Pa. cites Pittsburgh casino for missing payment

Problems for the fledgling Rivers Casino in downtown Pittsburgh continue.

The Pennsylvania Gaming Control Board filed a complaint yesterday against its owner, Holdings Acquisition Co. L.P., demanding that the casino make its first $7.5 million payment toward the Pittsburgh Penguins' new $325 million arena.

The complaint was filed by the gaming board's Office of Investigations and Enforcement. A chief concern is whether the casino's lack of payment will cause financial hardship for the Sports and Exhibition Authority of Pittsburgh and Allegheny County, which is building the NHL team's arena.

Former Rivers Casino owner Don Barden committed to making such payments annually for 30 years. The new owners - including Chicago billionaire developer Neil Bluhm - took over last year to rescue the project after Barden filed for bankruptcy. Bluhm is also the primary investor of the SugarHouse Casino planned for Philadelphia's waterfront.

But since it made its debut Aug. 9 on the Pittsburgh waterfront as Pennsylvania's most costly casino to build ($780 million), Rivers has faced falling revenue. Over the last two months, the gambling palace with a glass facade has ranked in the bottom tier among Pennsylvania's nine operating casinos.

Rivers generated $15.6 million in gross slots revenue last month, seventh among the nine casinos, and well behind front-runner PhiladelphiaPark Casino & Racetrack in Bensalem, which took in $28.7 million.

During its first two full weeks of business, Rivers had weekly gross slots revenue of $5.3 million and $4.7 million; in the third week, revenue fell to $4.3 million. Last week, Rivers took in $3.4 million.

Less than two weeks ago, Standard & Poor's downgraded Holdings Acquisition's credit rating one notch, from "B" to "B-." The agency cited concerns about what it described as Rivers' "weak operating performance" and its ability to meet debt-service payments.

Among those payments is the money to go toward the Penguins' new arena.

"Holdings Acquisition will have an opportunity to respond to the complaint, then a hearing can be scheduled either before a hearing officer or the seven-member board," board spokesman Richard McGarvey said.

He said nothing had been scheduled at this point.

Rivers chief executive officer Greg Carlin, who is also CEO of Philly's SugarHouse Casino (which broke ground today), called the complaint "premature."

"We are making a payment today in good faith to resolve the issue," he said.

The Sports and Exhibition Authority, which owns and operates public venues for Pittsburgh and Allegheny County, did not respond to calls for comment.