‘Save the Penguins’
boosts Isle’s bid

Dec 5, 2006 4:38 AM

Three bids are being considered by Pennsylvania gaming regulators for licenses to operate a stand-alone slots emporium in Pittsburgh, a highly-desirable location.

The three include Harrah’s Entertainment Inc. (HET) and its partner, local developer Forest City Enterprises; Don Barden’s Majestic Star, and Isle of Capri Casinos Inc. (ISLE).

Shortly after the applications were filed, local observers indicated that the Gaming Control Board would favor the Harrah’s/Forest City bid because of their established expertise in both running casinos and in area development for the betterment of the community.

But that has changed in recent days because of two factors: a spokesman for the National Hockey League put the state on notice that Isle of Capri’s bid, which includes a $290 million hockey arena to serve as a home for the Pittsburgh Penguins, is not accepted, the league could not guarantee that Pittsburgh would retain its hockey team, and a second factor involving the release of a state study that supported the Majestic Star Casino proposal as providing the biggest jackpot for taxpayers.

Both these developments were enough to push the Harrah’s/Forest City bid into the background.

NHL Commissioner Gary Bettman met with local officials last week to warn that "If the Isle of Capri doesn’t get the license, we’ve got a lot of uncertainty to deal with, and it’s best for everybody and the franchise that we’re not dealing in uncharted and uncertain waters."

The Penguins’ lease on the aging Mellon Arena expires in June and the city and county have been working on an alternate plan if Isle of Capri doesn’t get the license. Officials have announced that they will guarantee an arena for the Penguins even if it is not fully paid for with casino money. They noted that parcels of land near Mellon Arena already have been acquired for the project.

As for the state study supporting Don Barden’s application, it pointed out that the project will utilize 5,000 slot machines, thus bringing in more than $1.3 million a day or $483.6 million each year. "This is consistent with what we’ve been saying all along," said Majestic Star spokesman Bob Oltmanns.

The state said the Harrah’s/Forest City facility would generate annual revenues of $426.3 million, far less than the $538.7 million the applicants had projected.

Isle’s casino, the state said, would generate about $344.9 million, a figure disputed by an Isle spokesman. He said Isle proposes having 5,000 slot machines in its fourth year of operation and these machines would raise about $487 million in revenue.

Some state officials were projecting that state revenues would far exceed early projections when all 61,000 machines, permitted under state law, are installed. They point to the initial success being enjoyed by Mohegan Sun’s Pocono Downs which saw wagering reach nearly $40 million in the first week of operation with each machine winning $513 daily.