Wednesday, October 25, 2006

PA approves houses slots bill

HARRISBURG - The state House of Representatives yesterday prolonged its squabble with the Senate over a bill intended to strengthen regulation and enforcement of Pennsylvania's slot-machine industry, approving changes and sending it back to the Senate.
The unanimous vote kept the bill from going to Gov. Rendell. It also continued a volley between chambers that has lasted for much of the last year over how to fix problems identified by critics of the state's two-year-old gambling law, with one chamber often dropping pet provisions written by the other.
House Majority Leader Sam Smith (R., Jefferson) said he sympathized with colleagues who were dissatisfied with the Senate's version, but warned that further revisions could scuttle passage of a final bill before the legislative session ends Nov. 30.
"There's a limit to how many times we can bounce this ball back and forth across this building," Smith said. "If we amend this bill, this bill then will be sitting in the Senate in the lame-duck session, and at that juncture, all bets are off... as to whether or not we will actually be able to get a very solid reform bill in front of this governor this session."
Senate leaders were reviewing their options and expected to announce a plan today, said Erik Arneson, chief of staff to Senate Majority Leader David J. Brightbill (R., Lebanon).
The Senate passed its version of the gambling-law revisions during a marathon session that stretched from Monday to early yesterday as members rushed to complete major business and adjourned until after the Nov. 7 election. With just two weeks remaining, legislators were eager to return to their districts to campaign in a volatile election year.
Both houses have agreed to changes that would require the state Attorney General's Office to form a gambling-crimes unit, wipe out a requirement that slot-machine manufacturers sell through an in-state distributor, and delete language in the current law that allows public officials to directly own up to 1 percent of a gambling interest.
The House did not change a provision of the Senate bill that would force casino developers to follow local zoning procedures, including in Philadelphia, and allow zoning appeals to go to the state Supreme Court. In a bill passed in March, the House had introduced a clause eliminating local zoning control for casinos in Philadelphia.
But the two chambers have disagreed over many other provisions. The version the House approved includes provisions not endorsed by the Senate, such as banning campaign contributions from applicants for horse racetrack licenses and requiring casinos to comply with local ordinances banning indoor smoking.
The House version also allows the legislature, rather than the state, to decide whether to transfer state-owned riverbed property rights to casinos.
The law, which was passed in July 2004, legalized up to 61,000 slot machines at 14 sites.

Harrahs - Making the $$$

LAS VEGAS -- Harrah's Entertainment Inc. said Wednesday its third-quarter profit rose 5 percent as an incentives program drove players to its properties in Las Vegas, but missed analysts' expectations because of poor performance in Atlantic City.

Net income at the world's largest casino company climbed to $177.2 million, or 95 cents per share, from $169 million, or 91 cents per share, a year ago. Earnings from continuing operations rose 4 percent to $178.3 million, or 96 cents per share, from $171 million, or 92 cents per share. Revenue for the quarter increased 11 percent to $2.51 billion. On average, analysts were expecting earnings of 99 cents per share on sales of $2.41 billion, according to a poll by Thomson Financial.

A three-day government shutdown of casinos in Atlantic City in July and a subsequent move by competitors to ramp up marketing drives caught Harrah's off guard, chief executive Gary Loveman told analysts in a conference call. "Clearly, Atlantic City was our Achilles heel this past quarter," he said. "We believe our thorough review will enable us to regain lost ground." The company did not make any comments about a buyout bid it announced this month by two private equity firms, Texas Pacific Group and Apollo Management, other than to say a special committee of non-management directors continued to appraise the offer.

Harrah's said it was offered $15.05 billion, but the bid was reportedly raised to more than $15.5 billion after Harrah's rejected the original offer. The transaction would be the biggest deal ever for a casino operator and the fifth-largest leveraged buyout in history. Its stock rose 55 cents to $74.50 on the New York Stock Exchange in late morning trading Wednesday. Revenue at properties open at least a year climbed 8 percent. The comparison includes properties obtained in the Caesars Entertainment Inc. acquisition, but excludes sites closed for all or part of the periods due to hurricane damage sustained in last year's third quarter. Las Vegas resorts sales jumped 21 percent in the quarter to $812.4 million from $670.1 million, helped by higher visits by members of the Total Rewards customer-loyalty program and the World Series of Poker held at the Rio hotel-casino in July and August. A

tlantic City revenue edged down 0.3 percent to $560.2 million from $562.1 million.

