Keystone State casinos go begging; IRS: DFS is gambling

What if they gave a casino and nobody came? How about six casinos? That’s the problem faced by Pennsylvania, whose Lege over-optimistically authorized 10 satellite casinos, dollar signs dancing in their heads. The first couple of rounds of bidding were lucrative but the law of diminishing returns soon set in—and only four of the ‘Category 4’ licenses have been claimed. (Mount Airy had the fifth, but withdrew.) So the Keystone State is going back to the casino industry with an ‘offer you can’t refuse’: $7.5 million for 750 slots, $2.5 million for 30 table games (with the option to add 10 more after a year) and … here’s the kicker … $10 million for sports betting, a real deal-breaker. What’s more, slot routes are on the table in Harrisburg, another disincentive to invest in mini-regional casinos.

According to Global Gaming Business, a few still-promising locations have been identified. Prime among these is New Castle, which could draw upon Altoona, State College and Williamsport. “One positive for the three smaller markets is that they have the potential to draw patronage from other smaller, underserved markets, as there are no casinos near the geographic center of the state,” writes Cory Morowitz. That still leaves at least two licenses that will probably go begging. But are satellite casinos an idea whose time has passed? Internet gambling is on the upswing in Pennsylvania, sports betting in Category 4 is prohibitively expensive but you can’t not offer it and slot routes will leech into your revenues. As for upfront money, Morowitz adds, in the days of Covid-19 “any Cat 4 bid will be constrained and the license fee will likely skew towards the minimum.” Ya think?