Harrah's to Invest in Philadelphia CasinoBy: Adam Baker, Tuesday November 2nd 2010
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Harrah's Entertainment Inc. is the largest owner of land casinos globally. It owns 36 casinos, including 9 in Las Vegas and 4 in Atlantic City. It has 16 in the United Kingdom, Egypt, Uruguay, South Africa, and Canada. Last week it announced a deal that will see it investing in the Foxwoods Resort project in Philadelphia, Pennsylvania.
Casino gambling was legalized in Pennsylvania in 2004. Slot parlors opened in 2006, mainly as adjuncts to horse racing facilities. Two licenses were issued for land casinos. One of these went on stream in September 2010 after initial hiccups. The other license was issued to a local group called Philadelphia Entertainment & Development Partners (PEDP). PEDP tied up with the Connecticut tribal casino operator of Foxwoods Resort. Foxwoods began to have financial problems with its existing operations and was unable to raise funds for the new project. Then Las Vegas gambling mogul Steve Wynn stepped in, but in April 2010 he abruptly withdrew from the deal.
Now Harrah's Entertainment has agreed to enter as an investor and an operator of the project that has come to be known as Foxwoods. As per the proposal Harrah's will be a minor share holder, owning only one-third of the stake. The land for the casino was originally bought by PEDP from a Harrah's associate on a deferred payment basis. Harrah's has agreed to convert the funds owed to it into equity in the project. How much additional financing Harrah's would bring in was not made public in the announcement. However, in the announcement PEDP said that the total project cost would be $438 million. The casino would have 1,500 slot machines and 70 table games. This is a toned down version of the original plan. Keating Building Company has been retained to develop the casino, which could be operative in 20 months. The new arrangement will have to be approved by the Pennsylvania Casino Control Board. Doug Harbach, a board spokesman, said that the board could decide to hold a full hearing or could vote immediately based on documents already available.
There exists local opposition to the project and also scepticism about PEDP meeting the deadlines. Opposition has come from politicians as well as neighbourhood groups like Casino-Free Philadelphia. There is opposition from New Jersey as well. The casino in Philadelphia will further hit the already reeling Atlantic City casinos. State Senator Raymond Lesniak of New Jersey said that Harrah's will make more money in the Philadelphia casino than it would lose in the Atlantic City ones, and end up bolstering its corporate bottom line. Hence there are several hurdles to be crossed before the project comes to fruition.
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