What’s Next for the Vacant Philadelphia Casino License?

Following the Pennsylvania Supreme Court’s recent rejection of the final appeal by Philadelphia Entertainment Development Partners (“PEDP”)/Foxwoods in connection with the revocation of the PEDP/Foxwoods casino license – the looming question is what happens now with that license? Philadelphia developer, Bart Blatstein has expressed his desire to build a casino, entertainment retail complex on Broad and Callowhill Streets. One small problem with Blatstein’s proposal, the Pennsylvania Gaming Control Board has taken no steps towards accepting any applications or proposals for the now revoked, remaining Philadelphia casino license.

The 2004 state law that legalized casinos in Pennsylvania, set aside two standalone casino licenses to be located within Philadelphia. A local group of investors, PEDP, partnered with Foxwoods and were awarded one of the two Philadelphia casino licenses – the license which has now been revoked by the Gaming Board. The Gaming Board Chairman, William H. Ryan, Jr., has stated that it will be up to the Pennsylvania Legislature as to how the Gaming Board was going to proceed on this now unallocated license. Under the current law, the license must be located within the City of Philadelphia but no closer than 10 miles from the two, nearby racetrack casinos, Parx and Harrah’s Chester. There are several bills pending in the PA Legislature which may amend the current gaming law so as to allow the license to be awarded to a project anywhere within the Commonwealth outside the City of Pittsburgh.

Several industry analysis have opined that the Philadelphia area casino market may not be able to support another casino within Philadelphia. The continued success and growth of Parx Casino in Bensalem, Harrah’s Chester in Chester Pennsylvania, the Sugarhouse Casino on Columbus Boulevard and the recently opened Valley Forge Casino Resort may make it financially unattractive for a prospective licensee to pay the $65.5 million license fee and then fund the land acquisition and construction costs for a second Philadelphia casino. Chairman Ryan and the Gaming Board are not likely to rush forward with a process to award the open license without having both the Legislature and Governor all on the same page. The Board has done an excellent job in fostering the growth and success of the gaming industry in Pennsylvania, which has recently surpassed New Jersey in gaming revenue. Its decision regarding the now vacant license will have broad impact on the casino industry in the region and I suspect the Board will move deliberately before choosing a course of action.