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US – Penn National to sue as Pennsylvania signs in gambling expansion bill

By - 3 November 2017

Government leaders in Pennsylvania, already the second-biggest commercial casino market in North America, have approved a raft of initiatives to expand gambling which will see more casinos, online gaming and will also allow players to bet in airports and at truck stops.

But not every existing operator is happy with the opportunities it presents with locally-based gaming group Penn National saying it will sue over the threat of cannibalisation to its existing business.

Eric Schippers, Vice President of public affairs, said: “We are beyond disappointed by the Legislature’s ill-conceived and hasty gaming expansion plan, which will have a uniquely punitive impact on our Hollywood Casino in Grantvillle and the jobs it represents. We’re considering our legal options because this would have a uniquely punitive effect on our casino, more so than any other casino in the state. We’re out in central Pennsylvania alone, so again, we could be surrounded by licenses that would have a profoundly negative impact on our casino and could result in job losses and cannibalisation of our business.”

Others believe the tax rate is too high.

Chris Grove, a gambling industry strategist, added: “Pennsylvania’s unique structure makes it difficult to forecast revenues with precision, but the successes in other states suggest that online gambling will be a significant and reliable revenue driver for years to come. Pennsylvania’s high tax rate will force operators to cut back on marketing and promotion, and could dissuade some consumers from leaving black market sites. It is certainly possible that lawmakers will need to revisit the tax rate in order to ensure a market that works best for both the commonwealth and the casino industry that has contributed billions to Pennsylvania’s coffers.”

Pennsylvania’s Governor Tom Wolf, who signed in the legislation, said: “There’s been a lot of pressure from a lot of places in the commonwealth to actually expand this and we do need some recurring revenue,. Again, the goal has been all along to do what’s prudent, not cannibalise existing gambling revenue coming to the state, and I think what we’re settling on will actually do that.”

Ten of Pennsylvania’s 12 existing casinos will be allowed to bid $7.5m for a license for a new casino with 750 slots and a further $2.5m for 30 tables. The largest casinos in the state currently house up to 5,000 slot machines.

Valley Forge Casino and Lady Luck Casino Nemacolin will be allowed to pay fees to add slot machines and table games.

Valley Forge Casino Resort President and CEO Eric Pearson said: “Since opening five years ago, we have been constrained by the amenities requirements and membership fees which have confused and frustrated our guests. We are thrilled to be able to welcome our guests to our casino in the same manner as the other Pennsylvania casinos. Lifting this special requirement for guests to enter the casino allows us to better serve our existing guests, and puts us in a better position to attract new visitors to our property.”

The legislation also allows Valley Forge Casino Resort to add up to 250 slot machines and up to 15 poker tables as well as apply for online gaming and sports betting licenses as they become available.

“Our immediate first steps are to lift the access restrictions. Secondarily, we’ll explore the options related to expanding our gaming offerings,” said Mr. Pearson.

The casino groups will be allowed to offer slot halls in eight airports, including Philadelphia; Pittsburgh; Erie; Wilkes-Barre/Scranton; Lehigh Valley; Harrisburg; Arnold Palmer Regional Airport; and University Park Airport in State College. Only ticketed passengers would be able to play the machines.
Another provision will see qualifying truck stops allowed to operate up to five video gaming terminals.
The Pennsylvania Gaming Control Board advised: “Under the expansion language, a truck stop which could be eligible for placement of up to 5 video gaming terminals is defined as a premises that is equipped with diesel islands used for fuelling commercial motor vehicles; has sold on average 50,000 gallons of diesel or biodiesel fuel each month for the previous 12 months or is projected to do so for the next 12 months; has at least 20 parking spaces dedicated for commercial motor vehicles; has a convenience store; is situated on a parcel of land not less than three acres; and, is not located on any property owned by the Pennsylvania Turnpike.”

The online market will be opened to casinos, both in Pennsylvania and potentially beyond, for a license fee of $10m that allows online poker, table games and slots. Daily fantasy sports betting in Pennsylvania becomes regulated and taxed in Pennsylvania.

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