PA casinos are hot but still need work

Slots are hot at casinos and racetracks here, but Pennsylvania's having a tough time finding investors willing to put them in smaller ''resort'' settings.

One potential remedy: Allow table games — ranging from poker and blackjack to roulette and craps — at the smaller sites. Another: Double to 1,000 the number of slot machines allowed at the resorts.

Resort lobbyists will pitch both ideas to the state Legislature when it convenes in January. But some top policy-makers, including Gov. Ed Rendell, already are saying no, at least to table games.

The Pennsylvania Gaming Control Board awarded the bulk of the state's 14 available casino licenses Wednesday. Five went to stand-alone casinos housing up to 5,000 slot machines, including Sands BethWorks Gaming in Bethlehem and Mount Airy Resort in Paradise Township. Six went to so-called racinos, which blend slots with ponies. The state hopes to award the remaining licenses — including two earmarked for resorts — next year.

But the only two applicants for resort licenses withdrew their bids earlier this year. Pennsylvania's resort licenses received far less interest from investors and gambling entities than stand-alone parlors, which triggered fierce competition.

The reason boils down to money.

''They're not as economically feasible,'' said Clyde Barrow, director of the Center for Policy Analysis at the University of Massachusetts, Dartmouth.

Pennsylvania law limits resort casinos to 500 slot machines, a number potential bidders have found too low. (Each machine generates roughly $200 in gross revenue each day.) And the state won't consider an application unless it includes a hotel with 275 or more guest rooms and ''substantial'' year-round recreational amenities. Additionally, resort casinos must be at least 15 miles from any other casino to avoid saturating a gambling market.

That would make it impossible for Allentown, for example, to host a resort casino, because a stand-alone casino was awarded to Bethlehem. Similarly, Pocono Manor Resort in Tobyhanna Township could not apply for a resort license because of its proximity to Mount Airy Resort.

A casino accompanying an existing hotel can open more quickly than one built from scratch with other amenities. But room demands, slots limitations and the state's 55 percent tax on casino revenues so far have left investors unimpressed.

Hence the anticipated lobbying to add table games, a move some gaming experts predict would make the most economic sense for resorts.

''If I was a resort, that's the trade-off I'd be making,'' Barrow said. ''That would help them draw a different clientele and a higher-spending clientele, so they wouldn't be competing directly with the stand-alones.''

He said that also could make it possible for lawmakers to eliminate the 15-mile rule.

Rep. H. William DeWeese, a Greene County Democrat who could become House speaker in January, has already said he intends to introduce legislation legalizing table games at casinos. But there appears to be little appetite in the Senate or among House Republicans for table games now. Republicans control the Senate; Democrats will control the House next year.

''I don't think there's any desire whatsoever to expand gaming for quite some time,'' said Christopher Craig, general counsel for Sen. Vince Fumo, D-Philadelphia.

Finances were one of the reasons Nemacolin Woods, a luxury golf resort in Farmington, Fayette County, withdrew its application for a resort license earlier this year.

To comply with state law requiring resort casino patrons to be overnight guests or use some other resort amenities, Nemacolin proposed an annual $25 fee for visitors to its casino. But the gaming board wanted the fee charged for each visit, leading to a stalemate.

''In the end there still was disagreement over that daily minimum,'' gaming board spokesman Doug Harbach said. The board, he said, interprets the law to mean a resort casino is an additional recreational amenity for the resort's patrons.

But the way Pennsylvania has set up its casino licenses may change what's considered a resort here. Pennsylvania's stand-alone slots parlors — like the ones licensed Wednesday in Bethlehem, the Poconos, Philadelphia and Pittsburgh — may become more of a resort destination than the existing resorts that win casino licenses, Barrow said.
The stand-alone slots parlors will have more machines — and in some cases, more resort amenities, such as golf, shopping and spas — than resorts that already exist in Pennsylvania. As a result, they may draw more patrons

Bethlehem gets casinos

The Pennsylvania Gaming Control Board unanimously approved licenses for five casino projects Wednesday in a decision that's expected to alter the economy, character and basic needs of some of the state's most popular tourist spots, including Bethlehem and the Poconos.

