Differing visions offered for 2d Phila. casino

Karen Bailey, vice president for public affairs at Penn National Gaming, spoke about her company's vision for a casino in South Philadelphia. RON TARVER / Staff Photographer
Karen Bailey, vice president for public affairs at Penn National Gaming, spoke about her company's vision for a casino in South Philadelphia. RON TARVER / Staff Photographer
Posted: January 30, 2014

Penn National Gaming Inc. and developer Bart Blatstein's Tower Entertainment L.L.C. provided starkly different visions of what a second Philadelphia casino could offer at hearings Tuesday.

Penn National, one of the nation's largest casino operators, presented a relatively no-frills gambling hall whose great advantage was convenience for customers arriving by car.

Representatives for Blatstein, whose best-known project is the Piazza at Schmidts, touted their proposal as "an integrated urban entertainment destination" that would attract millions of visits from people who don't go to existing casinos in the region because they don't suit their style.

Casting a shadow over the Pennsylvania Gaming Control Board hearings at the Convention Center in Center City was a comment by Commissioner Gregory C. Fajt that market saturation is the "elephant in the room."

After six straight years of strong growth, Pennsylvania's gambling revenue fell 1.4 percent in 2013, to $3.11 billion. Locally, combined revenue at Parx, SugarHouse, and Harrah's Philadelphia fell 4 percent, to $1.06 billion.

"It's something I'm personally concerned about," Fajt, speaking during Penn National's hearing Tuesday morning, said of the notion that the Philadelphia market can't absorb another casino.

"We need to offer something more than a casino," he said.

Penn National officials skirted a question from Fajt about the "more" its Hollywood Casino, proposed for Seventh Street and Packer Avenue in South Philadelphia, would offer. Instead, they focused on the power of its brand to bring in new gamblers from South Jersey, as well as their location's convenience.

Penn National surveys its customers all over the country about why they gamble and where they gamble, and in "every market across the country, what comes back is convenience," Jay Snowden, Penn National's chief operating officer, told Fajt.

Later, when gaming board Chairman William H. Ryan Jr. asked why Penn National was not planning to build its entire project at once, including a second phase with a 500-room hotel and a bigger parking garage, a Penn National official gave a sobering response.

"We don't want to end up like Revel," answered Timothy Wilmott, Penn National's chief executive, referring to the $2 billion Atlantic City casino that declared bankruptcy before its first anniversary.

"We believe that half a billion dollars is the sweet spot for this market," Wilmott told Ryan.

The price tag for Phase One of the Penn National proposal is $480 million.

Wilmott said Phase Two would happen if it made sense financially. It's possible, Wilmott said, that it might not materialize for a long time.

"If at all," Ryan said.

Wilmott agreed.

Blatstein, by contrast, plans to borrow $600 million from investment banks and other private investment firms to build the Provence Resort & Casino all at once. Blatstein's contribution is $100 million in property he owns.

In having his architect, Paul Steelman, speak at Tuesday's hearing about the design of Provence, Blatstein drew a significant contrast to Penn National, whose Hollywood Casino brand is already used at 14 other locations, with certain standard features and restaurants.

The Provence would feature dining, entertainment, and a 125-room hotel. The site would extend from Broad Street to 17th Street on Callowhill Street. Steelman said the Provence casino would be "stratified" to appeal to different types of potential customers.

"Not all gamblers are the same," Steelman said.

Blatstein continued that theme later in the hearing Tuesday afternoon. "I believe strongly that the bulk of the market is being missed," he said.

Even so, Blatstein's consultants said that half - or $220 million - of the $439 million in gambling revenue projected for the second year of Provence's operations would be cannibalized from existing casinos, with the biggest chunk coming from SugarHouse, the closest.

The new revenue, $219 million, would be $103 million more than other applicants, said Scott Fisher, president of Leisure Dynamics Research L.L.C.

Penn National's consultant, Steve Gallaway of Gaming Market Advisors, estimated that 40 percent of its revenue would come from existing casinos.

SugarHouse would take the biggest hit, losing $52 million in revenue to Hollywood. The projected revenue losses would be $32 million at Harrah's Philadelphia in Chester and $27 million at Parx Casino in Bensalem, Gallaway said.

A recurring issue for Provence was parking. Plans include the construction of 2,400 parking spaces. Consultants also counted 2,500 parking spots available at scattered parking lots within a five-minute walk from the project.

That didn't convince Fajt. "I don't share your optimism that you have enough parking," he said.

The last word went to Provence's neighborhood opponents, who showed a video of the congestion near the Vine Street Expressway between Broad and 16th Streets.

It wasn't a pretty picture in the video taken from the front seat of a car.

"This is the most congested part of the city," said a traffic consultant for the opponents, Frank Tavani.


> Inquirer.com

Visit Inquirer.com for updates, blog posts, and live tweets from Harold Brubaker and Jennifer Lin as the casino hearings continue Wednesday.


hbrubaker@phillynews.com

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