Philly Live! Gets the Win

Live! Hotel and Casino, the joint venture of Cordish Companies and Parx owner Greenwood Gaming, has won the license to build Philadelphia’s second casino. The Pennsylvania Gaming Control Board discounted arguments that another casino would saturate the market in awarding the ducat.

Hotel, stadium location swayed board

After two years of proposals, plans and deliberations, the city of Philadelphia has its second casino licensee. In a public meeting last week, the Pennsylvania Gaming Control Board voted unanimously to award the second city casino license to Live! Hotel and Casino, the joint venture of Maryland’s Cordish Companies and Greenwood Racing, which operates Pennsylvania’s highest-grossing current casino, Parx at Philadelphia Park in nearby Bensalem.

Live! Hotel and Casino will be a 200,000-square-foot complex including a $425 million casino with 2,000 slot machines and 125 table games, with a 220-room hotel created by refurbishing the current Holiday Inn on the site. Board members said a deciding factor in choosing the project was not only the hotel but also its South Philadelphia location, at Ninth and Packer near the sports complex that includes the Philadelphia Eagles’ Lincoln Financial Field, the Phillies’ Citizens Bank Park and the NHL Flyers’ Wells Fargo Center.

The project also includes a 1,000-seat music venue and a collection of restaurants, including both local favorites and chain locations. It is a formula that has worked repeatedly for Cordish in other “Live!” gaming complexes, the most successful in the Baltimore, Maryland suburb of Hanover, where Maryland Live!, the state’s largest casino, has continued to lead its market despite increasing competition.

Cordish also owns Xfinity Live!, the dining and entertainment center at the site of the former Spectrum sports arena at the stadium complex, which connects the baseball stadium and the arena.

The stadium location gives the Live! project access to more than 8.5 million annual visitors, said Cordish President and Managing Partner Joe Weinberg in an interview with Bloomberg. “We think the market has tremendous potential that is untapped at this point,” he said. The gaming board, in a filing explaining the decision, said essentially the same thing, noting “the synergy between gambling and entertainment at a casino” and “the more than 400 stadium-area events per year.”

The awarding of the license is only the beginning of what will most likely be a two-and-a-half year process before the first gamblers can walk in a new Live! casino. Every decision of the Pennsylvania board on casino licenses has been challenged in court by losing bidders, and some or all of the losing bidders in this case—Bart Blatstein’s Provence, Joseph Procacci’s Casino Revolution and Ken Goldenberg’s Market8—are expected to challenge the decision under the law to the Pennsylvania Supreme Court.

The high court has never overturned a gaming board decision. However, expected court proceedings will delay putting a shovel in the ground for the new casino. After groundbreaking, construction is expected to take 18 months.

For Greenwood, it is the first win in an extended campaign to expand its gaming holdings. The company was a losing bidder for the resort-class license won by the Valley Forge casino. Outside the state, the company was a losing bidder in the recent Massachusetts competition—in which it partnered with Penn National Gaming—and also for the license in Maryland that was won by MGM at National Harbor, in which it purchased land near the eventual winning site and proposed a second Parx-branded casino.

Greenwood, which has seen great success at Parx thanks to its location just across the bridge from central New Jersey, was restricted to one-third ownership of a second venue under Pennsylvania gaming law. Greenwood is 85.84 percent owned by Watche Manoukian, an Armenian who made his fortune as an agent for the royal family of the oil-rich royal family of Brunei in Southeast Asia. To comply with the law, Manoukian will own 33.3 percent of the new Live! venture, with Greenwood Chairman Bob Green owning 4.67 percent and Greenwood investors making up the remaining portion of the operator’s 50 percent interest in the Philadelphia casino.

Greenwood’s 50/50 partnership with Cordish, which will operate the casino, is called Stadium Casino LLC.

Philadelphia Mayor Michael Nutter, who had pressured the board for a decision despite calls for the second city casino license to be shelved, praised the board’s decision, saying the construction process and the new casino itself will create “thousands of much-needed construction and permanent jobs,” according to the Philadelphia Inquirer.

Other city officials—not to mention the current Philadelphia casino, SugarHouse—remain opposed to creating a second Philadelphia casino, citing market saturation and opposition from local residents. Some local groups are pledging to continue to fight against the casino.

City Councilman Kenyatta Johnson, whose district includes the proposed site, said he will “join in opposition” against the new casino, according to the Inquirer, which also cited various local opposition. “It’s going to be a fight,” said Helen Gym, executive director of Asian Americans United and an activist on education, in an interview with the newspaper. “We’re trying to show that there can be a different vision of the city other than just gambling halls and defunding schools.”

Other community activists are reportedly preparing various actions to block the casino’s construction—which should be a familiar atmosphere in the city, where local groups fought bitterly to block construction of SugarHouse.

Opposition groups cite not only the typical social-effect arguments on new casinos (including those repeatedly proven to be myths, such as increases in crime), but congestion resulting from another attraction in a stadium district already typically gridlocked on game days.

When the rumors that Live! would receive the license leaked out during the week before the board meeting, protests erupted in the project’s neighborhood. More than 500 residents jammed Stella Maris Church school hall in a protest a few days before the licensing was announced.

“Your civic leaders have done everything possible to stop this train wreck,” said Barbara Capozzi, the Packer Park community director in the Sports Complex Special Services District, at the protest. “We don’t want to be the next Atlantic City.”

Capozzi lamented the congestion she said a casino will bring to the neighborhood. “With all the hoo-ha that we already put up with from sports and concerts and Xfinity Live! crowds, it’s bedlam here on too many nights,” she told the Philadelphia Daily News. “For 11 years, we’ve worked in unison with the teams to counterbalance the nonsense we go through.”

The losing bidders, predictably, criticized the board’s selection. “I think the board is very short-sighted,” said Blatstein in an interview with the Inquirer. “All they’ve done is created a monopoly for Parx, with one in Bucks County and one in South Philly, which will squeeze out SugarHouse. It will kill Harrah’s Chester. It’s just unbelievable. It’s shocking that they would choose another crappy slots-in-a-box project.”

Weinberg and Greenwood CEO Anthony Ricci responded in separate interviews with the newspaper that there is plenty of room for market expansion in Philadelphia, particularly with the ready-made market of sports fans.

“We’re laying down a lot of money because we know this market will expand,” Ricci said. “We’re not here to just take business from Harrah’s and SugarHouse.”

“This will be the only example in the country of having a casino-hotel complex with every major sport represented in terms of baseball, football, basketball, hockey, all in one destination,” said Weinberg. “The longer you keep people and the more you can have people stay overnight, that creates an exponential increase in expenditures in the market.”