Gaming board moves to strip Foxwoods group of license

It was a last-ditch effort, and the investors behind the Foxwoods Casino knew it. They have had no money, no design, no project, since Las Vegas tycoon Steve Wynn left them at the altar on April 8.

In a compromise worked out by lawyers for Foxwoods and the Pennsylvania Gaming Control Board in the last few days, the partners agreed to come up with all the ingredients for a new project in 180 days - or forfeit their license, plus the $50 million they paid for it.

On Thursday, however, the seven directors on the Pennsylvania Gaming Control Board unanimously nixed that idea, leaving their lawyers to file a motion to strip the Foxwoods group of its gaming license.

The two sides said they would continue talking, and Foxwoods intends to keep negotiating with potential investors to replace Wynn and revive the project on Columbus Boulevard in South Philadelphia.

But if the license does come up for fresh bidding, at least one party has expressed interest: Steve Wynn.

In a conference call with analysts and investors Thursday, Wynn was asked whether he would consider making a pitch. His answer: "Yes."

In the Foxwoods deal, Wynn Resorts Ltd. was "a participant in someone else's company," he said. Under an agreement signed April 2, an affiliate of Wynn Resorts would have become a partner with local investors and the Connecticut-based Mashantucket Pequot Indian tribe.

"We've never done that before," Wynn said, "and it became unattractive to us at the last minute."

Gaming opportunities in the state remain interesting, he added: "We backed out of a deal, rather than backing out of Pennsylvania."

The Foxwoods project is being steered by a trio of local entrepeneurs who have promised their profits to charity: developer Ron Rubin, New Jersey lawyer Lewis Katz, and Comcast-Spectacor chairman Ed Snider. All are close friends of Gov. Rendell.

A Rendell spokesman, Gary Tuma, said the governor would have no comment on the gaming board's action Thursday.

Within 30 days, the Foxwoods partners must file a response to the petition to revoke their license. Then it's up to the gaming board to schedule a hearing.

F. Warren Jacoby, a lawyer for the Foxwoods group, said he was "surprised and disappointed" by the board's actions.

"If the real object is to get a casino open," he said, "I would suggest that this is not the right solution."

On Thursday, the board also decided to continue fining the project $2,000 a day and demanded that the group pay $114,000 in the next five days, representing the fines accrued since March 3, when the board last reviewed the Foxwoods situation.

Jacoby said the Foxwoods group was engaged in "focused" talks with three potential investors, as well as "conversations" with two or three others. He declined to identify the parties.

"We continue to work to identify investors and sources of financing," he said. "We have to work a lot faster."

Cyrus Pitre, chief enforcement counsel for the gaming board, said regulators would continue on a dual track with Foxwoods - resuming negotiations for an agreement while pursuing the license revocation.

Under its license, awarded by the state in 2006, Foxwoods has until May 2011 to have 1,500 slot machines in operation. The new gaming law, however, would allow the group to apply for a license extension until December 2012.

Jacoby said the Foxwoods group had asked for a six-month extension because that was how long it took to iron out a deal with Wynn.

State Rep. Michael O'Brien, a Democrat who opposes building big-box casinos on the waterfront, called the proposed consent decree "yet another lame attempt at rescuing a failed project."

"I hope the board will continue exercising its duty to put an end to this licensee and do everything possible to get the rebidding process begun for a new licensee," he said.

About three dozen anti-gaming activists, holding signs reading "Revoke Don't Rebid," filled a Senate hearing room in the North Office Building.

Paul Boni, a lawyer for Casino-Free Philadelphia, expressed doubt that the board would act quickly. "It wouldn't surprise me if this board just dragged its feet until the election in the fall to see where the political chips may fall," he said.

Kenneth McCabe, a board member, said the board found the proposed agreement, or consent decree, "not acceptable and not in the public interest." Foxwoods had sought to keep the document confidential, but the board released it to the public.

In 2006, the investors in Foxwoods - who call themselves Philadelphia Entertainment and Development Partners (PEDP) - won an intensive competition for one of two gaming licenses for Philadelphia. The second license went to the SugarHouse Casino on Delaware Avenue, on a 22-acre site in the Fishtown and Northern Liberties sections. It is set to open in September.

In the motion to revoke the Foxwoods licence, a lawyer for the office of enforcement counsel, Dale W. Miller, wrote that PEDP "no longer has the financial or operational ability to plan, design and construct a facility on Columbus Boulevard" with 1,500 slot machines by May 29, 2011.

He said the only contingency plan, "if such a plan exists, is to construct a temporary or interim facility, which has not been approved, much less contemplated, by the board."