Foxwoods partners appeal to regain their casino license

Posted: April 12, 2011

Partners in Foxwoods Casino filed an appeal Monday in Commonwealth Court seeking to reverse the revocation of their $50 million license to build a casino in South Philadelphia.

In their petition, the partners say Pennsylvania's Gaming Control Board denied them a chance to adequately argue their case when it refused to hold a full hearing and instead issued a summary judgment Dec. 16 to strip the project of its license, the first revocation since Pennsylvania legalized gambling in 2004.

The Foxwoods investors - called Philadelphia Entertainment & Development Partners (PEDP) - called that decision "an excessively draconian sanction."

The Gaming Control Board must reply by May 11, with a hearing expected in early June in Harrisburg.

The revocation of the Foxwoods license has sparked debate over whether Philadelphia needs a second license for a casino.

The Foxwoods partners were one of two groups to win a coveted gaming license for Philadelphia in 2006. The other recipient, SugarHouse Casino, opened the city's first casino on Delaware Avenue in Fishtown in September.

In the 241-page brief, the Foxwoods partners say the gaming board erred in ruling that they were no longer financially suitable to hold a license by citing their inability to meet a May 29, 2011, deadline to open.

They note that they had an agreement with Harrah's Entertainment to take over the financing, development, and management of a full-scale casino. In addition, the Foxwoods partners say, two banks had signed letters of commitment to lend $200 million toward construction of a riverfront casino on Columbus Boulevard in South Philadelphia.

The partners say that under the revised state gaming law, they could apply for a 17-month extension to finish the project by December 2012.

The partners accuse the board of making "a legally flawed" decision "without conducting an evidentiary hearing to resolve numerous disputed issues of material fact." They add that they spent more than four years and $160 million to develop the casino project.

From the start, the Foxwoods project was beset with problems, including stiff opposition from residents and elected officials, and difficulties in arranging financing in the wake of the 2008 financial downturn.

The Foxwoods Casino was originally set up as a partnership between the Mashantucket Pequot tribe and local investors, including the family charitable interests of developer Ron Rubin, Comcast-Spectacor chairman Ed Snider, and entrepreneur Lewis Katz. In the Harrah's deal, Rubin intended to play a lesser role in the project.

According to the appeal, since September 2009 the Foxwoods partners had signed "term sheets" with three groups interested in building and operating the casino. Las Vegas gaming mogul Steve Wynn abruptly dropped out of one arrangement, but the partners negotiated a replacement deal with Harrah's, now doing business as Caesars Entertainment.

F. Warren Jacoby, an attorney for the Foxwoods partners, would not disclose the identity of the third group interested in becoming a partner.

"PEDP understood, shared, and still shares the board's apparent frustration that its casino project could not be completed quickly, as both the board and PEDP had hoped and envisioned," the petition says. "But frustrated expectations do not justify erroneous, arbitrary, and capricious decisions."


Contact staff writer Jennifer Lin at 215-854-5659 or jlin@phillynews.com.

 

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