Disputed casino license gets closer to market

Gaming board says it prevailed in court challenges, but process awaits lawmakers

Brent Burkey//May 11, 2012

Disputed casino license gets closer to market

Gaming board says it prevailed in court challenges, but process awaits lawmakers

Brent Burkey//May 11, 2012

The state Supreme Court on March 30 said it would not hear arguments from developers of the so-called Foxwoods casino site following the Pennsylvania Gaming Control Board’s decision to revoke its license in December 2010, according to the board.

The state’s Commonwealth Court previously upheld the board’s decision to take the license back from Philadelphia Entertainment & Development Partners after the Foxwoods casino was not built, the board stated.

But the board said it’s prudent to give the legislative process more time before starting a new licensing process, said Richard McGarvey, board spokesman.

The board stated in formal remarks that it would be unreasonable to assure potential bidders that the process would not be altered after it begins in light of current lawmaker discussions on where the license could be awarded.

Developers could expend time and money to secure property and put together plans and financing to secure a license application, and in the meantime the framework could change in ways that would be detrimental to their efforts, according to the statement attributed to Chairman William H. Ryan Jr.

Since then, the state House of Representatives has passed outgoing state Rep. Curt Schroder’s House Bill 65 to help open competition statewide and award revoked licenses to the “highest responsible bidder,” according to statements from Schroder.

The bill still requires Senate approval and Gov. Tom Corbett’s signature.

The casino-enabling Act 71 of 2004 called for two Category 2 licenses that don’t require on-site horse racing to be held within Philadelphia. Foxwoods would have been the second.

The rationale for Schroder’s bill to allow statewide competition is that licenses were created to benefit Pennsylvanians, so officials should allow them to have their greatest impacts, according to a release from his office.

Schroder, R-Chester County and chairman of the House gaming oversight committee, left the legislature this month to take another job.

The tax revenue generated by gambling at licensed facilities brought in $1.28 billion from slots machines and $81.4 million from table games in the 2010-2011 fiscal year for state and local use.

A York County casino would generate the most new revenue for the state, which taxes gaming, compared with other potential sites, according to a report state Treasurer Rob McCord commissioned and released last year.

A York County site could add more than $150 million per year to revenue totals, according to the state treasurer’s office.

The Reading area came in about $30 million behind to take second place in the study that looked at creating new revenue instead of potentially siphoning away customers from other gambling sites in Pennsylvania, the treasurer’s office previously said.

By comparison, the Foxwoods site in Philadelphia was included in the study and would bring in about $90 million, according to the report. The SugarHouse Casino already is up and running in the city.

But the measure does not take into consideration the total economic benefit a casino could have if it were in a given area, said Bill Thomas, a spokesman for state Rep. Rosita Youngblood, D-Philadelphia.

Other taxes levied on a casino in Philadelphia would bring in more total revenue compared with elsewhere, and another facility in the city could lead to a redevelopment corridor bookended by it and SugarHouse, he said.

Two amendments proposed by Youngblood, Democratic chairwoman of the House

oversight committee, failed to become part of House Bill 65 when the House approved it, Thomas said.

One would have given Philadelphia development efforts first crack at the license and a second would have created a new Category 4 license in case an auction sent the Category 2 license away from the city, Thomas said.

This category does not exist today, but the license essentially would allow for a site similar to a Category 3 facility, which has a smaller footprint, but without the requirement to have gaming as part of a resort, he said.

Youngblood will continue her effort by talking with state Senate colleagues to help make sure Philadelphia gets the benefits of gaming it was promised in 2004, Thomas said.

Meanwhile, the state is monitoring gaming developments in neighboring Maryland and Ohio for potential revenue impacts, McGarvey said.

Ohio facilities near the Pennsylvania border are about to come online and the state is watching possible effects there, he said.

Maryland already has gaming, including at a casino near Havre de Grace, but it does not appear to be affecting revenue numbers in Pennsylvania at this time, McGarvey said.

The York County Economic Alliance remains interested in having a conversation about whether a casino effort could be right for York County, said Darrell Auterson, the group’s president and CEO.

But Auterson said he is surprised he has not received any phone calls from potential developers despite the McCord report and the months that have passed since the treasurer released it.

Maybe the issue has flown below the radar screen or developers might have a different take, he said. Or maybe interested parties are just holding their thoughts close to the vest, Auterson said.

State Rep. Seth Grove, R-York County, voted for House Bill 65 and said it has important implications for the state.

A share of gaming tax revenue goes to property tax relief, so it’s important to help bring a facility with the license to fruition, he said.

The auction process also could be a precursor for privatizing functions of the state’s liquor store system, Grove said.

But whether York County could get the license in the end is another matter considering gaming in Maryland, he said.

“That’s going to be a private sector decision,” Grove said.

Where’s the money?

A report commissioned by state Treasurer Rob McCord and released last year analyzes alternative casino sites in terms of net gaming tax revenue they could generate. The greater midstate fared well in the top five. The disputed Foxwoods site in Philadelphia was ninth.

Alternatives: Net gain to Pa. gaming revenues (in millions)

South York: $153.99

Reading: $124.75

Valley View (western Pennsylvania): $122.65 (Valley View’s revenues could be significantly lower depending on gaming in Ohio.)

Chambersburg: $106.59

Western Philadelphia/City Line: $98.43

Source: State Treasurer Rob McCord’s office