penn has come far from its humble roots as a racetrack in South Central, PA. It plans to use the Barstool brand for the online sportsbook and online table games. The already established Hollywood Casino app will remain as the brand for online slots.

Jay Snowden, Penn National Gaming president and CEO, plans to use the Barstool Sports audience to ascend and capture a large share of the PA online gambling market. He says:

“With its leading digital content, well-known brand and deep roots in sports betting, Barstool Sports is the ideal partner for Penn National and will enable us to attract a new, younger demographic, which will nicely complement our existing customer database. In addition, with 66 million monthly unique visitors, we believe the significant reach of Barstool Sports and loyalty of its audience will lead to meaningful reductions in customer acquisition and promotional costs for our sports betting and online products, significantly enhancing profitability and driving value for our shareholders.”

Penn’s focus on national growth is nothing new. The company is not just a Keystone State operator, but has planted flags in 18 other US states.

Legalized sports betting states among them include:

  • Illinois 
  • Indiana 
  • Iowa
  • Michigan 
  • Mississippi 
  • Nevada 
  • Pennsylvania

Controversy surrounding Barstool

Barstool has certainly enjoyed a meteoric rise since its humble beginnings. According to Forbes, the company, founded by Dave Portnoy, started out by handing out free black-and-white gambling tip sheets at subway stations throughout Greater Boston. It has now grown into a media behemoth and is certainly enjoying even greater success with the Penn deal.

In 2016, the Chernin Group purchased Barstool for around $10-$15 million. Then the Chernin Group increased Barstool’s popularity despite the cancellation of its high-profile ESPN show.

On one hand, Barstool is known for a vulgar, misogynistic culture with a founder who has unapologetically degraded women, passing it off as humor. On the other hand, its audience is still growing thanks to its popular sports and comedy material.

Taking the good with the bad

Its content successfully caters to the young male demographic, which translates well into Penn’s growth plan. Penn’s stock soared after the partnership announcement was made.

However, Barstool is shunned and will likely always be shunned by certain organizations because of its reputation. For example, Barstool was escorted out of NFL Opening Night and was unwelcome during the Super Bowl.

But that’s not to say the deal won’t turn out favorably for Penn in terms of new customer acquisition.

It could also be good for Kambi, according to Legal Sports Report. Headquartered in Philadelphia, Kambi will be the technology platform provider for Penn’s online sportsbook.

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Pennsylvania Cashing In On Economic And Social Contributions Of Casinos

Casinos get a bad wrap as blights on communities, but PA casinos create jobs, outreach, and tax revenue for local communities.

Winners aren’t just limited to inside the confines of a casino.

Pennsylvania is experiencing a jackpot of jobs and an economic windfall as a result of the casino gaming industry.

On May 29, at a Get to Know Gaming event, the American Gaming Association (AGA) released their latest report, Casinos & Communities – Pennsylvania. It provided an in-depth look at the gaming industry’s economic and social contributions to communities across the state.

Highlights of the report included:

  • 33,171 jobs supported
  • $1.8 billion in wages generated
  • $2.5 billion generated in taxes

In 2004, Pennsylvania legislators passed the Pennsylvania Race Horse Development and Gaming Act, legalizing casinos and racinos. Today, there are 12 commercial casinos and racinos across the Commonwealth, which have rocketed Pennsylvania to the second-highest commercial gaming revenue in the United States, behind only Nevada.

“Over the last 15 years, gaming companies across the Commonwealth of Pennsylvania have served as an anchor for state and local economies, generating billions of dollars in tax revenue and operating as good stewards and community partners in the places casinos call home,” said Bill Miller, president and chief executive officer of the American Gaming Association.

Casinos as a beacon of hope

The growth of the gaming industry helped fill the void left by the downturn of the mining and manufacturing industries.

