The Foxwoods Casino project could be rescued by a neighbor in nearby Chester - Harrah's Entertainment.
The country's largest gaming company is in talks with the Foxwoods group about becoming a new partner, replacing Las Vegas casino titan Steve Wynn as developer and manager of the South Philadelphia gaming hall, according to sources familiar with negotiations.
Under Pennsylvania law, Harrah's could acquire only a 33 percent stake in the venture, since it already controls a casino in the state.
However, if the company finalizes a deal with the Foxwoods group, it also could expect to be paid to develop and manage a waterfront casino, sources said.
Harrah's has an added incentive to bail out Foxwoods: It is owed $67.3 million by local investors for land for the project.
In 2005, a Harrah's affiliate sold the 16-acre parcel to the partners, including Comcast-Spectacor chairman Ed Snider and charitable trusts for the families of lawyer Lewis Katz and developer Ron Rubin.
The investors did not pay up front. Instead, they gave the Harrah's affiliate a promissory note, due in 2015.
Jacqueline Peterson, a Harrah's spokeswoman, declined to comment. A lawyer for Foxwoods, F. Warren Jacoby, did not return calls.
Licensed in 2006, the Foxwoods casino has faced one setback after another. Neighbors and politicians have opposed the project, while the Connecticut tribe that was supposed to run the gambling house has been hampered by financial problems back home.
Local investors wanted to move the project to Center City, but were forced by state regulators to remain along the Delaware River. Wynn, who had stepped in to take over the floundering project, unexpectedly dropped out of the deal in April.
Soon afterward, the Pennsylvania Gaming Control Board initiated action to revoke the project's $50 million slots license.
The Foxwoods group - Philadelphia Entertainment & Development Partners - is fighting that move. Last month, in a filing with the gaming board, it said it was talking to five potential investors.
The field has narrowed to Harrah's, sources said.
Harrah's inherited title to the parcel for the proposed casino when it took over Caesars Entertainment in 2005. Caesars had expected to join the Katz and Rubin group in bidding on one of two slots licenses for Philadelphia.
But Harrah's already had a deal in the works with another group of investors in Chester who didn't want to compete against a sister property in South Philadelphia.
