Gaming head: Auctioning Foxwoods license not a sure bet

HARRISBURG - The head of the Pennsylvania Gaming Control board warned Thursday that it would be unwise to auction off or relocate the gambling license recently revoked from the Foxwoods Casino project because the matter is now mired in litigation.

Board chairman Greg Fajt made his comments in testimony to the state House Gaming Oversight Committee, which is considering a bill to auction off Foxwoods' license to the highest bidder and possibly move it outside Philadelphia.

Fajt noted that Foxwoods Casino's partners have appealed the board's decision last last year to revoke the license, and that it could take years for the matter to be resolved in courts. Right now, the matter is in Commonwealth Court, an intermediate rung on the appellate ladder, but it could go all the way to the Pennsylvania Supreme Court.

"Going down the road of taking applications while this litigation is ongoing is not the wisest decision," Fajt said.

Though Fajt did not take a position on whether Philadelphia should retain the right to open a second casino, others witnesses testified that there just isn't enough demand to sustain two in the city.

Steve Rittvo, who chairs a consulting group that helped craft the 2004 Pennsylvania law legalizing slots casinos, said a second casino in Philadelphia could get "cannibalized."

"We believe that the facility that exists in the city now really meets what the demand is," said Rittvo of the Louisiana-based Innovation Group of Companies.

He later added: "There is very little additional gaming revenue that can be extracted from Philadelphia if you put another facility there."

Under questioning by several legislators on the committee, Fajt said the SugarHouse casino, which opened last September in Philadlephia's Fishtown section, has been performing at half its original projections for slots revenue.

But, he said, the casino's revenue from poker and other table games has been "astounding," and urged legislators not to read too much into SugarHouse's performance at this early stage. The casino has only been open for six months, he said, and its operators are still trying to figure out the best mix of games to offer customers.

He also pointed out the impact of the recession, not just on SugarHouse but the entire industry.

Nonetheless, Fajt noted, 55 percent of gambling revenues goes to the state, and since 2006, he said, that has added up to more than $4.7 billion.

"That's billion, with a 'b,' " Fajt told the legislators.

But state Treasurer Rob McCord, who also testified Thursday, stressed that since slots were legalized in 2004, the gaming landscape has dramatically changed. Ohio and Maryland have approved gambling. New York is adding a racino at the Aqueduct racetrack in Queens. And Delaware, like Pennsylvania, is expanding to table games.

If the decision is made to auction the Foxwoods license, McCord said, the legislature should use the most up-to-date data to determine which location might generate the most revenue. He offered to have his department conduct such a study.

"I have no dog in this fight," said McCord, an ex-officio member of the Gaming Control Board.

Still, Jeff Hooke, managing director of Focus Securities LLC, a market research and advisory group, testified that if Pennsylvania were to auction off the Foxwoods license, it would get the best bids for a casino to be located in Philadelphia.

Such a license, he said, could fetch anywhere between $200 million and $300 million.

Outside Philadelphia, he predicted, that would plummet to $50 to $75 million.

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