Pocono Downs sale: More details; Huge purchase price, impressive, but what does this mean to the area?
Jobs, yes. Good wages? remains to be seen......
Traffic? Sprawl? A big change in typical 'Pennsylvania atmosphere'? Unfortunately, probably so.
Read on:
THE TIMES LEADER
Posted on Sat, Oct. 16, 2004
Downs sold in $505-million deal
Sale includes track, off-track facilities and construction of slots casino
By JERRY LYNOTT
jlynott@leader.net
PLAINS TWP. - In what could be the biggest private investment deal in the region's history, a Connecticut Indian tribe has agreed to buy Pocono Downs and five off-track wagering operations and build a casino for slot machines on the racetrack property at a total cost of $505 million.
The Mohegan Tribal Gaming Authority and Penn National Gaming Inc. on Friday announced a $280 million sale agreement for the betting parlors and the 40-year-old harness racing track.
The authority, which operates the 240-acre Mohegan Sun casino, resort and entertainment complex near Uncasville, Conn., estimated it will spend another $175 million to build and equip the local casino, which will open in early 2006.
On top of the purchase price and planned improvements, the tribe said it will buy a gaming license for $50 million to operate up to 3,000 slot machines at the Downs. The track is one of the 14 sites eligible for slots under the state's new Race Horse Development and Gaming Act.
The $505 million in planned investment dwarfs other recent economic development initiatives in Northeastern Pennsylvania. By comparison, the mostly taxpayer funded expansion of the Wilkes-Barre/Scranton International Airport will cost close to $70 million and the Wachovia Arena was built for nearly $56 million.
The total outlay by the tribe tops the $475 million in government funds spent to build the Casey Highway in Lackawanna County.
The deal is the gaming authority's first commercial venture outside of casinos on tribal land, said William Velardo, chief executive officer of the gaming authority. The authority has invested in other tribal gaming enterprises in Wisconsin and Washington.
"We had been looking at a number of possible commercial transactions," he said. "It was the third one we looked at that we took somewhat seriously."
Penn National Gaming, a publicly traded company based in Wyomissing, marketed the Downs to comply with the state's new gaming law, which limits companies to full ownership of one slot parlor and a one-third ownership of another . The company said it planned to add slots to its thoroughbred track Penn National Race Course near Harrisburg.
"There was a great deal of interest in the property," said Eric Schippers, Penn National spokesman. The company would have preferred to develop the Downs for itself. But, he said, because of the ownership restrictions, it had no alternative but to sell it.
In a prepared statement, Peter Carlino, chief executive officer of Penn National Gaming, said, "We believe the Pocono Downs' employees, the horsemen, and the Wilkes-Barre region will be well-served through (Mohegan Tribal Gaming Authority's) ownership given its proven track record as a successful and experienced gaming resort operator."
That track record put State Rep. Kevin Blaum, D-Wilkes-Barre, at ease. A top priority for the sale was that the buyer be a good citizen, he said.
Blaum, whose district includes the track, credited Penn National with moving quickly with the sale. He said he was worried a delay would put the Downs at a disadvantage while Penn National proceeded with adding slots at its other track.
"It's very exciting news," he said. "Penn National has done what we asked them."
Plains Township Commissioner Ron Filippini said the host municipality stands to benefit greatly from the sale.
Under the state gaming law, the township will receive 2 percent of the casino's slots income, but it is limited to a maximum of half of the township's annual budget per year. With a budget of $4.4 million this year, the most the township could receive would be $2.2 million.
Filippini said the money would go to capital improvements in the township.
The sale still needs the approval of the state Harness Racing Commission. The matter might come before the three-member commission on Oct. 22, its next scheduled meeting in Harrisburg.
In 1996 the commission approved the sale of the Downs and two off-track wagering sites to Penn National for $47 million. It operated the enterprises as a wholly owned subsidiary of the company.
Penn National also owns horse racing tracks, gambling facilities and resort properties across the country and manages a casino in Canada.
According to an Aug. 9 filing with the Securities and Exchange Commission, the total revenue for Penn National's Pennsylvania racing operations was $49.3 million for the six-month period ending June 30, with operating income of $4.8 million. The figures were down slightly for the same period in 2003.
The five off-track wagering sites to be purchased by the Mohegan authority are in Carbondale, East Stroudsburg, Erie, Hazleton and Allentown.
In Connecticut, the tribe has exclusive oversight of gaming activities and its revenues are not taxable under Internal Revenue Service laws. But Velardo said the Pennsylvania venture is not on tribal land. "All the applicable taxes apply."
Details of the gaming authority's plans for the Downs were still sketchy. Velardo said it's not yet known how many people will be hired to work at the casino.
The Mohegan Sun employs 9,500. They earn between $10 and $12 an hour and have a benefit package that includes fully paid medical, dental, vision and prescription drug coverage, company paid retirement savings plan, free meals, tuition reimbursement, paid vacation and tuition reimbursement.
Whether the same benefits would apply to workers at the Downs, Velardo said he was not certain. "We're really in the infancy stages" of what to do, he said.
Jerry Lynott, a Times Leader staff writer, may be reached at 829-7237.
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