Penn National Gaming Wins 2nd Mini-Casino License

Reading Pennsylvania Satellite Casino

Reading, Pennsylvania is the headquarters for Penn National Gaming.

Penn National Gaming won the bidding for the 5th new mini-casino license issued by the Pennsylvania Gaming Commission. This is the second mini-casino license Penn National has won in the bidding process, which began in mid-January and produces a license every fortnight.

The area chosen by Penn National for the latest satellite casino would be in southern Berks County, either in the city of Reading, the suburbs of Reading, or a section of the Pennsylvania Turnpike. Reading is the city in which Penn National is headquartered.

The winning bidder does not have to give an exact location for its bid, though it does have to specify an area with a 25-mile radius which is not within the verge of other licensed casino operations. The Reading casino would protect Penn National’s flagship property in Pennsylvania, Hollywood Casino in Harrisburg.

Reading Casino License

The Reading casino also would draw customers from Philadelphia’s outer suburbs, as well as the Reading and Lancaster areas, according to Penn National spokseman Eric Schippers. Under a new gaming law passed by the Pennsylvania state legislature and signed by Gov. Tom Wolf in October 2017, the new satellite casinos can have up to 750 slot machines and 30 table games. A slot machine license would cost $7.5 million, while an additional table game license would cost another $2.5 million.

The Reading-area mini-casino fits in a gap between southeastern Pennsylvania’s Philadelphia metropolitan area (which has 5 casinos) and Central Pennsylvania, which already has drawn interest from two of the proposed satellite casinos. Parx Casinos’ owners plan a Cumberland County casino along Interstate 81 near Gettysburg, while Penn National chose the city of York along Interstate 83.

4 Pennsylvania Casinos for Penn National

Penn National’s winning bid this week gives it 4 casinos inside Pennsylvania, which would make it the leading casino property owner in Pennsylvania. Besides the Hollywood Casino in Harrisburg, the York mini-casino, and the Reading mini-casino, Penn National’s spinoff Gaming and Leisure Properties owns the Meadows Racetrack and Casino in North Strabane Township.

The winning bid is something of a coup for Penn National, because it won for only $3 million more than the $7.5 million minimum bid. No other Pennsylvania casino license holder entered a bid for this week’s auction. In January, Penn National won the opening auction with a surprisingly large $51 million bid.

$120 Million in Licensing Bids

So far, the bidding has led to $120 million in auction money for the state of Pennsylvania. The bidding pool widened for this week’s auction, because Pennsylvania’s biggest casino owners — Bethlehem Sands’ owner Las Vegas Sands, Harrah’s Philadelphia’s owner Caesars Entertainment, Sugar House Casino — have declined to submit bids so far.

To expand the bidding pool, Pennsylvania approved second bids by casino operators already have won bids. Also, two smaller casino owners who were barred from the original bidding were given the opportunity to bid on a mini-casino. Those operators, such as Valley Forge Casino in King of Prussia, had visitor restrictions removed from their casino licenses in their original contracts with the states, but now receive the unexpected ability to add a new casino.

Remaining Mini-Casino License Process

Despite those opportunties, Penn National Gaming was the only casino license holder that bid. Observers wonder whether the remaining six auctions might receive bids, but there are reasons that casino companies might start to bid now. Since a ground floor has been reached, casino companies might decide now is the time to buy a casino license for a minimal investment.

Also, smaller casino companies might take time to put together the finances for a mini-casino bid, or their company might become suddenly more lucrative for a buyout from a larger out-of-state casino company.

Multiple Skins for Online Gambling

The Pennsylvania Gaming Commission gave another lift to the casino companies this week. The PGC voted to approve “multiple skins” per casino license in the upcoming online gambling industry. A skin is an additional brand or website for a single license. For instance, in the New Jersey online gambling market, SugarHouse Casino runs an online casino as a second skin underneath the Golden Nugget casino license.

SugarHouse has been an amazingly successful online casino in New Jersey, surpassing Borgata for first in the state, mainly because it licensed online slots from top designers like IGT, Bally Slots, WMS Interactive, NYX Gaming, and Konami. Adding multiple skins gives a company several ways to make additional money, but also opens the market to competition.

Bethlehem Sands Declines to Bid

It is unknown why a company like Las Vegas Sands has not bid on a mini-casino license in the last two auctions, because it bid (and won) a casino license in Mercer County. Later, that license win was disallowed, because LVS chose a centerpoint which was within the radius of already-existing casino licenses.

Whether Las Vegas Sands is declining to bid in order to show disfavor with that decision is unknown. Perhaps the owner of Bethlehem Sands is preparing a new location in Mercer County and is waiting to bid at a later time. Perhaps it is choosing another locations within the state. Or perhaps LVS is waiting until the cost comes down.