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Mashantuckets Eye Philadelphia Gaming License

Karen Florin Day Staff Writer, Courts

Publication: The Day

Published December 29. 2005 4:00AM   Updated December 17. 2009 11:32AM
Tribe's partnership is proposing $300m casino with 3,000 slots

The Mashantucket Pequots are partnering with music legend Quincy Jones and sports and business figures with ties to Philadelphia to compete for one of two slot machine licenses that will be issued in the City of Brotherly Love.


The partnership, known as Philadelphia Entertainment and Development Partners, proposes building a $300 million casino on a vacant, 16-acre waterfront parcel east of Christopher Columbus Boulevard between Tasker Avenue and Reed Street. The facility would open with 3,000 slots, restaurants and entertainment venues and could eventually expand to accommodate 5,000 machines and additional retail outlets.


The tribe's commercial expansion entity, Foxwoods Development Co., announced Wednesday that the partners had submitted an application to the Pennsylvania Gaming Control Board. The board is set to issue 14 licenses, including the two in Philadelphia, that will enable gaming operators to install some 61,000 slot machines throughout the state.


Some of the Mashantuckets' partners have agreed to donate their share of profits to charity in a unique arrangement they hope will win them favor as they vie with at least four major gaming operators for the coveted licenses. The Mashantuckets, who are seeking to diversify beyond their gaming empire in southeastern Connecticut, would manage the casino in exchange for 30 percent of profits.


In addition to Jones, the partners include Billy King, president and manager of the Philadelphia 76ers of the National Basketball Association; developer Peter DePaul; former Philadelphia Phillies centerfielder Garry Maddox; Atlantic City racetrack owner Robert Levy; Temple University women's basketball coach Dawn Staley; local attorney and businessman Fred Tecee; A.J. Agarwal, a senior managing director of The Blackstone Group; Sylvia DiBona, wife of the late Blue Cross executive Fred DiBona Jr.; and local businessman Alan Steinberg.


The licensing application filled 40 binders, said Gary Armentrout, chief development officer for the Foxwoods Development Co. He said the company has been looking at sites and talking to potential partners for the past 14 months. Pennsylvania authorized the slots last year and expects to issue licenses –– at a cost of $50 million each –– next summer. Wednesday was the postmark deadline for applications.


The Gaming Control Board was not releasing applicants' names Wednesday, but industry observers said some of the other applicants for Philadelphia slot licenses include Trump Entertainment, Midwest Gaming and Entertainment, Pinnacle Entertainment and a consortium headed by Planet Hollywood.


Armentrout said the Mashantuckets decided on the partnership based on the strength of the local partners and the site, which was once targeted by Caesars' Entertainment for a riverboat casino.


“We would not be involved unless we thought the partnership, the site and our association with this project would be successful, and if we didn't think the facility would be profitable,” Armentrout said.


After paying the state tax of 54 percent and operating costs, the local partners would take 70 percent of profits. More than 60 percent of that would be held by a consortium of not-for-profit charitable groups, including the Rubin Family Charitable Foundation, the Silver Family Charitable Foundation and Ed Snider, chairman and part owner of Comcast Spectacor, whose holdings include the Philadelphia Flyers of the National Hockey League and the 76ers.


“That's part of the reason we were interested in this project,” Armentrout said. “Our partners' primary motivation for entering into this development is philanthropic. They have committed in our partnership agreement and in the application they have filed today to contribute the majority of their profits in this operation to local charities.”


Armentrout said the Mashantucket Pequots, owners of Foxwoods Resort Casino, have the gaming know-how to make it work.


“We believe with our expertise in operating the world's largest slot floor, we certainly have the people and the procedures in place to operate a 3,000-slot facility,” he said.


Connecticut's other gaming tribe, the Mohegans, jumped into the Pennsylvania gaming market soon after slot machines were authorized last year. The tribe purchased the Pocono Downs harness racetrack and five off-track betting facilities in October 2004 and had hoped to be operating a temporary slot facility by now. The tribe is investing about $500,000 in the out-of-state venture.


Pennsylvania's newly minted gaming board has encountered delays, and spokesman Nick Hays said Wednesday that the summer of 2006 is the earliest possible date for awarding slot licenses. The Mohegans have an option to terminate the $280 million agreement to purchase Pocono Downs from Penn National Gaming if licenses are not granted by July 1.


The tribe is not likely to make a decision until the termination date is imminent, according to William Velardo, chief executive of the Mohegan Tribal Gaming Authority.


“We're still hopeful that conditional licenses may be awarded as early as June,” Velardo said. “We probably won't make a decision until that time.”


The gaming board is deadlocked over whether to issue regional or statewide licenses to the local distributors who will serve as the middlemen between slot manufacturers and casino operators. The distributor licenses must be in place 90 days before conditional licenses are granted.


“We believe this is the last hurdle,” said Robert J. Soper, president and CEO of Pocono Downs. “If they can clear the supplier hurdle it will clear the way for them to start issuing these gaming licenses.”


Meanwhile, the Mohegans are working on the first phase of improvements at Pocono Downs and are on schedule to complete the project in the spring, Soper said.



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