Hot Hands

Pennsylvania continues to build on its status as the hottest U.S. racino jurisdiction

Before this year even started, Pennsylvania was already the hottest gaming jurisdiction in the United States-racino or not.  

For the fiscal year ended last June, the eight casinos that were operating in the state at the time recorded a 25 percent year-on-year increase in gaming revenues. The ninth operating casino opened in August, and September year-on-year figures showed a 30 percent jump. 

Considering the current state of most gaming jurisdictions, these numbers are staggering, to say the least. And, for the most part, they form the greatest success story in the relatively brief history of the racino genre. Six of the eight properties recording that 2008/09 revenue jump were racetrack casinos. The most successful property in Pennsylvania, Philadelphia Park, is a racino.

And the really amazing part of Pennsylvania’s racino success story is that it only stands to get better this year and next. Yes, the next several properties to open will be stand-alone casinos-two in Philadelphia and several smaller resort casinos. But there is still one major racetrack casino, Valley View Downs & Casino, to open. Its developers are currently searching for the financing needed to complete the seventh and final racino in the state.

While that happening soon is certainly not a lock-its parent company, Hoosier Park owner Centaur Gaming, filed a voluntary Chapter 11 bankruptcy petition last month-Pennsylvania stands to remain the premier racino jurisdiction in the country for some time to come.

The main reason? Table games. In January, Pennsylvania Governor Ed Rendell signed table-game legislation into law. Pennsylvania’s properties will become full-blown casinos starting, in all likelihood, before the end of the summer.

It is a development that has been heralded by Pennsylvania operators-if perhaps lamented by those in Atlantic City, who have been hammered by revenue losses because of the current, slots-only Pennsylvania casinos. “We’re going to kill them when tables come in, just like we’re killing them with slots,” predicted Philadelphia Park President Dave Jonas at the recent Pennsylvania Gaming Congress.

While in 2004, the state imposed one of the nation’s higher slot tax rates of 55 percent, the Pennsylvania legislature got it right this time, keeping the tax rate on tables to a modest 16 percent, which will drop to 14 percent in two years. Those numbers include 2 percent for host cities. By comparison, the racinos in neighboring West Virginia pay 35 percent tax on table games.

The first Pennsylvania property to add tables likely will be Mohegan Sun at Pocono Downs, which was the first to submit a petition for a license to operate the games to the state Gaming Control Board. However, all of the properties will likely have complete table game operations in place by the end of the year.

Tables will change the competitive picture for the state’s racinos. The Philadelphia-area racinos-Harrah’s Chester and Philadelphia Park’s Parx Casino-stand to have the most immediate effect on Atlantic City, while Pittsburgh’s Meadows racino and Presque Isle Downs near Erie will provide stiff competition to the West Virginia racinos and any Ohio venues that open later.

The biggest benefits from table games, though, may go to those racinos farthest away from any table-game competition-the Hollywood Casino at Penn National Race Course near Harrisburg, and Sands Casino Resort Bethlehem, which will provide Manhattan gamblers a much easier commute to tables than Atlantic City.

Any way you slice it, tables mean Pennsylvania will remain the U.S. hot spot for racinos.

Frank Legato
Frank Legato is editor of Global Gaming Business magazine. He has been writing on gaming topics since 1984, when he launched and served as editor of Casino Gaming magazine. Legato, a nationally recognized expert on slot machines, has served as editor and reporter for a variety of gaming publications, including Public Gaming, IGWB, Casino Journal, Casino Player, Strictly Slots and Atlantic City Insider. He has an B.A. in journalism and an M.A. in communications from Duquesne University in Pittsburgh, PA. He is the author of the recently published book on gaming, How To Win Millions Playing Slot Machines... Or Lose Trying.  

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