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Taking Bets on the Future of the Foxwoods Casino License…
Even after this week’s House vote the fate of Pennsylvania’s only revoked casino license is still up in the air. HB 65 would remove the restrictions that tie the license to Philadelphia and open it up to a statewide auction. “By doing this the state stands to increase its revenue,” says State Rep. Curt Schroder (R-Chester), the bill’s prime sponsor and chairman of the Gaming Oversight Committee. His bill passed with a bipartisan vote of 140 – 48.
But it’s no sure bet in the Senate. A spokesman says the Republican leader is among those wondering if the gaming market is already saturated and whether the license should be eliminated altogether.
The state Treasurer released a study last year, which indicated market maturation and even saturation on the opposite ends of the state. He suggested that central PA may be the place to maximize revenues.
Governor Tom Corbett notes that plans have always called for the license to be awarded. “I always think that we need to look at property tax relief,” Corbett says. He acknowledges there have been discussions about the license within the administration, but did not offer many details while speaking with the media this week.
Pennsylvania is home to 11-operating casinos, where slot machines raked in more than $214-million in gross revenue last month. That translates into $116-million worth of tax revenue, according to the Gaming Control Board. The lion’s share of slot machine tax revenue is used for property tax relief. Table games tax revenue currently ends up in the General Fund.
The Gaming Board rolled the dice on the Foxwoods casino project in 2006. After four years of delays and financing woes, the license was revoked in late 2010. It’s been in limbo ever since.
PA Treasurer Analyzes Gaming Markets
Ten casinos are already operating in the Keystone State. Two resort casinos are pending, and two casino licenses are currently unallocated. One of those remaining two licenses was originally awarded to Foxwoods project in Philadelphia, and eventually revoked by the Gaming Control Board. The other is earmarked for a yet-to-be-built racetrack in Lawrence County.
Both licenses are subject to possible legislative intervention and relocation, and a key Senate committee got the first look at Treasurer Rob McCord’s analysis of alternative locations at a hearing this week. “When you take a look at eastern Pennsylvania, supply and demand seem to be meeting each other… when you move to western Pennsylvania you move from maturation to potential saturation,” explained McCord, who by way of his office is a non-voting member of the Gaming Board and legal custodian of gaming funds.
McCord commissioned a study with the Innovation Group, and found that the numbers drive regulators and policymakers to look at central Pennsylvania. Ranking alternative casino locations based on the net gain to PA gaming revenues, South York tops the list with a $154-million dollar impact. “This is a net revenue number. So you might see in Philadelphia the highest gross number but then you have to ask yourself, how much of that is cannibalization of Pennsylvania facilities? You really don’t care if you’re cannibalizing out-of-state facilities,” McCord says. Reading, PA came in at number two among the ranked alternatives.
McCord's presentation focused on the net gain for Pennsylvanians.
State Senator Jane Earll (R-Erie) who chairs the Senate Community, Economic and Recreational Development Committee recognizes there is some legislative interest in moving either of the aforementioned licenses. “I think to have concrete information about what the potential impacts on our incumbent investments might be is helpful,” Earll said after the hearing. McCord made no recommendations, rather calling the study a tool for analysis.
The study also found that a potential casino in Youngstown, Ohio would have a significant impact on future profits from the would-be Valley View casino in Lawrence County. The Ohio project would have a near 33% impact, dropping net revenues from $122-million to $83-million under that scenario.