Philadelphia gets to keep its casino license

Posted: July 13, 2012

In a decision that surprised some lawmakers and gaming industry insiders, the Pennsylvania Gaming Control Board announced Wednesday that it would keep a second casino license that was designated for Philadelphia in the city.

The General Assembly had considered taking away the license and putting it out to a statewide bid. But while the legislation sailed through the House in May, it didn't have enough support in the Senate, where it stalled - prompting Board Chairman William H. Ryan Jr. to move forward Wednesday with the license-application process in Philadelphia.

There have been at least three publicly announced proposals for a second casino in Philadelphia, among them a plan by developer Bart Blatstein to create a casino-hotel complex on North Broad Street. The second license had been held by a group that wanted to build a Foxwoods Casino in South Philadelphia.

But it will be at least until 2014 that a new casino could be operating in the city because of application and vetting procedures by the gaming board.

Though the legislature has until November to renew efforts to move the license out of Philadelphia, Senate Majority Leader Dominic Pileggi (R., Delaware) said the votes weren't there to take up the bill in the fall.

"All of the existing licensees relied on the current law, enacted in 2004, in obtaining their licenses and building their facilities," Pileggi said Wednesday, referring to the 11 casinos statewide, including SugarHouse, which opened in 2010 in Philadelphia.

"No consensus exists on whether it is possible to amend the 2004 law without unfairly impacting the existing licensees," added Pileggi, who said it was not realistic to expect a consensus when the legislature returns in September.

Mayor Nutter said he had been pushing for the license to stay in Philadelphia "for some time" and was elated over the announcement.

"This is the right decision at the right time," Nutter said. "Keeping that license in Philadelphia has been our top priority."

The mayor said he did not have a preferred site or a favorite among the current proposals.

Under the Pennsylvania Race Horse Development and Gaming Act - the law that opened the state to casinos - the board is allowed to award up to five Category 2 slot-machine-operator licenses, with at least two of those being in Philadelphia.

Doug Harbach, a spokesman for the Gaming Control Board, said the primary reason the board decided on reopening applications was to follow the intent of the gambling law, which was "for the city to have two casinos."

The deadline for submitting an application is Nov. 15. Ryan said the board could take up to a year to deliberate and vet all applicants, meaning Philadelphia could not see a new casino until 2014 at the earliest.

"There will be a thorough background investigation of all applicants and public vetting of all proposed projects," Ryan said in a statement. "Most importantly, this board will come to Philadelphia and listen to comments both in support of and against each application."

A study by the state House Gaming Oversight Committee on the economic impact of a second license in Philadelphia estimated that a second casino could generate between $144 million and $177 million in annual casino revenue; between $150 million and $170 million from one-time, indirect construction spending; and from 500 to 600 construction jobs.

Initial estimates showed that two casinos in Philadelphia would result in nearly 2,000 casino jobs and 4,500 ancillary jobs.

SugarHouse, owned by HSP Gaming L.P., won the first city slots license in December 2006. It opened Sept. 23, 2010, on the Delaware waterfront and has hired more than 1,500 employees. It has consistently ranked in the top four in table-games revenue among the state's 11 casinos, and in the bottom tier in slots revenue.

SugarHouse declined to comment on the board's decision, which would essentially allow for a direct city competitor. The casino now vies for customers against Parx in Bensalem, Harrah's in Chester, and Valley Forge Casino Resort.

Casino-Free Philadelphia said it was disappointed in the board's decision. The anti-casino group released a report last year showing that city residents lost 10 times the amount of money at SugarHouse than the city gained from its share of casino revenue during SugarHouse's first year in business.

"A second casino would be no less predatory than SugarHouse," said Dan Hajdo, board member of Casino-Free Philadelphia. "Casinos profit off people suffering from gambling addiction. Rather then another application process, the Pennsylvania Gaming Control Board needs to step up and provide real protection from the practices that create and stoke gambling addiction."

The winner of the second city license would be able to operate up to 5,000 slot machines and 250 table games, after paying one-time fees to the state of $50 million for the slots license, and $16.5 million for a table-games license.

Among the known developers interested in building the second casino is Blatstein, who said he would like to turn the recently vacated longtime home of The Inquirer and surrounding property into a $500 million casino, hotel, and entertainment complex.

Others who have expressed interest in a casino include Parkway Corp. president Robert Zuritsky and national real estate developer R. Donahue Peebles.

Blatstein declined to comment on the board's decision, but City Council President Darrell L. Clarke touted the project Wednesday.

Clarke, an advocate both behind the scenes and publicly for keeping the second license in the city, noted that the Blatstein project sat not far from the expanded Convention Center.

"Conceptually, I can be supportive of that particular location," said Clarke, whose Fifth District includes the Blatstein property.

The political and legal saga of the city's second casino license has lasted for years. It was awarded in 2006 to Philadelphia Entertainment & Development Partners L.P., which planned to open a Foxwoods Casino in South Philadelphia.

The investor group behind the Foxwoods casino included businessman Lewis Katz, Center City developer Ron Rubin, and Comcast-Spectacor chairman Edward M. Snider. Katz is part of a local group that in April bought Philadelphia Media Network Inc., parent of The Inquirer, Daily News, and Philly.com.

The gaming board revoked the Foxwoods license in December 2010 after repeated delays to build the casino. Court appeals on the license revocation ended in March.

Clarke said he hoped the neighborhood fights that erupted around the Foxwoods site could be avoided this time around.

"I think the most important part of the selection process is ensuring that everybody has their say," he said.

Zuritsky said he "was not looking to be in the casino business," but wanted to sell land that Parkway owns to a casino developer. He would not disclose the location.

"I think it's good news for the city," Zuritsky said. "There's been extreme uncertainty whether it was going to go out to bid, or whether Philly was going to get an exclusive shot at it."

Peebles, who has been listed by Forbes magazine as No. 10 among the wealthiest black Americans, said he was in Philadelphia recently to narrow down sites for a casino, including locations along the waterfront, in Old City, and in Northern Liberties. He said he had spoken with architects and has a financing partner.

"We're in, and we are going to submit an application for the license," the New York-based Peebles said. "We're very excited about it."


Contact Suzette Parmley

at 215-854-2594 or sparmley@phillynews.com.

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