Penn National sues over Pennsylvania’s casino expansion

(Harrisburg) — Berks County-based casino owner Penn National Gaming sued Tuesday in a challenge to a central element of the state’s aggressive new law expanding casino gambling that Democratic Gov. Tom Wolf signed as part of an effort to fill a massive budget deficit.

In the lawsuit, filed in federal court in Harrisburg, Penn National Gaming said that provisions allowing 10 more mini-casinos would cause “significant and unique” harm to its Grantville casino, Hollywood Casino.

Penn National said that the law, passed in October, effectively allows competing casino owners to use the new mini-casinos to pick off its relatively far-flung customer base, while the protections in the law are far more adequate for the rest of Pennsylvania’s casino owners.

“There was no rational basis for this arbitrary and inequitable treatment of (Penn National), which violated (its) constitutional rights in multiple ways,” the 57-page lawsuit said.

It said the bill violates its constitutional rights to equal protection and due process, as well as Pennsylvania’s constitutional prohibitions over legislation that benefits a particular person or entity.
Two other lawsuits filed in recent days, one by Las Vegas Sands and another by Penn National, target other aspects of the gambling law.

The bill, a couple years in the making, won passage from lawmakers within 18 hours after it was unveiled despite opponents’ warnings that it carried unforeseen consequences and complaints that it was packed with sweetheart deals.

Alan Woinski, president of Gaming USA Corp., a New Jersey-based consultancy that publishes newsletters on the gambling industry, called the law “the worst gaming expansion bill in the history of the casino business” in a Monday newsletter.

Pennsylvania is the nation’s No. 2 state for commercial casino gross revenues, second to Nevada, and already rakes in more tax revenue from gambling — $1.4 billion in the most recent fiscal year — than any other state.

Penn National sued a day before it and 10 other casino owners in Pennsylvania can bid on the right to apply for the first mini-casino license, which allows the operation of up to 750 slot machines.
The minimum bid is $7.5 million, and allows the winner to buy a separate certificate for $2.5 million to operate up to 30 table games. Budgetmakers hope to land at least $100 million by auctioning the 10 licenses.

Under the law, each casino owner gets a 25-mile protection zone around their casino, and they may not build a mini-casino inside a competing casino owner’s protection zone. Penn National argued in the lawsuit that, because it is built in a relatively rural area, more than two-thirds of its gamblers travel from beyond 25 miles to visit the casino.

Most of the other casinos are closer to each other and benefit from overlapping protection zones, creating what Penn National calls “mega clusters” that extend much farther than 25 miles and block off the eastern third of Pennsylvania and southwestern Pennsylvania.

Meanwhile, it said Mount Airy Casino Resort in northeastern Pennsylvania was given special treatment in the law, with provisions barring a mini-casino from being built in the nearby Pike, Wayne and Carbon counties.

Wolf’s office declined comment on the lawsuit.

Sen. Mario Scavello, R-Monroe, who chairs the Senate committee that handles gambling legislation, said Tuesday the 25-mile zones were simply carried over from a previous version of the state’s gambling law that had used them to offer protection under the pre-existing licensing scheme.

The extra protection around Mount Airy Casino, which Scavello requested to be in the bill, was fair because Mount Airy provides a cut of its revenues to those adjacent counties, Scavello said.

Every casino is required by law to share a certain portion of its revenue with local or host governments, although the precise distribution of the money varies by casino.

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This story has been corrected to show that Pennsylvania is No. 2 in commercial casino revenue and No. 1 in casino tax revenue.

An earlier story appears below. 

(Harrisburg) — A new lawsuit is challenging a central aspect of the two-month-old law expanding casino gambling in Pennsylvania that Democratic Gov. Tom Wolf signed as part of an effort to balance the state’s deficit-riddled budget.

Berks County-based Penn National Gaming sued in federal court, saying provisions allowing 10 more mini-casinos would cause “significant and unique” harm to its Grantville casino.

It’s seeking to bar the construction of the new casinos under the existing law. It’s suing a day before it and 10 other casino owners in Pennsylvania can bid on the right to apply for the first mini-casino license.

Budgetmakers hope to land at least $100 million by auctioning the 10 licenses.

Two other lawsuits filed in recent days, one by Penn National and one by Las Vegas Sands, target other aspects of the gambling law.