The following guide contains answers to Frequently Asked Questions related to Pennsylvania Category 4 casino legislation and licensing.
It is designed to be a helpful resource for casino patrons, media outlets and industry representatives alike.
The page numbers referenced in green font are taken directly from PENNSYLVANIA HOUSE BILL 271.
Pennsylvania Category 4 Casino FAQs
1. What are Pennsylvania Category 4 casinos?
Once built, Category 4 Pennsylvania casinos (often described as “mini” or “satellite” casinos) may house between 300-750 slot machine terminals upon license approval by the Pennsylvania Gaming Control Board (PGCB). (Page 573, Line 18)
These establishments will also be allowed to host up to 30 tables used for either house-edge or poker “table games” during their first year of operation. This number may be increased to 40 during the second year. (Page 600, Line 25)
2. Who is responsible for governing and regulating a Pennsylvania Category 4 casino?
The Pennsylvania Gaming Control Board is afforded a wide berth of regulatory powers over all CAT 1, CAT 2, CAT 3 and CAT 4 casinos in the state. (Pages 555-561, § 1207 “Regulatory Authority of Board”)
3. How many poker tables may be in use at a Pennsylvania satellite casino?
Typically, Pennsylvania land-based casinos (CAT 1, CAT 2, CAT 3) can use a maximum of 30% of tables for “non-banking” games, such as poker. (Page 599, Line 14 – Page 599, Line 30)
There is no clause covering these limits for Category 4 licensed facilities. However, tables used for “tournaments” do not count towards this maximum number. (Page 601, Line 23)
“Non-banking” (poker) tables may seat a maximum of 10 players each. (Page 601, Line 17)
4. Are fully-automatic “electronic” table games allowed in Pennsylvania satellite casinos?
Yes, but CAT 4 casinos would be responsible for paying an additional 34% tax on “Gross Table Game Revenue” (GGR). This would result in a total tax rate of 50% (approximately) upon combining the state and “Local Share Assessment” (LSA) base taxes. (Page 606, Line 2)
This law encourages the creation of “skilled jobs” as well as a means to “supplement slot machine gaming” in all licensed Pennsylvania casinos. (Page 519, Line 10)
It also effectively discourages land-based establishments from utilizing fully-automatic electronic table games. This and potentially similar future legislation in other states does/would decrease the number of such games in operation at brick & mortar casinos which are/would be regulated in such a manner.
5. Are Pennsylvania Category 4 casinos subject to “Daily Assessment” fees?
No. Satellite casinos in PA are exempt from paying out daily percentages of their slot machine GGR to the Pennsylvania Horse Race Development Trust Fund. (Page 758, Line 23)
Category 4 casinos are likewise not responsible for paying 5% of their slot machine GGR to the Pennsylvania Gaming Economic Development and Tourism Fund, nor are they liable for the additional 0.5% rate (authorized as of Jan 1st, 2018) to the Casino Marketing and Capital Development account. (Page 764, Line 1)
6. Can civil disputes between applicants and the Board influence a license ruling?
Yes. The PGCB is required by law to automatically deny the approval of any Pennsylvania Category 4 casino licenses along with interactive gaming, simulcasting, or sports wagering certificates if the applicant — or one of its affiliates — is engaged in a civil dispute “seeking to overturn or otherwise challenge” a Board decision related to its licensing process. Applicants’ rights “to seek judicial enforcement of mandatory obligations of the Board” are still protected. (Page 797, Line 29)
7. What are the four categories of casinos in Pennsylvania?
Category 1: Racetrack and Casino (Racino)
Parx, Preque Isle, Penn National, Mohegan Sun, The Meadows, Harrah’s Philadelphia
Category 2: Stand-Alone Casino
SugarHouse Philadelphia, Rivers Pittsburgh, Sands Bethlehem, Mount Airy
Category 3: Resort
Valley Forge, Lady Luck Nemacolin
Category 4: Satellite Casinos
Penn National, Stadium Casino, Mount Airy, Parx, TBA
8. How are Category 4 casino licenses awarded?
The PGCB is allowed by law to hold “blind” (sealed bid) auctions to sell a maximum of ten Category 4 licenses. (Page 525, Line 17 – Page 579, Line 11)
The minimum bid for a Category 4 casino location in Pennsylvania is $7.5 million USD. (Page 576, Line 23)
9. Who can participate in Category 4 casino license auctions in PA?
Category 1 and Category 2 casinos were allowed to participate in “initial” auctions for the right to apply for a Category 4 slot machine license and to designate a Category 4 location.* (Page 533, Line 17)
* As of March 9th, 2018 the “initial” auction process had concluded with the following Category 1 or Category 2 casino license holders reserving a Category 4 location.
