Casino News Today

The tight state-imposed deadline for opening Foxwoods Casino by May 29, 2011, has made raising money “more problematic” and prompted the project’s partners to consider putting up a temporary structure before building a permanent gaming hall, an attorney for Foxwoods said yesterday.In a letter to the Pennsylvania Gaming Control Board on Friday, Foxwoods had disclosed the possibility of a temporary casino along the Delaware River in South Philadelphia, citing “unanticipated issues.” It did not elaborate.

But attorney Stephen A. Cozen, in a telephone interview yesterday, explained that potential lenders have been concerned about the time constraints on the project, which adds another element of risk to the deal.

“No one wants to take the chance of going up against the time limit without options,” Cozen said. “They may feel it’s safer to go with a temporary building than an interim one.”

A temporary casino could be erected quickly, then torn down and replaced. A racetrack in Western Pennsylvania, the Meadows, opened a slots parlor in a structure made of metal framing and a material sheath before moving into a permanent structure this year.

In contrast, an interim facility would serve as the first phase of permanent construction. The developers of SugarHouse Casino broke ground this month for just such a hall on Delaware Avenue in Fishtown-Northern Liberties.

Cozen said the Foxwoods investors - 13 mostly local entrepreneurs and sports figures, plus the Mashantucket Pequot tribe of Connecticut - have until the end of November to decide which way to go. However, “the decision, I think, will be made long prior to that,” he said.

If they pursue a temporary facility, Cozen said, he expected a quick handling of the matter by the Pennsylvania Gaming Control Board.

“They’d be more than happy to get us up and running as quickly as possible, if that’s what we need to do,” he said.

Foxwoods has until Dec. 1 to give state regulators specifics on the financing of a slots parlor for 1,500 machines. The partners have not disclosed how much money they will need to raise.

A temporary structure could be put up on the 16.5-acre site on Columbus Boulevard in South Philadelphia, without interfering with the construction of a permanent casino, Cozen said. “You can do both.”

A spokesman for Mayor Nutter said a temporary casino along the Delaware would present the same problems as a permanent structure.

“We have long had concerns about a Foxwoods casino on the waterfront, and these concerns would certainly not be alleviated by the proposal of a temporary structure for which traffic, congestion, and parking would remain significant challenges,” said Luke Butler, a spokesman for Nutter.

Butler said the mayor has asked for, but not received, a copy of the letter Foxwoods sent to the state gaming board. The mayor had reached out to Foxwoods “on a number of occasions,” most recently last week, he said, but “we haven’t heard back from them.”

Since 2006, when it secured one of two gaming licenses in the city, the Foxwoods project has bounced from its original waterfront site to Center City and, in August, back to the waterfront by order of the gaming board.

If Foxwoods wants to build a temporary casino, it will have to petition the gaming board, said Douglas Harbach, a spokesman for the agency.

“All parties involved know the clock is ticking and progress in any direction needs to continue to move forward briskly,” he said.

In addition to the Meadows Racetrack & Casino in Washington County, two other Pennsylvania casinos have utilized temporary facilities, Harbach said.

The Mohegan Sun at Pocono Downs in Wilkes Barre also had a temporary casino in the grandstands, before adding a second, permanent structure in July 2008.

PhiladelphiaPark, meanwhile, opened a temporary site in its grandstand area in 2006 and will unveil a new full-scale facility in December, Harbach said.

The main local investors behind the Foxwoods project are developer Ron Rubin, New Jersey entrepreneur Lewis Katz, and Comcast-Spectacor chairman Ed Snider. They have assumed a more dominant role in steering the casino project in the wake of financial difficulties for the project’s minority partner, the Mashantucket Pequot.

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A Wichita-based investment group including former Mayor Bob Knight on Monday applied to build and manage a $225æmillion casino in the southeast corner of the state.

Investors envision a casino that would draw customers from a four-state region, Knight said.

The first phase would include a casino with 900 slot machines and 30 gaming tables, a 30-seat coffee and pastry shop, a 225-seat buffet, a lounge and retail space, said Keith Kocher, the Kansas Lottery’s director of gaming facilities.

The facility — which would be called Ozark Trail Casino — would also include a hotel, Knight said, though he couldn’t provide details.

If the state approves the proposal, Wichita-based Ozark Trail Gaming LLC would build the casino in Cherokee County at U.S. 166/400, one mile north of I-44, the Lottery officials said.

The location makes economic sense for a number of reasons, said Knight, a former longtime Wichita mayor and former Kansas commerce secretary who has been involved in other casino proposals.

The proposed site is essentially adjacent to Downstream Casino Resort, just across the border in Oklahoma, Knight said.

Although that could be seen as competition for the Kansas casino, the investors think it would help draw customers to their facility, Knight said.

“They’re going to draw a lot of people. I think we’re going to draw a lot of people,” he said.

Last year, another group — Penn Hollywood Kansas — withdrew its application to build a casino in southeast Kansas in part because of anticipated competition with Downstream, said Kocher, the Lottery official.

The state had set a Monday deadline for investors to submit proposals to build a casino in southeast Kansas. Ozark Trail Gaming was the only one to meet the deadline.

