Masked up and open for business near Pittsburgh By Ken Adams, CDC Gaming Reports November 29, 2020 at 5:50 pm In the midst of COVID-19 and its attendant restrictions and limitations, a new casino opened in Pennsylvania just before Thanksgiving. Live! Casino Pittsburgh welcomed its first customers on November 24th. To be specific, in Pennsylvania terminology, it is not really a casino; Live! is instead a mini-casino, properly and legally defined as a satellite casino. A category unique to Pennsylvania, but characteristic of the commonwealth’s approach to expanding gaming in a piecemeal and sometimes disjointed fashion. It has been an ongoing process for nearly sixty years. Horse racing was legalized in Pennsylvania in 1959, and a state lottery followed in 1972. More than thirty years later, in 2004, Pennsylvania legalized slot machines after the state legislature passed the Race Horse Development and Gaming Act. The intent of the act was to shore up the struggling racing industry by allowing them to operate slot machines. It authorized slot machines at seven racetracks and five stand-alone casinos and two resorts. Helping the racing industry was the stated purpose of the law, but generating substantial revenues for the state was written into the subtext. Casino licenses were $50 million, a resort license was $5 million, and the tax rate was 50 percent. The FanDuel sportsbook at Live! Casino Pittsburgh In 2010, the Keystone State added table games to the mix. The next year, 2011, casinos generated $3 billion in revenue and over $1.5 billion in taxes from the combination of slots and table games. However, by 2017 the governor was hunting more gaming tax revenue, leading to the legislature’s passing of the Expanded Gaming Act that year. The act authorized online gambling, fantasy sports, sports betting, video gaming terminals in truck stops, airport gambling, online lottery sales, and ten new satellite casinos statewide. As with the original casino licenses, the state hoped for significant upfront payment for the satellite licenses, even though the satellites were to have no more than 750 slot machines and could be no closer than 25 miles to an existing casino. Further, local governments could opt out, which mean the potential sites for these casino sites were necessarily limited. Clearly, those licenses were not worth as much as a casino license that permitted 5000 slot machines. Pennsylvania’s state government thought they could auction the licenses one at a time and bag a bundle. And, at first, it appeared to be a good strategy – the first license went for the princely sum of $50 million, just like a full casino license. However, the next one garnered only $40 million, and with each subsequent sale the price fell even further, bottoming out with the fifth license, which sold for the minimum bid of $7.5 million. After that, there were no more bidders, and no more auctions. Hosting a satellite casino was not universally seen as a good idea; over a thousand communities in the state opted out. As the bidding demonstrated, Pennsylvania’s existing casinos were not enthusiastic about more competition in the state. Even when an extant casino did offer a bid, there might have been a secondary agenda behind it. Penn National, for one, had fought against the legislation, but in the end it did submit a bid. It was like a move in a chess game; Penn wanted to prevent a competitor from encroaching on its territory. Penn eventually received two of the five mini-licenses granted, but has yet to build a venue for either of them. There have been several delays, and now, with COVID, Penn looks to be no closer to opening a mini casino than it was three years ago when it paid $50 million for its first satellite license. That makes Cordish and its new Pittsburgh property something of an anomaly. The Cordish Companies, with Greenwood Gaming, were awarded the last full casino license in Philadelphia in 2014. Four years later, in 2018, Cordish bought out Greenwood and promised to get on with building the Live! Philadelphia casino. The estimated $700 million casino and hotel is currently targeting early 2021 for its opening, a mere seven years since the license was awarded. The Philadelphia license made Cordish eligible for a satellite – and the increasingly lucrative online and sports betting in Pennsylvania. Live! Pittsburgh is actually 30 miles from the city’s core in a remodeled shopping mall in Greensburg, PA. Live! cost $150 million to build: not cheap, but a bargain compared to the $700 million Cordish is spending in Philadelphia. The process of obtaining a license and building the casino was quick by Pennsylvania standards. The license for Live! was awarded in 2018 for $40 million. Cordish managed to build and staff the casino in the midst of the pandemic, an admirable accomplishment, even though the casino is modest by 21st century standards: Live! Pittsburgh has 30 table games and 150 slot machines, its size further tempered by state mandated restrictions. There is a limit of 50 percent of capacity, due to COVID, and the venue also has the very latest technology to detect feverish people. Its slot machines automatically shut down on either side of a customer, to insure social distancing; after a customer leaves, the machine turns itself off until it is cleaned. Unlike the legendary openings of the past, there were only 30 people waiting for the doors to open Tuesday in Greensburg, and it is impossible to predict Live! Pittsburgh’s short-term future. The casinos in the country that have reopened after closing due to the coronavirus have loyal customers. At least some of those customers were eager to return to “their” casino. Live! does not have that base to rely on in these days when people are reluctant to go out in public. The only other notable new casino that has opened during the pandemic is Circa in Las Vegas, a venue that’s basically the opposite of the little casino in Pennsylvania: the cost to build Circa is estimated at $1 billion, it is the tallest building in Las Vegas, with the biggest swimming pool, sports book and attitude – all in a town known for big pools, books and attitudes. However, the two properties share an uncertain future nevertheless. They are risky bets in unstable and unusual times. Both probably have enough financial resources to hold out until the end of the pandemic. Sometime in the next twelve months, with any luck, the economy, the gaming industry and Live! and Circa will collectively begin to experience the post-pandemic world. None of us yet knows what that world will be like. In the meantime, we can wear a mask, keep our distance, and try to act normal. We can also hope that those measures will be enough for all of the businesses attempting to survive the pandemic.