Wednesday, December 06, 2006

Pennsylvania Casino decision getting closer - Gaming board weighs options this week

Just before Christmas, the final licenses will be awarded. Until then, starting Monday, casino proponents — including those with proposals in Allentown, Bethlehem and the Poconos — will make their final pitches.

Las Vegas Sands vows to save Bethlehem Steel's legacy. Aztar promises to pull Allentown from its financial ditch. Crossroads Gaming near Gettysburg sees itself as a destination for millions of out-of-state gamblers. Mount Airy Lodge and Pocono Manor in the Poconos say they will draw not only local gamblers, but also day-tripping New Yorkers.

Only two will get a coveted slots license.

So who will win this race? Well, Wall Street analyst Brian McGill has laid odds making Bethlehem and Mount Airy the front-runners, but in reality, the only people who matter are the seven gaming board members. With four appointed by legislators and three selected by the governor, they must reach a unanimous decision, because all seven have veto power.

For those who haven't waded through 1.4 million sheets of proposals, here's a CliffsNotes version of what the board has to consider:


Few cities need the $10 million fee that gaming brings each host municipality more than Allentown, and few others can boast having virtually no opposition to a casino. Almost overnight, Allentown's budget deficit would be erased, and a desperate city would get a new tax-paying business and 1,300 new jobs.

But Pennsylvania Gaming Control Board members must weigh Allentown's need against whether the full potential of the Aztar Corp.'s plan matches up with its chief competitor in Bethlehem.

LOCATION — Its site is Aztar's strength, or weakness, depending on who is doing the evaluating. On 23 acres of former Agere Systems land in east Allentown, the project wouldn't be in the city's struggling downtown, where its millions of casino visitors could spill over into the downtown business district. However, the site is not near any schools, churches or homes, which is likely why there was virtually no opposition to it during public hearings before the gaming board last summer. It is less than 2 miles from Route 22, making access easy for most in the Valley.

One potential drawback is its size. At 23 acres, there is little room for ancillary development.

OPERATOR — Aztar Corp. is considered a midrange casino operator with five locations, including one in Las Vegas and its flagship Tropicana resort in Atlantic City, N.J. Though some of its competitors boast upscale gaming, Aztar Corp. argues that its riverboat facilities in towns such as Evansville, Ind., are what make it the perfect fit for the Lehigh Valley.

A potential drawback is that Aztar is being acquired by Columbia Sussex Corp., which owns several casinos in addition to 81 hotels. Aztar officials said the acquisition makes the company bigger and better, but some analysts believe the uncertainty of the new ownership could create doubt among board members.

PLAN — What would be named the Tropicana, Lehigh Valley, would be a $325 million casino with at least 3,000 slot machines, 250 hotel rooms, a dozen restaurants and shops and 3,400 parking spaces. All of it would have the architectural flavor of Havana. A second, $200 million phase would expand the hotel and casino, add restaurants, build a new parking garage and add a conference center.


On the banks of the Lehigh River are 126 acres of rusted Bethlehem Steel property that could return to life if the Pennsylvania Gaming Control Board allows Las Vegas Sands to build a casino on it. That's the argument of city officials and developers, who say that without the casino, the remnants of Steel will have to be demolished if that site is ever to be redeveloped.

''We have a unique site in a great location and we have the best operator in the industry,'' said Bethlehem Mayor John Callahan. ''It's not just the most impressive site in the Valley, it's the most impressive in the state.''

Regardless, there have been few places in the state where opposition to gambling has been more active. The Moravian Church and community groups such as the Citizens for a Better Bethlehem argue that bringing gambling to Bethlehem would ruin the quaint and historic atmosphere city leaders have spent decades building.

LOCATION — There is perhaps no site in the state that carries more nostalgia than the Bethlehem Steel lands. For Gov. Ed Rendell, who has argued that legalized gambling should not only provide tax relief but also bring economic revitalization to the communities that host it, Bethlehem is the poster child for his vision. Not only would some of the Steel buildings be reused, but the casino could anchor a district that could include the National Museum of Industrial History and a shopping mall. Officials at Artsquest say that their performing arts center and a concert arena project will occur regardless if the casino goes in or not.

