Deal reported near on Harrah's-Foxwoods accord

Harrah's Entertainment is only a flurry of pen strokes away from taking over the troubled Foxwoods Casino project in South Philadelphia, with a final agreement ready for the original partners' signatures, according to people familiar with negotiations.

More than a dozen Foxwoods investors, including the Mashantucket Pequot tribe in Connecticut and the charitable interests of the families of local entrepreneurs Lewis Katz, Ron Rubin, and Ed Snider, are expected to approve the deal.

Even so, they and Harrah's still must persuade the state not to revoke the project's license, an action to be discussed by the Pennsylvania Gaming Control Board at a hearing Wednesday.

Citing repeated delays in Foxwoods' development during the last four years, the board's lawyers had urged the commissioners last April to strip the group - called Philadelphia Entertainment & Development Partners - of its right to put a gambling hall on the Delaware riverfront in South Philadelphia. It won the license in 2006 in an intense contest for one of two available in the city; the other went to SugarHouse Casino, which opened last month.

Under the original concept, the Mashantucket tribe was to operate a branch of its Foxwoods Casino on South Columbus Boulevard, between Reed and Tasker Streets.

However, the project was stalled by political and neighborhood opposition, as well as the partners' thwarted plan to move it to Center City. In addition, the tribe was hurt by the recession, and unable to raise the money to develop a new casino.

Reached by phone on Thursday, Rubin, a prime player in keeping the Foxwoods project alive, declined to comment about a deal with Harrah's. "We'll be ready to talk soon," he said.

But according to sources, Rubin might not remain involved in the project once the Harrah's deal is finalized.

Stephen A. Cozen, a lawyer for the Foxwoods group, wrote in an e-mail to The Inquirer that he had no comment on Harrah's or on Rubin's role "due to confidentiality agreements and privilege considerations."

Harrah's spokeswoman Jacqueline Peterson also declined to comment on the deal.

Under the agreement, the Las Vegas-based gambling giant would operate the South Philadelphia casino, while a major investor in Harrah's - the Apollo Management private-equity firm - would both arrange financing and invest in the project.

Because Harrah's already operates a casino in Chester, it would be allowed under Pennsylvania law to own only 33 percent of Foxwoods.

Sources say the Harrah's deal also calls for 2 percent of casino revenues to be contributed to local charities. That is in keeping with the original focus of the Foxwoods project, in which a partnership for the charitable interests of the families of Rubin, Katz, and Snider was to donate its 42 percent share of profits to charity.

On Wednesday, the gaming board will consider whether to hold a full hearing on revoking the Foxwoods license - or make a judgment on the matter based on documents and depositions already filed.

Doug Harbach, a board spokesman, said that if the Foxwoods group proposed changes, the development plan would have to be "substantially similar" to what was presented in 2006. The vision then was a multi-phased casino and hotel worth more than $600 million on 16 waterfront acres.

However, if SugarHouse is any indication, a Harrah's project in South Philadelphia would likely be scaled back because of the increased difficulty of borrowing money to build casinos.

Developing the 45,000-square-foot SugarHouse cost $355 million, including construction, the Delaware Avenue tract, and licenses for slots and table games.

If the gaming board agrees to replace the Mashantucket with Harrah's, the new operator would still need to generate political backing to secure city, state, and federal permits and approvals - all while working against the clock.

Even with an extension from the state, Foxwoods would have to have 1,500 slot machines operating by December 2012.