The board's history-making votes authorize Sands BethWorks Gaming to build a casino on Bethlehem Steel's rusting brownfields and Mount Airy Resort to construct a facility in Paradise Township, Monroe County, despite questions about whether its owner, Louis DeNaples, has or had ties to a reputed mobster.


The board also snubbed a Philadelphia casino plan pitched by real estate mogul Donald Trump, and a bitterly contested slots parlor proposed near Gettysburg National Military Park.

Lengthy court appeals could follow, but board Chairman Tad Decker and Gov. Ed Rendell stood by the board's decision on the 13 casino applicants, which included owners and investors who are celebrities and millionaires. ''They were great applicants, really good applications,'' Decker said.

Those who won licenses to operate up to 5,000 slot machines are expected to bolster tourism and generate millions of dollars in tax revenues for the state and their host municipalities, but also increase the demand for police services and traffic improvements. For sites where casinos were denied, it's back to the drawing board.

''I think the application [for Allentown] was really competitive and a better proposition for the Lehigh Valley,'' said a saddened Allentown Mayor Ed Pawlowski as he hurried out of the hearing. Still, he said, ''We're going to continue in Allentown … and pursue our goals as a city.''

Bethlehem Mayor John Callahan shook hands with gaming board members and beamed under the glare of media cameras. ''This development will without a doubt widen the national profile of our city,'' he said.

For the place known as Christmas City, the decision could mean a change in character and identity. More immediately, it means that a more than $600 million South Side development project that has spent months in a holding pattern can take flight.

David Freeman, leader of Citizens for a Better Bethlehem, said the group opposed to the slots parlor had no comment.

The city will try to hire more planning staff to handle the flurry of site plans it is about to get from Las Vegas Sands. Early next year, Sands will probably begin to demolish some of the former Bethlehem Steel buildings, with the hope of excavating the old ore pit that in 18 months is expected to be home to a 300-room hotel and a casino with 3,000 slot machines.

Sands BethWorks partners can now begin signing the growing number of upscale retailers that have been waiting in line to be part of the 200,000-square-foot mall. Sands BethWorks principal Barry Gosin said he will begin engineering and design work for a $50 million to $60 million project to turn Steel's former Third Street headquarters into upscale condominiums and apartments.

On the next lot, ArtsQuest President Jeffrey Parks now begins a capital campaign to build the $49 million SteelStax performing arts and PBS-39, WLVT-TV broadcast center that will take more than a year to plan and an additional 18 months to build.

In Paradise Township, the supervisors are evaluating whether a new casino will require forming a police department or participating in a regional police department. The township relies on state police coverage.

''Now we are going into uncharted territory,'' said Dennis Keesler, chairman of the Paradise supervisors.

The township will also have to consider how much the casino will increase demand for fire services and social services, said state Rep. Mario Scavello, whose district includes Mount Airy. ''We need to make sure everything is in place to protect people from the social ills this will create,'' he said.

The gaming board's decisions, made after about four hours of closed-door deliberations Tuesday night, came in a series of votes taken Wednesday morning without public debate or discussion.

''There wasn't a terrible impasse. … This isn't like we sat down for the first time. … We've been thinking individually for months,'' Decker said. ''I think some people had some ideas before they came in.'' He said he could not talk about the pros or cons of any of the applications, for legal reasons.

An order approving the licenses and an opinion explaining the board's reasoning is expected to be released within three weeks. It has not been decided whether the opinion will also explain why some proposals were rejected, Decker said.

Those who were denied licenses have 30 days after the order is issued to appeal the board's decision to the state Supreme Court. The board will not issue licenses until the appeals period has passed and certain conditions, such as paying a $50 million fee and obtaining permits, are met.

Foxwoods and Sugarhouse to build in Philly

South Philadelphia and the Fishtown area to the north will play host to the city's two slots casinos.