Ravaged by the high unemployment, crime and poverty for decades, the 2007 opening of Caesars Entertainment’s Harrah’s Philadelphia provided a beacon of hope. In May 2015, Harrah’s reported:

  • 1,400 jobs created
  • $1.6 million in charitable contributions
  • $1.4 billion in taxes
  • A $100 million economic impact in the city of Chester

Chester Mayor Thaddeus Kirkland explained that when the shipbuilding, steel and automobile industries left the city, jobs were limited and businesses were not coming.

“Harrah’s was the first real economic development that we had in this city for quite some time – for decades. They took a bet on the city. Folks now feel good about going to work in the morning. The casino has provided them with the opportunity to better take care of their families. And not just jobs, because jobs can come and go, but they provide them with career opportunities.”

Boosting the economy and nightlife

Twenty-five miles south of Chester, King of Prussia is in many ways, a world apart. It is home to the largest concentration of commercial office, industrial and flex buildings in the Philadelphia suburbs.

However, the area needed a boost from the 2008 recession. Boyd Gaming’s Valley Forge Casino was a “big, big part of that transition from a bad economy to a good economy,” said Eric Goldstein, executive director of King of Prussia’s Business Improvement District.

The casino created job opportunities and attracted visitors while keeping entertainment dollars in the community with their nightlife offerings such as musical acts, stand-up comedy, dueling pianos and Valley Beach, a pool bar with entertainment every Friday and Saturday night during the summer months.

“In the past four years, we’ve added almost 40 new restaurants at King of Prussia, which is crazy. You must have a lot of people to support that level of new business. The casino is obviously helping with that,” Goldstein added.

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Casinos as community partners

The impact of Pennsylvania casinos is not limited to their utility as economic engines. They boost local government budgets, support many community causes and are actively involved in the areas they call home.

In April, SugarHouse hosted a veteran-focused job fair to recruit over 100 candidates. In early 2019, SugarHouse was recognized for the seventh time as a “Top Workplace” by the Philadelphia Inquirer and also earned multiple “Best Places to Work” honors from the Philadelphia Business Journal. The Philadelphia-based casino is known for offering employees exceptional benefits, immediate 401 (k) vesting, and tuition reimbursement for continuing education.

Parx poured $90 million into over 800 organizations. Their representatives sit on the boards of addiction facilities and homeless shelters in the Bensalem area.

When the Greater Washington County Food Bank needed a new location, local grant funding from casino revenue “made it possible,” said Executive Director Connie Burd.

The new building with its 800-square-foot cooler and 400-square-foot freezer has enabled the food bank to “get out a lot more fresh produce to people” than before the grant. Employees from The Meadows regularly volunteer their time giving out food to low-income families and seniors.

Winning in western Pennsylvania

The western side of Pennsylvania is winning, too. Communities in and around Pittsburgh have benefitted from an economic upturn from Rivers Casino and the Meadows Racetrack & Casino.

Before Penn National Gaming’s Meadows Racetrack & Casino opened in Washington County in 2009, lifelong resident Larry Laggi recalled a stagnant economy with the area “losing jobs, losing people and losing families.”

Laggi equated the economic impact and excitement generated by the casino with the boon days of the local coal mining and steel industries.

“Every community, large and small, has prospered and benefited from gaming being in Washington County.”

Over the past 11 years, gaming has generated almost half-a-billion dollars for Washington County. That money funded job creation, infrastructure and workforce development projects, according to Jeff Kotula, president of the Washington County Chamber of Commerce.

“Those monies go right back into our economy. They go right back into new projects, encouraging more and more population growth, business investment and things of that nature in our community.”

The Lowdown On PA’s First Sportsbook: The Sportsbook At Hollywood Casino

The first-ever Pennsylvania sportsbook will officially open its doors at Hollywood Casino at Penn National on Saturday, Nov. 17.

Hollywood Casino, at Penn National Race Course, announced a test launch Thursday for its new sportsbook, a first of its kind in Pennsylvania.

