Friday, October 24, 2008

The Tribe In The Media: Update On Possible Third Slot Parlor In The Poconos

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This installment of the Tribe In The Media is an article from today's Times Tribune that offers a consultant's analysis of the effect a third Pocono slot parlor would have on the Mohegan's Pocono Downs and Mount Airy Resort.

Gaming consultant: Fernwood would hurt Mohegan Sun, Mt. Airy
By Robert Swift
Times Tribune
October 24, 2008

A consultant anticipates that Fernwood Hotel and Resort will draw some business away from the two operating casinos in Northeast Pennsylvania if a resort casino is licensed there.

Stephen Szapor, managing partner of Innovation Managment Services, Littleton, Colo., told state gambling regulators Thursday that 82 percent of an estimated $26 million in annual slots revenues at Fernwood will be generated by new customers, namely hotel guests and owners of time-shares on the property on Route 209 in Bushkill, Monroe County.

Mr. Szapor predicted that Mount Airy Casino Resort in Paradise Twp. and Mohegan Sun at Pocono Downs in Plains Twp. will lose some revenue to Fernwood, but he didn’t have a specific breakdown. Mr. Szapor testified on behalf of Fernwood at a gaming board hearing to determine whether the Pocono resort is suitable to hold a state slots license.

He was questioned by gaming board Chairwoman Mary DiGiacomo Colins about the extent to which Fernwood would “cannibalize” slots revenue from nearby casinos.

Mr. Szapor said the reverse of that scenario could also develop, where guests come to Fernwood to play slots and then drive to a nearby casino for a new experience.

Fernwood, owned by Bushkill Group Inc., is one of two remaining applicants for two available resort licenses that allow up to 500 slot machines for a small clientele.

Referring to the crisis in the credit markets, Ms. Colins asked a key lender how solid Fernwood’s financing for the casino project is.

“We believe the project will be a success,” said Steven Reedy, managing director for CIT Investment Banking Services, Morristown, N.J.

The economic downturn already prompted a third resort license applicant, the Resort at Split Rock in Carbon County, to withdraw earlier this month.

With Split Rock out of the picture, Fernwood and the Valley Forge Convention Center, at King of Prussia, Pa., remain as applicants.

The board will make a decision on the suitability of the two applicants and schedule a vote on awarding the licenses before year’s end, said spokesman Richard McGarvey.