Pennsylvania Cities Prepare for Satellite Casino Process

Pennsylvania Satellite Casino Locations

Locations will be determined in a blind auction process which takes place on January 16, 2018.

Pennsylvania municipalities are deciding whether they want to lure one of the 10 satellite casinos created by the recently-passed gambling expansion bill. Satellite casinos are mini-casino versions of bigger hotel-resorts people picture when thinking about casino gambling.

The satellite casino plan is part of a wider Pennsylvania gambling expansion which includes online gambling, truck stop VGTs, and tablet computer gambling at select airport terminals. Online lottery ticket sales also were included in the package. The satellite casinos are the most visible part of the $200 million-a-year gambling expansion, so they have received the most media attention.

Now, cities and towns like Reading, Altoona, York, Lancaster, Gettysburg, State College, Johnstown, and Williamsport must decide whether they want to embrace the casino culture. On the one hand, casinos create jobs and generate tax revenues for local communities. Gaming venues bring tourists, as well as investments in local construction.

On the other hand, city leaders worry about increased crime and problem gambling in their communities. Some civic leaders wonder whether casino gambling is a sin.

Lancaster and Williamsport: Dueling Opinions

Cities which do not want a casino can ban them. Lancaster Mayor Rick Gray said he expects to recommend to his city council that they ban casinos in their city limits.

When asked why, Rick Gray said, “I’m a strong believer that if you want revenue, you should raise taxes. You shouldn’t really impose a regressive fee on the hopes of poor people.”

Gabriel Campana, the mayor of Williamsport, sees the choice in a different light. Mayor Campana would rather generate tax revenues through personal choices, not collective taxing.

As Gabriel Campana sees it, “I’d like to have the opportunity to sit down with citizens to discuss how they feel about it, because every time you bring gambling into a community, there’s some pros and there’s some cons.”

Lawrence County’s Sales Pitch

Certain areas are embracing the idea of a satellite casino. Those areas which might not be at the top of the list feel as if they need to recruit casino developers, so they are planning public relations campaigns. Lawrence County, Pennsylvania is one of those areas.

Lawrence County Commissioner Dan Vogler says his county does not have the kind of population center that casino developers might be seeking. Because Lawrence County could use an influx of jobs, it plans to market itself based on proximity to Ohio. Vogler believes Ohio gamblers will cross into Pennsylvania to wager at a Lawrence County casino, so his county’s representatives plan to call that to the attention of developers.

The people of Lawrence County might have a better chance than is commonly thought. A provision stipulates that no new casinos can be built within a 25-mile radius of existing brick-and-mortar casinos. That precludes many of the most heavily populated parts of the state. It also precludes parts of northeastern Pennsylvania, because the Valley Forge Casino and Lady Luck Casino Nemacolin occupy that stretch of the state.

January 1st Casino Ban Deadline

First, city leaders have to decide whether they want to ban casinos in their area. Each municipality has until January 1, 2018 to prohibit casino developments in their area. If they fail to prohibit casino gambling, then an operator has the right to apply for a license in their city.

Even if cities do prohibit gambling in their area, that is not the end of it. Cities can repeal a casino ban later, if their leadership decides they want to seek a satellite casino. It might be too late, because most of the state’s existing casino operators are brainstorming locations at the moment. Prior plans likely would have to fall through for a do-over.

January 16 Blind Auction

On January 16, the Pennsylvania Gaming Control Board plans a blind auction to determine where casino bids will be placed. The auction determines which casino operator gets first choice of location. Once they name their site, no other operator can place a satellite casino within a 15-mile radius of it.

Only Pennsylvania’s licensed casino operators have the option to buy a casino license. To offer slot machine, the operator must pay a $7.5 million licensing fee. If they also want 30 gaming tables, they’ll need to pay an additional $2.5 million.

Penn National Gaming’s Dilemma

Not every casino operator is happy with the arrangement. Penn National Gaming, which owns the Hollywood Casino in Harrisburg, said it is considering suing the State of Pennsylvania over its satellite casino plan. Penn National says the Hollywood Casino draws 50% of its revenues from gamblers who live beyond the 25-mile radius set by the law, so they could see a lot of revenues lost if new casinos are placed nearby.

The decision to sue or not has yet to be determined. In many ways, that decision lies with the blind auction and the strategic game played between the operators after the auction. If other operators do not place casinos near Hollywood Casino, then Penn National might not sue. If Penn National gets one of the early picks, it might choose to build a casino nearby their own, to keep a competitor from cannibalizing their business.

Eric Schippers, a Penn National spokesman, told local newspapers that January 16 could determine a lot. Schippers said, “The playing field has yet to be truly determined at this point. But I will tell you we are in the uniquely awkward position of figuring out how to protect our market share.”