Tough Casino Decisions Still Hanging Around in Pa.

ICTMN Staff
12/27/10

Casino-licensing decisions are still knocking around in Pennsylvania, more than six years after the Legislature created the state Gaming Control Board and legalized slot machine casinos.

As an example of how slowly things have moved, the agency’s chairman, Gregory Fajt, issued this threat 15 months ago: “We expect this to move and move quickly, or we will yank the license.”

The investor group on the receiving end of that threat was scheduled to reappear in front of the gaming board Dec. 16 to again try to persuade the seven board members that it should keep its license to build a casino along Philadelphia’s section of the Delaware River.

This time, the group had help from the world’s largest casino company, Las Vegas-based Caesars Entertainment Corp. – the third major casino operator in four years to take a crack at the project.

Meanwhile, the gaming board has scheduled a Jan. 6 vote to decide the four-way stakes for a second miniature “resort” casino license. It will surprise few if a legal challenge follows that vote, no matter which way it goes.

The state Supreme Court is considering a legal challenge that could undo a license the board previously awarded to another resort casino project. And the last remaining racetrack casino license remains an orphan.

This is the situation just weeks before the terms of two board members expire – both are legislative appointees – and Gov.-elect Tom Corbett takes office and, with it, the power to pick a new chairman.
One prominent lawmaker, Sen. Jane Earll, R-Erie, said she was surprised so many casino licensing questions persist as 2011 is about to begin.

“I don’t think anyone would have predicted that these issues would have evolved as they have,” said Earll, who chairs the Senate committee that oversees gambling policy in Pennsylvania.

Still, the long process should not be blamed on the board, she said.

Ten casinos, including SugarHouse Casino in Philadelphia, have opened their doors in the past four years, even as the financial meltdown and lawsuits have ambushed other casino projects.

A decision on the Philadelphia license will be thorny, whether or not the gaming board revokes it.

The investor group, including several people with longtime ties to Gov. Ed Rendell, paired up with the Mashantucket Pequot Tribe, which owns Foxwoods Casino in Connecticut, and won the license in 2006.

But the casino project triggered considerable community opposition, and the recession hammered the tribe’s finances, forcing the group to scrap its original design. A year ago, the board imposed a $2,000-per-day fine on the group when it missed a December deadline to provide a revised plan.

In the spring, international casino mogul Steve Wynn flirted with the project, then pulled out. Caesars – which just changed its name from Harrah’s – surfaced as a partner this fall.

Last month, the board gave the Philadelphia group until Dec. 10 to submit finished paperwork on its new partnership agreement, financial backing and construction details.

But a top agency enforcement lawyer warned that his staff may not be able to assess the merit of the documents before the gaming board met next to review the matter.

“Just because everything is filed, it might not be ripe for board consideration for some time,” Cyrus Pitre, the gaming board’s chief enforcement counsel, said at the board’s Nov. 18 meeting.

Should the Caesars partnership come together, the gaming board must decide whether it wants to accept substantial changes to a design that it approved four years ago.

The gaming board also must decide if Caesars – with $20 billion in debt – is a stable partner.

And it must decide whether it wants to hand a license to a group that involves the largest casino operator in Atlantic City, N.J.

After all, the gaming board’s original decision cited a handful of reasons why it picked the Foxwoods group, including a lack of ties to the seaside gambling city “which could provide competition to lure customers to another site.”

A critic of the casino site – state Rep. Michael O’Brien, whose Philadelphia district border sits about two football fields away – for months has pressed the board to revoke the license.

But, he said, “I don’t believe the board has the foresight or the courage to do it.”

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