Starting at 2 p.m. Friday, the book will have another day of testing. The Pennsylvania Gaming Control Board (PGCB) will oversee the new operations during the testing phase, expected to last only one day. The sportsbook at Hollywood Casino anticipates operating regular business hours and a full launch effective Saturday, Nov. 17.

It will open at 11 a.m. on weekdays and an hour earlier on weekends. It will close at midnight daily.

The sportsbook will be in the simulcast theater next to the Skybox Sports Bar on the second floor of the casino. The area was recently renovated in anticipation of legalized sports betting, which included the addition of dozens of televisions.

William Hill to operate Hollywood sportsbook

William Hill operates the sportsbook at Hollywood Casino at Penn National Race Course. Penn National is the parent company of Hollywood Casino.

The two also partnered for West Virginia sports betting. It opened days before the start of this year’s football season. William Hill also operates sportsbooks in Delaware, Mississippi, Nevada and New Jersey, as well as the United Kingdom.

In a press release, Penn National CEO Timothy Wilmott said:

“Penn National is excited to be the first casino to offer sports wagering in Pennsylvania. The enthusiasm around sports betting has been growing since the federal ban was repealed in May, and we look forward to providing our patrons with another great amenity to enjoy at Hollywood Casino at Penn National Race Course.”

In the same release, Hollywood Casino General Manager Dan Ihm stated:

“We are extremely appreciative for the tireless effort and support of the Pennsylvania Gaming Control Board. They moved heaven and earth to get us to this point and we couldn’t be more excited to be Pennsylvania’s first sportsbook.”

More PA sportsbooks on the way

The sportsbook at Hollywood Casino is one of many expected to open in Pennsylvania in the coming months. Five other casinos in the state are in the licensing process. Three think they will open retail sportsbooks by year’s end. These are:

Pennsylvania will be the seventh state to launch sports betting in the United States. It is the fifth to do so since the Professional and Amateur Sports Protection Act (PASPA) was thrown out by the U.S. Supreme Court earlier this year.

The states that already have licensed sports betting are:

  • Delaware
  • Mississippi
  • Nevada
  • New Jersey
  • New Mexico
  • West Virginia

William Hill operates in all those states, except New Mexico, which only offers betting at one tribal casino.

While Penn Launches Sports Betting In PA, It Expands Into Michigan

Penn National is adding another casino and another state to its portfolio. The company is acquiring some of the rights to Greektown Casino in Detroit, MI.

Pennsylvania gaming is heading west.

Well, not that far west. And not the entirety of PA gaming either.

But at least one PA-based gaming company is pushing into the Great Lake State.

Penn National has officially inked a deal to purchase Greektown Casino-Hotel in Detroit from Jack Entertainment.

The casino property itself will be sold to VICI Properties.

The full cost?

A whole lot.

The payout?

Potentially massive.

$1 billion deal for Penn National

Penn National currently owns both the Hollywood Casino, at Penn National Race Course, and the Meadows. Both properties are PA-based.

What’s pushing Penn National to make a run at Michigan?

Money, of course. And opportunity.

At least that’s how Penn National’s Chief Operating Officer Timothy Wilmott, framed it:

“Detroit is undergoing an exciting renaissance as a result of billions of dollars of new investments in the city’s residential, commercial, entertainment and cultural center, all of which are driving new residents, businesses, tourists and employment to the downtown area.”

“Greektown is the only casino in the heart of downtown, and we look forward to welcoming patrons from the many nearby attractions, such as Comerica Park, Ford Field, Little Caesars Arena, the city’s theater district, GM’s Renaissance Center and the Cobo Conference Center. We also look forward to working with JACK Entertainment and VICI to ensure a seamless transition for all of our constituents including customers, employees, vendors, local government and Michigan regulators.”

But it’s not just the existing enterprise and some citywide upgrades that have Penn National so happy to find themselves in their new home.

Sports betting FTW?

If you weren’t paying attention following the recent elections, you might have missed something important.

