Lawmakers Seek Probe of Penn National

Six lawmakers are asking Pennsylvania Attorney General Kathleen Kane (l.) to investigate Penn National Gaming over its cancellation of a partnership in the Lawrence Downs racino.

Six lawmakers from western Pennsylvania have sent a letter to state Attorney General Kathleen Kane asking for an investigation into allegations that operator Penn National Gaming was criminally fraudulent in ending its partnership with Endeka Entertainment in the planned Lawrence Downs Casino and Racing Resort.

Penn signed on as a minority financier and partner in the proposed project, which is the applicant for the final Category 1 racino license in the state. Penn was to supervise the construction of the racino, and operate it the $225 million facility near New Castle in Western Pennsylvania.

In March, Penn abruptly pulled out of the deal, citing market saturation, and filed a complaint in the Berks County Court of Common Please seeking a declaratory judgment that it has the right to withdraw from the project. Endeka, a partnership of prominent Philadelphia-area investors, countersued the same day, accusing Penn National of entering and then exiting the project as a “fraudulent scheme” to “destroy any chance” that the Lawrence County project would go forward.

Endeka’s lawsuit alleges that Penn National intentionally torpedoed the Lawrence Downs project to protect its Hollywood Mahoning Valley racino, 20 miles away in Youngstown, Ohio.

The state senators and representatives who represent Lawrence County want the attorney general’s office to look into that claim.

“I, along with my colleagues have called on Attorney General Kane to promptly investigate these allegations, which include alleged criminal conduct, and to take all appropriate action,” state Rep. Chris Sainato wrote in the letter. “Clearly, the citizens of Lawrence County would be harmed by lost tax revenue, economic stimulus and jobs if these allegations prove true and if the project were lost.”

Senator Elder Vogel and state Reps. Jaret Gibbons, Mark Longietti, Robert Matzie and James Marshall also signed the letter.

The companies already missed an April 9 deadline to submit project documents, and were scheduled for an April 29 public licensing hearing before the Pennsylvania Gaming Control Board. The board could deny the entire application as a result.

“State and local officials have invested time and energy to ring this project to the area,” Vogel told central Pennsylvania’s Patriot-News. “We want to make sure that the entire process has been conducted in an honest manner.

Eric Schippers, Penn National’s senior vice president of public affairs, told the newspaper the allegations are baseless. “This is nothing more than a commercial dispute between two private parties,” he said. “There was never an agreement of any sort between Penn National and Mahoning Township or Lawrence County.”

He added that the company had a contractual right to pull out of the deal. “We have been completely open with our partners, the county and the state about the multiple financial challenges of this project at every juncture,” he said.