Foxwoods Casino on Columbus Boulevard, and SugarHouse Casino near Fishtown and Northern Liberties, were approved for slots licenses this morning by the Pennsylvania Gaming Board.

The board's decisions, in two separate votes, are considered likely to be appealed to the state Supreme Court.

The ballots were cast just before 11:30 a.m. in a packed conference hall. The audience included Mayor Street.

Foxwoods Casino Philadelphia, a $560 million project in South Philadelphia, will be built on a 30-acre parcel off Columbus Boulevard, north of Home Depot and Target.

Developers say that by November 2008, they will have installed 3,000 slot machines, restaurants, shops, and a 2,000-seat entertainment complex. Investors include Quincy Jones, Comcast-Spectacor chairman Ed Snider, and 76ers president Billy King.

Sugarhouse Casino is a $550 million project on 22.6 acres on North Delaware Avenue at Shackamaxon Street. Plans call for 3,000 slot machines, restaurants, a plaza, and a pedestrian promenade. It would employ 1,090 people.

Investors include Chicago developer Neil Bluhm, lawyer Richard Sprague, former State Supreme Court Justice William L. Lamb, and auto sales magnate Robert M. Potamkin.

The board did not explain why they selected each applicant. A written explanation will be issued later.

The board was supposed to follow strict criteria when selecting the winners. Among them: whether applicants can maintain a successful, revenue-producing casino; how they would finance the casino; their history of promoting diversity; and their impact on the communities in which they plan to build.

The move puts casinos on the northern and southern ends of the city's central waterfront.

Tad Decker, the board chairman, prior to the vote addressed the complaint that there hadn't been enough public input by pointedly stressing the number of public hearings held around the state.

"No jurisdiction in recent history... has moved so quickly and so efficiently," he said.

Although members voted in public to award licenses in Philadelphia, Pittsburgh and other locations, any discussions and deliberations leading up were held in private.

In those closed sessions, the board engaged in "quasi-judicial" discussions that "fully and frankly" reviewed each applicant, Decker said.

In Pittsburgh, the board awarded a license to Detroit-based casino developer Don H. Barden.

Las Vegas-based casino operator Las Vegas Sands Corp. won a license for a Bethlehem casino and businessman Louis A. DeNaples won one for a Pocono Mountain resort.

Talks involved privileged financial information about the applicants and confidential background information about the people running the companies.

The state's open-meetings law and the state law that legalized gambling exempted most of this information from public disclosure.

Although gambling experts say Pennsylvania's approach to awarding licenses is not unique - other states have followed similar guidelines - the process angered anti-casino groups, which say the board has shut them out and shunned them from the beginning.

Many in those groups say that there are still concerns and many questions about the casinos' impact on neighborhoods, and that the board is rushing licenses through so the first casinos can be running next year.

The losers in Philadelphia were TrumpStreet, Riverwalk Casino, and Pinnacle.

The licenses are considered preliminary until any court appeals are decided and fees paid by the winners and construction is completed.

The law passed in 2004 authorized up to 61,000 slot machines at 14 sites

Bethlehem, Mount Airy hit jackpot!

Sands Bethworks plans to open in summer 2008 with 3,000 slot machines. Mount Airy Resort plans a late 2007 opening, also with 3,000 slots. Slot machines and a multi-million dollar tax windfall are headed to Bethlehem and Monroe County, thanks to votes cast in Harrisburg this morning.

The Pennsylvania Gaming Control Board picked Sands BethWorks, on former Bethlehem Steel Corp. land in the city's southside, for a slots license today. It also picked Mount Airy over competitor Pocono Manor.

In earlier testimony to the state Gaming Control Board, Sands BethWorks promised to spend $600 million and open its doors with 3,000 slot machines in the summer of 2008, and eventually expand to 5,000 slot machines.

The bulk of the project -- proposed for 124 acres of the old Bethlehem Steel plant -- would not actually redevelop the rusting steel buildings that sprawl across South Bethlehem. It would turn the ore bridge into the casino's entrance, refurbish the high house, and stabilize and light the blast furnaces.

