Penn National Gaming drops lawsuit over PA’s mini-casinos

A federal lawsuit filed in January this year by Penn National Gaming against the Pennsylvania Gaming Control Board (PGCB) and Governor, Tom Wolf, has reportedly been withdrawn. The lawsuit sought to overturn a portion of the governor’s 2017 expansion law; the Wyomissing-based operator at the time citing unfair competition for its Hollywood Casino at Penn National Race Course near Grantville.

The case alleged that the gambling expansion law signed by Gov. Wolf on October 30, 2017, leaves the Grantville business uniquely vulnerable to its business being cannibalized by the new “mini-casinos,” more so than all the other casinos in the state.

Penn feared cannibalization:

According to Philly.com at the time…

The lawsuit states, “Though the 25-mile buffer zones purport to treat all existing casinos equally, as applied, Hollywood Casino, uniquely situated in the middle of the state, is the only casino likely to face significant cannibalization.”

Penn National argued that the sole 25-mile buffer would not be sufficient to protect its casino in South Central Pennsylvania because the facility is alone and situated in the middle of the state, unlike other casinos which are already are close to competitors. Those casinos, the lawsuit argued, form what it calls “mega-clusters” that present a super buffer of sorts and increase the exclusion zones around them.

The lawsuit claimed that if gamblers frequent new facilities, Hollywood would lose $34 million annually, causing financial harm that is “significant and unique.”

Penn National filed the lawsuit on January 9 in federal court in Harrisburg, a day before bidding opened on the right to apply for the first mini-casino license.

Winning bids for two mini-casinos:

However, the operator’s objections to the new gambling extension law failed to deter it from bidding some $50.1 million in January for the first [York] Category 4 license. Penn National has in fact since then, bid successfully on a second license, paying just $7,500,003 for the fifth casino license [Reading] in April.

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According to Penn Live…

Penn National has yet to name a final site for either of its winning bids.

The operator formally withdrew the federal suit in a July 12, 2018, notice filed in U.S. District Court.

Penn National spokesman Eric Schippers reportedly had this to say to Penn Live last week when the news agency reached out about the withdrawal:

“We made a business decision to withdraw our lawsuits against the Category 4 (casino) law.

“While we continue to believe in the merits of our arguments, we have chosen to focus entirely on our development efforts for our two new casinos, rather than pursue what is likely to be a lengthy and costly legal battle.

“As previously stated, our goal in pursuing our Cat4 licenses is both defensive, in terms of protecting our exis 7BALL ting investment at Hollywood Casino from new competition, and offensive in terms of penetrating more deeply into more populous market areas to our south and east, in order to drive incremental value for our shareholders.”

Not out of the woods yet:

While the withdrawal from the lawsuit by Penn National removes one threat to the state gambling laws, another filed in state Supreme court at the end of last year by Sands Casino Resort Bethlehem remains in play.

In its December 28, 2017 suit, Sands alleges that by requiring lucrative casinos such as Sands to pay a special tax to subsidize casinos that are struggling financially, the gaming law violates state and federal constitutions.