UPDATE (2/21 4:30 p.m. ET):
The Pennsylvania Gaming Control Board (PGCB) released a statement Wednesday afternoon announcing the Sands bid is invalid. As detailed in our original story, the Sands selected a location in Hempfield Township, a town in Western Pennsylvania near the Ohio border. The site is just north of Mount Airy’s satellite site in New Castle, PA, near Youngstown, OH.
Because the radius around the Sands location overlaps with the existing 15-mile radius around Mount Airy’s site. While the auction’s written rules were a little vague about exactly what constitutes a location, PGCB has now clearly established that the entire radius around the given coordinates are considered part of the satellite property’s turf.
There will be a replacement auction Thursday morning. Really though, the proceedings are a formality. Now that Sands’ bid is invalid, the only other bidder on Wednesday gets the license. That bidder is Parx Casino owner, Greenwood Gaming and Entertainment.
During Thursday’s proceedings, gaming officials will simply announce the bid amount and location information submitted on Wednesday.
The prices for the Pennsylvania mini-casinos are down from the astronomical $50 million they opened at back in January. There is still demand above the minimum bid of $7.5 million though. The latest buyer, Sands Bethlehem, spent $9,885,000 to secure the fourth satellite license. The company selected a location near Hempfield, PA in Mercer County. However, there is a chance this location could cause some legal problems.
Sands site will compete with Mount Airy’s mini property
There are actually several Hempfields and Hempfield Townships in Pennsylvania. To be clear, the area Sands selected is the township in Mercer County. It is on the western end of the state, near Youngstown, OH.
If that description sounds familiar, it should. During the last auction, Mount Airy selected a similar site in New Castle, PA. The Mount Airy property is closer to Youngstown than the Sands site. However, both are just shy of two hours away from Cleveland, OH.
The Sands location is just over 30 miles from New Castle
If the sports betting law does change in Pennsylvania, the proximity of these sites to Ohio will become even more advantageous. Per the law, a Category 4 casino should be able to accept bets. So, the location near a populated sports town like Cleveland could bring in interested bettors. Especially since Ohio is one of the states who has not taken any legal action to allow wagering.
Is this location allowed though?
There is potential for controversy over this latest bid though. The law is very precise about where a Category 4 casino can go in relation to Category 1-3 casinos and opt-out municipalities. Where it is less clear is where a Category 4 casino can go in relation to another mini casino.
Per the auction rules provided by the Pennsylvania Gaming Control Board (PGCB), this is the only stipulation:
An affirmation that the proposed “Category 4 location” is notwithin any portion of a previous winning bidder’s “Category 4 location.” 4 Pa.C.S. §1305.1(B)(3)
Earlier in the rules, “location” is defined as the precise latitudinal and longitudinal coordinates the casinos provide. However, that is not where the casino will necessarily go. Bidders have to put their casino in a 15-mile range of the coordinates. Essentially, the location selected puts a pin at the center of a circle where the casino needs to go.
Problem is, the Sands Bethlehem location and the Mount Airy location now overlap. So, should the companies so choose, they could theoretically end up with casinos across the street from one another and still be in their respective circles.
The law is vague, so there is certainly a chance this overlap becomes an issue, especially if Mount Airy feels as though Sands is honing in on its area, which it paid more than twice as much for than Sands did for its satellite property.
Should Presque Isle Downs be worried?
There is a third party in the state who might be concerned about today’s auction too. Both sites are far from the boundary protecting the racino Presque Isle Downs in Erie, PA. Nonetheless, this is added competition for the casino, who relies on Ohio players for revenue.
All three properties are relatively equidistant from Cleveland. While Erie does have the natural attraction of the lake bearing the same name, Sands has the advantage when it comes to brand recognition. Sands Bethlehem trails only Parx Casino in revenue within Pennsylvania. Moreover, Sands is part of a global casino brand. The draw of the name and the linked rewards program that goes with it is certainly a boon.
Who is left in these auctions now?
With four licenses down and six to go, the field for available licenses is thin. Only Category 1 and 2 casinos are eligible to bid in this initial round.
The list of remaining eligible casinos is:
- Harrah’s Philadelphia
- The Meadows
- Mohegan Sun
- Presque Isle Downs
- Rivers Casino
- SugarHouse Casino
Parx participated in previous auctions. Other than that, the other casinos are silent on if they are going to stake claim to a property or not.
The base price for a satellite casino license is $7.5 million. Should any of the properties want to add table games, that will cost an additional $2.5 million on top of the auction bid. Once there are no more initial auction bidders, the secondary auction begins. At that time, Category 3 properties can bid, as can Category 1 and 2 casinos that previously bid on a location.