Probe of gaming regulation reaches Valley View Downs racino project

Panel questions horsemen's groups

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Investigators for the Pittsburgh grand jury that was empaneled last summer to examine -- for a second time -- potential problems with the regulation of the state's gambling industry have been interviewing horsemen's groups, among others, in recent months, according to sources familiar with the probe.

One area being questioned by the grand jury and attorney general's investigators is peculiarities in contracting between racetracks and horsemen's groups, according to several sources.

Investigators are said to be taking a close look at Centaur Inc., the Indiana-based gaming firm that won the rights to build a racetrack in Lawrence County in 2007, then filed for bankruptcy three years later and ultimately sold the Valley View Downs project to a group of local investors called American Harness Tracks for $5.6 million in 2010.

Sources also said that individuals involved in the development end of the Centaur project, before it changed hands, have been interviewed in Harrisburg. Their specific concerns are not clear.

While other casino projects -- including the previous incarnation of Pittsburgh's Rivers Casino, called PITG Gaming -- were examined by a grand jury in a May 2011 report, Centaur's was not, partly because it was not, and still isn't, a casino licensee or applicant in Pennsylvania.

Meanwhile, the current owners of the Valley View Downs project in Lawrence County have been beset by financial problems of their own. Two years after buying the project and nearly six months after being awarded a racing license by the Pennsylvania Harness Racing Commission, the owners have yet to apply for the gaming license that would allow them to operate a casino.

Under current state law, the remaining casino license is reserved for the owner of the harness racing license. Some legislators and casino investors want to change that, and have suggested that the casino license be separated from the harness track rights or that the Valley View project be scrapped and the harness track relocated elsewhere.

American Harness Tracks has kept its hold on the license, even though the Harness Racing Commission, as a condition of its transfer approval from Centaur, told the group that it must have at least $150 million in financing in place "within 60 days from the date of this order."

That order was issued in July 2011, more than nine months ago. But despite financing troubles, American Harness Tracks was awarded a harness racing license in November.

"It's been very, very frustrating," said state Sen. Elder Vogel, R-New Sewickley, whose district includes parts of Lawrence County. "They keep telling us soon, soon, soon, but the days keep ticking by."

At last Thursday's monthly harness racing commission meeting, American Harness Tracks updated the commission on its financing situation -- the company said it may have some news to report in the next month and that it is again talking with new, Pennsylvania-based financiers.

That's because the "old" financier, New York-based Och Ziff Capital Management, is out of the picture and has been linked to a new project.

In April, Hard Rock International announced plans to develop a $275 million slots casino at the Northfield Park racetrack, near Cleveland, which means that Valley View probably will have to compete against yet another nearby racetrack casino, this one about 70 miles away.

Northfield Park owner Brock Milstein, contacted by phone, wouldn't comment on the nature of the financing behind Hard Rock's $275 million pledge. Pennsylvania sources said one of the financiers is Och Ziff, which has partnered with Hard Rock in the past. The Hard Rock proposal is contingent on the State of Ohio permitting slots at racetracks.

More bad news for Valley View: Pennsylvania-based Penn National Gaming Inc. last month closed on the purchase of a property near Youngstown, Ohio, where it plans to build a thoroughbred racetrack and ancillary slots casino. It paid $4.6 million for the 186-acre property, which is just 20 miles from the proposed Valley View Downs site, and would be a direct competitor, pulling gamblers from the same population radius.

In an email, the Pennsylvania harness commission said of Thursday's meeting that "the commission and staff met with [American Harness Tracks]. The commission is pleased with the progress that they are making, and [American Harness Tracks] will be coming out with more information on the project in the near future."

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Bill Toland: btoland@post-gazette.com or 412-263-2625. Tracie Mauriello contributed to this report. First Published May 1, 2012 10:45 AM


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