Lawrence County revives gambling expansion option

Lawrence County officials’ fruitless hope since 2004 to see a racetrack casino open within their borders has morphed into an alternative quest under Pennsylvania’s gambling expansion: active pursuit of one of the state’s new mini-casinos. “We intend to communicate to those 10 casinos [that can bid to open a satellite facility] and tell them our community would welcome them,” said Dan Vogler, chairman of the Lawrence County commissioners.

Mr. Vogler, now early in his fourth term as commissioner, spent his first 12 years in office making frequent trips to Harrisburg in support of plans to create a racino in Lawrence County. A succession of planned developers failed to win regulatory approval, largely due to questions surrounding their financing. A negative vote by the Pennsylvania Gaming Control Board in July 2016 blocked the proposed Lawrence Downs harness racing track and casino and seemed to squelch prospects for thousands of gamblers from miles around to flock to the economically struggling region anchored by New Castle.

Hopes have been revived, however, by an unusual development option under the wide-ranging gambling expansion enacted by the Legislature a month ago. And rather than leave those hopes to chance, local officials are seizing the opportunity in an unusually proactive way.

Mr. Vogler said that he, his fellow commissioners and business and tourism agencies in the county have agreed to make a formal pitch to the 10 existing casinos that have rights to pick a location next year for a satellite operation. A written presentation will be sent by mid-December to proclaim multiple selling points on Lawrence County’s behalf.

Among those, Mr. Vogler said, are the collection of major highways (Pennsylvania Turnpike, Interstate 79, I-376, I-80) in and near the county; a population of about a million people within Lawrence and five contiguous counties; the potential to draw revenue from non-Pennsylvanians interested in table games, as the closest Ohio casino offers only slot machines; and the lack of any visible local opposition to gambling expansion.

Many other counties are potential sites for the new casinos, which can have up to 750 slot machines and up to 30 table games, but none has been publicly vocal in support. The state gaming board is expected to approve the first mini-casino in early January, through an auction at which the 10 casinos must bid at least US$ 7.5 million for the right to choose a satellite location, which may be no closer than 25 miles to any competing casino. Nine subsequent auctions will be held for additional mini-casinos.

The potential jobs creation, tax revenue and spin-off tourism benefits for a county that has among the highest unemployment rates in Western Pennsylvania make Lawrence County want to partner with the Rivers Casino in Pittsburgh, Meadows Racetrack and Casino in Washington County, Presque Isle Downs in Erie County or any others.

“We want to strike while the iron is hot,” Mr. Vogler said. “Hopefully, our phone will ring, and we’ll welcome any of them with open arms. We’ll take them around and show them potential sites and hope to convince them it will be conducive.”

It is unknown presently which of the 10 casinos will want to pay at least US$ 10 million in fees (US$ 7.5 million for a minimum slots bid and US$ 2.5 million to add table games) to develop a satellite, and if so, where they would want to place it. The casino industry did not lobby for the expansion — it was driven by state government’s need for new revenue. For competitive reasons, the casinos are unlikely to make their intentions known until the auction, which the law states is to be held by January 15.

No other state with commercial casinos has tried a similar revenue-raising scheme — encouraging existing operators to add smaller facilities, despite concerns the market for gambling activity is already saturated. Industry analysts have suggested that even if casinos are unenthused about the new investment, they are likely to pony up the fees as a defensive measure, keeping outside competitors from entering their territory.

Officials of the Rivers Casino, the closest Pennsylvania casino to Lawrence County - New Castle is about 50 miles away - have declined to discuss the satellite concept or other aspects of the new gaming law.

The Meadows, owned by Pinnacle Entertainment, is about 70 miles from New Castle. After the legislation passed, Pinnacle executive vice president Troy Stremming said its analysts would review demographic and marketing data to determine if and where a satellite makes sense.

There is an opportunity to look into underserved markets and [add a casino] that could create new jobs and be a catalyst for growth,” Mr. Stremming said. “It’s going to be a business decision on everyone’s part based on where the ultimate locations are, and every operator is going to view the cannibalization factor a little differenty.”

Penn National Gaming, which operates the Hollywood Casino in Dauphin County, has been the loudest objector to the new law, even threatening to go to court to try to block it. It is the only casino in the center of the state and maintains it could be uniquely harmed by other operators creating satellites overlapping its market, even if beyond 25 miles from the Grantville casino. (As owner of the Hollywood Gaming at Mahoning Valley racino near Youngstown, Penn National also faces potential harm from any Lawrence County casino.)

Mid-sized Pennsylvania cities such as Reading, Lancaster, Altoona, Williamsport, Gettysburg and State College have been cited as potential locations for satellites. In Western Pennsylvania, Greensburg or other parts of Westmoreland County could be desirable because of the population density and chance that residents who already patronize the Rivers or Meadows casinos would relish avoiding those drives.

Counties cannot vote to exclude themselves from consideration to host a mini-casino, but municipalities may do so. They have until December 31 to file such actions with the gaming board, and 88 had done so as of November 20. Most of those were in eastern Pennsylvania.

The only Lawrence County community listed as acting to exclude itself was Little Beaver, which has about 1,400 residents. As it is a dry community (about half of Lawrence County’s municipalities prohibit alcohol), chances that any casino operator would have wanted to locate there would presumably have been a million to one.