Pa. says there’s room for a 5th Phila.-area casino

Even though the Philadelphia region will open its fourth casino in Valley Forge, a state-commissioned study says there is room for one more gaming place for either City Avenue or West Philadelphia.

That is, if the second license intended for Philadelphia stays within city limits. The Pennsylvania Gaming Control Board revoked a planned second city casino license over repeated delays by the Foxwoods investor group. The license was pulled in December when Foxwoods made no progress on a casino planned for South Philadelphia.

The matter is tied up in court. For now, SugarHouse is the only casino in the city.

"A western Philadelphia location would add approximately 10 percent, or $10 million more, in revenues than the Foxwoods site, but would still be considerably lower [in revenues] than developing in a less competitive location, like South York or Reading," said the 88-page report released Tuesday in Harrisburg by Pennsylvania Treasurer Robert M. McCord.

City Avenue is a more attractive site than the proposed Foxwoods site on Columbus Boulevard between Tasker and Reed Streets. A South Philadelphia site would raise only $90 million a year because of competition from the expanding SugarHouse Casino and Harrah's racetrack/casino in Chester, the study concluded. By comparison, a City Avenue or West Philadelphia casino would produce $98.4 million a year.

McCord presented the report - assembled by the Innovation Group of New Orleans - to the Senate Community, Economic and Recreational Development Committee. He said it was intended to be a tool for legislators, policymakers, and the public to make future decisions on the state's gambling industry.

The study arrives at a time when state regulators and lawmakers are mulling what to do with the two remaining licenses still to be awarded, including one reserved for a yet-to-be-built racetrack and one that must be in Philadelphia. Based on the study's findings, McCord said, the state should proceed cautiously in awarding those licenses.

The report ranked 11 potential casino sites based on their potential annual revenue, and West Philadelphia/City Avenue came in fifth. South York ranked first, with the potential to produce an estimated $153.9 million a year, followed by Reading at $124.8 million a year.

Valley View in Schuylkill County placed third at $122.7 million, and Chambersburg, in south-central Pennsylvania, finished fourth at $106.6 million.

A City Avenue casino - if selected - would be the second in the area not sited along the I-95 corridor. It would join the $100 million-plus Valley Forge Casino Resort, owned by real estate magnate Ira Lubert and a group of local investors, which is scheduled to open in the spring. That site is less than two miles from the King of Prussia mall.

Under the state's gambling law, a Category 2 stand-alone casino, such as SugarHouse, must be at least 10 miles from a Category 1 racetrack casino, such as Parx in Bensalem. But there is no language that places a mileage restriction on the distance that a future Category 2 casino must be from an existing Category 3 casino, such as Valley Forge.

McCord said state taxes and license fees among 10 operating casinos had raised more than $5 billion since the first one opened in late 2006. But the report cited competition from new casinos in neighboring states, including Ohio and Maryland, and even intrastate competition that could affect future revenue.

The report showed vast disparities in population and slot-machine supply between the western and eastern parts of the state.

"In the east, it is clear demand has absorbed supply, which suggests future growth opportunities will be more modest," McCord said. "Overall, this study shows the state's gaming market is maturing. The days of double-digit growth from month to month are likely behind us.

"We can expect future revenue growth that is more modest or that simply plateaus."