Panelists advise caution on casino licenses

In a discussion at the Loews Philadelphia Hotel are (from left) moderator Mike Pollock, managing director of the Spectrum Gaming Group; Ron Baumann, general manager of Harrah's Chester; Robert DeSalvio, president of Sands Casino Resort Bethlehem; Wendy Hamilton, general manager of SugarHouse Casino; John Finamore, vice president of regional operations for Penn National Gaming; and Bobby Soper, president/CEO of Mohegan Sun at Pocono Downs.
In a discussion at the Loews Philadelphia Hotel are (from left) moderator Mike Pollock, managing director of the Spectrum Gaming Group; Ron Baumann, general manager of Harrah's Chester; Robert DeSalvio, president of Sands Casino Resort Bethlehem; Wendy Hamilton, general manager of SugarHouse Casino; John Finamore, vice president of regional operations for Penn National Gaming; and Bobby Soper, president/CEO of Mohegan Sun at Pocono Downs.
Posted: March 23, 2011

What to do with Philadelphia's second casino license? That issue permeated every panel discussion at this week's Pennsylvania Gaming Congress.

Tuesday, at least four Wall Street analysts reached a similar conclusion: that the state Gaming Control Board should hold off on awarding any additional licenses, including the one to build a second downtown casino, which remains tied up in court.

"The prudent thing to do is to put a moratorium on gaming expansion right now," Andrew Zarnett, of Deutsche Bank A.G., said on the final day of the two-day Gaming Congress at the Loews Philadelphia Hotel. "Maybe what happened with Foxwoods is a blessing."

Delaying new licenses would "allow existing operators [time] to invest in their properties," Zarnett said, and develop hotels, restaurants, and entertainment venues.

In 2004, the Race Horse Development and Gaming Act legalized slot machines, allowing 14 casinos to operate in the state. In January 2010, then-Gov. Ed Rendell and the legislature amended the law to allow casinos to add table games.

To date, 10 of the 14 casinos are up and running. Among the unopened facilities is the one proposed under the recently revoked Foxwoods license in the city. The others are a racetrack license sought by a firm that wanted to locate a casino in Lawrence County, in the western part of the state, but that has since faced bankruptcy; a resort casino licensed to the Valley Forge Convention Center; and a second resort license expected to be awarded by the gaming board soon.

Southeastern Pennsylvania is home to three of the 10 casinos: market-leading Parx in Bensalem; Harrah's Chester Casino & Racetrack in Delaware County; and SugarHouse Casino on the Penn's Landing waterfront.

And the region will soon host a fourth. Earlier this month, a state Supreme Court ruling allowed a local investor group led by real estate titan Ira Lubert to open its casino at the Valley Forge Convention Center in King of Prussia. The group is working with the gaming board on a development timetable.

Fierce competition among casinos has not been lost on their operators, especially during a still-slumping economy, some noted during a panel discussion Tuesday.

"We don't see that the recession is over," said John Finamore, senior vice president of regional operations at Penn National Gaming Inc., who oversees Hollywood Casino near Harrisburg. "Spend-per-visit just hasn't been back to the levels it was four or five years ago."

Finamore said his firm would oppose the second Philadelphia license moving to another part of the state where it would compete directly with Penn National Gaming's central Pennsylvania casino.

"It comes down to the $325 million investment we made to build Hollywood Casino under the original legislation," he said.

The Gaming Control Board revoked the license awarded to the group trying to develop the Foxwoods casino in South Philadelphia after repeated delays and difficulty in obtaining financing to build it. In January, the Foxwoods group appealed the board's decision, and the case is likely to be tied up in the courts for many months, if not years.

"The board should keep it downtown," analyst Christopher Jones, director of Telsey Advisory Group, said during a panel discussion called "The Candid View From Wall Street."

Six-month-old SugarHouse stands to gain the most by eliminating the head-to-head competition a second waterfront casino would have brought.

General manager Wendy Hamilton said the state needed to take a slow, methodical approach. "What's the bid you'll get for the license, and what is the gain for the state?" she asked. "Those are factors that should be considered."

Ron Baumann, senior vice president and general manager of Harrah's Chester Casino, had a different view. His parent company, Caesars Entertainment Inc., entered an agreement late last year with the Foxwoods investor group to partner in building the waterfront casino, but the gaming board rejected the plan.

"Obviously, we believe there is a market for it," he said. "But we're respectful of the board and will allow the board to make that decision."

Pennsylvania's 10 casinos grossed nearly $2.5 billion in revenue from slot machines and table games last year. The state received 55 percent, or about $1.3 billion, through a tax on gross gambling revenue.


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

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