PGCB enforcement arm: Kill Foxwoods license

April 29, 2010

By Kellie Patrick Gates
For PlanPhilly

Foxwoods’ casino license should be revoked, the Pennsylvania Gaming Control Board’s chief enforcement officer said during a break in a hearing in Harrisburg Thursday.

Cyrus Pitre told the press his office had just filed a complaint asking the PGCB to yank the license.

This came just hours after Pitre’s Bureau of Investigations and Enforcement reached an agreement with Philadelphia Entertainment and Development Partners that would have given the casino team an additional 180 days to turn in a financial agreement, drawings and site plans for the casino proposed for South Philadelphia.

The gaming control board rejected both that agreement and a request to keep the information in it confidential. (Foxwoods attorney Fred Jacoby told the board his clients wanted to keep paragraphs three and four of the agreement confidential, because the information they contain could harm Foxwoods’ ability to negotiate with potential investors.)

“I thought had a decent deal,” Pitre said when asked why he petitioned the board to yank the license after first encouraging them to consider the agreement. “Everyone stood to gain something, everyone stood to lose something. What we stood to lose was time. They stood to lose, I think, a whole lot more.”

The rejected consent agreement, released about an hour after the proceeding, seems to shed light on Pitre’s answer.

Had the board approved the agreement, Philadelphia Entertainment Development Partners would have been bound to voluntarily surrender their license at the end of the 180-day extension period if they  failed to produce the financial and planning documents within that time. That means the board could have started the process of re-awarding the license in six months.

Pitre said that the revocation process could take a year or more. “I’m sure it’s going to be a very heated battle. There’s a lot of money at stake,” Pitre said. “I don’t expect them to just roll over and say, ‘here’s the license. Have a good day.’”

The revocation complaint states that the Office of Enforcement Council believes that PEDP should lose their license for failure to comply with board orders demanding the documents and because it has “no funds, financing, prospects of obtaining financing, or prospects of entering a partnership with others who could obtain financing to begin or complete the construction of a facility with a minimum of 1,500 slot machines…and have a license facility open to receive the public on or before May 29, 2011.”

An amendment to state gaming law would allow the board to give Foxwoods until December 2012 to make slots available. As of Thursday, Foxwoods had not requested an extension.

Foxwoods has 30 days to file an answer to Pitre’s complaint and request a hearing. Then the proceedings enter the discovery stage, which also has the potential for legal battles, Pitre said.  A public hearing would have to be held before the board could vote, something which could happen this summer, Pitre said. But if the board votes to revoke the license, Foxwoods can appeal to the State Supreme Court, he said.

The dead agreement also states that the board could void it at any time during the 180 days if the BIE determined that Foxwoods is not making a good faith effort. And it would have prevented PEDP from filing either Chapter 7 or Chapter 11 bankruptcy prior to either the end of the consent period or early termination by the board.

The 180-day extension would have been the third time the board set a deadline by which Foxwoods had to provide the information or risk license revocation. Everything was originally due Dec. 1. The most recent previous financial deadline was March 30. The drawings and site plans were due this past Monday, April 26.

After the board voted down Foxwoods’ requests – but before Pitre announced he had filed the complaint – Jacoby said the 180 days requested represented the amount of time Foxwoods had spent negotiating with casino mogul Steve Wynn.
Wynn told the board in March that he was going to be the lead partner in the Foxwoods casino. With Wynn, Foxwoods had turned in the financial documents prior to the March 30 deadline, and the construction and planning documents well ahead of their Monday deadline. But Wynn took his money and plans earlier this month when, days after turning in drawings and discussing his plans with Philadelphia city officials, he withdrew from the project.

Wynn’s withdrawal essentially put the Foxwoods team back at square one through no fault of their own, Jacoby said.  To this day, he said, the Foxwoods team does not know why Wynn left.

When asked about the boards decision not to accept the agreement, Jacoby said, “We were surprised, disappointed. We thought that the consent agreement was fair. We respectfully disagree that it was in the best interest of the commonwealth, the taxpayers and the potential employees. And we will continue to work with the bureau of investigation and enforcement and try to come up with a solution that the board will accept.”

Jacoby said during the board meeting that Foxwoods has been in “focused” negotiations with three investment sources, and has also been talking with several others. These talks will also continue, he said after the meeting.

Although Jacoby did not know when he spoke that Pitre was going to file a complaint to revoke the license, he said that the board’s actions did make him concerned that things might be headed that way. Revocation would not be good for anyone, he said. “A revocation proceeding would be long, drawn out and expensive process for everybody, and if the real objective is to get the casino open, I would suggest that that’s not the right solution.”

Pitre and BIE Deputy Counsel Dale Miller said that their office will continue to talk to Foxwoods to try to reach an agreement that can be presented to the board. They said the office always moves on dual tracks, so continuing to negotiate while having filed a petition to rescind is not unusual. It is what the OEC did in a situation with a Pittsburgh casino, too.

“Foxwoods is obviously going to have to come back with a whole lot more before I enter into a consent agreement with them,” Pitre said.

If the license is revoked, the gaming control board would have to devise procedures to re-bid the license, and start that entire process again. In all, Pitre predicted it would be at least four years before anew licensee could be named.

That new license would not necessarily apply to the current South Philadelphia waterfront location to which the Foxwoods license is tied, he said.

A new location would please some city officials and residents, who have always said Columbus Blvd. and Reed Street was problematic because of traffic concerns and its proximity to residential neighborhoods.

State Rep. Michael O’Brien is one of a group of local elected officials who has asked the gaming board to revoke the license and is hoping a new location will be found for a new licensee.

“I am happy the Board recognized giving PEDP an additional 180 days to attempt to come up with a plan was not in the publics best interest,” he said in an emailed statement. “I am glad the Board, through enforcement counsel, is moving to revoke this license and find a more suitable licensee.

“Further, their inability to work to develop this site validates what I have been saying for years, this site is flawed and it is undevelopable for the purpose of a casino.”

But a change in locale wouldn’t be enough for Casino-Free Philadelphia. Attorney Paul Boni said his group would be satisfied only when the license is “revoked and not rebid.” He said the BIE’s complaint was just “theatrics.”

Casino-Free members say casinos are a predatory industry that hurt communities by bringing crime and addiction. The group brought a bus load of protesters to the hearing, many of whom carried signs urging the board to get rid of Philadelphia’s second casino license altogether. (SugarHouse is already under construction in Fishtown, and set to open this summer.)

“We came to Harrisburg to demand that the license be revoked and not re-issued, because predatory gambling has no place in Philadelphia,” said Lily Cavanagh, organizing director for Casino-Free Philadelphia, in a statement issued after the board meeting. “The board, unfortunately, has let down the public once again — despite its ‘complaint,’ it’s clear they have yet to recognize the predatory nature of any casino proposal.”

The casino concern has been paying a $2,000 per day fine, retroactive to Dec. 1, for being tardy, and the board voted to continue that fine and told Foxwoods it has five days to make another payment of $114,000 – the amount accrued since a March 3 payment was made.

The next PGCB meeting is set for 10 a.m. May 13 in Harrisburg.


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