Under Construction: Malls Make Way For Mini-Casinos In Pennsylvania

Posted on February 4, 2020

Mini-casinos seemed so promising back in October 2017 when gaming expansion legislation authorized licenses for 10 satellite casinos.

Just think: The creation of 10 smaller casinos scattered throughout the state would mean millions in new license auction fees for Pennsylvania, additional gambling revenue streams and more casino jobs.

Implicit in the mini-casino legislation, there would then be a total of 23 brick-and-mortar gambling facilities. That would have been 13 regular casinos or racinos if we included Philadelphia Live!, which is to open later this year, plus the 10 new mini-casinos. That would equate to retail gambling being an easy drive for nearly every citizen in Pennsylvania.

But it didn’t work out that way with mini-casinos.

Four mini-casinos, well, maybe just three

At most, there will be four new mini-casinos when all is done, but only three are sure things.

Auction bidding began in January 2018.

For a time, mini-casinos looked like a financial juggernaut with $114 million in license fees collected, including more than $50 million for one site in York County, and more than $40 million for a site in Westmoreland County, near Pittsburgh.

Both of those expensive sites are mall rehabs.

Interest and money for mini-casinos went elsewhere

But then the auction money suddenly dried up. No one bid for the sixth license last April.

Instead, operators and their financial market backers turned to investments elsewhere as legal wagering spread to other less saturated — and less expensive — jurisdictions.

However, with dollar signs still gleaming in their eyes, the undaunted PA Legislature attempted to restart the auctions last September under slightly tweaked rules.

They passed legislation requiring a new round of bidding. At the time, Joe Weinert, an executive vice president at Spectrum Gaming Group, was skeptical. “I think the market has already spoken on that.”

The Pennsylvania Gaming Control Board (PGCB) dutifully held one last auction. Again, no bidders. The market spoke, but as if with a megaphone amplifying the silence.

And with that, a sunset clause killed any further attempts to sell new mini-casino licenses.

Mount Airy goes away

But all has not gone according to plan, even for those with mini-casino licenses.

Mount Airy Casino Resort recently had the plug pulled by the PGCB on a plan for a satellite casino in Beaver County in Western, PA. Mount Airy had spent more than $21 million to buy the license.

The company claimed it could not find adequate financing and regulators killed the project.

But a local news outlet reported the continuing presence of former Mount Airy owner Louis DeNaples, considered a mob associate ordered to distance himself from Mount Airy, was a factor in the project’s failure. DeNaples had tried unsuccessfully to have the ban against him doing business with Mount Airy lifted.

Parx still sunk for now in Shippensburg

Parx Casino has struggled to find a site after first having two potential host communities, Carlisle and South Middleton Township, say no thanks.

Last July, sinkhole formations in the bedrock nixed a proposed location in Shippensburg. The limestone bedrock is prone to erosion, causing the ground to subside. The company said at the time that it was seeking an alternate site.

PGCB spokesman told PlayPennsylvania that remains the case with no new mini-casino site submitted, and no movement on the project. Parx paid about $8.1 million for the license.

Two mini-casinos satellites of Penn National

Which leaves PA with just three mini-casino projects with work underway. Hollywood Casino at Penn National Race Course is the big player in the mini-casino landscape, with two projects underway simultaneously.

The company paid more than $50 million for a license to rehab an empty mall space near York. Significant construction is ongoing and the target for work completion is early October.

Penn doubled down on mini-casinos, creating a southern perimeter for its flagship Hollywood Casino, which is not far from Harrisburg. It made a second successful auction bid for a site in Caernarvon, Berks County, a flea-speck township off the PA Turnpike.

The location is better-known for the ZIP code and exit name, Morgantown. The ZIP code sprawls through three counties, and multiple municipalities, some of which had opted out of hosting a mini-casino. Approval hearings were contentious because residents thought the opt-out status of the municipality shielded them.

Penn paid more than $7.5 million for the license. Construction on the site is ongoing and should finish after the mall rehab has launched.

One distant satellite for Live!, which is also building in Philadelphia

Live! Casino, which is building a full-sized casino at the stadium area in South Philly, is at work on a distant satellite space at a mall rehab near Pittsburgh, in Hempfield in Westmoreland County.

The Pittsburgh Post-Gazette projects the 100,000-square-foot mini-casino will open in late 2020 but before its flagship Philly location.

Live! officials told PlayPennsylvania, in November, the location will feature 750 slots and approximately 30 live-action table games, a retail sportsbook, restaurants and entertainment venues. They paid more than $40 million for the license.

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Kevin Shelly

Kevin C. Shelly is an award-winning career journalist who has spent most of his career in South Jersey. He's the former assistant city editor of The Press of Atlantic City, where he covered the casino industry and Atlantic City government as a reporter. He was also an investigative, narrative enterprise, and features reporter for Gannett’s Courier-Post.

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