Pennsylvania tries luck again in mini-casino license auction

The Pennsylvania Gaming Control Board on Wednesday scheduled the auction after budget legislation that passed in May required another auction.

Owners of the state’s licensed casinos are eligible to bid, although many of them never even bid in seven prior auctions. The bidding is under an aggressive 2017 state law to expand gambling, including authorizing auctions of 10 mini-casino licenses that allow the holder to operate up to 750 slot machines and up to 40 table games.

Bidders must submit a prospective site for the casino that cannot come within 40 miles of another casino location.

Minimum bids are set at $7.5 million, and the state tax rate on casino revenue is among the nation’s highest.

Meanwhile, exclusion zones around the 17 existing and proposed casino sites have rendered Pennsylvania’s largest metropolitan areas off-limits. That leaves bidders with a choice of rural northern Pennsylvania, a stretch along the Ohio border between Pittsburgh and Erie, and a handful of smaller cities, including Altoona, Williamsport and State College.

On top of that, coronavirus shutdowns have kept Pennsylvania’s casino closed for much of the last four months, and slot-machine play – the dominant money-maker – was off by about 25%, or almost $7 billion, in the 11 months through June, according to the latest state statistics.

The state received bids in five auctions in 2018, but interest petered out in the sixth auction and another auction ordered by lawmakers last year drew no bids.

None of the mini-casinos have opened yet and one successful bidder, the owners of Mount Airy Casino Resort in the Pocono Mountains, saw regulators reject their proposed mini-casino after acknowledging that they couldn’t finance the project.

One mini-casino is being built near the city of Reading, along the Pennsylvania Turnpike, while two are sited in southcentral Pennsylvania and another is being built in Westmoreland County, in western Pennsylvania. All told, the state has reaped about $111 million in bids.

With 12 casinos operating, Pennsylvania was the nation’s No. 2 state for commercial casino revenue, behind Nevada, at $3.4 billion in 2019, according to American Gaming Association figures. It was No. 1 in tax revenue from casino gambling last year at $1.5 billion.