Penn National Gaming lands license for Pennsylvania's next casino
Karen Shuey | Reading Eagle, Pa. | January 11, 2018 4:18pm
Jan. 10--With a winning bid of just over $50 million, Wyomissing-based Penn National Gaming Inc. secured the first license to operate a mini-casino in Pennsylvania as part of a gambling expansion law authorized in October in an attempt to balance the state budget.
Penn National Gaming, which operates Hollywood Casino at Penn National Race Course in Grantville, Dauphin County, had the highest bid in an auction held by state gambling regulators Wednesday morning in Harrisburg. The desired location for the new casino is in York County.
The auction came a day after the company filed a lawsuit in federal court challenging the constitutionality of the very law that led to the creation of mini-casinos and established the guidelines for awarding licenses to operate them.
In the lawsuit, Penn National Gaming said that provisions allowing 10 more mini-casinos would cause "significant and unique" harm to its existing casino. The company argued the law allows competing casino owners to use the mini-casinos to poach its customer base, while providing far more protections for large casino owners in cities such as Philadelphia and Pittsburgh.
Penn National's strategy
Eric Schippers, Penn National's senior vice president for public affairs and governmental relations, said company officials felt they had no choice but to participate in the process given the significant cannibalization that would have occurred at their existing casino.
"We played our strategy today with one eye on defense and one eye on offense," he said. "We were in the perverse situation of having to bid against ourselves to buy back our own market share. Our plan is to proceed through this process until we get a final judgement."
Schippers said the company put together the bid to protect its flank while also providing an opportunity to try to create incremental value for its shareholders. And the key to that process, he said, was picking the right location.
Penn National announced it will build its mini-casino somewhere inside a 15-mile circle centered around Yoe -- a small borough about 10 miles north of Maryland. Schippers said the hope is that the site will allow the company to draw people across the border while providing some protection against a competitor sweeping in to take its existing business.
Four other casino companies participated in Wednesday's auction.
Local interest appreciated
A host of municipalities across the commonwealth -- including Reading -- had expressed interest in hosting the new casino. Reading City Council and Mayor Wally Scott had communicated to the Gaming Control Board and to Penn National that the city would welcome a casino in hopes of spurring economic development and additional tax revenue.
Schippers said the company appreciated the desire of local officials to host one of these casinos but again cited the company's desire to protect its territory near Hollywood Casino and to draw customers from Maryland.
"The investment that we make had to check both boxes from both an offensive and defensive standpoint," he said.
But there is still a chance one of the mini-casinos could end up in Reading.
Nine more auctions will be held through May 16. The minimum bid is $7.5 million to operate up to 750 slot machines and buy a separate certificate to operate up to 30 table games.
The next auction takes place Jan. 24.
More than half of Berks County's municipalities, including Exeter Township, Kutztown, Shillington, West Reading, and Wyomissing, told state regulators they do not want a casino in their borders. All of Lancaster County's municipalities told the gaming control board that they don't want a casino.
Some Berks municipalities, including Cumru Township and Spring Township, chose to at least have the option of hosting a casino.
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Karen Shuey -- Reporter
Karen Shuey is the breaking news reporter at the Reading Eagle.