Turns out satellite casinos are a pretty big deal.
The first two auctions for satellite casino licenses garnered $90.2 million. The two bids easily exceeded the $67.5 million Gov. Tom Wolf anticipated earning from the auctions. Their success also points to the fact that these mini-casinos are far more valuable to PA’s casino operators than first thought.
The first auction on Jan. 10 ended with Penn National bidding $50.1 million for a license. They’ll use it to build a casino near Yoe, just a few miles from the Maryland border.
The basics of satellite casinos
When Pennsylvania lawmakers approved a gambling expansion bill in Oct. 2017, one of the new twists to PA gambling was the possibility of seeing 10 satellite casinos. These are mini-versions of casinos that could be built at least 25 miles from existing casinos.
Licenses for those casinos would be put up for auction under the authority of the Pennsylvania Gaming Control Board (PGCB). The auctions take place in Harrisburg and follow the secret ballot format
Each casino bidding for a license presents the auction committee with two envelopes: one with their bid and the other with the coordinates of where they plan to build.
Minimum bids on these properties are $7.5 million, a number that now seems comically low based on the first two options and perhaps an indication that nobody really understood how sought-after these licenses would be.
As for the properties themselves, the satellite casinos can house between 300 and 750 slot machines and up to 30 table games with the option to add 10 more table games the second year.
Looking ahead to the eight remaining auctions
Pennsylvania has 12 casinos. Two of those casinos have won satellite licenses, which leaves eight licenses for 10 casinos.
Judging by the early sale price of the first pair of licenses, one would have to conclude that the remaining eight could sell for even more than that as casino owners react to what their competitors are doing.
Rivers Casino in Pittsburgh is feeling the pressure, for example. The new Stadium mini casino will be just outside city limits.
Moreover, Penn National will build their satellite in Westmoreland County, essentially cutting off from Rivers anyone coming from the east of the city. This is, of course, conjecture.
We’ve yet to see how gamblers will respond to satellites. While the assumption is that they’ll stop off at Penn National’s satellite instead of driving into the city, they may very well prefer to head to Rivers for a full-fledged casino experience.