The rest of the money would go toward constructing buildings for a casino, retail shops and restaurants on vacant land near the Minsi Trail bridge.

"We are honored to be granted this opportunity," said Sheldon G. Adelson, chairman and chief executive officer of Las Vegas Sands Corp. in a news release. "We aim to produce a development so outstanding that the people of Bethlehem, Lehigh Valley, and the Commonwealth of Pennsylvania will all be proud to call it their own."

"This development will provide tremendous economic opportunity locally and really represents the beginning of a new era for the Lehigh Valley," said Bill Weidner, president and chief operating officer of Las Vegas Sands in the release. "But the real beauty of this development is its ability to pay tribute to the heritage of Bethlehem Steel and allow the industrial giant to secure its place in history as a great American icon."

Also today, the board picked Mount Airy Resort over Pocono Manor. Mount Airy proposed a slots casino in Paradise Township. Pocono Manor's would have been located in Tobyhanna Township.

Mount Airy developer Louis DeNaples had little to say as he left the meeting in the company of a priest. "I thank God for the opportunity to get this license," said DeNaples, who also thanked his family's support.

In earlier testimony, representatives for the Mount Airy Resort promised to open their $400 million project in late 2007 with 3,000 slot machines and 400 hotel rooms.

In granting the license to Sands BethWorks today, the board rejected Allentown's competing proposal for a slots casino on former Agere Corp. land in east Allentown.

Allentown Mayor Ed Pawlowski, who attended the gaming board meeting this morning, issued a written statement:

"I am of course disappointed that the Pennsylvania Gaming Control Board failed to recognize the merits of the … Aztar proposal, which I believe to be the perfect fit for both Allentown and the Lehigh Valley."

Pawlowski said the revenues generated from the slots would have helped revitalize the city, which he said is facing "daunting" fiscal challenges.

He congratulated Bethlehem's mayor and Sands on winning a license, but offered assurances to Allentown residents. "I want to make it clear to the residents of Allentown that this is merely a disappointment, not a defeat." Allentown will not come away empty-handed.

Thanks to an agreement crafted by a group of Lehigh Valley politicians, who agreed Pennsylvania's winner-take-all system of awarding host fees was neither fair nor acceptable to Lehigh and Northampton counties, Allentown is in line for more than $3 million of the estimated $15.6 million in city and county host fees.

Earlier today, a group led by billionaire developer Neil G. Bluhm and Connecticut-based Mashantucket Pequot Tribal Nation won licenses for casinos along the Delaware River in Philadelphia.

Finally, the board awarded one slots license in Pittsburgh to Majestic Star, which would build in the city's North Shore area.

Casino in Allentown won't hurt neighboring business

The Pennsylvania Gaming Control Board will decide on Dec. 20 whether to award a slots casino license in the Lehigh Valley to Allentown or to Bethlehem. The decision will have far-reaching implications for both the state and the region, and it is imperative that it be a fully informed decision. Statewide, gaming will determine the success of the property tax reforms advanced by Gov. Ed Rendell and the state Legislature. But in the Lehigh Valley, it could determine the success or failure of Allentown.

As I told the Gaming Control Board in April, I truly believe that the Tropicana proposal in east Allentown is the most inclusive and conclusive development for a casino site in Pennsylvania and the best hope for Allentown to re-start its economic engine. Columbia Entertainment has pledged to follow through on all promises made by its predecessor, the Aztar Corp., to work with Allentown and the greater community to ensure that its $525 million hotel-casino provides the greatest benefit.

Columbia and the unions agreed to ensure that jobs in the complex offer solid, living wages. It has worked with the city and local social service agencies to minimize the potentially negative impact of gaming in the community. And, it has worked with city administrators to win approval for a plan that bolsters our overall development efforts while providing a top-notch entertainment destination.

Columbia also has a solid track record of working with communities similar to Allentown, such as Evansville, Ind., demonstrate its positive impact on such communities. In addition, Allentown's Tropicana site is safely removed from schools, churches and neighborhoods.

