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A ‘satellite’ casino locally unlikely, but Middletown, Lower Swatara don’t act to stop the possibility

By Dan Miller

danmiller@pressandjournal.com

717-944-4628
Posted 12/27/17

Middletown and many other communities in Dauphin County seem to be hedging their bets regarding the possibility of a “satellite” casino coming to their municipality.

Borough council …

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A ‘satellite’ casino locally unlikely, but Middletown, Lower Swatara don’t act to stop the possibility

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Middletown and many other communities in Dauphin County seem to be hedging their bets regarding the possibility of a “satellite” casino coming to their municipality.

Borough council Dec. 5 took no action on a proposed resolution that would prohibit a Category 4 casino — also known as a satellite casino — from locating anywhere in Middletown.

Lower Swatara Township commissioners also chose to take no action on the same resolution, said interim township Manager Frank Lynch.

Legislation signed by Gov. Tom Wolf on Oct. 30 allows for developing up to 10 satellite casinos throughout Pennsylvania.

Some refer to these as “mini” casinos, but that makes it sound as though these new casinos could fit in a storefront, said Doug Harbach, communications director for the Pennsylvania Gaming Control Board.

The satellite casinos would be much larger, in that each could have 350 to 700 slot machines and up to 40 tables for games, Harbach said.

That suggests a footprint roughly one-fifth the size of Hollywood Casino, which has space for more than 2,300 slot machines and 76 tables. But the satellite casino could also have restaurants and other such amenities.

Exactly how big a satellite casino would be is “extremely difficult” to say, until much more is known regarding the plans of those who will be developing the new gaming venues in Pennsylvania, Harbach said.

To Lynch, the resolution is “a moot point for every community in Dauphin County” because the legislation prohibits any satellite casino from locating within a 25-mile radius of an existing casino, such as Hollywood Casino at Penn National.

Lower Swatara and Middletown are both well within that 25-mile radius.

But — and it’s a big but — Hollywood Casino would be permitted to develop its own satellite casino, within that 25-mile radius.

That would be like Walmart opening a second regularly sized Walmart, to “compete” with its own existing Walmart super center just down the road.

Acting by Dec. 31

To bar a satellite casino from locating within its borders, Middletown and the other municipalities must pass the resolution and get it to the gaming control board by Dec. 31. The resolution was not on the agenda and did not come up for discussion during Middletown council’s last regularly scheduled meeting of the year on Wednesday, Dec. 20.

As of Dec. 22, just five municipalities in Dauphin County — Mifflin, Reed, Washington and Wayne townships, and Pillow borough — had passed the resolution to prohibit a satellite casino, according to the gaming control board website.

Londonderry Township Manager Steve Letavic did not respond to messages left by the Press & Journal by phone and email regarding whether the resolution had been considered by the board of supervisors.

However, the information posted on the gaming board site indicates that Londonderry chose not to act on it.

Even if Londonderry, Lower Swatara or Middletown had acted to pass the resolution before the end of 2017, that would not be the end of it.

The new law allows any municipality that passes a resolution barring a satellite casino to change its mind later, just by rescinding the first resolution.

But if you don’t pass the resolution before Dec. 31, you cannot decide to “opt out” later on, Harbach said.

The board has not received anything from Hollywood Casino regarding Hollywood wanting to develop a satellite casino within its 25-mile radius, Harbach said.

Auctioning licenses

Starting in January, the board will hold a series of auctions toward awarding licenses for the 10 new satellite casinos.

The law requires a minimum bid price of $7.5 million for a license to cover the 350 to 700 slot machines. A separate certificate for table games would require another $2.5 million, according to information posted on the gaming board website.

If all the licenses are not awarded by July 31, the gaming control board will open up the auction to allow “smaller category” existing resort casinos to apply for the new satellite licenses, Harbach noted.

Eric Schippers, senior vice president for public affairs for Penn National Gaming, the parent company of Hollywood Casino, did not respond to a request for comment from the Press & Journal about any plans the company may have for building its own satellite casino within a 25-mile radius of Hollywood Casino.

Borough council didn’t spend much time discussing the proposed resolution after it was presented by borough Manager Ken Klinepeter Dec. 5.

Klinepeter mentioned that the legislation would allow Penn National to build a satellite casino within the 25-mile radius. He also told council that the Pennsylvania Family Council is recommending municipalities pass the resolution to prohibit the satellite casinos.

Financial benefit?

Borough Solicitor Adam Santucci also characterized the resolution as a moot issue, but for a different reason.

“As a practical matter, I’m not sure where they could put it” in Middletown, he said, referring to a satellite casino. “You’d have to buy a block and knock it down.”

But Councilor Diana McGlone said that borough zoning could be used to determine where a satellite casino could be in the town.

McGlone also suggested the borough might be entitled to additional grant money if a satellite casino located in Middletown.

“Would this give us an advantage?” McGlone asked.

Santucci said he didn’t know, but pointed out that East Hanover Township has derived financial benefit from Hollywood Casino being in the township.

The casino in August paid $2.3 million to the township for what is known as the host municipality fee, according to a Dauphin County press release. This is in addition to what the township receives from the casino in property tax revenue.

Other municipalities in the county, including Middletown, have received grants from revenue that Dauphin County gets from Hollywood Casino being in the county. However, these grants are not automatic and are subject to being awarded by county commissioners.

The host municipality fee had been put in limbo by a 2016 state Supreme Court decision that overturned the revenue sharing program associated with the state’s existing gambling law.

But the new Oct. 30 legislation that expands gambling, in part by adding the satellite casinos, fixed that by including language that preserves the host municipality fee as is.

The legislation also continues the other revenue from Hollywood Casino that goes to Dauphin County, which the county doles out each year in grants to the municipalities.

After the Dec. 5 meeting, McGlone told the Press & Journal she is glad council did not act on the resolution. Doing so would take away a potential opportunity for the borough, in her view.

“I don’t want to stifle any possible economic growth for the borough,” McGlone said. “You never shut the door on something that could possibly occur in the future.”

As she noted during the meeting, the borough can use its own zoning to control where a satellite casino could be.

And if there is any possibility of a satellite casino coming to Middletown, “there should be more public commentary on it than just the seven members of (council) saying yes or no, because it can controlled by our zoning,” McGlone added.

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