Monday, October 23, 2006

The Zoning Battle Continues!

ZONING CONTROL FOR two local casinos has been a high-stakes game of political ping-pong paddled between Harrisburg powerhouses for more than two years.
As the game wears on, long and lofty serves are supplanted by short and vicious strokes.
Last month, the state Senate served up the issue again by passing a gambling reform bill and sending it to the state House.
House Speaker John Perzel last week returned that serve to the Senate with serious political backspin. State Sen. Vince Fumo quickly slapped back, leaving the ball in Perzel's court again today.
Here's a game breakdown:
PING - Fumo started the volley more than two years ago when his office crafted language for the original gambling law that took away local zoning control for 14 casino licenses statewide, including two in Philadelphia. Gov. Rendell was, and still is, concerned that local zoning boards could stall the opening of casinos.
PONG - That law was approved by the Senate and House and signed into law by Rendell in July 2004. But five months later, Rendell vetoed new legislation that would have allowed local appeals on casino zoning.
PING - The state Supreme Court swatted the original slots law back to the General Assembly in 2005, ruling that pre-emption of local zoning was unconstitutional.
PONG - "Gambling reform" quickly became a hot political issue as legislators in both houses crafted a myriad of bills to reshape the original law. Senate Bill 862 emerged last November as the leading candidate but did not address the zoning issue.
PING - Perzel in February had that legislation amended to put zoning control for Philadelphia's casinos in the hands of the state Gaming Control Board. Perzel said federal investigations of City Hall convinced him the city was too corrupt to handle the zoning. Sixteen state representatives from Philadelphia supported Perzel's measure while nine opposed it. Rendell said he wanted zoning pre-emption for casinos statewide, not just in Philadelphia.
PONG - Local community groups, including some that were initially slow to react to the possibility of casinos next door, seized the zoning issue as a rallying cry. They make that part of their protests, asking for e-mails to state representatives, calling for retention of zoning power. The bill has also been used as a political weapon. Allies of electricians union chief John Dougherty decried Fumo's role in the zoning pre-emption while not mentioning that it all started with Perzel.
PING- The Senate re-approved the reform bill in September, keeping the provision that takes zoning decisions away from Philadelphia, while adding several other measures, including a streamlining of how the state sells water rights. Four of the five applicants for two city casino licenses are located on the Delaware riverfront.
PONG - The House last week stripped out much of the language added by the Senate. One staffer jokingly said the bill had been "Fumo-gated." The Philadelphia delegation in the House, perhaps now aware of community opposition, voted 16-7 against the measure, which was sent back to the Senate.
PING - Fumo quickly responded, saying he had heard the cries of the community groups and would abandon the call to pre-empt local zoning when the Senate sends the bill back to the House today. Fumo plans to restore language making it easier to claim state water rights. This move puts the ball back into the House, where Perzel, a fan of pre-empting local zoning control, will make his next move with local community groups watching.
PONG?- Will the House change the wording of the bill yet again and return it to the Senate or pass it as currently written?