Knight said he and the other investors are confident that their Cherokee County proposal would offer a “world-class casino” that would co-exist with Downstream and prosper because it is on the way to Branson, Mo.

They are betting on drawing customers from a four-state market including Springfield and Joplin, Mo.; Fayetteville, Ark.; Tulsa; and Wichita, Knight said. The investment would pay off for the state, southeastern Kansas and for the investment group, he said.

Although the numbers could change, he said, the investors conservatively estimate that the casino would bring in at least $100æmillion in its first full year. The investors would also pay a $25æmillion “privilege fee” to the state.

According to Lottery officials, the managing member of the investment group is Wichita attorney Henry Blase, also listed as trustee of the Schultz Family Trust; Knight; and Wichita investment banker Theron Froggatte. Knight said he expects the investment group will grow.

The Lottery has 90 days to review the application and negotiate a contract with the applicant. If a contract is worked out, the Lottery Gaming Facility Review Board would consider it.

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Would-be Ohio casino kingpin Dan Gilbert was confronted yesterday over his 1981 arrest for running an illegal bookmaking operation as a college student.During a Cleveland debate over state Issue 3, which would permit four casinos in Ohio cities, including two to be owned by Gilbert, a man in the audience asked Gilbert whether his 1981 arrest should disqualify him from being in the casino business.

Gilbert minimized the arrest, noting that he was an 18-year-old freshman at Michigan State University at the time and that no money changed hands. He said police dropped the case.

Gilbert’s interrogator asked what sort of crimes should disqualify someone from operating a casino in Ohio. (Issue 3 doesn’t say.)

“What crimes?” Gilbert mused. “Probably murder, rape, extortion of funds, things like that. Good question, though.” 

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Backers of Issue 3, which would allow casinos in Cleveland, Columbus, Cincinnati and Toledo, are confident that Ohio voters are ready to embrace gambling.

Their odds improved a bit last month when the Ohio Supreme Court ruled that Gov. Ted Strickland can’t add slot machines right now to Ohio’s horse racing tracks.

That decision sucked away the financial incentive some track owners might have had to fight for all of the potential gambling dollars and oppose Issue 3, leaving Cleveland businessman Jeff Jacobs largely alone in bankrolling the opposition, known as TruthPAC.

This battle, of course, is between gamblers.

Jacobs owns MTR Gaming, which operates the Scioto Downs racetrack near Columbus, which would profit from slots, and Mountaineer Casino in West Virginia, which would face competition from Ohio casinos.

Issue 3 sponsors get their muscle from Penn National Gaming of Pennsylvania, which sank more than $35 million into defeating a 2008 ballot initiative to place a single casino in Southwest Ohio, which would have competed with its Argosy Casino in Indiana.

Even if he had more stones, Jacobs would have a tough time killing the Issue 3 Goliath because it has so much money. (Deep-pocketed Dan Gilbert, majority owner of the Cleveland Cavaliers, is Penn’s partner.)

One only needs to turn on the television, open the mailbox or answer the phone to understand that Issue 3 is doubling down with an aggressive campaign selling casinos as a jobs panacea. And the campaign is a full-employment act for consultants and lobbyists too numerous to mention in this short column.

Issue 3 doesn’t have to detail its spending in finance reports just yet and campaign spokesman Bob Tenenbaum said he won’t talk about “mechanics of the campaign.” But a report titled “2009 Ohio Casino Gaming” obtained by The Plain Dealer offers some insight into those mechanics.

The report, authored in part by Columbus consultant Rex Elsass, says winning a casino campaign would require $45 million to $50 million.

That’s more than Barack Obama and John McCain spent in Ohio during last year’s presidential campaign and more than the 2006 U.S. Senate race cost.

Elsass, who heads the Strategy Group for Media, wrote the report in January in the hopes of becoming the lead consultant on the campaign. The report, which was shown to gambling interests including Gilbert, also mentions that Elsass’ team includes My Ohio Entertainment, the group behind the 2008 single-casino proposal. (Controversial Minnesota casino builder Lyle Berman, chief executive of Lakes Entertainment, was a part of My Ohio Entertainment.)

Elsass lost out on the big score to run this year’s casino campaign. That honor went to former Ohio GOP Executive Director Thomas Whatman’s Strategic Public Partners lobbying firm, which represents Penn.

But this being the land of strange bedfellows, Elsass, also a former GOP executive director, is handling the lucrative media-buying portion of the Issue 3 campaign.

Elsass’ January report called for spending a whopping $27 million just on television and radio, so it’s likely the Issue 3 campaign has a similar goal. The plan also budgeted $250,000 for an economic study boasting of the job benefits of casinos. And the plan budgeted $5 million for direct mail and millions more for voter identification and outreach.

It’s paying off, so far. A recent Ohio newspaper poll shows that a majority of Ohio voters support Issue 3.

But the consultants know from history that the November ballot issue will mark the fifth time in two decades that Ohio voters have weighed in. And they know that proposals that have led in opinion polls have gone on to fail on Election Day. That’s why Issue 3 backers are keeping their chips stacked high, ready to go all in.

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