Park Place partner takes step toward Indian casino in N.Y.

David Strow

Monday, Aug. 13, 2001 | 10:31 a.m.

Park Place Entertainment Corp.'s vision of a casino resort in the Catskills took another step forward Friday when its partner, the St. Regis Mohawk Tribe, struck a deal that will secure the support of formerly critical local officials.

The price of their support: $15 million a year.

The agreement in principle, which must still be approved by the Sullivan County Legislature and the Mohawk tribal council, calls for the annual payment of that amount to Sullivan County and the town of Thompson, the community which would be home to the proposed $500 million casino 100 miles northwest of New York City.

In exchange, Sullivan County will tell the Bureau of Indian Affairs it supports the project, and will "urge" the U.S. Department of Interior to allow a related land deal to go forward.

Park Place Chief Executive Tom Gallagher called the deal "a major step" in the approval process.

"This was a big win for everyone involved," Gallagher said. "It was important to us to reach a deal with the county that everyone was happy with, and this agreement does that."

It is a significant step, observers agree, though major hurdles still remain. Negotiations for a compact with New York Gov. George Pataki continue, and the BIA must still approve of the tribe's application to place the casino's proposed location in trust for the benefit of the tribe, something that's not been done in New York before.

"I'd say it's a step, not a huge step," said gaming analyst Dennis Forst of McDonald Investments. "There's a lot of steps to go ... I would not factor it (the proposed casino) into my earnings estimates yet."

But if it is built, "it could be huge," Forst said.

"You're within 90 minutes of New York City," Forst said. "In theory, it should make a ton of money. It would assume it would make money similar to some of the better Las Vegas Strip casinos."

Officials in the Catskills region have been trying for "years and years" to land legalized gambling, but have never been able to convince the state of New York to go along, said Shannon Bybee, executive director of UNLV's International Gaming Institute.

"It's good, it's helpful (to have local support), but it's no guarantee the state will go for it," Bybee said.

While it may be a slight positive, Bybee said it would have been a far larger negative had county officials not agreed to the deal.

"There may be enough opposition to not get it through (the state legislature), but they (casino opponents) won't be able to use local opposition as the excuse to stop it," Bybee said. "That's significant from a political standpoint."

That was the case a year ago, when local officials expressed their displeasure with the Park Place-Mohawk alliance struck in April 2000. The tribe had previously partnered with Catskill Development to build a $505 million casino at a nearby racetrack, and the partners had already received federal approval to put a 30-acre land parcel in trust for the Mohawks.

When the Mohawks suddenly dumped Catskill Development for Las Vegas-based Park Place -- and the racetrack for a nearby resort -- Sullivan County officials made it clear they were troubled, primarily because bringing a new partner could delay the process for years.

"There's a window of opportunity to get this casino done at the Monticello Raceway," Raymond Pomeroy, chairman of the Sullivan County Legislature, said in May 2000. "By starting the process all over again, that window is shut." Pomeroy went on to warn the tribe that the county would review casino options with other tribes if the final location wasn't the racetrack.

Thompson Town Supervisor Anthony Cellini also blasted the switch. "It's not fair to the residents, to put them on the roller coaster ride they've already been through," Cellini said.

With Friday's deal, however, their tones had changed dramatically.

"We believed it was crucial not to be totally dependent on Albany for compensation from the resort/casino, and we think this separate agreement, along with the economic benefits a resort/casino will bring, is a huge win for the county," Pomeroy said. "We look forward to joining with Park Place and the St. Regis Mohawk Tribe to ensure this project receives speedy approval at all levels."

"I am pleased to be part of a process that is brining 4,000 jobs to the town of Thompson and a substantial payment to offset expenses of the town," Cellini echoed. "Working with the tribe, Park Place and the county is a pleasure."

But the former partner of the Mohawks, Catskill Development, is still seeking retribution for the switch. In November 2000, Catskill sued Park Place for $6.3 billion in New York federal court, accusing the Las Vegas company of tortious interference and conspiracy to stop its racetrack casino plans.

This lawsuit is now pending, and Catskill majority owner Alpha Hospitality Corp. said it expects the lawsuit to go to trial sometime next year. While this case continues, Alpha said it will continue its efforts to find a tribe to partner with on a casino at the racetrack.