Proponents argue that its location on the edge of Bethlehem's South Side business district would bring new customers to those businesses.

A $70 million highway-widening project is planned to help ease traffic into south Bethlehem from Interstate 78.

The downside, said Citizens for a Better Bethlehem leader David Freeman, is that gambling is not needed in a historic city that is doing well without it.

OPERATOR — Las Vegas Sands, with its $18 billion market value and $1.7 billion in annual revenues, is the Neiman Marcus of the casino industry. It is building casino complexes around the world, but its lone casino in the United States is one of the world's most luxurious. The massive Venetian Resort Hotel in Las Vegas has more than 4,000 rooms and an upscale shopping mall that includes an indoor canal modeled after Venice, Italy. It is the top shelf of the gaming industry, but opponents question whether it is too big. While Sands builds $4 billion worth of casino hotels in Macau and Singapore, opponents ask how much attention it would pay its smallest property in Bethlehem?

PLAN — Its $350 million Phase 1 looks much like the casino and hotel plans of most of its competitors: an industrial look and a casino with 3,000 slot machines, a 300-room hotel, a multiscreen movie theater, dozens of restaurants and upscale retail shops and a parking garage for nearly 6,000 vehicles. More importantly, at 126 acres, Sands has room to grow and donate pieces of land to allow ArtsQuest to build a performing arts center and 3,500-seat concert hall, and the National Museum of Industrial History to build exhibits. Developers also plan as many as 1,200 loft apartments and a full project cost of $879 million. At full build-out, it would be one of the largest in the state.

Mount Airy

Mount Airy has pitched a substantially smaller casino plan than the other Monroe County site, Pocono Manor, centered primarily on lodging and gaming. That could help other area businesses because slots parlor patrons might have more incentive to wander off the casino property in search of entertainment.

The project is designed for ''the whole area to benefit, not just Mount Airy,'' said its spokesman, Kevin Feeley. ''We by design chose not to compete with those attractions but to complement them.''

But it also means promises of fewer jobs and less tax revenues than what Pocono Manor has pledged.

Nevertheless, McGill of Susquehanna Financial Group said the project is the front-runner to win a slots license in the Poconos.

McGill gave Mount Airy 3-to-1 odds in winning a license, in part because of a commitment by Mount Airy's owner Louis DeNaples to build a hotel regardless of whether he wins a license. McGill said DeNaples is also favored because of his business and political activities. DeNaples and his family have heavily contributed to state and federal political campaigns.

On the flip side, some of DeNaples' alleged connections could create problems for him landing a license.

LOCATION — It will be built in Paradise Township on the site of the renowned — and since demolished — Mount Airy Resort. Access will be from Woodland Road, which leads from Route 611 to the hotel and casino. Mount Airy officials have said their project would boost regional tourism and economic growth because of its location along the Route 611 corridor. It's within 10 minutes of The Crossings shopping outlets and within 15 minutes of 22 hotels with an average 54 percent occupancy rate.

The site's name recognition also is expected to help generate tourism.

A downside: The site is near a Pocono Mountain School District complex.

OPERATOR — The resort would be run by a team of gaming industry executives led by Paul Henderson, the former president and chief operating officer of Caesars Atlantic City, the Atlantic City Hilton and Trump Marina Hotel and Casino.

The project is owned by Lackawanna County native DeNaples, who owns nearly 100 businesses, including two landfills, and is chairman of a $1 billion Scranton bank.

DeNaples' slots application has come under scrutiny because of his 1978 felony conviction for submitting fraudulent invoices to the federal government for cleanup work after the Hurricane Agnes flood in 1972. Years later, state and federal investigators claimed to link DeNaples to organized crime, saying he had ties to William ''Billy'' D'Elia, the reputed head of the Bufalino family in Northeastern Pennsylvania. Neither DeNaples nor D'Elia was charged with any crimes.