The Bethlehem proposal, on the other hand, is being built virtually on top of schools and places of worship and an existing neighborhood. This project would swallow whole the South Side business community. Just as ''large box stores'' overtake hometown retailers, the Bethlehem project will surely cannibalize the quaint shops and restaurants that define that community. Sands President Bill Weidner told the Gaming Control Board as much in his testimony. ''We're not social workers,'' he said. ''We want to make money.''

The fundamental problem is that Weidner and the Sands team are not qualified to develop and operate a project of this nature. Their expertise is in markets like Las Vegas, mainland China, and Singapore. As a result, they've proposed an awkward project that is ill-fitted for the South Side of Bethlehem.

The Tropicana project, on the other hand, is a perfect fit for Allentown, and a perfect fit for the Lehigh Valley. Strategically located along the American Parkway, it offers every opportunity to continue an economic revival that is taking seed on the East Side with the construction of the new minor league stadium and the reconstruction of the historic Hanover Acres homes. I anticipate that it will spur further entertainment, dining, and retail development that will provide longtime benefit to Allentown.

In addition, it will supplement and complement our efforts to draw business and visitors to Center City because of its proximity to the new American Parkway Bridge that will be completed by 2011, and the New England Avenue thoroughfare that will provide direct access to the businesses on the East Side of Allentown. The site also is close to the retail corridor on Airport Road and Irving Street.

It's big enough to generate significant revenue for the city and county and become a destination resort. It's big enough to pull in customers from all over the region. And, it's the perfect size to produce a stimulative effect for Allentown and Lehigh Valley businesses without driving them out of business.

I applaud the leaders of Bethlehem for their already successful efforts to restore a city hurt by the loss of its largest industrial citizen. They have a strong tourism and commercial base supported by such successful events as Musikfest, Celtic Fest and Chriskindlmarkt, and the revival of the South Side and this development will continue to occur without the casino's presence.

On the other hand, Allentown continues to reel from the loss of its textile and heavy industry, from tax base that has never fully recovered from the economic changes since the late 1980s, and from the influx of a much needier population, which has placed larger demands on city services. The awarding of a casino license to the Tropicana would provide Allentown with a much-needed tool to rework its economy and build a strong base for the future. And remember, a strong Allentown is vital to a strong Lehigh Valley.

Lawmaker seeks to expand gaming

Although the idea has the support of some casino operators and some lawmakers, who note that expanding gambling ultimately would generate more money for the state, even some in the casino industry question whether adding table games would really rake in more dollars.

''We think it's too premature to expand,'' said Christopher Craig, spokesman for Sen. Vince Fumo, D-Philadelphia. ''We think we need to get used to casinos working here and get used to regulating the industry before we consider expanding card games.''

The proposal received an equally tepid response in the House, where DeWeese has said he intends to introduce a gaming expansion bill early next year.

''It took years to get slots in there, and it took two years to get that bill respectable,'' House Republican spokesman Steve Miskin said. ''Expanding table games will take a long time — if that's where the state wants to go.''

DeWeese supports expanding gambling to raise more revenue toward property tax relief, his spokesman Tom Andrews said. ''It's [just] a matter of starting the discussion,'' Andrews said of his boss' plan.

Casinos reap 70 percent to 85 percent of their gaming revenue from slots and the rest from table games, according to industry experts. Adding table games can help casinos increase their profits by drawing not only table game players, but also additional slots players.

By not having table games, Pennsylvania may lose slots players to other states, said Steve Rittvo, spokesman for The Innovation Group, a gambling consulting firm based in New Orleans.

''The biggest thing table games do is protect you against entertainment in competing environments,'' said Rittvo, who described expanding gambling as ''a defense mechanism.''

Legalizing table games, he said, would make casinos planned in Philadelphia ''definitively more competitive with Atlantic City.''

The reason: If one spouse plays table games and the other plays slots, the pair is more likely to travel to New Jersey or another location where both can gamble. ''It's not just table players that you lose, but those that travel with them,'' Rittvo said.

