Rivalry intense for Philly’s final casino license
PHILADELPHIA – High-flying developers, a tomato king and a nonprofit that wants to funnel gambling money to Philadelphia schools and public-employee pensions are among the competitors vying for the city’s second and final casino license.
With hundreds of millions of dollars in revenue from table games and slot machines potentially at stake, the rivalry is intense. The five applicants will make their final pitches to state gambling regulators this week in Philadelphia.
A decision is expected within months.
Though the region’s gambling market softened last year, would-be casino operators said there’s room for another casino – if the Pennsylvania Gaming Control Board chooses wisely. Their task is to convince the seven-member board they have the right track record, the right location and the right mix of gambling, entertainment and hotel space to succeed.
“You’re talking about very successful business people. You’re talking about great operators,” said Ken Goldenberg, a real estate developer whose Market8 proposal has won praise from city officials.
Philadelphia has waited a long time for its second casino after state regulators pulled the plug on the failed Foxwoods project in 2010. Boosters say it could mean tens of millions of dollars in new tax revenue for state and local coffers and thousands of new construction and permanent jobs.
Casino opponents are also making their voices heard, saying another gambling hall will lead to more addiction and crime. They want gambling regulators to sit on the license.
So does the city’s existing casino – but for another reason.
SugarHouse Casino contends the market is already saturated, pointing to the troubled $2.4 billion Revel Casino Hotel in Atlantic City, N.J., which filed for bankruptcy less than a year after its April 2012 opening, and the recent shuttering of Atlantic City’s Atlantic Club as proof.
SugarHouse, which opened in 2010 and is expanding, predicted another gambling hall will weaken existing casinos and prompt them to lay off workers and delay upgrading their properties.
“The casino market in the Northeast, and in the greater Philadelphia area in particular, is not capable of absorbing additional gaming supply,” SugarHouse attorney John Donnelly warned in a filing with Pennsylvania regulators. “The novelty and scarcity of casino gaming is gone.”
That view is not universal. John Maxwell, an analyst at Jefferies LLC, said he believes the Philadelphia region can accommodate another casino. A new facility might poach customers from existing casinos, he acknowledged, but there’s still plenty of business to go around – and still room to grow demand.
“Our view is that the market is still quite strong,” he said. “Obviously the existing guys will not be as profitable as they are now, but we still think they will be quite profitable.”
Two of the applicants want to build in downtown Philadelphia, including Goldenberg, whose Market8 is his latest effort to revitalize the highly visible but long underused East Market Street corridor.
Fifteen years ago, Goldenberg was the Walt Disney Co.’s local partner on a planned indoor amusement park called Disneyquest. When Disney killed the project, it left taxpayers on the hook for millions of dollars – and a gaping hole at 8th and Market.
Now it’s a parking lot, an improvement but hardly the best use for a corner that’s just a few blocks from the Liberty Bell and Independence Mall. Goldenberg wants to transform it into a $500 million gambling and entertainment complex that would link the historic district to the east with heavily trafficked destinations to the west, including the Pennsylvania Convention Center and Reading Terminal Market.
“There’s nothing exciting and dynamic that’s in the middle to connect them and electrify the corridor, and that’s what this should be able to do,” he said.
The second downtown proposal is also the most expensive of the lot: the $700 million Provence, a French-themed casino complex in the former North Broad Street home of The Philadelphia Inquirer and Daily News. City officials have boosted its potential for revenue generation, but some of its neighbors, including two schools and a synagogue, say it doesn’t belong in the neighborhood.
Helping to round out the field are two projects within shouting distance of the Philadelphia Phillies’ ballpark in south Philadelphia: Penn National Gaming Inc.’s Hollywood Casino and the Live! Hotel & Casino promoted by The Cordish Cos. and Greenwood Racing Inc. A nonprofit corporation would own two-thirds of the Hollywood Casino, distributing gambling revenue to Philadelphia schools and municipal pensions.
And then there’s the tomato king.
Joseph Procacci is the 86-year-old co-founder and CEO of Procacci Bros., a south Philadelphia produce distributor and grower that ships some 20 percent of America’s fresh tomatoes.
He wants to convert a sprawling warehouse that now holds carrots, garlic, peppers, onions and other produce into Casino Revolution, a $428 million casino complex that Procacci said could be open six months earlier than any of the other applicants and thus provide tens of millions in additional tax revenue.
The produce magnate was approached by casino developers a few years ago about selling off a chunk of his property in south Philadelphia’s warehouse district. Instead, he decided to apply for a casino license himself.
“I said, ‘Joe, why now? Why would you do this?”’ recalled Joseph Canfora, president of PHL Local Gaming, the entity headed by Procacci.
“He looked at me and said, `Why not? It’s a great opportunity.”’