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Slots Battle Heats Up: Plainville Challenges Millbury, Leominster

Friday, September 06, 2013


Yet another slots proposal may come to Massachusetts, as more players enter the scene.

Originally, Penn National Gaming was one of two big players seeking to develop a casino resort in Springfield. But, the Pennsylvania-based firm lost out when that city’s officials backed MGM Grand’s casino plan. Next, Penn National pitched a slots parlor in Tewskbury. However, town voters rejected a required zoning change. The third time may be a charm.

The $2-billion, publicly traded company is back at the Bay State’s legalized-gaming table. This time, Penn National is eyeing a slots parlor in Plainville – on the site of the struggling, 14-year-old Plainridge Park, a harness-racing facility.

On September 3, Penn National signed an option to buy the 89-acre complex - for an undisclosed amount - only after it secures the state’s sole slots license. Last month, the Mass. Gaming Commission disqualified a Plainville slots proposal by Ourway Realty, which owns the property, over concerns about a former executive’s business dealings.

Penn National has yet to file a slots proposal with the Gaming Commission. If and when it does so, it would compete with two other Central Mass. communities - Leominster and Millbury – as well Raynham as for the Bay State’s only slots license.

On September 5, the Gaming Commission, in an open meeting, began discussing the request to allow the Plainville host-community agreement to be transferred to Penn National. The meeting is scheduled to resume today at 1:30 p.m.

Plainridge President John Grogan points to Penn National’s “strong track record of transitioning racing facilities into successful racing and gaming entertainment operations, which benefit local horsemen, local communities and all state residents through economic development, leading to the creation of new jobs and new tax revenues.” Those factors, he adds, “combined with the geographic location, project plan and time to market advantages of Plainridge Park, strongly positions Penn National as the leading contender for the [slots] license.”

Alfred Ross, a major shareholder of Plainridge Park, applauds the agreement between Penn National and the track’s ownership. “This agreement represents an opportunity for harness racing to survive in Massachusetts,” he states. I am happy that prospect remains alive and am hopeful town voters will come out to vote ‘yes’ on September 10 … .“

The clock is not ticking in favor of Penn National, which has yet to return GoLocalWorcester calls. Like the other three Mass. slots developers, Penn National must win town voters’ approval in a referendum election – which must held by October 4 under the state’s three-year-old Expanded Gaming Law.

When Ourway Realty was the developer, the referendum vote was scheduled for September 10 – which is next Tuesday. Penn National has now asked the Board of Selectmen to honor the terms of the host agreement with Ourway and proceed with the vote on that date.

Possible competitor to Central Mass. slots developers

Penn National, which seeks to do a major expansion and renovation of the Plainville complex, runs a total of 29 gambling or racing facilities in 18 states and Ontario. As such, it could prove to be a potent competitor to other hopeful slots developers in Mass.

Penn National Gaming is back to the table in Massachusetts for the third time. Will luck be a lady?

The Expanded Gaming Law authorizes up to three regional casinos plus one slots parlor in Mass. Three other developers want to locate slots parlors. Two of them - Millbury and Leominster – are in Worcester County. The other, Raynham, is in Bristol County, in Southeastern Mass.

On July 15, representatives of Rush Street Gaming, parent of Mass Gaming and Entertainment, unveiled plans for a $200-million slots parlor in Millbury. On July 23, the Board of Selectmen and Rush/MG&E signed a required host-site agreement. On September 24, voters in that Blackstone Valley town will cast ballots on the proposed slots parlor in a required referendum election.

Jeannie Herbert, president and CEO of the Blackstone Valley Chamber of Commerce, was unavailable for comment for this article. Last month, though, she sounded ecstatic about the prospects of a slots parlor in Millbury, which sits atop the Blackstone Valley. She called the Rush Street/MG&E plan “a really positive for the Valley.”

Three days after the Millbury slots proposal was announced, on July 18, Leominster Mayor Dean Mazzarella signed a host-site agreement with The Cordish Cos., parent of PPE Casino Resorts MA, to locate a $125-million slots parlor there. Also on September 24, voters in that North County city will decide the fate of the planned facility in a referendum election.