Table game players are attractive to casinos for other reasons: They tend to spend more money than slots players on lodging, food, alcohol and entertainment. Additionally, they tend to be younger and financially better off than slots players and help casinos woo another audience.

''All these kinds of games are very popular with the younger set … . These are another opportunity for the casinos to attract the gambler,'' said Rep. Paul Clymer, R-Berks, a staunch opponent of legalized gambling.

Clymer and other gambling foes worry that legalizing table games such as poker and blackjack, which have seen a boom in popularity among high school and college students in recent years, would increase gambling addictions among Pennsylvania's young people.

A study by the American Gaming Association found that adults aged 21 to 39 play poker more than any other age group and that poker participation has increased in each of the last three years. Consumer spending on poker in Nevada rose from $62.6 million in 2000 to $140.2 million in 2005. In New Jersey, poker spending increased from $35.6 million to $67 million during that same period.

''Table games really attract a lot of the younger people. Let's face it: Senior citizens are dying off. They want to have a new generation of people to fleece,'' said Dianne Berlin, spokeswoman for CasinoFreePA.

To date, no other state that has legalized slot machines has changed its law to add table games, although some states legalized both at the same time. Part of the reason states have been slow to expand gaming, said Clyde Barrow, director of the Center for Policy Analysis at the University of Massachusetts, is ''public opinion and political feasibility.''

It's one thing to convince constituents that it's not a bad idea to legalize gambling at racetracks, Barrow said. Convincing them that full-fledged casinos with table games are good for a state is tougher, he said. ''Pennsylvania is the first to start talking about it this quickly,'' he added.

Still, it's unclear whether legalizing table games would actually be a jackpot for Pennsylvania casinos, which face one of the highest taxes in the country. Pennsylvania levies a 55 percent tax on slots parlor revenues, of which 34 percent will go toward lowering property taxes.

''I've not seen an area implement table games with the tax rate that is in effect in Pennsylvania,'' said Rittvo, of the consulting firm.

Table games — because they require more employees — are more costly for casinos than slots. The lower profits generated from table games, coupled with a high tax, has led some casinos to shy away from pushing lawmakers to legalize table games.

''I think it is a very difficult place to make a profit,'' Rittvo said. ''I'm not sure that there's total unanimity among operators that they want it.''

Rendell, who supported legalizing slots parlors to generate money for property tax reductions, said it's premature to discuss gambling expansions. He prefers a two- to three-year test period after the state's casinos open.

Rendell signs law allowing unlimited drinks at casinos

He says state gambling regulators should have 'control mechanisms' in licensing agreements. Gov. Ed Rendell on Wednesday signed legislation to let Pennsylvania's slot-machine parlors serve unlimited free alcoholic drinks to gamblers — a measure that allows an exception to the state's current limit of one free drink per person.

Rendell, however, said he expects state gambling regulators to include ''control mechanisms'' in licensing agreements with the operators of gambling establishments, such as possibly limiting the per-person distribution of drinks to one per hour.

''Virtually every gaming operation around the world has this amenity, but there are rules and regulations that control it and limit it,'' Rendell said at a news conference on another topic. ''There is a tendency … to think that these gaming institutions or gaming businesses want people to get falling-down, sloppy drunk so that they'll lose more money. That isn't the case.''

The bill passed 27-22 in the Senate and 112-75 in the House on Nov. 21, before the Legislature adjourned for the year.

Proponents of the measure say it is necessary to allow Pennsylvania's gambling establishments to compete with those in other states where around-the-clock free drinks are customary.

Under current law, the state's horse racing tracks cannot serve any free drinks, and other licensed establishments, such as bars and restaurants, can serve up to one free drink per patron.

The bill will allow 14 slots parlors, including the ones at racetracks, to serve free drinks during the hours that licensed liquor establishments can serve them — from 7 a.m. to 2 a.m.

Lawmakers who opposed the bill called it both irresponsible and unfair to other establishments that serve alcohol.