Last week, the United States District Court for the Eastern District of Pennsylvania, Judge Jeffrey Schmehl, granted the Motions to Dismiss of Sands Bethlehem Casino Resort and other Pennsylvania casinos, which were alleged to have engaged in a retaliatory boycott impacting a mixed martial arts (MMA) promoter’s events. Sands Bethlehem was alleged to have engaged in a boycott of plaintiff’s events as a retaliation for a prior lawsuit promoter Ryan Kerwin filed against Valley Forge Casino and Harrah’s in Chester, Pennsylvania.
Sands, Parx and Sugarhouse Casinos and their respective event directors faced allegations that certain emails cited in the Complaint established a conspiracy. The plaintiff alleged that the defendants’ “horizontal group boycott” would put the plaintiff promoter out-of-business. The Court found the emails, at best, demonstrated nothing more than unilateral action by the individual casinos. There was no “plus factor” in the complaint’s allegation that would have shown a motive, actions that were against the individual casinos’ economic interests or, evidence that implied a traditional conspiracy. In the Sands instance, it was alleged that Sands actually emailed with plaintiff offering to contract for MMA events but plaintiff would not agree to Sands’ “inflated terms”.
Judge Schmehl found that nowhere in the Amended Complaint did there appear evidence of “a conspiracy that supports an inference of collusion.” The Court’s holding that plaintiff failed to plead an unlawful agreement precluded an analysis of the other elements of the Section I Sherman Act claim.
The Court also dismissed claims that the defendant casinos (and Harrah’s and Valley Forge) were collective monopolists by keeping essential facilities from the MMA promoter. The plaintiff’s own pleadings that MMA events were staged elsewhere in Pennsylvania, other than the casinos’ event centers, convinced the Court that defendants’ properties were not “essential facilities”.
Sands was represented by Duane Morris lawyers – Manly Parks and Sarah O’Laughlin Kulik.
On June 22, 2016 the Pennsylvania General Assembly passed a sweeping expansion of gambling . The bill, which must be passed by the state’s Senate and signed by the Governor, would allow for internet based gambling, daily fantasy sports, slot machines at off-track betting parlors (“OTBs”), slot machines at airports and even paves the way for legalized sports betting, if, and when that is allowed under federal law.
- Pennsylvania would be the fourth state to allow legal internet gambling (Internet gambling is currently legal in New Jersey, Delaware and Nevada);
- Internet gambling would be offered through the Commonwealth’s current, licensed casinos with each casino paying an $8 million license fee to offer internet gaming;
- Age and geo-location controls will be required – players must open an account, be 21 or over and must be located within PA while participating in internet gambling;
- The tax rate on internet gambling revenue would total 16%;
- Participating casinos would not be allowed to reduce their number of slots machines their existing b casinos
Daily Fantasy Sports
- Bill allows current DFA operators like FanDuel and Draft Kings to obtain a license to offer DFS without partnering with a PA casino; DFS operators would pay 5% of its revenues ( after player payouts) to the state;
- DFS players must be 18 yo or older;
Slots at OTBs
- PA’s 5 racetrack casinos would each be permitted to have up to 4 off-track betting parlors with up to 250 slot machines per OTB;
- Each such OTB must be outside a 50 mile radius of an established PA casino;
- There is a $5 million licensee fee for each OTB with slots;
Slots at Airports
- Casinos can seek permission to install slot machines at airports; the PA Gaming Control Bd can set limits on the number of slot machines l allowed;
- License fees for such operations would be $5 million in Philadelphia; $2.5 million in Pittsburgh; and $1 million a each at the four other international airports in PA;
Expansion of Current Resort Casinos
- Current Category III casinos in PA can expand their max slot machines counts from 600 to 850 and table games from 50 to 65;
- There is also a relaxation in the requirement that casino patrons be customers of other amenities;
- If a current Category III casino and all three changes it so would requires $4.5 million is additional license fees.
- The bill instructs the PA Gaming Control Bd to develop regulations to allow for sports wagering if, and when the federal government permits such sport betting
On February 12, 2014, the Pennsylvania House of Representatives’ Gaming Oversight Committee held a hearing to receive testimony regarding the prospects of legalizing electronic gaming devices, i.e video gaming machines, in the Commonwealth. The hearing focused on gaming along the lines of what was raised in a prior session’s bill, (2014 House Bill No 1932), which sought to legalize video gaming machines for bingo, keno, blackjack and other games for use in establishments with valid liquor licenses, such as restaurants, bars, taverns, hotels and clubs.
With a looming budgetary deficit Pennsylvania legislators are exploring various ways to increase gaming related tax revenue, including potentially moving forward with internet gaming through its existing bricks and mortar casinos. This recent Gaming Oversight Committee hearing revisiting the video gaming machines issue would be another means through which to generate gaming based tax revenue. The hearing’s witnesses touted the jobs and tax revenues generated by Illinois which implemented video gaming machines in bars, restaurants, taverns and truck stops several years ago – (projected IL tax revenues in excess of $250 million in 2015). While Illinois has had success generating tax revenue and producing jobs with its video gaming machine roll out, the machines do compete, on a low end basis with the states’ existing casinos. While local municipalities in Illinois can opt out of the video gaming program that option may not exist in a Pennsylvania bill and opposition from Pennsylvania’s casino industry remains to be seen.
Also, if considering video gaming at bars and taverns Pennsylvania may be well served to learn from some of the mistakes made with the passage of last year’s Tavern games legislation. Tavern games, with its gaming regulatory scrutiny focused on the bars/tavern owners, rather than through the games’ owners and route operators, lead to cost issues and a reluctance to move forward which hampered widespread implementation of tavern gaming. In addition, while Illinois has had relative success with its multi-tiered system of manufacturers, distributors, operators and establishments, that system has one too many layers to operate as effectively as it otherwise could. Few recall Pennsylvania’s short-lived requirement of local suppliers of slot machines layered between the industry’s manufacturers and end user casinos. The removal of the local supplier requirement opened the way to the implementation of Pennsylvania casinos in 2006. Finally the Pennsylvania Gaming Control Board and its agencies are more than capable of regulating and rolling out video gaming should it become law. Bringing in other, less experienced state agencies, such as Liquor Control or the Department of Revenue would only further complicate and delay implementation should the law pass.
The Pennsylvania Gaming Control Board announced that it is now accepting applications for the one remaining casino license that must be located within the City of Philadelphia. This is the former “Foxwoods” license which was revoked by the Board in December 2010. The Board set an application deadline of November 15, 2012.
In its announcement, Board Chairman, William Ryan stated that it was in the “best interest of the people of Pennsylvania” to proceed with the application process since it appears that recent legislation, considered by the Pennsylvania General Assembly, which would have amended the current gaming law and allowed the vacant license to be located anywhere within the Commonwealth, is unlikley to move forward.
The licesne fees to operate a casino with up to 5000 slot machines and 250 table games, totals $74.5 million.
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.
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