Specifically, Rep. Brandt Iden, the state’s champion for online gaming legislation, managed to squeak out a victory over his gambling-critical opponent.

This, after the Michigan House of Representatives passed the Lawful Internet Gaming Act earlier this year. The bill currently sits in the Senate, awaiting further updates to language that would include sports betting.

While roadblocks remain, sports betting isn’t as far-fetched as it once was in Michigan. That makes Penn National’s purchase a potentially shrewd one.

But that’s no surprise considering their operating procedure to this point.

They were first to market in West Virginia. They are already operational in Mississippi. Now they are going to be first to market for PA sports betting, too.

The full cost of play

Really, why else shell out $300 million for the rights to the casino, plus another $700 million from VICI for the property, to purchase a casino in a formerly depressed city?

As for other specifics of the Greektown deal, Penn National will enter into a triple-net lease agreement with VICI for the Greektown facility.

The lease includes annual rent of approximately $55.6 million and an initial term of 15 years, along with four 5-year renewal options.

The rent coverage ratio in the first year after closing is expected to be 1.8x.

Penn National will finance the deal with a combination of cash on hand and debt.

Penn National’s big push

With 100,000 square feet of casino space, 2,700 gaming machines, and 60 table games, a poker room, three restaurants, seven fast casual food outlets, four bars and a coffee shop, it’s easy to see what Penn National saw in Greektown.

It probably also won’t surprise you to hear that Detroit’s not the only city seeing some of that PA push.

Penn National is currently wrapping up two other acquisitions, keeping them at the forefront of gaming news.

Just last month, Penn National put the finishing touches on a deal to acquire Bucks County-based Pinnacle Entertainment for a whopping $2.8 billion.

This comes on the heels of the casino conglomerate’s acquisition of Margaritaville Resort Casino in June.

With the Greektown deal now in place, Penn National has staked their claim as one of the preeminent gaming companies, not just in PA, but the US.

And while it will be a long time before we can say anything definitive about the decision to go all-in on Detroit, it seems stockholders are already feeling good about the deal.

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Put A York In It: Hollywood Casino Reaches Mini-Casino Mall Deal

After nine months of searching and debating, Penn National found a mini-casino location. It announced plans for the $120 million Hollywood Casino York.

One of the five upcoming Pennsylvania-based mini-casinos finally found a home – the York Galleria Mall.

York Galleria provides space, parking, and infrastructure

Penn National Gaming, Inc. announced last week that they had officially filed a $120 million application with the Pennsylvania Gaming Control Board (PGCB) for the location in Springettsbury Township.

The Hollywood Casino York will house 500 slot machines and 20 table games, with room for expansion.

“We explored numerous other potential opportunities within York County, but the mall’s convenient location, existing infrastructure, and ample parking, as well as the support of Springettsbury Township officials and the local business community, helped cement our decision,” Timothy Wilmott, Penn National’s CEO, said in a statement announcing the gaming conglomerate’s decision.

Two weeks ago, Penn National spokesman Eric Schippers told reporters that the Bucks County-based company was finalizing an option to lease an empty Sears space.

Penn National asked for extension on project

Mini-casinos, also known as Category 4 casinos, can house 300 to 750 slot machines and up to 40 table games. They were authorized as part of a gambling expansion bill signed into law last year by Gov. Tom Wolf. The law allows up to 10 mini-casinos. However, auctions for satellite casino licenses only resulted in five bids. The other five are still in limbo regarding their future.

Penn National actually won the very first Category 4 license in January of 2018. It then took months of research and back-and-forth squabbling with various members of Springettsbury Township to strike a deal.

Assuming all goes according to plan, it’s expected that the future Hollywood Casino York will open within 12 to 18 months with 500 slot machines and 20 table games immediately up and running.

