Penn National Reducing Slot Machines at Two PA Casinos; Rip Unregulated, Untaxed Skill Games

Written By Katie Kohler on November 11, 2021 - Last Updated on November 22, 2021

Hollywood Casino at Penn National Race Course and Hollywood Casino at The Meadows were given approval by the Pennsylvania Gaming Control Board to remove a number of slot machines. One of the main reasons for the slot reductions and modification of the gaming floor is the proliferation of unregulated, untaxed gambling machines, also known as “skill games,” across Pennsylvania.

Two other Pennsylvania casinos – Harrah’s Casino Philadelphia and Mount Airy Casino – also have cut down on the number of slot machines.

Unregulated gambling machines caused reduction in slots at casinos

Adrian King of Ballard Spahr represented Mountainview Thoroughbred Racing Association (Penn National) at the Nov. 10 PGCB monthly meeting. When asked by regulators if the proliferation of unregulated skill games caused the petitions to reduce the number of slot machines at two of Penn National’s casinos, he started by saying that a number of factors impact the amount of slots at a casino including the lingering effects of the coronavirus pandemic and the emergence of online gaming.

Then, King spoke on the impact of the unregulated, gray machines that are all over PA:

“Penn National contends that skill machines have undoubtedly contributed to slot count reduction being necessary. Skill games are a type of slot machine.,” he continued. “This isn’t just a Penn National problem.”

King pointed to the growth of distributed gaming, the widespread distribution of slot machines outside of casinos. He said that between 2013-2019, casino gross gaming revenue declined by $200 million and it caused the Illinois gaming industry to shed 19% of its workforce and casinos’ valuation to deteriorate.

“This should come as no surprise,” continued King. “If you can play at a bar, tavern or convenience store and avoid a trip to the casino they will. It comes as a real price to casino operators who have made vast investments in their properties and to the Commonwealth which can’t collect its 52% tax rate on legal casino slot machine revenue.”

Impact of gambling machines outside of casinos

In addition to the cannibalization of legal, regulated and heavily taxed casino revenue, the proliferation of unregulated games has other effects.

King referred to:

  • Unregulated skill games undermine the public’s confidence in gaming integrity.
  • Distinguishing between regulated and unrelated machines since some illicit machines are placed next to PA Lottery machines.
  • No underage gaming protocols in place where skill games are available.
  • Skill games creating a crime wave across the state.

The most recent example of these machines being connected to crime was in early November. A man was shot and killed while playing at a machine inside a Kensington convenience store.

“It’s why the PA general assembly has rejected the distributed gaming concept for the Commonwealth,” said King. “The best and safest place for slot machine devices to operate is in a highly regulated casino environment that has layers of monitoring and security.”

Unlicensed casinos operating in open in PA

The owners of Windfall Amusements 777 Casino in Berks County were charged with running an unlicensed casino with illegal gambling devices. Pennsylvania State Police and county detectives did a joint investigation from Feb 2020 – August 2020. When it was operating, 777 Casino had ads online and on local billboards.

777 Casino shut down, however there are others just like them operating in plain sight. They aren’t the only one operating slot parlors.

During the meeting, PGCB Commissioner Sean Logan said he was driving in McDonald, Pennsylvania, and saw a sign for a “casino” which turned out to be an unlicensed slot parlor.

“I’m on the Gaming Board and I wasn’t aware we had a casino in McDonald, PA.”

PA Senator says skill games save small biz; calls for regulation and taxes

About an hour after the PGCB meeting and across the street at State Capitol Media Center, State Sen. Gene Yaw (R-23) and Rep. Jeff Wheeland (R-83) held a scheduled press conference to introduce legislation to regulate and establish an additional tax on video skill games in Pennsylvania.

“If you want to know why legal skill games are important, all you have to do is walk into any market in Western Pennsylvania, family owned restaurant, VFW, or bar,” said Yaw. “They are allowing these businesses to provide health insurance for their workers, increased salaries, and in some cases, keeping the doors open.”

