Wednesday, October 27, 2010

Foxwoods Philly Casino Revived With Harrah's Talks

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This installment of the Tribes In The Media is an article in the Atlantic City Press on a tentative deal between Harrah's and the group licensed to build a Foxwoods Philadelphia casino in Pennsylvania.

Harrah's Entertainment seeks minority ownership to run Philadelphia's Foxwoods casino
By Brian Ianieri and Eric Scott Campbell
October 27, 2010

Harrah’s Entertainment, the world’s largest gaming company and owner of four Atlantic City casinos, wants a larger stake in the rival market growing across the Delaware River.

Harrah’s announced plans Tuesday to salvage the troubled Foxwoods casino project in Philadelphia. Under the terms, Harrah’s would take a minority ownership and run the riverfront property on South Columbus Boulevard.

The plan drew mixed reactions from Atlantic City observers, analysts and state legislators as Harrah’s seeks a stronger hold in a new market an hour’s drive away on the Atlantic City Expressway.

“Harrah’s only interest is their corporate bottom line in Nevada. They don’t care about Atlantic City. They don’t care about New Jersey,” said state Sen. Raymond Lesniak, D-Union, a proponent of bringing video lottery terminals to the Meadowlands. “They made a corporate decision they’ll make more money in a casino in Philadelphia than they’ll lose draining it from Atlantic City,” he said.

Others believe there could be benefits to Atlantic City by having Harrah’s own casinos in both markets — potentially building a larger base of loyal gamblers.

The deal between Harrah’s and the existing Foxwoods investors, Philadelphia Entertainment and Development Partners, hinges on regulatory approval and sufficient financing. The existing investment partners include the Mashantucket Pequot Tribal Nation in Connecticut and a large group of Philadelphia-area investors.

The Pennsylvania Gaming Control Board is considering stripping the license of the proposed Philadelphia casino beset by years of delays due to financial problems and neighborhood opposition. Oral arguments are scheduled for today.

Investors in Foxwoods hope the casino can open in 2012 with 1,500 slot machines, more than 70 table games, restaurants and a sports bar.

“Atlantic City has known for several years now that there was going to be a second casino in Philadelphia. The more supply there is outside Atlantic City, the less demand there will be inside Atlantic City,” said Joe Weinert, senior vice president at Spectrum Gaming Group in Linwood, a consulting firm that previously worked with Harrah’s.

The proposed deal means existing creditors, which include Harrah’s and Citizens Bank, would agree to restructure interests, the investment company said in a release Tuesday. Through the partnership, Harrah’s would invest more money in the property and be given a management role.

For a number of years, Harrah’s has discussed a role it could play in the proposed Foxwoods casino, said Jacqueline Peterson, spokeswoman for Harrah’s.

Harrah’s is limited in what it can say because it is in a “quiet period” mandated by the federal Securities and Exchange Commission as it plans to move from a private company to a publicly traded one.

Harrah’s owns the Harrah’s Chester Casino & Racetrack in Pennsylvania. Philadelphia’s first casino — the $355 million SugarHouse Casino — opened in September. The Foxwoods property is a vacant riverfront lot close to Interstate 95 interchanges. Pennsylvania legalized casino gambling in 2004. The first slot parlor opened in 2006, and the first casinos with table games opened this year.

New Jersey state Sen. Jeff Van Drew, D-Cape May, Cumberland, Atlantic, said the potential move illustrates the need to make Atlantic City a location that cannot be replicated elsewhere, one that’s cleaner, safer, brighter, with more dining and more shopping.

“It’s a stark reminder of the competitive nature of this business and of how important it is we make Atlantic City a very unique experience, because if we don’t we are going to be in deep trouble,” Van Drew said. “If we don’t do that, it’s a moot point whether it’s Harrah’s or somebody else.”

Atlantic City Mayor Lorenzo Langford said of the Harrah’s arrangement, “I really don’t know what that might mean,” declining further comment.

Republican Gov. Chris Christie’s office declined to comment on Tuesday.

Jane Pedreira, a gaming analyst for FBR Capital Markets & Co., said the move makes sense for Harrah’s.

“It allows them to hedge a little bit, to mitigate the declines they’ve had,” she said.

“I would say it’s very synergistic,” Pedreira said. They’ll have customers that will want to play in Atlantic City as well. I don’t feel it necessarily means they’re going to take Atlantic City customers and steer them in any direction, but I think it makes their customers more loyal if they have a choice.”

“I don’t think it’s necessarily a positive for Atlantic City, but I think it’s probably the least negative,” she said. “If you’re going to have an owner, might as well make it an owner with (four) properties.”

In Atlantic City, Harrah’s owns Bally’s, Caesars, Showboat and Harrah’s Resort.

“All of those (Pennsylvania) properties are just another form of convenience gaming, and Atlantic City needs to be much more than that,” said Assemblyman Vincent Polistina, R-Atlantic, who said he was confident Harrah’s would use Foxwoods to divert customers to Atlantic City for a richer experience.

Assemblyman John Amodeo, R-Atlantic, said another Philadelphia casino will create more competition.

“As a partner in Atlantic City they should try to concentrate on Atlantic City and not worry about developing in a neighboring state where that competition has targeted us. I have friends in Pennsylvania that still want to travel to our amenities ... there’s a world of difference.”

A group called Casino Free Philadelphia has been pushing the gaming board to revoke Foxwood’s license to block casino gambling in the Philadelphia.

“It’s been four years since they got the license. They haven’t been able to put together the financing,” said group spokesman Dan Hajdo.