by Phil Yacuboski
Mini casinos are coming to Pennsylvania. The Pennsylvania Gaming Control Board recently auctioned off its latest mini casino license to Philadelphia developer Stadium LLC, which won in a $40 million bid. It will be built in a 15-mile radius of Derry Township, Westmoreland County.
It’s the second such license granted since the state announced mini casinos could be built around Pennsylvania. In January, Penn National Gaming won the first mini casino license for $50 million. It can be placed in a 30-mile radius in south central Pennsylvania that includes the city of York.
“I don’t think there is any doubt that it’s not just Pennsylvania, but the entire northeast is saturated with casinos,” said Alan Woinski, president, Gaming USA Corporation, a New Jersey-based consultant group. “It’s been like this for a while.”
In October, Governor Tom Wolf signed an expansion of the casino gaming law, which is partly to fill Pennsylvania’s $1.5 billion budget deficit. The state already secured more than $90 million from two mini casino licenses with eight more to go. The state has 12 full casinos and a 13th is about to be built in Philadelphia. A mini casino license allows operators to build a slots parlor with 750 machines. An additional $2.5 million would allow for 30 table games. The legislation also allows online wagering for poker, casino and lottery games, however regulations still must be set.
“Nowadays, it doesn’t matter if you have a small or big casino,” Woinski said. “If you open it up within 25 or 50 miles, you impact each other. It doesn’t matter if it’s a massive casino or mini casino, it’s going to impact another one nearby.”
Woinski said while the amount of casinos are growing, people are not.
“The mini casinos being allowed now in Pennsylvania are what Atlantic City first thought Pennsylvania was going to have,” he said. “Instead, there are now big casinos. And Atlantic City misjudged what was going into their feeder market. But the casinos in Pennsylvania are doing well.”
Woinski said the biggest issue with Pennsylvania is its high tax rate on gaming. In Pennsylvania, the tax rate is 55 percent on gross gaming revenue on slots (table games are taxed at 16 percent). Compare that to surrounding states – New York at between 31 and 41 percent and New Jersey at 8 percent.
In December 2017, casino revenue rose 1.2 percent over the previous year, according to the Pennsylvania Gaming Control Board. Table games were also up. In 2017, Pennsylvania collected slightly more than $32 billion in gross gaming revenue. The Sands Casino Resort in Bethlehem is the state’s top performer.
“I think you have to look at the revenue trends and see if they are increasing,” said Dr. Dave Schwartz, director for the Center for Gaming Research, University of Las Vegas, NV. “It looks like in Pennsylvania, that the numbers are flat.”
He said the market is saturated.
“You definitely will see more competition,” he said.
As far as the future, Schwartz said as states continue to seek revenue, look for additional casinos to open.
“There’s not really much more room for that,” he said. “It’s hard to say if it’s really good or bad. It’s good for people who want to gamble, but bad for the people who are already there.”
The Pennsylvania Gaming Control Board will hand out 8 more licenses in the coming months.
“We have put an ordinance on our books, that if someone wanted to build one, we wouldn’t block it,” said Charlotte Sullivan, chairwoman of the Towanda Township Board of Supervisors.
The Bradford County community isn’t particularly looking for a casino, but she said they’d welcome one if a developer tried to build one.
“We have no negative comments about one,” she said.
“I don’t think all of these mini casinos will be built,” he Woinski said, citing lawsuits and other challenges that may pop up along the way. “That could delay the whole thing.”