Phila. questions plan to give it a stake in casino

The Hollywood Casino Philadelphia as proposed by Penn National, in which some revenue would flow to the city.
The Hollywood Casino Philadelphia as proposed by Penn National, in which some revenue would flow to the city.
Posted: November 19, 2012

On paper, it looks altruistic enough: Build a South Philadelphia casino through a public-private partnership and earmark two-thirds of the profits to benefit city schools and pensioners.

That's the premise behind the proposed Hollywood Casino Philadelphia at the stadium complex, one of six projects vying for the second and final city gaming license.

The problem, and possibly a big one: City officials, namely Mayor Nutter, were never dialed into the plan.

The unconventional proposal - crafted by gambling powerhouse Penn National Gaming Inc. and Democratic U.S. Rep. Bob Brady - would allow Penn National a one-third stake in a casino to be built at the South Philadelphia Turf Club at 700 Packer Ave.; two-thirds of the profits would go to the Philadelphia School District and the city's pension fund via a nonprofit.

City officials say they first learned of the plan late Thursday, from media reports about the six groups submitting bids for the license to the Pennsylvania Gaming Control Board. And they say the plan is rife with legal issues.

In a letter sent Friday to Frank T. Donaghue, vice president of regulatory affairs and chief compliance officer at Penn National, City Solicitor Shelley R. Smith wrote: "While we are unable to discern with any certainty the precise ownership structure supporting your application to the gaming board, the many problems with your proposal have emerged with remarkable clarity."

Smith noted that the land at 300 Packer Ave. Penn National is considering as an alternative site "would not be considered for development as a gaming venue without an appropriate open, public-acquisition process."

Second, she wrote, the School District and city pension fund have not agreed to participate. Finally, and not least important, she said, "the city is legally prohibited from taking an equity interest in a casino. The Home Rule Act explicitly provides that."

Alan Greenberger, deputy mayor for economic development, sent a similar letter outlining the legal issues to R. Douglas Sherman, chief counsel to the Gaming Control Board.

Brady was undeterred.

"My role is to get more money to the city I love," he said. "Why give it to more millionaires to buy jets? Give the profit to the city's School District to buy more books, and to pensioners."

He said Penn National would establish a nonprofit and turn money over to the city that way.

As proposed, Hollywood Casino Philadelphia would offer 2,050 slot machines, 66 live table games, and a 15-table poker room, plus a 3,500-space parking garage, restaurants, and a 180-seat entertainment lounge. Plans for a second-phase expansion would add a 500-room hotel and other amenities.

The state gaming board will spend the next several months reviewing documents from the six license applicants. The five others are: gaming mogul Steve Wynn; developer Bart Blatstein; a partnership between Baltimore-based Cordish Cos. and Greenwood Gaming & Entertainment Inc., owner of Parx; Market East Associates; and PHL Local Gaming L.L.C., which represents the interests of Joseph G. Procacci, who owns the largest tomato supplier on the East Coast.

Of the Hollywood Casino Philadelphia proposal, gaming board spokesman Doug Harbach said Friday: "Ultimately, the board may need to decide whether the structure is permitted or not, and thus, it would be improper for staff to offer an opinion on this."

Penn National has said that if it prevailed, it would consider moving its casino to the larger Packer Avenue site, the 27-acre former location of the Food Distribution Center now owned by the Philadelphia Industrial Development Corp.

Under the 2004 law permitting casino gambling in Pennsylvania, Penn National may own no more than one-third of the proposed South Philadelphia casino, given its ownership of the Hollywood Casino at Penn National Race Course near Harrisburg.

Penn National chairman and CEO Peter Carlino said, "We plan to move quickly to develop this facility using funds from our existing operations."

Said Brady: "I think it's unique because the city benefits tremendously from it. You go from $7 million in revenue to the city from a casino like SugarHouse, to $40 million to $100 million a year with one like this."


Contact Suzette Parmley

at 215-854-2855 or sparmley@phillynews.com.

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