Challenge in works on second casino license

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Rendering of the Live! Hotel & Casino in South Philadelphia.

The three losing bidders and the owner of the city's only existing casino all are heading to the state Supreme Court to challenge the Pennsylvania Gaming Control Board's decision to grant a second casino license for a gambling complex proposed near the South Philadelphia sports complex.

The gaming board issued the license last month to Live! Hotel & Casino, a joint venture by Cordish Cos. of Baltimore and Greenwood Gaming & Entertainment, which also owns Parx Casino in Bensalem. The companies argued that a stadium-area casino would draw sports fans and appeal to gamblers who wanted to arrive by car.

The losing applicants had 30 days to appeal to the state's high court, and all were expected to file challenges by the end of Thursday - as lawyers did by late afternoon on behalf of proposed Center City casinos Market8 and the Provence.

Through his company Tower Entertainment L.L.C., developer Bart Blatstein had proposed the Provence, a casino complex at Broad and Callowhill Streets in buildings that once housed The Inquirer and the Philadelphia Daily News. Market8 would have risen on a parking lot at Eighth and Market Streets, near the Gallery at Market East.

None of the losing bidders or representatives of SugarHouse Casino, which opened in Fishtown since 2010, directly responded to requests for comment.

But a Blatstein spokesman, Frank Keel, said in a statement that the winning applicant's ownership overlaps with Parx violated state law and justified reopening a process that has continued for nearly a decade. The latest proposals were sought in July 2012, after earlier plans for a Foxwoods Casino on the Delaware in South Philadelphia fell through and its license was withdrawn.

Keel said the Gaming Control Board "failed to conduct a statutorily required analysis of economic concentration" that would result from the ownership ties between Parx and Live!, which would be operated by Stadium Casino L.L.C.

"Certain individuals and entities who maintain an ownership interest in Stadium also maintain an ownership interest in Parx, which exceed the thresholds stated in the Gaming Act," Keel said.

A spokesman for the third losing applicant, PHL Local Gaming, backed by produce wholesaler Joseph Procacci, said an appeal would be filed by the midnight deadline on behalf of its proposed South Philadelphia casino.

The spokesman, A. Bruce Crawley, echoed Keel's comments, calling the Cordish-Greenwood joint venture in Live! "an entity we always believed was ineligible to participate in the bid process." Crawley said the ownership overlap "would constitute a violation of both the letter and spirit of the Gaming Act, as it relates to the prohibition of monopolies in the Pennsylvania casino gaming industry."

He said PHL's appeal would challenge the decision on two other grounds: The board "in our opinion blatantly disregarded the Gaming Act as it applied to community support and opposition. In addition, we are concerned that, in selecting Cordish-Greenwood, the board seemed to ignore the mandate to ensure minority inclusion as part of the winning bid."

Market East Associates L.P., which proposed the Market8 project backed by developer Ken Goldenberg, also argued that the Live! project violated the law's ownership rules, and accused the board of "a capricious disregard for the evidence" submitted as it weighed bids for the license.

In last month's decision, the gaming board found that "the synergy between gambling and entertainment at a casino [with] the more than 400 stadium-area events per year" could create a year-round attraction at the sports complex, according to a document that explained the board's selection.

The board voiced skepticism "that public transit would be utilized to the extent projected by the Center City applicants" - one of the key arguments, along with access to tourists and economic stimulus, for locating a casino in the city's heart.

SugarHouse's appeal, outlined in about 400 pages of argument and exhibits, raises similar issues but also presents a different kind of challenge: whether the board wrongly discounted evidence showing that the market "is already saturated with a glut of operators and a formidable amount of competition."

Its lawyers said the evidence "proved that the addition of another casino will not grow the market. Rather, it will result in the cannibalization of revenues from existing casinos to the detriment of both the Philadelphia gaming market as a whole, as well as the commonwealth."

SugarHouse said the gaming board violated the law by not allowing it to intervene as a "full party" and by ruling that it had a legal burden "to present 'substantial, credible evidence . . . to support a finding that the market is saturated' " as a reason to not reissue the remaining Philadelphia license.

 


jgelles@phillynews.com 215-854-2776 @jeffgelles www.inquirer.com/consumer

Inquirer staff writer Julia Terruso contributed to this article.