Monday, October 09, 2006

Fixing the Steel

If the slow death of Bethlehem Steel was tragedy, then the imminent slots-and-lofts redevelopment of its steelworks is farce.
For a few years, the abandoned acres surrounding the Bethlehem Steel plant in Bethlehem, just an hour north of Philadelphia, were the stuff of coffee-table nostalgia and regional despair. Today, a consortium of developers led by casino giant Las Vegas Sands plans to turn the former plant and 124 acres into a theme-park mix of stores, apartments, and a casino hotel. There are Disneyesque touches in the works, including a climbing wall, laser light show, and boat rides.
The Lehigh Valley is the fastest-growing region in Pennsylvania, and its proximity to New York and Philadelphia make it ripe for sprawl. The large gap between New Jersey's overheated housing market and the Lehigh Valley's still-modest costs mean it is a magnet for developers. The valley's average house price jumped 60 percent in the last five years, reaching $218,000 in the first half of 2006. Many new residents are well-off professionals who have pushed the region's average household income to more than $71,043, according to the Lehigh Valley Development Corp. The newly attractive demographics have yielded three proposals for "lifestyle centers," a euphemism for upscale malls.
Enter the Las Vegas Sands Corp. Known for its "Renaissance Venice"-theme casino on the Las Vegas Strip (with full-scale palace and working gondolas), the $25 billion casino giant revealed in 2005 that it would be the majority investor in the BethWorks plan. The fast-growing gambling company was proposing a $350 million slots parlor and convention center as the centerpiece of a revamped plan, now worth $879 million.
Thanks to revenue projections and the nearby New Jersey border, the Lehigh Valley is an odds-on favorite for one of two stand-alone slots licenses that Pennsylvania will award this year. And with recent support from the Bethlehem City Council, the Sands-led plan looks as though it has a serious chance.
But is a crowd of wealthy out-of-towners really what the community needs to keep it moving in the right direction? One Bethlehem developer envisioned his $30 million South Side loft renovation as a rental property, but as its first residents move in, more than three-quarters of its units have already sold as condos. His is one of many upscale projects under way in the old steelworkers' neighborhood. A victory for the BethWorks team would simply accelerate the high-end makeover already in progress and entomb the once-grand, gritty Bethlehem Steel in market-tested urban chic.

Thursday, October 05, 2006

Bethlehem council approves Bethlehem Steel plant as casino site

In another marathon meeting punctuated by some laughs, applause and the gavel, Bethlehem City Council signed off on zoning changes that would open up a portion of the old Bethlehem Steel plant to gambling should the state award a slots license for the site.

Council also voted 5-2 on changes that would restrict nuisance businesses — such as adult bookstores, massage parlors and pawns shops — from proliferating near a casino or each other.

''I think it will be a success over the next 10 years,'' Councilman Robert Donchez said. ''And hopefully we can have something that will benefit all of us.''

The 11:45 p.m. votes came during a four-hour meeting that drew more than 150 people. While more people spoke against gambling, the turnout was noteworthy for the people wearing ''BUILD BETHWORKS NOW'' buttons and T-shirts. Fourteen speakers rallied behind how a casino could jump-start an $879 million entertainment district of a museum, shops and restaurants wrapped around a collection of restored Steel buildings.

At the last meeting, when council approved the zoning changes on first reading, 55 of the 58 speakers opposed gambling in the Christmas City. They argued it would breed crime, cause addictions to spiral and ruin the city's quaint character. Some quoted the Bible; others sang hymns outside.

Meanwhile, several community leaders took the podium to restate their support of the project proposed by a team of developers — including the Las Vegas Sands of Nevada. ArtsQuest President Jeffrey Parks referenced how Melbourne, Australia, is an example of how a casino can anchor a cultural and retail project.

Tuesday's vote doesn't close the door on the gambling debate in Bethlehem which started more than a year ago when two councilman proposed banning casinos. That ban failed and Leeson and Mowrer have come up with a proposal to ban table games.

Leeson and Mowrer had floated the idea as an amendment to the zoning changes council had considered Tuesday, a substantial change which would have sent the zoning amendments back to planning. But the councilmen withdrew the amendment change and may pursue the restriction in a separate proposal. If pursued, the proposal would require more public hearings.

The Pennsylvania Gaming Control Board is expected to approve the slots licenses for stand-alone casinos Dec. 20.

BethWorks Sands Gaming is one of six players competing for two slots licenses the state will approve for stand-alone casinos.

In Allentown, Aztar Corp. hopes to build a Tropicana hotel and casino.