The gaming board is only required to consider convictions 15 years old or newer.

Additionally, DeNaples' connection to members of the Pennsylvania Gaming Control Board has drawn attention.

Board member Ray Angeli is president of Lackawanna College and reports to the college's board of trustees, which until recently was headed by DeNaples' brother, Dominick. Al Magnotta of CICO Associates, DeNaples' chief engineer at Mount Airy Lodge, also resigned from the college board amid concerns his ties to Angeli would bias the gaming board member.

Feeley said the allegations shouldn't matter.

''It shouldn't make a difference because it's just not accurate. [DeNaples] has built a record of achievement in both the business world and the world of philanthropy, that really is second to none,'' Feeley said. ''We believe the gaming board can come to their own conclusion about what's fact and what's fiction about Louis DeNaples.''

PLAN — DeNaples has proposed a $412 million project that includes an 18-hole golf course, 200-room hotel and a glass-enclosed pool. The 547,000-square-foot resort also will have a 400-seat restaurant, 120-seat steakhouse, 300-seat nightclub and retail space.

Construction already has begun on the hotel, which is scheduled to open regardless of whether DeNaples is awarded a slots license.

The new pool building will take up nearly an acre and will be built behind the planned casino.

Pocono Manor

This massive $3.1 billion project bills itself as the largest casino plan in the state, promising to create nearly 4,000 jobs and generate annual gaming revenues exceeding $350 million.

How? With a colossal entertainment complex that would contain 3,000 slot machines to start — 5,000 upon completion — alongside a convention center, 6,000-seat sports/entertainment arena, two golf courses, a dozen upscale restaurants and more than 600,000 square feet of retail space encircling a 12-acre lake.

And it's expected to have about 2,000 hotel rooms by the time construction is completed.

''We're planning a world-class resort,'' said Greg Matzel, the New Jersey developer who bought Pocono Manor.

Matzel has said the ambitious project would become one of the region's largest employers, and the expected midweek convention business would rival events held in New York City and Atlantic City.

LOCATION — The 3,000-acre Pocono Manor property is between Interstate 380 and Routes 940 and 314 in Tobyhanna Township. It sits two miles north of Camelback Ski Area, a major resort. Entrance-only access would be provided off Route 940, while two main entrances and exits would be off Route 314.

OPERATOR — Dennis Gomes, who previously was president of Aztar Corp. and ran the Tropicana casinos in Las Vegas and Atlantic City, will become the chief executive officer of Pocono Manor should it be granted a casino license. In addition to heading Matzel Development, Matzel is a principal of Pocono Manor Investors, which owns Pocono Manor. If the facility is licensed, Matzel will become chairman of the Pocono Manor and Casino.

PLAN — Pocono Manor is proposing a ''destination resort'' of more than 600,000 square feet of retail space, a 750-room hotel, two large conference centers, a sports arena and a 120,000-square-foot convention center. It also wants a 230-foot-tall, glass-enclosed hotel and casino. Plans have drawn little opposition with the exception of three community groups, who don't like the height of the hotel/casino. Some also have complained that the proposal will include so many amenities, it will dissuade gamblers from patronizing other area businesses.

Adams County

Pennsylvania would never allow a casino near the historic battlefields where the Union Army beat back Confederate forces during the Civil War, right? That's the conventional wisdom among political observers. McGill, the Wall Street analyst for Susquehanna Financial Group, puts 99-1 odds against the state letting casino developers anywhere near Gettysburg. Yet, executives at appropriately named Chance Enterprises said there isn't a better place for their $350 million casino and hotel complex in Straban Township.

''For all those people who say we have no shot, I have two words: Vicksburg, Mississippi,'' Crossroads spokesman David LaTorre said, referring to the Civil War battlefield town that has four riverboat casinos. ''They've reduced taxes, rebuilt their schools and rebuilt their town. Not bad for a town with four riverboat casinos across the road from a battlefield.''