Took eight months to settle on a mini-casino location

Springettsbury Township will receive two percent of the gross tax revenue from the new casino’s slot machines and one percent from table games. Penn National says that of the $120 million they’re investing, $52.6 million will go toward licensing fees for slots and table games. That bid was the largest of the five. The base cost of a license is $7.5 million.

Revenue from York Galleria will be distributed at the state, county and local levels.

As late as July of this year, Penn National was still considering a number of other locations within York County.

“We wanted additional time to conduct further analysis on the sites and expect to make a final decision in the near future,” Penn National spokesman Jeff Morris told The York Daily Record at the time. “Accessibility and enough space to accommodate both the facility and ample parking are two of the primary factors in determining the ideal location for our Category 4 facility.”

Initially, after Penn National expressed interest in the York Galleria location, supervisors said no to hosting a casino on the site. Municipalities could opt out as part of the expansion bill. Many did.

Community members poured into public hearings in July in an effort to voice their displeasure. Opponents voiced concerns about an increase in crime, potential fluctuations in property values, and the casino’s proximity to schools and a playground.

York initially said no, then changed its mind

Econsult Solutions, Inc., a consulting firm hired by Penn National to assess the overall impact of the mini casino on the township, found that it was likely to have a positive impact fiscally. Even if the casino only earns the township a few hundred thousand in annual revenue, it should up tourism and offer increased business opportunities. However, other issues, such as improving traffic patterns and building bigger water and sewer lines, could require an additional investment. In spite of the initial disagreements, the fiscal allure of a mini casino was simply too much for Springettsbury Township to ignore.

Springettsbury isn’t without its own allure, of course. The township provides plenty of opportunity for the casino as well. There are a number of shopping centers, a Target and the York Galleria. Additionally, it is in close proximity to Route 30 and Interstate 83.

Details on the Hollywood Casino York project

The expectation from Springettsbury Township supervisors is that the Hollywood Casino York will revitalize the mall and bring customers back to other shops.

“The development of this mini casino will be a catalyst for further investment and economic growth at the York Galleria Mall,” County Supervisor Charles Wurster said in a statement. “The vast majority of residents that I have received feedback from, overwhelmingly support this additional benefit in the community for a different form of entertainment and for the economic opportunities to the area that this investment will provide.”

Beyond the betting parlor, the Hollywood Casino York will feature a sports bar, a small entertainment lounge and a pair of fast-casual eateries. More from Wilmott:

“Penn National Gaming has been proud to call Pennsylvania home for over 45 years. We look forward to adding hundreds of new team members in York County and becoming another economic engine for Springettsbury and the greater York business community.”

Penn National expects their new location to create 200 permanent jobs, along with 75 short-term construction jobs.

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With PA Online Gaming Licenses Opening Up, Industry Could Be An International Affair

The Pennsylvania Gaming Control Board is putting seven unclaimed online gambling licenses up for sale to qualified gaming entities outside the PA casinos.

The Pennsylvania Gaming Control Board (PGCB) now has a plan for dealing with the seven online gambling licenses that have gone unclaimed by PA casinos.

During a meeting this week, the PGCB decided to put the remaining licenses up for sale to qualified gaming entities. It will award the licenses to these qualified gaming entities through a random draw involving all that apply. A date for the draw has yet to be determined.

Essentially, this decision opens up the PA online gambling market to companies outside the PA casino industry for the first time.

Currently, the seven available interactive gaming licenses include:

  • 3 for online poker
  • 2 for online slots
  • 2 for online table games

Leaving licenses on the table

Six of the licenses available represent the three each The Meadows Racetrack & Casino and Lady Luck Casino Nemacolin passed on.

Additionally, the online poker license is the one Presque Isle Downs & Casino passed on when it applied for online slots and online table games licenses alone.

Meanwhile, it seems interested entities have Churchill Downs Incorporated to thank for four of the licenses still being available.

The Louisville-based racing, gaming, and online entertainment company recently finalized a deal to purchase Presque Isle Downs & Casino. It will assume management of Lady Luck Casino Nemacolin from owner Eldorado Resorts as well.

