State Yanks The Foxwoods Casino License In South Philly
The state Gaming Control Board, fed up after four years of delays, today took the unprecedented action of revoking the state license for a South Philly casino. That action came despite pleas from the local investors for more time to open the casino on Columbus Boulevard at Reed Street in a new partnership with Caesars Entertainment Inc.
State Yanks The Foxwoods Casino License In South Philly
Chris Brennan
The state Gaming Control Board, fed up after four years of delays, today took the unprecedented action of revoking the state license for a South Philly casino. That action came despite pleas from the local investors for more time to open the casino on Columbus Boulevard at Reed Street in a new partnership with Caesars Entertainment Inc.
The board seemed to focus on three reasons in questioning the investors today: They submitted incomplete documents on the deal going forward, they changed the way charities would benefit from casino profits and the project as designed today is notably different than the project approved in December 2006.
The move comes as a stunning political blow in Gov. Rendell’s last month in office. Rendell is close with the local investors and ran for office pitching casino gambling as a way to raise money for the state. A project in the town where he was mayor for eight years becomes the first to lose its casino license.
The vote was 6-1 with just board member Jim Ginty, appointed by Rendell in July to a second three-year term, pushing to give the casino investors more time. Ginty said he was worried about the 650 construction job and then 1,200 casino jobs the project would create. He also had concerns that the city and school district would lose out on local gaming taxes from the project during the delay. And Ginty said the state General Assembly might grow frustrated and pass legislation to move the license out of Philadelphia.
Fred Jacoby, an attorney for the local investors, accused the board of "arbitrarily" revoking the license. He said the investors will wait to see the board's written opinion before deciding whether to file an appeal.
"I was shocked," Jacoby said after the vote. "I really did not expect to see revocation."
Jacoby said it as an open question as to whether the investors would be refunded the $50 million fee they paid for the casino license. Doug Sherman, chief counsel for the board, later said state law has no provision for a refund and the board has no authority to issue one.
Bill Downey, an attorney for Caesars, said his client would not be a party to an appeal because it had not been approved as a partner for the local investors. "I think the board told us we have no role at this point," Downey said. Caesars already owns the Harrah's casino in Chester, Delaware County.
The “Foxwoods” license rested today on a stack of documents the investors had to file Friday to demonstrate what they wanted to build, how they would pay for it, who would own it and who would manage it. The board last month demanded final versions of those agreements.
Cyrus Pitre, head of the board's Office of Enforcement Counsel, said during the hearing that the investors submitted letters from two banks who said they were confident but not yet committed in funding $200 million in debt for the $275 million first phase of construction. Pitre said the ownership information submitted had some blank spaces and other areas where information was promised later.
On the other $75 million, the investors told the board they had $21 million committed from two local partners and $25 million from Caesars. They hoped to raise the remaining $29 million but could get a $10 million bridge loan from Caesars if they raised at least $19 million more.
Pitre said the documents as drawn up meant the deal might not have closed as late as May 2011.
The board was clearly unhappy with changes made to the original casino project, which originally committed 42 percent of the profits to local charities for children, with an anticipated $300 million over 10 years. The new plan had money going to local charities, but $6 million over seven years would go to the Pequot Museum in Connecticut. The Mashantucket Pequot Tribal Nation, which runs two casinos under the Foxwoods brand in that state, was originally a major partner and planned to manage the casino. The tribe, after stumbling into serious financial trouble, is now little more than a passive investor.
"I guess there's charity and then there's charity," Jacoby said after the board questioned sending charitable funds to Connecticut. "I hadn't realized that today."
Caesars proposed becoming a one-third owner of the project, which it would have managed under its “Horseshoe” casino brand. The board noted the company recently reported that it has nearly $22 billion in debt, though company officials said that would not impact their ability to complete the South Philly project.
The board's staff in March said it would take at least four years from revocation to legal challenges to rebidding the license to approval of a new applicant to opening a new casino project.
A small group of Casino-Free Philadelphia members cheered today's decision as a huge victory but anticipated another casino operator would seek the license. "We keep fighting," said group spokeswoman Lily Cavanaugh.
Thanks god this endless morass was finally put to bed. RIP— hotelguy- THANK GOD!!! Can we build that casino that centers around the ship idea now? That was the best idea I've heard for the waterfront and casinos EVER!— elzblz
- Like Fast Eddie cares at this point? He is probably lobbying to have a casino put in the Comcast tower.— FletcherT
Actually, it seems like it's just another phase. Now the appeals begin.— paulshin
This is great news. We have one low end people fleecing enterprise with run of the mill food, run of the mill clientele and no security as the robberies seem to indicated. Would controlled access be in order? You know, a gated community. Pre-registration to get into the parking lot. You have to sign in here to write even the most moronic comments.
What is needed is a lux hi-end casino/entertainment complex in a hi-rise hotel, condo, retail office complex, preferably across the street on Market from the Convention Center. The Girard Sq development site is a city block slated for some kind of development which should include an amazing commuter station the city hall stop with Septa Commuter trains and Patco. Come on, you know we can do it! A tall 90 story building with a restaurant slowing turning in the sky with a concert venue for Sade, and tuxedoed James Bond types with slinky Halle Berry types draped on their arms! Dress code, controlled access, hi security, hi end. Now that would get the AMA types on convention to come in gamble away their Medicare fees.- yeah, the new casino group should use the USS United States as an attraction/hotel/casino/entertainment space.— palmyra21
- So the Indian tribe backs out to the point of being a minor player but more of the profits go to their museum in CT? How does that work? Good call, GCB!!— Rudykizuty
- Finally a board with some b-lls! The casino should be in CC near the convention center and hotels at the Gallery. Ron Rubin (local casino investor) already owns that building. The Gallery has been a failure from day 1.— Ed Rendell Nixon
- Glad it's gone.— Don Cornelius
- The whole concept of gambling is beyond me. First the state lotto to take money from the welfare receipents fueling their dreams of owning a whole bock of row homes in West Philly. Then we buld casinos in Chester and South Philly to add some flashing lights into the mix of fleecing the already poor. Someone explain the attraction to me, or is it just that I work hard for my money and can't imagine tossing it away on a spin of a wheel or dropping numbered balls.— unbelieveable!
- I'm blown away that this was approved.— schnaars
- Someone forgot to bribe the right people.— 420-24-7
- They need money from Phila to fund a museum in Conn? They have a right to do what they want on their land, but it surely isn't a 'charity.' I hope its a memorial to the tribe's lost innocence and greed, because they've been emptying New Englanders' pockets in Mystic for like 15 years and turned a bucolic setting into a sleazy sprawl of parking lots and pink and turquoise neon lights.
- who is the big loser now the City of Philadelphia i.e. tax breaks and the shcool childrens. Appeals and reissusing the license will take another three to four years congras to casino free philadelphia.— worshipful
- The casinos seem to be a way for government to get back social security and welfare checks! Visit them during the day and note who and what you see.— Teeke
- YESSSSS!!!!— jamesmafyew
- Thea..thea..thea..that's all folks..
- A good decision that was long overdue. Give license to Harrahs, and let them get to work.— shirleyf
- SugarHouse and Parx are cheering today! Not to mention the AC casinos. Maybe Caesars was dragging its feet so this would happen and not impact AC any more!— dave202
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