He contends that skill games are an important part of the small business economy in Pennsylvania and are a way to ensure that they survive beyond the pandemic.

A 2014 Court of Common Pleas decision in Beaver County ruled that skill games are legal. Since then, Pennsylvania casinos and the Pennsylvania have challenged the ruling.

Hollywood Casino at PNRC removing some slots

The proposed reduction at Hollywood Casino at Penn National Race Course and Hollywood Casino at The Meadows slots is not expected to impact gaming revenues or taxes. Older products that are hard to get parts for repair and have low occupancy are the main targets for removal .Also, the removal of machines will not impact any jobs. Table game count remains the same.

Penn National reps there will be a sufficient supply of slot machines to satisfy customer demand.

Gross terminal revenue at Hollywood Casino PNRC peaked at $253 million in 2010. Since then gross terminal revenue has decreased and in 2020, sunk to about $125 million.

Hollywood PNRC currently has 1,927 slots and is removing 191.

Gross terminal revenue at Hollywood Casino at PNRC

  • September: $13.8 million
  • August 2021: $15. 1 million
  • July 2021: $16.8 million

Mike Mueller, Vice President of Gaming Operations at Hollywood Casino at PNRC said:

“It might sound counterintuitive, but more slot machines do not necessarily equate to more revenue. We want to provide the right number of slots, a comfortable layout, and games people want to play in.”

What’s new at Hollywood Casino at Penn National Race Course

  • The Epic Buffet permanently closed.
  • A new Barstool Sportsbook opening soon. Hollywood reps hope the space creates more excitement, energy and attracts a younger demographic.
  • New carpet, slot chairs and bases
  • Tattered Flag, a veteran-owned and operated restaurant, is now open.

Hollywood Casino at The Meadows slot reduction and updates

At Hollywood Casino at The Meadows, gross terminal revenue in 2008 reached $275 million. In 2020, it was just above $100 million.

The Washington, PA casino will remove 317 of 2,323 slot machines.

Gross terminal revenue at Hollywood Casino at The Meadows

  • September: $13.9 million
  • August 2021: $13.9 million
  • July 2021: $14.5 million

What’s new at Hollywood Casino at The Meadows

  • A new name. The Meadows is now Hollywood Casino The Meadows.
  • Cashless gaming. (Yes, you can still use cash to play at any Penn National Casino). So, far over 1,000 customers have adopted the cashless, cardless, contactless mywallet.
  • The Carvery, a pseudo buffet experience closed for good. A new Barstool Sportsbook is in the works. Reps say it will have a “campus like” environment with food, entertainment and gaming.

Penn National, other casinos levied fines

During the Nov. PGCB meeting, the Office of Enforcement Counsel levied the following fines to Pennsylvania casino operators

  • Penn National (Mountainview Thoroughbred Racing) fined $57,500 for allowing self-excluded individuals to gamble on HollywoodCasino and BarstoolSportsbook.
  • Penn National Gaming (Mountainview Thoroughbred Racing) got a second fine of $25,000 for allowing underage individuals onto the casino gaming floor and gamble at Hollywood Casino at Penn National Race Course. The individuals were 16, 17, 18, and 19 years of age.
  • Presque Isle Downs Casino fined $45,000 fine for violation of the Pennsylvania Governor’s COVID-19 Safety Order regarding alcohol service.
  • Harrah’s Philadelphia Casino fined $22,500 for failure to protect assets. A customer stole $955 of chips at a table game. In another incident, a patron stole $24,000 in cash from an open cash drawer.

Lead image: Hollywood Casino Instagram

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Katie Kohler

Katie Kohler is a Philadelphia-area based award-winning journalist and Managing Editor at PlayPennsylvania. Katie especially enjoys creating unique content and on-the-ground reporting in PA. She is focused on creating valuable, timely content about casinos and sports betting for readers.

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