Mini Casinos – Coming to a Municipality Near You?

Pennsylvania’s new gaming expansion law paved the way for a wide variety of new gaming activities including e-lottery games and video gaming terminals at truck stops. The most significant change in the new law for Pennsylvania municipalities is the creation of satellite casinos or mini casinos. Up to ten mini casino licenses will be auctioned off to current Pennsylvania casino licensees.

Mini casinos cannot be built within 25 miles of a current casino licensee. Given the number of existing casinos in the greater Philadelphia area, this means that the most likely locations for mini casinos will be in Central and Western Pennsylvania. Successful bidders for mini casino licenses win the right to develop a mini casino within a 15-mile radius of a selected location. As of this date, the Pennsylvania Gaming Commission has given four current licensees the exclusive rights to develop mini casinos, including at locations in York and Cumberland Counties.

The gaming expansion law provided municipalities with the option to opt out of the mini casino portion of the law. Municipalities were required to adopt a resolution by December 31, 2017, opting out of the law, and a complete list of these municipalities is available on the Gaming Commission’s website. For municipalities that have not opted out, mini casinos represent a type of land use that has not previously been encountered in Pennsylvania.

As the name suggests, mini casinos are considerably smaller than the existing casinos in Pennsylvania. The law limits mini casinos to a maximum of 750 slot machines and 30 table games (subject to an additional fee), compared to the 5000 slot machines and 250 table games permitted in existing casinos. Therefore, it is possible that a mini casino would fit more easily into existing commercial districts than a larger, fully-fledged casino. However, a smaller casino size may limit the degree to which a mini casino will expand a municipality’s employment and property tax base. Municipalities should also consider the potential increase in traffic and law enforcement activity that may accompany mini casino development.

Successful bidders are required to select a final site for the mini casino and submit a formal license application within six months. Therefore, municipalities who have not opted out of mini casino development should immediately begin reviewing existing zoning ordinances to determine what amendments are necessary to accommodate mini casino development.

Presently, Penn National Gaming filed suit in the United States District Court for the Middle District of Pennsylvania to prevent the implementation of the mini casino portion of the new gaming expansion law. Penn National also was the first successful bidder for a mini casino license, and it selected a location in York County. If Penn National’s lawsuit succeeds, and the mini casino provision of the law is held to be unconstitutional, it is possible that mini casino development could be delayed or scrapped altogether. Municipalities interested in mini casino development should monitor this lawsuit closely throughout 2018 and work with their solicitor to adequately plan for the effects of gaming expansion under the new law.

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