Paulos Pennsylvania-bound

Sep 12, 2006 3:52 AM

Las Vegas-based Millenium Management is poised to open Pennsylvania’s first casino early next year, more than two years after lawmakers approved a slots law.

Later this month, the first gambling licenses will be awarded to racetracks, including the Meadows harness track in Western Pennsylvania, which was bought by Millennium Management in July.

Millennium Management owns and operates The Cannery and Nevada Palace and manages the Rampart casinos in Las Vegas.

Bill Paulos, a partner in Millennium Management, said The Meadows could have a casino open by next February and a permanent casino and grandstand would follow in 2008.

Paulos added that The Meadows’ temporary casino would contain 1,500 slot machines, a 321-seat buffet and a 500-seat entertainment space. It would have a permanent feel, Paulos said.

With a $450 million, 250,000-square-foot permanent casino, daily attendance at The Meadows is expected to grow tenfold to 4,200 people daily by 2010. The track now draws an average 355 people a day.

Visitors walking into the permanent grandstand and casino would see the track behind banks of slots machines, according to plans presented to the gambling board.

The two-story building would include dining for 700 people overlooking the track, a wine bar and a steak house, a theater and a conference center. From one spot in the casino, players could see into a new paddock, where horses would be groomed for racing.

The idea, Paulos said, is to combine racing and slots so that people drawn to the track for the casino might take an interest in racing. The new owners already are marketing the track.

The addition of a casino is expected to pump up declining attendance and pari-mutuel revenue. Business at The Meadows began to decline when West Virginia opened slots casinos 10 years ago.

The Meadows has lost 40 percent of its attendance and 30 percent of its handle to casinos there, Mike Jeannot, vice president of operations for Magna Entertainment Corp., which runs track operations, said.

In Pittsburgh, three groups seek the one license for a stand-alone slots casino.

Isle of Capri Casinos, based in St. Louis, would locate in Uptown and pay $290 million for a new arena. Cleveland-based Forest City Enterprises wants to open Harrah’s Station Square Casino. And Detroit businessman Don Barden, who also owns Fitzgerald’s in downtown Las Vegas, would put a Majestic Star Casino on the North Shore.

The gambling board, which will hold hearings Nov. 20-21 for the Pittsburgh casino, tentatively is scheduled to issue a license Dec. 20.

Gambling industry analysts are watching Pennsylvania this month as it moves toward licensing slot machines at racetracks — the first step toward the eventual operation of 14 casinos statewide.

Pennsylvania "is a substantial market, and for operators and slot manufacturers, it is a big deal to get this up and running," said Edward J. Montgomery, research analyst at Goldman Sachs. Montgomery said he expects slots revenue "to be trickling into the marketplace in 2007."

The state Gaming Control Board will hold hearings this week on conditional licenses for six tracks. The Meadows made its case on Monday.

On Tuesday, the Senate Rules Committee is scheduled to conduct a hearing on several reform measures to amend the July 2004 law.

The changes range from eliminating a provision that enables public officials to own 1 percent of casinos, to stripping part of the law that requires in-state suppliers to sell machines to casinos, which critics say poses the potential for corruption.

Those proposals have been mired in politics since Democratic Gov. Ed Rendell in November 2004 vetoed an overhaul of the law. Rendell, a key slots proponent, faces re-election on Nov. 7.

Even if another delay occurs, industry analysts said they believe the "market will begin to open up in Pennsylvania in 2007 and 2008," said Montgomery of Goldman Sachs.