- Penn National – Yoe, York County – $50.1 million (January 10th)
- Stadium Casino – Derry, Westmoreland County – $40.1 million (January 24th)
- Mount Airy – New Castle, Lawrence County – $21.2 million (February 8th)
- Parx Casino – South Newton, Cumberland County – $8.1 million (February 22nd)
10. Can winning “initial” auction bidders reserve more CAT 4 locations?
Yes. Penn National, Stadium Casino, Mount Airy and Parx Casino may participate in all “subsequent auctions.” (Page 575, Line 21)
11. What happens if CAT 4 licenses are still available after the “subsequent auctions” process?
In such a scenario, the PGCB would be allowed to host “additional auctions” permitting CAT 1, CAT 2, CAT 3, and “Qualified Entities” to participate. However, the decision on whether or not to hold these “additional” blind auctions is left entirely up to the Board, and the criteria for determining such qualified entities would have to be established before doing so. (Page 575, Line 27)
12. Are there restrictions on where Category 4 casinos may exist?
Yes. Pennsylvania mini casinos may not be located within 25 linear miles of existing land-based casinos, unless the established casino in question belongs to the winning CAT 4 auction bidder. (Page 571, Line 21)
Furthermore, Category 4 locations may not exist in counties where a “resort” (CAT 3) casino is currently located. (Page 573, Line 6)
Category 4 locations may not exist in “sixth class” counties that share a border with a county that currently hosts a “stand-alone” (CAT 2) casino.** (Page 573, Line 8)
** This clause is known as the “Mount Airy carve-out” in Pennsylvania gambling legislation circles. Mount Airy’s stand-alone CAT 2 casino is located in Monroe County (northeastern PA). Monroe “is contiguous with” the sixth-class counties of Carbon, Pike and Wayne (See: Pennsylvania County Classification List).
Category 4 license auction winners may build their CAT 4 facility within a 15 mile radius of the designated “center point” established during the corresponding auction. (Page 526, Line 19)
13. Can municipalities “opt-out” of hosting a Pennsylvania Category 4 casino?
Yes. Pennsylvania municipalities were granted the choice to “opt-out” of hosting a satellite casino. Any municipality that prohibits the construction of a CAT 4 facility is allowed to “rescind” that choice at any time, but may not subsequently place itself back on the official PGCB “opt-out” list. (Page 571, Line 2)
14. How much time does a CAT 4 auction winner have to apply for a license?
A Pennsylvania Category 4 casino auction winner is required to apply for a corresponding license within six months of paying the winning bid amount. This deadline may be extended for two additional months at the Board’s discretion. If no application is submitted in eight months’ time, the winning bid amount is forfeited. (Page 577, Line 20)
15. In what time frame must winning auction bidders pay the bid amount to the PGCB?
Auction winners are required to make full payment of the bid amount within two business days after being deemed a Pennsylvania Category 4 casino license auction winner. Otherwise, the bid is cancelled and the right to apply for the corresponding CAT 4 license is awarded to the second-highest bidder from the same auction. (Page 577, Line 2)
16. What happens if the PGCB ultimately denies a Category 4 license to a winning bidder?
If the Board decides not to approve a Category 4 casino license, it will refund 75% of the total winning bid amount to the casino, and then hold a replacement auction for that license application and location. (Page 578, Line 4)
17. Is the cost of a Category 4 slot machine license covered in the winning bid?
Yes. Resort and satellite casino facilities are exempt from the $50 million USD slot machine license fee that must be deposited into the State Gaming Fund by CAT 1 and CAT 2 casinos upon approval of said license. The typical slot machine license fee for a Pennsylvania CAT 1 or CAT 2 casino is $50 million. Similar licenses for CAT 3 (resort) facilities cost $5 million. (Page 562, Line 10 – Page 574, Line 21)
18. Are Category 4 casinos required to pay an additional fee to host table games?
Yes. Each Pennsylvania land-based casino that currently operates within the commonwealth is already a table game “Certificate Holder” by virtue of existing CAT 1, CAT 2 or CAT 3 casinos. This grants each the right to offer table games in their CAT 4 casinos for an additional, one-time fee of $2,500,000 USD. (Page 573, Line 11- Page 600, Line 16)
This would also apply to any “Qualified Entities” that may be eligible to operate a CAT 4 facility upon submitting a winning bid in an “additional auction.” In this hypothetical scenario, those new Pennsylvania gambling businesses would need to apply (and be approved for) a separate $2.5 million USD license to make table games available in their CAT 4 casino.
19. In what time frame is a winning bidder obligated to build and open a CAT 4 facility?
Upon Pennsylvania Category 4 casino license approval, the winning bidder may designate a “temporary” facility to host CAT 4 slot machines (and table games if applicable) for a period not to exceed 18 months. (Page 578, Line 11)
Referencing this time frame along with the 6-8 month process of applying for a CAT 4 slot machine license, it is understood that all “permanent” Pennsylvania CAT 4 casinos will be established and open for business by the 2020 calendar year.
20. Will Category 4 Pennsylvania casinos be required to submit a “Hiring Plan” to the Board?
Yes. Similar to CAT 1, CAT 2, and CAT 3 casinos, Pennsylvania Category 4 casino license holders are required to submit an updated “Hiring Plan” to the PGCB annually. (Page 779, Line 13)
FEATURED IMAGE: Pennsylvania General Assembly
ABOUT THE AUTHOR: David Huber (known online as “dhubermex”) has been involved in the iGaming industry as a writer, editor, podcast host and consultant since 2004. His experience covering legislative agendas dates back to the early 1990s as a broadcaster/news service provider for terrestrial AM/FM radio stations.
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