HARRISBURG -- For the second time in four months, an investigation has begun into the purchase of land in Pennsylvania that could eventually become the site for a slot machine casino.
The latest investigation involves 22 acres of a former shipyard along the Delaware River in Philadelphia, which was bought from the state Department of General Services last year for $100,000. The buyer is a company partly owned by state Sen. Mike Stack, D-Philadelphia, and members of his family.
Some critics at the Capitol who don't like gambling have raised questions about the selling price of the land because it was considerably below the original price of $1.5 million.
Gov. Ed Rendell acknowledged yesterday that his office received a federal subpoena seeking information about the land sale.
The site has become a focus of interest because Las Vegas-based Ameristar Casinos Inc. has said it's interested in buying the 22 acres. It's taken an option on the land for a reported $37 million, part of an effort to assemble a 46-acre tract for a casino.
The state's new gaming law permits 14 casinos to be created around the state, including two somewhere in Philadelphia and one in Pittsburgh.
The subpoena for information from the Rendell administration was from the U.S. attorney for Central Pennsylvania, who is based in Harrisburg.
"We are cooperating fully with the subpoena," Rendell said at a news conference in his office yesterday, but he refused to go into details about what investigators want. Rendell said he's also begun asking questions himself about the land purchase by the Stack group.
Kate Philips, Rendell's press secretary, said the sharp drop in the asking price for the land -- the former Cramp Shipyard -- was due to high cleanup costs for removing pollutants from the site. About a third of the site is still under water, Philadelphia newspapers have said.
This Philadelphia investigation by federal officials comes on the heels of a probe by the state attorney general into the purchase of land along Lake Erie.
In December, Erie Mayor Rick Filippi and two business partners were charged with using the mayor's inside information in an effort to benefit from the purchase of four parcels near a former industrial site.
At the time, that International Paper site along the waterfront was considered a possibility for a racetrack/casino that will be built in Erie. But the developer of that facility, MTR Gaming President Ted Arneault, has since decided to build along Interstate 90 in Summit Township -- still in Erie County but south of the city.
The dual investigations into casino land purchases have led some critics of expanded gambling to fear that problems, such as public corruption, already may be on the rise.
"The problems in Philadelphia and Erie are only the tip of the iceberg," said Rep. Paul Clymer, R-Bucks, one of the plaintiffs in the lawsuit before the state Supreme Court seeking to overturn the July 2004 slots law.
"The advent of 'Nevada East' in this state is shameful and irresponsible," he said. "Slot machines are a gathering storm that will change the culture of Pennsylvania and not for the best."
Rendell insisted yesterday that nothing is amiss with the process for legalizing slots casinos in Pennsylvania.
He said he recently wrote a letter of protest to the Washington Post "when they said that Pennsylvania gaming was mired in scandal and controversy already.
"Pennsylvania gaming isn't mired in controversy and scandal. There hasn't been one applicant yet who's had any problems with their background. Everybody's getting hysterical, and nobody's even applied for a license yet."
That's because the new Gaming Control Board isn't ready to begin accepting applications for casino licenses. That won't happen for another few months, after forms and application procedures have been developed by staff members who haven't even been hired yet.
The gaming board has said it won't issue the first gaming licenses -- for the four sites at existing racetracks -- until late December. Licenses for stand-alone casinos, such as those to go in Philadelphia and Pittsburgh, won't be issued until sometime in 2006. After that, the winning applicants likely will need another six to 12 months to get the slots parlors ready to open for business.
Rendell said it's the Gaming Control Board's job to weed out inappropriate casino operators whose backgrounds may include illegal behavior. He said that has happened in a few cases in New Jersey, where the Casino Control Commission has prevented unfit companies from running casinos.
"The Gaming Control Board will ferret out people who have connections to things that raise the specter of corruption or controversy or conflict of interest," Rendell said.
"Can we stop people from conjuring up schemes to get rich fast and cash in on gaming? No. But can we stop them from getting licenses? Yes. Can we take their licenses away if these things come to light? Absolutely."
