Pennsylvania passed a satellite casino bill in October 2017.
Parx Casino gained the fourth mini-casino location this week, after the Las Vegas Sands choice of Mercer County in Western Pennsylvania was invalidated. Parx Casino chose a general location along Interstate 81 in Cumberland County for its satellite casino.
The location process transpires every 2 weeks with a new blind bidding process. The highest bidder among Pennsylvania’s current brick-and-mortar casino owners choices a location somewhere in the state. The location has a 15-mile radius and the owner has 6 months to decide where in that radius the casino will be built.
Bidders cannot place a casino with a 25-mile radius of any existing casinos. They also are disallowed from placing a mini-casino bid within any of the existing 15-mile radii. The Sands Beckworth Gaming (Las Vegas Sands) mini-casino selection was placed within the 15-mile radius of the proposed New Castle mini-casino chosen by Mount Airy Casino Resort two weeks ago.
Las Vegas Sands Bid Invalidated
The LVS satellite casino was announced on February 21 after winning the 4th auction with a $9.9 million bid. Hours later, the Pennsylvania Gaming Commission announced the choice had been invalidated. Parx Casino, which placed a $8.1 million bid, was given the choice.
Each mini-casino has the right to house up to 750 slot machines. To house the gaming machines, the developer must pay an additional $7.5 million licensing fee. If a casino wants to house 30 gaming tables, then it can pay another $2.5 million for that right. Most of the satellite casinos are expected to pay the full $10 million to offer both gaming machines and gaming tables. In all, up to 10 satellite casinos could be built in the current wave of casino development.
$120 Million in Casino Location Revenues
So far, the satellite casino blind bidding process has generated $120 million for Pennsylvania. Penn National Gaming won the first auction with a $50.1 million bid — which shocked rivals at the time — and placed its satellite casino’s centerpoint near the border with Maryland in York County. The choice was designed to draw North Maryland gamblers, while blocking rivals from getting too close to Penn National’s Hollywood Casino, which is in Harrisburg.
The second auction was won by Stadium Casino LLC, which is developing a South Philadelphia casino near the city’s various pro sports stadiums. Stadium Casino’s $40.1 million bid was a reaction to Penn National’s bid, and secured the right to place a mini-casino expected in Westmoreland County.
Mount Airy’s New Castle Casino
Mount Airy Casino’s $21 million bid won the third auction. That resulted in a casino location most likely for Lawrence County, with its centerpoint near New Castle. The centerpoint’s radius overlaps the border of Mercer County, so Mount Airy’s developers might place its satellite casino in Mercer County.
The $8.1 million bid by Greenwood Gaming and Entertainment Inc., owner of Parx Casino in Bucks County, therefore brings the total to $120 million. Those bids are wildly higher than most expected them to be, so the Pennsylvania Gaming Commission should be pleased with the bidding process so far.
Still, the PGC seemed apologetic to the Las Vegas Sands Corporation for disallowing its bid. Board spokesman Doug Harbach said, “We really had no choice but to invalidate it.”
Las Vegas Sands’ Options
Joseph S. Weinert, SVP of Spectrum Gaming Group, said that Las Vegas Sands is not used to bidding on satellite casinos. The Las Vegas casino company is famous for some of the most lucrative integrated casino-resorts in the world, such as the Venetian Macau in China and the Marina Bay-Sands in Singapore.
Weinert said, “This is a real departure for Las Vegas Sands in terms of the type of facility they’re developing. They are a developer of renowned resorts, and even Sands Bethlehem does not fit that, but it has evolved into a significant destination.”
The Spectrum Gaming analyst was uncertain whether LVS would move its Mercer County bid to another part of the county, where it would not impede on the New Castle bid, or whether it would chose another part of the state entirely. Weinert added, “It’ll be interesting to see if Las Vegas Sands has another desired location in the state. We think there are a couple more spots where one of these smaller casinos could do well.”
Pennsylvania Casino Blind Bid Auctions
Five more bidding rounds are expected. The price in each round has come down significantly, so Las Vegas Sands could win the right to place its next casino for less than it would have paid. Since Greenwood Gaming chose an entirely different part of the state for its bid, the snafu could be advantageous for Las Vegas Sands.