If you're wagering at home — for entertainment, of course — here are factors that may determine whether Gettysburg's longshot comes in:

LOCATION — Of all slots applicants, none has a more controversial site: roughly two miles from the Gettysburg battlefield, perhaps close enough to scare board members. There is a large group of locals who oppose the project.

Yet it has the potential to be the most lucrative site outside of Philadelphia. Sitting just 10 miles from the Maryland border, its ability to draw visitors from Baltimore and Washington, D.C., could yield $320 million a year, according to a 2003 study commissioned by the state Senate Appropriations Committee. But that comes with a downside. If gambling is approved in Maryland, the casino's business would be cut by more than half, according to the study.

OPERATOR — Millennium Gaming Inc. would operate the facility, with partners who once helped run luxury casinos such as Mirage, MGM and Excalibur, all in Las Vegas. But the development group Crossroads Gaming Resort and Spa is led by Gettysburg-area businessman David LeVan. LeVan, 59, owner of Battlefield Harley-Davidson, grew up in Gettysburg and spent 30 years in Philadelphia as an accountant and then chief executive officer of Conrail, until 1997. Before gambling was approved, he donated money for the preservation of historic sites in Adams County. His local popularity has gained the trust of some opponents.

However, even some of LeVan supporters have expressed worry, because documents released in August show that while LeVan is the front man, he owns just 12.5 percent of the plan, compared with the 75 percent owned by Silver Point Capital of Greenwich, Conn. While locals worry that decisions will be made by out-of-town majority investors, LaTorre said as chairman LeVan makes all the decisions.

PLAN — The $350 million resort, near Routes 15 and 30, would include a 224-room hotel with a spa and at least 3,000 slot machines. Its ancillary development plan, with a few shops and several restaurants, is modest compared with the later phases in Bethlehem and Pocono Manor.

The next step

It's taken a mountain of paper, hundreds of hours of public hearings and 12 months of waiting since 22 applicants applied for the right to run one of Pennsylvania's 14 casinos. By Christmas, millions of would-be gamblers will know where they'll be able to drop their quarters into one of the state's fancy new slot machines. Whether it's near a historic battlefield, on a vacant industrial site or in a defunct resort, one thing is certain: Casino companies expect to make a fortune. In its first eight days of gambling, Mohegan Sun at Pocono Downs — the only casino to open in Pennsylvania — saw nearly $43 million bet. Roughly $38 million was paid back to winners; $2.4 million will be paid in state and local taxes. That leaves $2 million for what was projected to be one of the smallest casinos in the state.

''You can see why so many casinos are anxious to get into this market,'' said gaming board spokesman Doug Harbach. ''Those numbers indicate that maybe the revenues from this will be even more significant than we thought.''

More here.


Vanessa Williams said...

I really hope the licenses go to Mount Airy Lodge in the Poconos, and Las Vegas Sands in Bethlehem. I think they both have the best potential for positive impact on the community. I just visited Gettysburg, and the citizens are overwhelmingly opposed to the casino there. Everywhere you looked there were opposition signs, especially in local businesses. I only saw 3 signs for the casino. Bethlehem opponents argue that it will wreck the historic image of the city. They are trying to lump the south and north sides together - two very distinct and very different areas. I think the casino will have little impact on the northside, with the exception of bringing in significant revenue that the whole city will benefit from. The other positive of both of those sites is that they occupy a space that already has or had development on it. There is no need to take open space. Only time will tell where the casinos end up. Here's hoping we at least get one in this area! We need it.

Loretta said...

Oh my God, they demolished the old Mount Airey Hotel!!! Me and my significant other stayed there in the mid ninety's had the heart shaped tub round bed,poolattached to our room with a glass divider and also fireplace. I guess people get big kicks putting money in to a no brainer slots, except for the poker ones!! What a shame!!! It was nostalgic kinda like the movie Dirty Dancing!!!

Loretta said...