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Foxwoods Under New Partnership, Casino License Still in Jeopardy

Posted on October 30th, 2010

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The investors for the planned Foxwoods Casino to be located in the southern portion of Philadelphia have a new partner. This will be the second time in half a year that the casino’s investors will be presenting a new associate to the gaming regulators of the state. Aside from this, they will also be presenting a plan to revive the project which has been encountering a number of delays. Foxwoods, this time, claims it has struck a deal with Harrah’s Entertainment. Harrah’s will not only be an investor, but also an operator of the gambling facility in the waterfront. The gambling industry giant has another casino 15 miles away from the proposed casino, situated in Chester. Because of this, the law of the state will only allow Harrah’s the maximum of a one-third stake in the Foxwoods facility.

The Philadelphia Entertainment and Development Partners or PEDP is the local group involved in this project. They made the announcement earlier this week, adding that plans to join forces with Harrah’s will result in the assurance that the casino, worth $348 million, will indeed push through. They project the gambling hall to house 1,500 slots and 70 table games. The exact location of the casino will be on South Columbus Boulevard, which is in the middle of Reed and Tasker Streets. The first party the PEDP tapped to partner with them was Steve Wynn, one of Las Vegas’ biggest names in the gambling industry. The partnership between Wynn and the PEDP did not last as Wynn pulled out their support last April. With the current set-up, the Foxwoods project could only move forward should the Pennsylvania Gaming Control Board be convinced by the PEDP and Harrah’s can pull the project through without any further delays for their license.

The commissioners have taken up the license revocation issue last Wednesday. They are due to either make a summary judgment based on the depositions and documents that have been previously presented, or hold a full hearing on the issue. Doug Harbach, a board spokesman, said the seven regulators could cast a vote or take the matter under further consideration. At the Wednesday meeting, they decided to delay the decision of license revocation. As of the moment, the PEDP has retained the Keating Building Co. to be the developers of the project. The PEDP’s lawyer, Stephen A. Cozen, made a claim that the casino should be operational within 20 months once construction starts. The Chairman of Keating Building, Dan Keating, said that his company had involved themselves with the primary design work of the project. Aside from this casino plan, Keating Building has also been successful in completing the SugarHouse Casino, which only opened last month.

The SugarHouse is located along the Delaware between the sections of Fishtown and Northern Liberties. Cozen added that aside from making sure that the regulators will not strip them of the license, the PEDP and Harrah’s will also need to iron out final details, including the securing of financing options. The new partnership will need to raise $275 million, most probably through debt and equity for the project to be finished. Cozen said the existing partners have already shelled out $163 million, which has been mostly funneled for the land and the license worth $50 million. He also said that Harrah’s will be converting money it has with local investors into an equity position for this deal. In 2005, an affiliate of Harrah’s affiliate sold the company the lot measuring 16 acres for the casino.

This lot is now valued at $52 million. Cozen claims that Citizens Bank, which has $60 million in collectibles, is also planning to have an equity stake in the casino in exchange for the debts. Lastly, Cozen assured, “The PEDP and Harrah’s will immediately begin working with the gaming board to get our project back on track and open the next downtown casino in Philadelphia.” A lot of local sectors remain opposed to the project. Casino-Free Philadelphia’s organizing director, said, “Four years after they were awarded the license, after countless delays, excuses and ’second chances,’ Foxwoods still hasn’t worked out final plans for construction, let alone a final deal for financing.”