Sands Bethlehem's USD 9.9 million winning bid invalidated

On Wednesday, Sands Bethlehem aimed for Pennsylvania’s fourth mini-casino auction with a bid of nearly $9.9 million and chose Hempfield Township, Mercer County -and a 15-mile radius of land around that spot- as the location for its satellite casino. However, shortly before 4 p.m., the Pennsylvania Gaming Control Board said Sands Bethworks Gaming LLC’s bid was invalidated, an announcement that came nearly six hours after the board announced Sands as the winner of the fourth mini-casino auction.

Wednesday’s auction was the fourth of a planned 10, running biweekly until May 16. The creation of 10 mini-casinos across the state is just one aspect of the massive gambling expansion law -signed last year by Gov. Tom Wolf- which foresees $100 million could be generated if all 10 slot and table games licenses were sold at the minimum asking price of $7.5 million and $2.5 million, respectively. So far, the four winning bids have totaled nearly $121.3 million.

At the state’s first auction, the owners of Hollywood Casino at Penn National Race Course in Dauphin County won with a bid of $50.1 million. Penn National’s mini-casino would be near Yoe in York County, allowing the company to protect Hollywood Casino’s customer base to the south and potentially attract gamblers from nearby Maryland. Even as Penn National moves forward with its plans in York County, the company is seeking to strike down the mini-casino provisions via a lawsuit in federal court.

In the second auction, held Jan. 24, Stadium Casino won with a bid of $40.1 million for a facility near Greensburg, Westmoreland County, a location that will allow it to compete for the Pittsburgh market. Stadium Casino, a joint venture between The Cordish Cos. and Greenwood Gaming & Entertainment, is the same group behind the plan to build the $600 million Live! Hotel & Casino Philadelphia.

Then, in the third auction, the operator of Mount Airy Casino Resort in Mount Airy submitted a lucky winning bid of $21,188,888.88, and selected the coordinates of New Castle, Lawrence County, an area that shares a border with Ohio and has been trying to lure a casino for about 14 years. And it is precisely with Mount Airy that Hollywood Casino's location choice intruded upon. 

With New Castle and Hempfield less than 30 linear miles apart, that meant Sands’ planned 15-mile reserved zone overlapped with the one Mount Airy already claimed, in violation of provisions in the gambling expansion law signed last year.

“We really had no choice but to invalidate it,” gaming board spokesman Doug Harbach said.

Sands officials, after earlier in the day saying they were excited to partner with the state, did not provide a comment.

With Sands’ bid invalidated, gaming board Executive Director Kevin O’Toole will consider naming Wednesday’s other bidder, Greenwood Gaming and Entertainment Inc., as the winner. Greenwood is the operator of Parx Casino in Bucks County and should hear its winning bid amount and location announced at 10 a.m. Thursday in Harrisburg.

For Sands, meanwhile, Harbach said the company is eligible for upcoming auctions. The remaining six auctions run biweekly, from March 7 to May 16, and the state’s racetrack and standalone casino operators have first dibs on the new licenses before the process is opened to the state’s two resort casinos, previous auction winners and other qualified entities.

Through three auctions — soon to be four — the state has collected winning bids totaling nearly $111.4 million, outpacing an estimate that it could raise $100 million if all 10 slot and table games licenses were sold at the minimum asking price of $7.5 million and $2.5 million, respectively.

A location in Mercer County, which shares a border in Ohio, would have given Las Vegas Sands Corp. a presence on the eastern and western edges of Pennsylvania. No matter where it is, a mini-casino would be a shift for the world’s largest casino company, which is known as a developer and operator of massive integrated resorts in Las Vegas, Macau and Singapore.

The company’s decision to submit a winning, then invalidated, bid for what would have amounted to a much smaller property — a mini-casino can have up to 750 slot machines and 30 table games initially — puzzled at least one industry expert. “This is a real departure for Las Vegas Sands in terms of the type of facility they’re developing,” said Joseph S. Weinert, senior vice president of Spectrum Gaming Group, a nonpartisan consulting firm in Linwood, N.J. “They are a developer of renowned resorts, and even Sands Bethlehem does not fit that, but it has evolved into a significant destination.”

Now, Weinert noted, it will be intriguing to see whether Sands bids again. “It’ll be interesting to see if Las Vegas Sands has another desired location in the state,” Weinert said. “We think there are a couple more spots where one of these smaller casinos could do well.”

In response to questions sent earlier in the day — when everyone thought Sands had won — the company sent a statement from Sands Bethlehem President and Chief Operating Officer Brian Carr. “Pennsylvania remains a great gaming market, and we believe some parts of the state are actually underserved,” Carr said in the statement.