4 seeking Pa.'s final casino license

Applicant: Mason-Dixon Resorts L.P.
Applicant: Mason-Dixon Resorts L.P.
Posted: August 22, 2010

Four applicants are vying for Pennsylvania's final and highly coveted casino license: a group that wants to convert a Holiday Inn near Harrisburg into "RV World," one proposing to build near Gettysburg's historic battlefield, and the backers of a pair of megaresorts in the Poconos and southwestern Pennsylvania boasting everything from golf to a private airstrip.

Much is at stake. Gambling revenue in the state already has exceeded expectations, topping $2 billion over six years, and the potential for more is considered great.

All four applicants claim that a casino with up to 600 slot machines and 50 table games would boost tourism in their parts of the state and enrich the experience for patrons, in addition to generating tax revenue. The resort license they seek (at a fee of $12.5 million) requires casino customers to be guests at the resort's hotel or to spend at least $10 at its other amenities, such as restaurants.

Hearings on the applications are set to begin Aug. 30. The state's Gaming Control Board "hopes to be in a position to make a decision . . . by the end of year," said spokesman Richard McGarvey.

In April 2009, a group led by real estate magnate Ira Lubert snatched the first of two resort licenses for a casino at Valley Forge Convention Center. But that project has since been mired in the courts.

Parx Casino, formerly PhiladelphiaPark Casino & Racetrack, sued the Valley Forge group the following month on grounds that its casino would hurt Parx's business because of its proximity, and thus should be denied the license.

That case is pending before the state Supreme Court, and a decision could come any day. In the last month, the two sides have wrangled over whether the gaming board should postpone further decisions on the Valley Forge site until the justices rule.

In several fits and starts, efforts to settle the final license resumed last year. In January, table-games legislation signed by Gov. Rendell required that the gaming board reopen the application process for an additional 90 days.

Here is a look at the four applicants:

Penn Harris Gaming L.P. has proposed a 40,000-square-foot casino with restaurants, a bar, a spa, and a fitness center at the Holiday Inn West on Route 11 in Mechanicsburg, near Harrisburg.

But because the Holiday Inn has only 239 rooms - and under state law, a resort casino must have at least 275 rooms to qualify for a gaming license - the hotel plans to park 36 new RVs on its rear lot to make up the difference. Overnight guests could stay in the RV "rooms," on a six-acre site along Interstate 81 to be aptly called "RV World," or rent an RV on their own.

Investors in the $75 million project include CMS Cos., the Wynnewood-based private- equity investment firm that owns the Holiday Inn. Veteran Atlantic City gaming lawyers John Donnelly and Michael Sklar are providing free legal counsel and will become partners should the project win the license.

"As a secondary market, the RV market is great," Donnelly said. "There's lots of people in that area with the right demographic. That is, they're a little older with discretionary income and time."

Not to mention the thousands of car buffs who attend popular auto shows in nearby Carlisle and Hershey every year.

Donnelly, whose casino clients have included SugarHouse in Philadelphia, several Atlantic City gambling halls, Mount Airy Casino Resort in the Poconos, and Rivers Casino in Pittsburgh, said an RV was similar to a boat: "If you have it, you have to go somewhere with it.

"I think that site . . . is ideal, smack down in the middle of the state with tons of attractions, like the Civil War Museum and Amish country. Plus, anyone going east or west will pass that part of the state."

The reason to pick the RV plan? A better competitive environment, he said: There are already three big casinos serving the Poconos, and the proposed southwestern Pennsylvania casino would "eat into the two Pittsburgh casinos."

Mason-Dixon Resorts L.P., which envisions a $75 million casino near Gettysburg, is making a strikingly similar argument.

"Mason-Dixon is the only applicant that sits in Pennsylvania's last untapped marketplace along the Maryland border," said project spokesman David LaTorre. "The other applicants will cannibalize existing state casinos, like the Rivers, which is falling woefully short of its expected revenue projections.

"The only casinos in our proximity are owned by Penn National," LaTorre said, referring to the company Mason-Dixon has tapped to operate its casino.

Penn National Gaming Inc., of Wyomissing, Pa., already owns Hollywood Casino outside Harrisburg and will soon open a slots parlor in Maryland. "Clearly, if we were crowding Penn, they wouldn't compete with themselves," LaTorre said.

Among the investors in Mason-Dixon's casino is former Conrail chief executive officer David LeVan.

The venture's proposed location a half-mile from the revered Gettysburg battlefield has drawn fire. In June, hundreds of historians - many of them top Civil War scholars - signed a letter urging the gaming board to reject it.

"We are not building a casino on the battlefield," LaTorre said. "We are renovating a 35-year-old resort in Cumberland Township that isn't located on a single inch of the 6,000-acre park."

Woodlands Fayette L.L.C. figured it just made sense to apply for a gaming license for Nemacolin Woodlands Resort. It seems to have everything else, so why not add a $50 million gambling venue at its southwestern Pennsylvania location?

The casino would be managed by Isle of Capri Casinos Inc., of St. Louis, which runs 14 others in the United States.

Nemacolin, described on its official website as "one of North America's premier resort destinations," sits on nearly 2,000 acres and features 335 guest rooms, suites, townhouses, and private luxury homes. It offers 36 holes of golf on two championship courses, a 30-station shooting academy, trail rides, shopping, ski facilities, and its own airfield with a 3,900-foot airstrip.

"The casino resort license is intended to be a new amenity for a well-established, year-round resort," spokesman Tom Hickey said. "There is no resort more well-established, with more amenities, than Nemacolin."

As for poaching on the Pittsburgh gaming market, that's not likely, Hickey said. Nemacolin is about 40 miles south of downtown Pittsburgh; the casino would be in a former retail space on Route 40.

"Just because [license competitors] keep saying it, it is not going to make it true," he said. "Maps and distances don't lie. It's a ridiculous argument."

Bushkill Group Inc. fell short the first time, but now is getting a second shot at a license for Fernwood Hotel & Resort in the Poconos. The Bushkill, Pa., company applied in 2008, but the effort stalled when gaming officials questioned the firm's financial strength.

"In our opinion, we meet all the intent of the legislation, which was for an established, four-seasons resort in excess of 275 rooms. We have 906 rooms," said Gina Bertucci, vice president of marketing for Bushkill Group and a company investor.

Fernwood, she said, attracts an average of 425,000 annual visitors, with about 84 percent of them coming from outside Pennsylvania. The 440-acre resort hotel, which sits about a mile from the Delaware River and offers horseback riding and canoeing, would not be a threat to nearby casinos, Bertucci said.

"For the customers going for just a gaming experience, they will go to the bigger houses versus ours," she said.

This time, Bushkill Group has partnered with Penn National Gaming to operate and finance its $39 million casino.

That is the same Penn National that is the operator of choice for the Mason-Dixon project.


Contact staff writer Suzette Parmley at 215-854-2594 or sparmley@phillynews.com.

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