Racetrack Slots Hearings Begin in Pennsylvania

Pennsylvania gambling regulators began licensing hearings Sept. 11 that will be a prelude to authorizing slot machines at racetracks later this year.

If all goes smoothly for the racetrack owners, Mohegan Sun at Pocono Downs could open the first slots parlor at a makeshift center this year, and Harrah's Chester Casino & Racetrack could open a finished slots parlor in January. Executives from the gambling companies that would own the racetrack slots parlors came to Harrisburg, the state capital, for the hearings to give their pitches and answer questions from the Pennsylvania Gaming Control Board.

At times, the questions were pointed.

"I have a big problem sitting here and listening to you tout your commitment to diversity," board member Sanford Rivers told Harrah's Entertainment officials after noting that only a tiny fraction of the track's construction costs through June were spent on minority-owned firms.

The 2004 law that legalized slots directed the gaming board to push applicants to ensure that minorities are represented among their owners, employees, and contractors.

The $500 million-plus Harrah's Chester facility opened for live harness racing Sept. 10 at the site of a shuttered shipyard along the Delaware River. Harrah's officials said they had sought minority-owned firms to compete for big contracts on jobs such as design and steel fabrication, but found none. Harrah's senior vice president Jan Jones said the board members' questions made clear that applicants must take diversity issues seriously.

In addition, applicants will have to plan for a non-smoking casino, Jones said, judging by the slew of questions from board members about how the companies would react to an indoor smoking ban in Pennsylvania.
Board members also clashed with the owners of The Meadows racetrack in suburban Pittsburgh, saying their projections indicated slots at the track would produce far less revenue than the estimates advanced by the track's consultants. William Paulos, a principal of Milennium Gaming Inc. and co-owner of The Meadows, stood by his company's projections. If the board's figures are right, he said, the company wouldn't be able to run a profitable operation.

The hearings in the Pennsylvania State Museum auditorium continue Sept. 12 and are supposed to wind up Sept. 27. They are tied specifically to conditional slots licenses for racetrack owners that the board hopes to issue in two weeks to give the racetracks a head start on gambling. Further hearings are anticipated before the board votes on the permanent licenses in December.

The board is authorized to issue 14 slots licenses to racetracks, resorts, and stand-alone casinos. Seven of those licenses are reserved for racetracks, though there are only six applicants for them: Philadelphia Park, Penn National Race Course, Harrah's Chester, The Meadows, and Pocono Downs, all of which current operate; and the under-construction Presque Isle Downs near Erie.

The hearings on the Philly Park and Penn National applications are to be held Sept. 12. The first two floors of the Philly Park grandstand already have been gutted to make room for slots; the old grandstand/clubhouse at Penn National has been demolished and will be replaced with an integrated racing and gaming facility.

The gaming board has scheduled licensing hearings leading up to Dec. 20, when it is expected to vote on all 22 applications that have been filed.