Tribe sees a big prize in a riverfront casino - Tuesday 12th of December 2006
In the 17th century, ancestors of the Pequot Tribal Nation lost their position as the dominant culture along New Englands Atlantic Coast.
Today, the Pequots - now owners of the worlds largest casino - aim to secure a position along Philadelphias Delaware riverfront to build a $560 million slots palace.
If Foxwoods Development Co. wins a license Dec. 20 to build on the 161/2-acre site on South Columbus Boulevard in South Philadelphia, its Foxwoods Casino Philadelphia will be the tribes first gambling venture outside Connecticut - confirming it as a major player in the casino industry.
"Its certainly the next step for this tribe," Foxwoods chief executive officer William Sherlock said in an interview in his office next to the sprawling casino in Connecticut. "Philadelphia could be that first step for a plethora of projects throughout the United States."
But Philadelphia presents some special challenges. Five companies are competing for two casino licenses in the city. And Foxwoods plans are opposed by community groups fearing the impact of the big slots parlor on South Philadelphia.
For Foxwoods, the stakes are enormous.
The tribe was made wealthy by its Foxwoods Resort Casino - a 5-million-square-foot gambling destination on a 1,200-acre reservation in southeastern Connecticut. The casino, which started as a high-stakes bingo hall, is now a $1.2 billion enterprise contributing 25 percent of its slots revenue to the state.
The tribe established the Foxwoods Development Co. in 2003 to oversee expansion of its Foxwoods brand. It has its eye on Las Vegas, Atlantic City and Biloxi, Miss. Its also building partnerships with other gambling companies, including MGM Mirage.
And it assists other Indian tribes. In June, Foxwoods Development signed a seven-year management contract with the Pauma Band of Mission Indians to manage its $300 million casino north of San Diego. Last year it had a consulting contract with the Picayune Rancheria of the Chukchansi Indians, a tribe that runs a central California casino.
"Theyve blazed the trail in a new arena for gaming in this country," said Howard Dickstein, an attorney who represents large tribes with casinos in California. "Theyve earned the respect of other tribes."
In Connecticut, Foxwoods averages 40,000 visitors per weekday, and up to 55,000 on weekends. About 1.3 million arrive on buses each year.
It employs 10,300 in three hotels, 30 restaurants, numerous retail shops, entertainment venues and two golf courses.
The Pequots and other tribes began gambling operations on reservation land under the 1988 Indian Gaming Rights Act. In Connecticut, the tribe was permitted to offer bingo and table games, such as poker and blackjack, which were legal in the state. Slot machines were not, so the Pequots opened a table games casino in 1992 by expanding the original bingo hall. The tribe entered into the slots revenue sharing agreement a year later in exchange for also being allowed to offer slot machines.
For the 12 months ending June 30, Connecticut took in $204.5 million from Foxwoods, according to the state Division of Special Revenue, the agency that tracks all forms of gambling in Connecticut. It received an additional $224 million from nearby Mohegan Sun - another casino operated by the states Mohegan Tribe - under a similar compact.
Foxwoods now has 390 game tables and 7,400 slot machines - the most of any U.S. casino. It will soon add 1,500 slots with its eighth expansion, and a hotel tower featuring a 4,000-seat theater and 824 rooms with MGM Mirage. The MGM Grand hotel, set to open in spring 2008, will allow the resort to compete with Las Vegas for conventions and top concert acts.
"In the early days, it was more about just build it and they will come, " Foxwoods Casino president John OBrien said. "Today, its much more strategic."
The bingo hall, now the worlds biggest with 3,500 seats, attracts devotees such as Maria Marcinko, 51, a state government worker from Harrisburg. Marcinko makes the 51/2-hour trip to Foxwoods at least four times a year to take part in the big tournaments.
"Yes, Ill go to the slots parks in Pennsylvania," Marcinko said as she marked her game sheet with a lavender dauber on a recent Saturday. "But I wont stop coming here - because of this bingo hall. Theres nothing like it anywhere."
Foxwoods, which draws clientele mainly from New York, Massachusetts and Connecticut, does not report its earnings. But industry experts say the casino is one of the most profitable in the business.
Andrew Zarnett, an analyst with Deutsche Bank AG, estimates the tribe has generated about $350 million in cash flow - money left over after operating expenses but before taxes - per year. "They clearly have the ability to expand beyond Connecticut, and have been aggressively looking for opportunities in the last two or three years," he said.
Their golden ticket
The Pequots became one of the most powerful American Indian cultures in southern New England in the early 1600s, controlling much of the regions coastline and currency - the Wampum, a bead made from a hardshell clam. But a series of conflicts with European settlers reduced their population to about 2,500 from 4,000, according to historians.