Meanwhile, The Meadows Racetrack & Casino owner Penn National Gaming looks to be leaving its interactive gaming licenses on the table to focus online gambling plans it has its other PA casino, Hollywood Casino at Penn National Race Course.

Qualified gaming entities

To be considered a qualified gaming entity, the Board has put together regulations stating an applicant must:

  • Have a license in good standing in another gaming jurisdiction
  • Operate in a jurisdiction where licensing standards are comprehensive, thorough, and similar to those in PA
  • Have the business experience and expertise to operate in the online gambling sphere

There’s no telling who will apply. However, the regulations make it clear any casino company not in the PA market will have now the opportunity to get in.

Thumbs up for Hollywood and SugarHouse

Meanwhile, after approving online gambling licenses for Harrah’s Philadelphia Casino & Racetrack, Parx Casino, and Mount Airy Casino Resort at its last meeting, the Board said yes to two more properties.

PGCB approved online gambling operations at Hollywood Casino at Penn National Race Course and SugarHouse Casino.

SugarHouse Casino parent Rush Street Gaming and its Rush Street Interactive subsidiary already run a New Jersey online casino. It just added sports betting services to the platform, but there is no online poker.

Rush Street Interactive President Richard Schwartz told the Board its online casino platform is ready to launch in PA. However, its plan for what to do with its online poker license remains unclear.

Hollywood Casino executives told the board it has set up its own interactive division to handle online gambling operations. It will launch online casino and poker in 2018 or early 2019 with primary technology partner IGT.

Penn National Takes The Plunge On PA Sports Betting

Penn National Gaming and its Hollywood Casino at Penn National Race Course are the first to apply for a $10 million sports betting license in PA.

Last week, Penn National Gaming became the first Pennsylvania casino license holder to apply for a $10 million sports betting license.

The news came via the Pennsylvania Gaming Control Board (PGCB) Twitter account on Aug. 17:

Penn National Gaming in PA

Penn National Gaming is based in Wyomissing, PA and currently operates 29 casino and racetrack facilities in 16 states and Canada. This includes two PA casino and racetrack properties:

If its sports betting license application is approved, Penn National Gaming will have the right to launch both live and online sports betting out of its Hollywood Casino location.

Penn National Gaming and William Hill US

The company says it will partner with leading US sportsbook operator William Hill US for both brick and mortar retail and mobile sports betting.

William Hill US is Nevada’s largest sportsbook operator. It also recently opened two sportsbooks in the budding New Jersey sports betting market:

  • Monmouth Park Sports Book by William Hill in Oceanport, NJ
  • William Hill Sports Book at Ocean Resort Casino in Atlantic City, NJ

Penn National Gaming VP Fred Lipkin issued a statement saying the company’s plans include turning Hollywood Casino’s simulcast theater into a William Hill sportsbook:

“Hollywood Casino at Penn National Race Course today formally applied for a license to conduct sports wagering at our facility. We believe this will provide us another attractive amenity at Hollywood Casino, in addition to our full suite of the latest slot machines, table games, multiple dining outlets, exciting live racing and soon to be online gaming offerings. Our plan is to locate our sports book in a newly renovated simulcast theater area at Hollywood Casino and the operations will managed by William Hill US, the largest sports betting operator in the United States. Operations are expected to begin later this Fall upon final approval by the Pennsylvania Gaming Control Board.”

PA sports betting regulations

The application was filed just days after the Board released a series of temporary sports betting regulations designed to govern sports betting in PA. The regulations include a stipulation allowing just a single online skin for sports betting license holders. That skin must prominently feature the name of the property.

The regulations also ask casino license holders to apply for a sports betting license 90 days ahead of launch. This would put the launch of sports betting at Hollywood Casino at Penn National Race Course in mid-November. However, the Board has the right to approve the launch ahead of that.

