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Despite questions over its timetable for opening, Penn National Gaming Inc.'s bid to develop a $260 million slot machine casino at its namesake horse-racing track appeared to survive a state licensing hearing yesterday.
Pennsylvania Gaming Control Board staff members told board members they have found no problems with Penn National's fiscal viability or its ability to meet other requirements of the 2004 gambling expansion act.
The board's chief enforcement counsel, Michael Schwoyer, did not, however, sign off on the company's "character suitability" review. He cited one unspecified issue.
Board staffers and company representatives refused to discuss that issue after the meeting, but both sides characterized it as a minor problem that should not stand in the way of an expected license approval this month.
"We've already satisfied it," said Robert P. Krauss, an attorney for Penn National. "We just need to get the paperwork done."
Company officials said the Hollywood-themed casino at Penn National Race Course, featuring 2,000 slot machines at opening and at least 700 new jobs, could be open as early as the end of 2007.
Redevelopment of the East Hanover Twp. site started in late July with demolition of the old racetrack clubhouse.
Gaming Board members quizzed Penn National's senior managers yesterday on why the company has chosen not to plunge into the slots market faster with a temporary facility. Several other proposed racetrack casinos will do that and expect to be open this winter.
Chief Financial Officer William Clifford said Penn National felt it would gain only six to eight months of slots play by the time a temporary structure could be ready. Officials decided that was not enough time to justify the investment.
When members pressed the point, Clifford and Penn National President and CEO Peter Carlino noted the gaming board's stalemate over slot machine supplier licenses -- which threatened this spring to delay the timetable for licensing casinos.
The board deadlocked for months over whether to issue supplier licenses by region or make them statewide, "and frankly, until I saw that issue settled in July [when the supplier licenses were issued], I wasn't willing to pull the trigger" on construction, Carlino said.
Board members also questioned the executives about revenue projections for the casino, noting that a PricewaterhouseCoopers analysis commissioned by the board predicted annual revenues some $60 million lower than Penn National's estimates.
The gaming board report has not been released, but Clifford said Penn National has projected first-year revenues of $160 million, growing in time to $300 million. He said he believed the board's study factored in a potential casino outside Gettysburg, which Penn National's study did not allow for.
"What happens if we're right?" member Joseph W. "Chip" Marshall III asked. "Is it still a solid, safe project?"
"Yes," Clifford replied.
Even at the reduced numbers, he assured members, the Penn National project would be profitable.
"Penn National Race Course is our namesake property," he said. "We want this to be a showcase for such [racetrack] facilities throughout the United States."
The board is expected to vote on the first set of conditional licenses for racetrack casinos at its Sept. 27 meeting. Applications for up to seven standalone casinos, including the Gettysburg project, will be acted on later this fall.
The slots law authorizes up to 14 casinos statewide. Most of the state tax proceeds are earmarked for school property tax cuts.
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