The North Central Mass. Chamber of Commerce has taken a public stand in favor of Cordish’s slots proposal. However, David McKeehan, the chamber’s long-time president, does not know what impact the Penn National re-entrance to the Mass. gaming competition may mean for the Cordish plan. “I haven’t followed it close enough to know who the players are,” he tells GoLocalWorcester.

Both Rush Street/MG&E and Cordish have yet to provide anyone who can comment on what Penn National’s Plainville vision could mean for their own slots proposals.

A high roller in the national gaming sector

Penn National is a high roller in the national gaming sector. And it has deep pockets.

The company owns, operates or has ownership interest in 28 gaming and racing facilities in 18 states plus Ontario province. They feature a combined total of 34,500 gaming machines, 850 table games, 2,900 hotel rooms and 1.6 million square feet of gaming-floor space.

Penn National appears to be in solid financial shape. In its latest annual report, the company shows net income of $212 million, or $2.04 per diluted share, on net revenues of $2.9 billion for the fiscal year that ended last December 31. The firm also reports total shareholder equity of $2.2 billion - up about $280 million, or about 14 percent, over the year before.

The gambling giant also likes to tout The Penn National Gaming Foundation, a 501(c)3 non-profit launched in 2005, in the wake of Hurricane Katrina, to provide assistance to the nearly 2,000 Penn National employees impacted by the storm. The Foundation awarded over $1.4 million in grants for immediate needs such as food, water, clothing, shelter and medical needs.

Last November, Penn National separated the majority of its gaming-operating assets and real-property assets into two publicly traded companies. The company, as noted in its latest annual report, “faces intense gaming competition in most of the markets where its properties operate. Various states are currently considering or implementing legislation to legalize or expand gaming. Such legislation presents potential opportunities for the company to establish new properties. However, this also presents potential competitive threats to the company’s existing properties.”

For example, Penn National’s two largest properties in terms of net revenues “will face or have faced new sources of significant competition in the near term,” the annual report states. A competing casino opened this March in Cincinnati, Ohio and another competing casino opened in June 2012 in Arundel, Maryland.

“Although these openings will have a significant impact on the company’s operations,” Penn National states, “they have less significance on the company’s operations than in recent periods” due to the 2012 openings of casinos in both Columbus and Toledo, in Ohio, as well as the company’s 2012 acquisition of Harrah’s St. Louis gaming and lodging facility for $618 million.

AG’s Office rejects anti-gaming request

There’s at least one piece of good news for Penn National and other gaming firms seeking to set up shop in Mass. It came on September 3 - the same day on which Penn National announced the purchase option for the Plainville property for a slots parlor.

The Mass. Attorney General’s Office rejected a request to place an initiative petition on the 2014 statewide ballot. Such a petition would have called for a ban on casinos and slots in the Bay State.

The proposed ban, the AG’s Office decided, would “impair the implied contracts” between gaming-facility developers and the Gaming Commission. That’s because, as of this June 8, those developers had paid $4.4 million in application fees plus $4.2 million in investigation charges and the Commission had spent $6.8 million of the combined amount.

In recognition of those payments, the AG’s Office found that the Gaming Commission “is bound to consider such applications in accordance with statutory and regulatory licensing procedures and  criteria, and to award licenses to such applicants, if any, as the Commission in its discretion determines best meets the licensing criteria. Were the Commission not to act in accordance with this process, a damages remedy … would appear to be available.”

In addition to the slots parlors being eyed for Millbury, Leominster, Plainville and Raynham, six proposals have been floated for a total of three regional casinos, which unlike slots parlors, contain other games such as blackjack and roulette. Two casino proposals are for Eastern Mass. (Boston and Everett), one is for Central Mass. (Milford) and three are for Western Mass. (Palmer, Springfield and West Springfield).

Steven Jones-D'Agostino is chief pilot of Best Rate of Climb: Marketing, Public Relations, Social Media and Radio Production. Follow him on Twitter @SteveRDAgostino.


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