The earliest that could happen would be the Board’s next meeting on Sept. 12. The Penn National Gaming application says Hollywood Casino could be ready to start taking bets Sept. 30.

Penn National Gaming and William Hill US are also preparing to launch sports betting at five Mississippi casinos. Plus, the pair recently obtained a sportsbook license to operate at Hollywood Casino Charles Town in West Virginia. These sportsbooks plan to launch Sept. 1.

PA sports betting tax

Prior to the news, speculation was PA casinos were hesitant to apply for sports betting because the state’s $10 million licensing fee and 36 percent sports betting tax rate will make it hard for sportsbooks to turn a profit.

Back in May, Penn National Gaming spokesman Eric Schippers said the tax rate was certainly influencing its sports betting plan:

“We haven’t made a final determination on whether to pursue what is the highest rate on the planet for sports betting. If Penn National does get in in Pennsylvania, (it will) try to do it at the very lowest cost because the state has strangled the goose on this one.”

In the meantime, both Parx Casino and Mount Airy Resort Casino have released plans to launch sports betting. Although, neither property has applied for a license to date.

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.

PGCB Signs Off On Penn National’s Meadows Acquisition

The Pennsylvania Gaming Control Board approved Penn National Gaming’s takeover of The Meadows Racetrack and Casino gaming license this week.

The Pennsylvania Gaming Control Board (PGCB) approved Penn National Gaming‘s takeover of The Meadows Racetrack and Casino gaming license this week.

The board approved the transfer of the license from Pinnacle Entertainment to Penn National at its March 21 meeting. Pinnacle has held the license since September 2016.

Penn National Gaming, Inc., is a publicly traded company based in Wyomissing. It owns and operates dozens of casinos and racetracks across the country. Its list of gaming properties includes Hollywood Casino at Penn National Race Course in Grantville.

Penn National acquiring Pinnacle Entertainment

Penn National announced in December 2017 it was acquiring gaming-industry competitor Pinnacle Entertainment Inc. in a cash-and-stock deal worth approximately $2.8 billion.

Rumors of the deal first surfaced in October 2017 when the Wall Street Journal reported ongoing discussions.

According to reports, Penn National Gaming will operate a combined 41 casino and gaming properties once the deal is finalized, including The Meadows.

In order to meet regulatory requirements, Penn National was forced to sell four Pinnacle casino properties that were part of the deal to Las Vegas-based Boyd Gaming Corp. for $575 million.

These casinos include:

  • Ameristar Kansas City
  • Ameristar St. Charles
  • Belterra Park
  • Belterra Casino Resort

Penn National Gaming corporate spin-off Gaming and Leisure Properties originally bought The Meadows from Las Vegas-based Cannery Casino Resorts for $465 million in 2014.

However, Pinnacle signed a $138 million deal with the company to operate the Pennsylvania casino in 2016.

Gaming and Leisure will continue to own the real estate and lease the casino and racetrack to Penn National as a part of the Pinnacle acquisition.

However, Penn National will have to cough up a $3.75 million control fee to PGCB.

The Meadows Racetrack and Casino

The racetrack at The Meadows first opened near Pittsburgh in June 1963. The Meadows takes its name from part-owner and Pennsylvania horse racing industry legend Delvin Miller‘s nearby Meadow Lands Farm.

The track traded hands a few times over the years. However, racetrack giant Magna Entertainment Corporation held ownership when Pennsylvania first started considering authorizing the operation of slots at racetracks.

Las Vegas gaming operator Cannery Casino Resorts bought the property at that time.

A temporary casino with more than 1,700 slot machines opened at The Meadows in June 2007. That same year, Australian billionaire James Packer bought a minority interest in the property.

A permanent casino with 350,000 square feet of gaming space took its place in April 2009. Plus, the casino added table games a year later in accordance with a change in Pennsylvania gambling laws.

Penn National Fighting Satellite Casino Battle On Two Fronts

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

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.