Bally’s Gains PA Access Through Satellite Casino Construction Deal

Less than a week into 2021, the plot has already thickened in Pennsylvania’s online gambling and sports betting market. Bally’s has struck a deal with local businessman Ira Lubert to build a Category 4 satellite casino in Center County.

Lubert won the bidding for the right to build the casino with an offer of just over $10 million. Bally’s says it estimates that the construction costs will be another $12o million.

The project will begin soon, within the first half of the year, but probably won’t be complete until next year. Neither Bally’s nor Lubert has revealed the exact location. However, the bid specifies a 10-mile radius close to Penn State University. One strong possibility for a casino of that size would be to repurpose part of the struggling Nittany Mall, on the outskirts of the college town.

One crucial aspect of the deal is that Bally’s will have a majority interest in the property and 100% of all online revenue, as well as retail sports betting. Access to the PA online gambling market is presumably a major motivator for Bally’s. It would otherwise have had to strike a partnership deal with a competitor to enter.

“Expanding our rapidly growing, national footprint into the attractive Pennsylvania gaming market represents yet another major milestone for Bally’s and a great way to cap off a truly extraordinary year,” said Bally’s CEO George Papanier. “Regional, land-based casinos remain the cornerstone of our portfolio diversification strategy, providing the necessary support for the growth, development and success of our future sports betting and iGaming initiatives. We look forward to combining our own proven track record of greenfield development with Ira Lubert’s local knowledge and expertise to bring Bally’s first-in-class gaming experience and amenities to customers and sports fans across Pennsylvania.”

What’s a satellite casino?

Pennsylvania’s current casino laws recognize four distinct types of casino.

  • Racinos (Cat. 1)
  • Standalone casinos (Cat. 2)
  • Resort casinos (Cat. 3)
  • Satellite casinos (Cat. 4)

There are, at the moment, a total of 12 casinos of the first three types combined, and no plans to build any more. Starting in January 2018, however, the state has been auctioning off permits to build satellites, also known as Pennsylvania mini-casinos.

Initially, there were going to be 10 satellites built, but interest dried up quickly. The first permit went to Penn National for over $50 million, but the fifth went for just 3 dollars more than the $7.5 million minimum bid. At that point, the state pulled the plug on additional auctions. Last year, however, plans for a Mount Airy satellite fell through, and its permit went back on the auction block to be scooped up by Lubert.

Satellite casinos are important for PA sports betting

Despite the name, these are modestly sized, not tiny establishments. Each can have up to 750 slot machines and 30 table games.

They’re now proving to be of outsized importance, however, because of a quirk of Pennsylvania’s sports betting law. While each of the larger casinos can have up to three partners for online casino and poker, the limit for sports betting is one partner per casino. Those partnerships have all been snapped up, so the only remaining path for access to the sports betting market is through the satellites.

This is, for instance, the route BetMGM took. Late last year, it abandoned its plans to launch as a qualified gaming entity, as this would have left it without a sportsbook in the state. Instead, it partnered with Penn National’s first satellite, and started taking sports bets last month.

Notably, BetMGM didn’t even have to wait for Penn to open the casino in question before launching its online products through that partnership. Given the popularity of sports betting, this is something we are likely to see more of this year. There are still three such partnerships up for grabs.

Bally’s is a wild card for 2021

The Bally’s brand dates back many decades. However, the Bally’s we’re talking about is effectively a new company, at least when it comes to online gambling.

The name was transferred just two months ago to another casino company, formerly known as Twin River Worldwide Holdings. It purchased the brand along with the Bally’s casino in Atlantic City. The plan seems to have been to gain access to the new online casino and sports betting spaces, while simultaneously adopting a name that will resonate with potential customers.

The Pennsylvania satellite casino deal fits in nicely with that plan. It’s just one of several moves Bally’s is undertaking. Just before Christmas, it opened a retail FanDuel Sportsbook at Bally’s Atlantic City. That same week, it completed its acquisition of a casino in Shreveport, Louisiana from Caesars. It’s also in the process of rebranding most of the former Twin River properties to fit the new corporate identity.

Its designs for Michigan are more up in the air, as it has neither a casino property nor a partnership in place there. It has, however, purchased the naming rights for a local Detroit sports station, however, so it clearly has something planned.

It likewise hasn’t yet implemented the online portion of its plan, but that will be coming soon. A Bally’s Online Casino should be coming to New Jersey in the next few months. It even has two additional skins lined up in theScore and PointsBet, both of which will also be launching with a similar timeline.

Compared to its competitors, it is quite a late arrival to the US online gambling scene. Yet, it clearly has big ambitions and a coherent plan for pursuing them. How things unfold for this newcomer has the potential to be one of this year’s most intriguing plot arcs.

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