Penn National Gaming challenges new Pennsylvania gaming law

HARRISBURG, Pa. — Pennsylvania-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 suburban Harrisburg casino, Hollywood Casino.

Penn National said that the law, enacted 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.

Las Vegas Sands also has sued over an element of the law that subsidizes lower-performing casinos with revenue from higher-performing casinos. Sands operates Sands Bethlehem in Bethlehem, Pennsylvania.

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 commercial casino state and already rakes in more gross revenues from gambling — $1.4 billion in taxes in the most recent fiscal year — than any other state except Nevada.

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.

The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson.

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