Income from their casino has helped the Pequots to rebuild their community, create jobs, and provide health care, education and other services for the members, who now number about 900, according to tribal chairman Michael J. Thomas. Gambling has paid for a community center, a fire and police department, and new housing. It also financed the $250 million Mashantucket Pequot Museum and Research Center, which documents the tribes history.
The money has also helped the Pequots to build political and casino industry allies. Since 1995, the Pequots have given $3.1 million to Democrats and Republicans - from individual donors and through the tribes political action committee.
"The world has clearly changed, and we certainly need every ally we can get today," Thomas said. "Weve returned to this position of influence, and we hope to keep it alive for a long, long time."
Sherlock, the Foxwoods chief executive officer, said Foxwoods Development began looking at Pennsylvania in summer 2003 - a year before the legislature approved slot-machine gambling.
Under the casinos ownership structure, local investors would own 70 percent, and Foxwoods Development would own 30 percent and manage the casino.
Sherlock said Foxwoods fielded more than one offer to partner with a Pennsylvania slots license applicant, but found the group including Comcast-Spectacor chairman Edward Snider, developer Ronald Rubin, and Lou Katzs daughter, Melissa Silver, to be the best fit.
Snider said that his family is close with the Rubins and the Katzes. He said the three families agreed to become involved with a casino development when the legislature first considered legalizing slots.
"We decided that if this was going to happen... we could step in and invest in one of them, and give back to the community," Snider said. "Thats what motivated us."
Snider said 42 percent of profits would benefit underprivileged children in Philadelphia and South Jersey through trusts established by the investors.
Foxwoods backers hoped that would sway community groups.
Still, of the five applicants for a city license, Foxwoods has generated the most controversy and community opposition.
Residents near the site say the traffic on South Columbus Boulevard is already jammed by commercial and port activity. A casino drawing 10 million visitors a year would turn it into a nightmare, they say.
The casino would be next to a shopping center with big-box stores Wal-Mart and Home Depot. The casinos southern border would abut 20 acres of commercial development. South of that are IKEA and Best Buy.
More than two dozen members of Riverfront Communities United, a coalition of neighborhood civic groups opposed to the Foxwoods casino, attended casino suitability hearings in Harrisburg last month. They held up signs - such as "Neighborhoods Not Foxwoods" - as the Foxwoods team gave its three-hour presentation to the Pennsylvania Gaming Control Board, which will decide which of the five applicants will win the two city licenses.
Gary Armentrout, chief of development for Foxwoods Development, said the company has proposed to spend $2 million to widen lanes and add traffic signals. He said it has also proposed adding a ramp for southbound traffic coming off Interstate 95.
But Foxwoods hasnt addressed who would pay for such a ramp, said Chris Meck, a South Philadelphia resident and civic group activist.
"When you put in an I-95 ramp into a community, you need to have proactive civic planning," she said. "If you are proposing a project that will attract nearly 10 million visitors a year, you need to plan for that."
Armentrout said his company hasnt come up with a cost because the ramp was planned for a later date and would need approvals at several levels of government.
The community groups also cite a controversy over the casinos proposed use of government-controlled riparian lands - the tidal flats along the riverbanks. Such property can be sold only through an act of the legislature. By tradition, the lawmaker whose district includes the property introduces the legislation - giving that lawmaker a de facto veto and putting an obstacle in a casino developers path.
Foxwoods and another waterfront casino applicant, SugarHouse Gaming, which proposes a $550 million casino at North Delaware Avenue and Shackamaxon Street, would be affected the most if they are not granted riparian rights. Each has proposed building a significant portion of its casino on riparian land.
But Foxwoods presented two casino designs - one on riparian land and one off - at the Harrisburg hearings last month.
"We came up with an alternative plan over the summer," said Armentrout, as a screen showed the casinos dramatic new look: pulled 50 to 80 away from the waterfront.
"The new design allows us to incorporate all of the same riverfront attractions without the need to acquire any riparian rights from the state," he said.
But opponents in the audience werent swayed.
Some thought a plot was afoot when State Sen. Robert J. Mellow (D., Lackawanna) introduced a Senate bill that would have granted riparian rights automatically to Foxwoods and SugarHouse if either wins a license. The bill died in a committee last month.
As he distributed anti-Foxwoods flyers at that Harrisburg hearing, Ed Kirlin, a lifelong Pennsport resident and member of Riverfront Communities United, said: "Its too much, too quick, for the communities to absorb. The impact will be disastrous."
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