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Foxwoods Submits Appeal to Regain License

Posted on April 15th, 2011

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The search for the state’s second casino takes a new turn as original license owner Foxwoods Casino appealed to the Commonwealth Court on Monday to have its revoked $50 million license reinstated and that the company be allowed to build a casino in South Philadelphia as originally proposed.The Pennsylvania Gaming Board revoked Foxwoods’ license on December 16 after issuing a summary judgment despite not holding a full hearing to air out the issues. According to the board, Foxwoods failed to secure adequate financing to push forward the planned development of the casino and repeated delays show Foxwoods’ inability run a facility as complicated as a gaming establishment.

The absence of a full hearing constitutes the bread and butter argument by Foxwoods to have its license reinstated as it claims it was unjustly treated by the board. The Philadelphia Entertainment and Development Partners (PEDP) who sponsors the Foxwoods proposal called the decision “an excessively draconian sanction.” Because of the issue, questions abound as to whether Philadelphia indeed needs a second casino. If the current numbers posted by Philadelphia’s first gaming establishment, the SugarHouse casino, is to be taken as a precedent, a second facility is certainly worth the effort. Since SugarHouse’s opening five years ago, it has funneled more than $4 billion in revenues in various forms to the state’s coffers. Of that amount, $2.5 billion has gone on to provide relief for taxpaying residents. It has also created more than 14,000 jobs which pay wages, benefits and other forms of employee compensation, most of which are long-term. The casino also pays taxes to the state government as well as earmarked for education financing, and local community projects.

SugarHouse sits on Delaware Avenue in Fishtown and opened on September 2006. Meanwhile, Foxwoods is still mired in the case which many observers are expecting will take years for a court settlement to resolve the issue. For this round of appeals, the Pennsylvania Gaming Board is required to submit a reply by May 11 after which a hearing is expected to he conducted in mid-June in Harrisburg. Foxwoods detailed its grievances in the 241-paged brief that said the board did a mistake when they “assumed” that Foxwoods and Philadelphia Entertainment and Development Partners were no longer financially capable to sustain the license after citing its “failure” to meet a May 29, 2011 opening deadline set by the board.

PEDP was steadfast in outlining the project’s financing plans by saying an agreement was already in place for Harrah’s Entertainment – a subsidiary of world-famous Caesars Entertainment – assume the financing of the development project as well as the management of casino operations once it is up and running. Foxwoods also cited the willingness of two banks who have each signed letter of commitment to shell $200 million in the construction project of a riverfront casino on Columbus Boulevard in South Philadelphia attesting to the company’s ability to take care of its investments. PEDP also cited the current law’s provision allowing for a 17-month extension of the construction timeline, more than sufficient to meet the demands of a rushed casino project. With this, the casino should be up and operational by December 2012.

The brief also details Foxwoods and PEDP’s accusation that the Pennsylvania Gaming Board made a “legally flawed decision without conducting an evidentiary hearing to resolve the numerous disputed issues of material fact.” The 4 years and $160 million expense that both companies have shelled for the project was proof of their determination to see it through only to be stymied by the board’s ruling. Indeed, the Foxwoods project has had its share of problems since the beginning of the proposal’s release. There was the strong opposition by residents and elected officials to the construction of the facility as well as difficulty in securing adequate financing to move the project forward during the peak of the September 2008 global financial crisis. The destabilization of the initial partnership between Foxwoods Casino and the Mashantucket Pequot tribe as well as the participation of developer Ron Rubin, Comcast-Spectacor chairman Ed Snider and entrepreneur Lewis Katz was perceived as a negative for the project.