Lure of slots draw hopefuls from across U.S.

Marc Levy

Friday, Feb. 4, 2005 | 9:34 a.m.

HARRISBURG, Pa. -- The field to own a casino in Pennsylvania is getting more crowded.

From Bethlehem to Beaver County, powerful gambling companies are optioning or buying land, rolling out plans to local officials, and talking about investing hundreds of millions of dollars in retail stores, movie theaters, restaurants, and parking garages to surround a gambling hall.

Some are multicontinent gambling companies, others billion-dollar-plus investors, still others Indian tribes that own casinos in other states.

The companies are eager to stamp their brand name on Pennsylvania and mine a relatively new market with deep pockets, observers say.

"Given the appetite for gambling in the northeast, it's not surprising to see some of the country's biggest players in the gaming industry knocking on Pennsylvania's door," said Joe Weinert, an Atlantic City-based gambling consultant.

So far, the state's fledgling gambling commission has not awarded any of the state's 14 gambling licenses, much less written regulations to award them. Commission officials won't put a timeline on when they expect that to happen.

Most slots parlors will be concentrated in the Philadelphia and Pittsburgh regions and the Lehigh Valley-Poconos corridor, and will be a short drive for many residents of surrounding states.

Seven licenses are supposed to go to racetracks, four of which are operating and two more of which are licensed but not built.

The track owners already include gambling giants Penn National Gaming Inc., MTR Gaming Group Inc., and Magna Entertainment Corp. Because the state's seven-month-old slot-machine gambling law limits a company to a majority stake in one casino, Penn National sold one of its two tracks, Pocono Downs near Wilkes-Barre, to the Mohegan Indian tribe, which operates the huge Mohegan Sun casino in Connecticut.

A license for the state's fourth and final harness track is down to two bidders with property in rural areas northwest of Pittsburgh. One bidder is Centaur Inc., a track and casino owner based in Indianapolis.

Five more licenses are destined for standalone sites, two in the city of Philadelphia, one in Pittsburgh, and two more elsewhere, although some areas will be off limits because the law requires a certain distance between slots parlors. The 12 licenses at the tracks and standalone sites allow up to 5,000 slot machines at each, while two more licenses to go to existing resorts will allow up to 500 at each.

The world's largest gambling company, Harrah's Entertainment Inc., could get involved on both ends of the state.

It has an agreement to manage a slots parlor at Chester Downs, a licensed harness track southwest of Philadelphia that has not yet been built, and also owns the rights to build a casino at Station Square, a retail and restaurant venue along the Monongahela River in Pittsburgh.

In the Lehigh Valley, the Mashantucket Pequot Tribal Nation, which owns one of the world's largest casinos, Foxwoods in Connecticut, and Las Vegas Sands Inc., owner of the Venetian casino in Las Vegas, each have proposed a slots parlor in the Bethlehem area.

In Philadelphia, Caesars Entertainment Inc. bought a 30-acre piece of land and marsh along the Delaware River in South Philadelphia. It originally optioned the parcel 10 years ago when it thought casino gambling would arrive in Pennsylvania on a riverboat.

"There'll be more slots in there than there are at Caesars Palace," said Robert W. Stewart of Caesars, which operates or owns 25 casinos on three continents.

About two miles away, in Center City, a property across Market Street from the Pennsylvania Convention Center is drawing interest from well-heeled investors in Philadelphia, Chicago and New York City. Each would likely partner with a Las Vegas operator, said Richard Burcik, general manager of the Girard Estate, which owns the property.

"When somebody is making a proposition to us, we want to be certain that they've brought all the correct pieces to the transaction, and so you need to have a first-class operator," Burcik said.