Wednesday, October 04, 2006

Sugarhouse hosts vendor forum

Today, at the Hyatt hotel in Penn’s Landing, Sugarhouse, one of the key players for a casino in Philadelphia hosted a vendor forum. If granted a license on December 20th, 2006, Sugarhouse will build its casino at the old Jack Frost refinery, very close to Dave and Buster’s in Penn’s Landing.

Present at the forum were several important people:

Mr. Neil Bluhm – Chairman

Mr. Greg Carlin – CEO

Mr. Jerry L. Johnson – Chairman of Radnor Trust

Mr. John Donnelly – counsel

Mr. Dan Keating - Chairman and CEO of the Keating Group

Ms. Darlene Jenkins – MSDC of PA, NJ, and DE

Ms. Delilah Winder – African Am. Chamber of Commerece

Ms. Gerri Swift – Womens Business Development Center

Mr. Bluhm made comments indicating that there could be an interim casino in 2008 if Sugarhouse is granted a license. Also – Mr. Bluhm reiterated his commitment to the Sugarhouse diversity program.

Mr. Carlin discussed the diversity plan of Sugarhouse, how the casino would not affect traffic due to its location, talked about the selection of vendors with strong indicators that minority vendors would be welcome, and the 22 acres that Sugarhouse has purchased for the casino site.

Mr. Johnson discussed the fact that Sugarhouse will be updating its website, how committed Sugarhouse is to diversity and attracting minority business from the area, and reaffirmed Sugarhouse’s commitment to the diversity plan.

Mr. Donnelly spoke about the diversity program, the need for vendors to become certified, the business plan of Sugarhouse which at this time does not use national contracts for vendors and suppliers, and how Sugarhouse operates two casinos in Ontario.

Mr. Keating discussed the site (2.2 million square feet, a 3000 car parking garage), the fact that they are currently working on the design side with schematics; no materials yet, the engagement of an architectural engineering group in the project, and some of his role as a partner/builder.

Ms. Jenkins elated to the raising of the bar and standards that Sugarhouse is currently involved in, how minority vendors need to register and be counted, how Sugarhouse is working for the area and community, and bringing suppliers into this project.

Ms. Winder, owner of Bluezette Restaurant in Philadelphia, discussed the Sugarhouse commitment to the community, and there support of vendors and suppliers. She also reaffirmed Sugarhouse's commitment to the Philadephia community.

Ms. Swift discussed how Sugarhouse’s new model of diversity will help vendors by giving them access, the strict monitoring of contract that the Women’s Business Development Center engages in, and the importance of small businesses in the community.

Not only was the forum an excellent way to meet Sugarhouse’s team of executives, it brought together many vendors and suppliers in the area and reaffirmed Sugarhouse’s commitment to diversity in the Philadelphia area.

If granted a license in December, Sugarhouse will be committed to enhance the Philadelphia area with their strong commitment to community improvement and civic leadership.

Monday, October 02, 2006

Ban table games in Bethlehem?

A year after they proposed a ban on gambling in Bethlehem, City Councilmen Gordon Mowrer and Joseph Leeson Jr. want to prohibit table games, craps and roulette wheels if council designates a zone for a slots casino on the South Side.Though only slots are legal in the state, Mowrer and Leeson said council should consider their proposal to tack on more gambling restrictions before it votes on a zoning amendment to allow ''licensed gaming facilities'' at the old Bethlehem Steel plant.
Mowrer and Leeson argued that council needs the debate on table games because of the potential impact to the city in decades to come, but council President Michael Schweder sees it as a political move.''This is a transparent ploy to kill the [zoning amendment],'' Schweder said.Council, which voted 5-2 earlier this month to support a casino at the old plant, is scheduled Tuesday to take its final vote on the zoning amendment. Any changes to the amendment could delay the decision for months.''A majority of council indicates a willingness to support slot machines in the city of Bethlehem,'' Leeson said. ''The question becomes: Are we willing to take a stand on blackjack, roulette?…Do we see ourselves as a Las Vegas or Atlantic City-style gambling or just slot machines? I think it's a proper question to ask and a good discussion to have.''

A copy of Mowrer's and Leeson's proposal was not available Friday from the city clerk's office.The proposal follows the public debate over a proposal from developers — including the Las Vegas Sands of Nevada — to build a casino they say will jump-start redevelopment of the old plant into an $879 million entertainment district of museums and shops.The Sands is vying for one of two available licenses for a free-standing casino in the state. The project has ignited one of the most divisive debates in the city's history, prompting more than 700 people to turn out last year when council considered banning slot machines. The proposal failed 4-3.

Two weeks ago, a majority of council backed the zoning amendment to allow gambling in the industrial-redevelopment district, which covers a portion of the old plant. Hundreds showed up at that meeting, most asking council not to allow slots because of crime, addiction and other ill-effects gambling brings.But supporters, some who said they didn't show up because they thought the debate was over, have said Bethlehem is going to feel the ill-effects whether the casino is at the plant or five miles away in Allentown. If a casino is in the city, they argue that Bethlehem will get a host fee to deal with those social problems.It is unclear how Leeson's and Mowrer's proposal will play out Tuesday.Schweder said he still must decide whether it is germane to council's debate. He said such a major change would send the zoning amendment back to planning for months.

The Pennsylvania Gaming Control Board is expected to award slots licenses Dec. 20.''They could have brought up this a year ago,'' Schweder said. ''Any [additional] amendment would send this proposal back to the planning process.''Mayor John Callahan, a casino supporter, questioned whether Mowrer's and Leeson's proposal was even legal. State law, he said, would trump local ordinances.

But Mowrer argued that the city needs protection in place now in case the city doesn't like what slots bring to town.''Table games are illegal right now,'' Mowrer said. ''But who knows what will happen in the future? This would give us a chance to look at what slots have done here.''Besides the gaming use, other zoning changes council will consider Tuesday include restrictions to prevent nuisance businesses — such as massage parlors, adult-oriented bookshops and pawn shops — from proliferating near casinos or each other.

PA and gambling - whats next?

For years, legalizing casino gambling in Pennsylvania was a whispered political discussion, the subject of rumors. For at least six years, it has been an active political debate. It started with the state horse racing industry arguing that slots were necessary to reinvigorate farms and horse tracks. It became part of the last gubernatorial election and a priority during Gov. Ed Rendell's first year in office. Last week, the rumors became reality.

Act 71 of 2004 created the Pennsylvania Gaming Control Board and gave it a mission: License up to 14 slots casinos. Whatever you think about the badly flawed law (see the editorial below) and whether the ''racinos'' should have waited until it was fixed, a law was in place and the board had a job to do.However, it would be a mistake to ignore political realities regarding what the board did on Wednesday. The slots law has been controversial from its inception and it was challenged in court. Gov. Rendell made it the centerpiece of his promise to deliver property tax relief, especially to senior citizens. Last week, Republican gubernatorial candidate Lynn Swann attacked this promise with television commercials. There has been just as much partisan effort to delay slots operations from coming to fruition as there has been to get it done.In this context, Gaming Board Chairman Tad Decker said, ''We did it as fast as we could.'' And Gov. Rendell was able to called it a ''milestone'' that ''is a clear sign to all homeowners that property tax relief is on the way.''

How much that relief will be remains to be seen. Pocono Downs in Luzerne County was awarded the first license and will probably have the first slots operation producing revenue as early as the end of November. In all, the gaming board awarded five licenses to tracks and these licensing fees alone will generate $250 million.And, the board showed it means business regarding enforcement by fining the Pocono Downs licensee for political gifts from two employees. Whenever this happens, however, the board must identify which officials or candidates benefited.

Gov. Rendell predicted slots would generate $3 billion in revenue and $1 billion for property tax relief. But board studies on revenue estimates were lower by tens of millions of dollars than the applicants predicted.Even before all the licenses have been awarded — and that won't happen until the end of December — there's talk of what's next. Slots applicants and board members expect the General Assembly to eventually approve table games and full casinos. Democratic House members have already proposed that. Time will tell if slots can deliver on all the promises.