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Casino hopeful wants slots law ruling
Questions if promise to fund arena is legal
Saturday, February 25, 2006

A Detroit businessman who is competing for the Pittsburgh slot machine license has asked the state Gaming Control Board to determine whether it is legal to offer funding for a new arena as part of his or any other bid.

Don Barden, who is proposing to build a casino on the North Shore, west of Carnegie Science Center, questioned whether a section of the state law that legalized slot machines in 2004 prevents bidders from offering such funding and could lead to their disqualification if they do.

"I want to make sure it is permitted and legal under the statute and that I'm not at risk of being disqualified," he said yesterday.

Isle of Capri Casinos Inc., teaming with the Penguins, already has offered $290 million toward a new arena as part of its bid for the Pittsburgh slots license.

Mayor Bob O'Connor and Allegheny County Chief Executive Dan Onorato are urging Mr. Barden and Forest City Enterprises, the other competitor for the license, to put up funding for an arena in their proposals. Neither has done so yet.

The language at issue is in Section 1313 of Act 71.

It says that applicants for slots licenses that commit or promise to pay more than the $50 million set in the law as the license fee or to return more in revenue to the state and host municipalities than the amounts set in law "shall not be deemed a financially successful, viable or efficient business operation and shall not be approved for a slot machine license."

Since slots revenues would be used directly or indirectly to supply funding for an arena, Mr. Barden said that section conceivably could apply to any bidder offering such a pledge as part of his proposal.

He said he has sent a letter to the gaming control board, which will award the slots licenses, asking for a clarification. Mr. Barden said if he gets clearance from the board, he will come up with a proposal to help with funding for an arena.

"I said all along we're willing to assist in building a multipurpose facility to be utilized by the Penguins," he said.

State Gaming Control Board spokesman Nick Hays would not comment on Mr. Barden's letter. The Penguins also declined comment.

However, Christopher Craig, a lawyer on the staff of Sen. Vincent Fumo, D-Philadelphia, who helped write the 2004 "Race Horse Development and Gaming Act," said yesterday he doesn't think Isle of Capri's offer to build a new arena in Pittsburgh violates the law.

Mr. Craig said that section 1313 of the July 2004 law was aimed at preventing slots license applicants from getting into a bidding war over the cost of a slots license.

He said state officials wanted to set a firm license fee -- $50 million -- for slots licenses that go to seven racetracks and five nontrack venues. One of the nontrack venues is earmarked for Pittsburgh.

State officials feared that if an applicant was permitted to pay more than $50 million for the license -- say, $75 million -- then that would be $25 million less that the applicant would have to put into the casino and make it a first-class facility.

"Every dollar extra that goes into a license fee is $1 that doesn't go into building an attractive casino," Mr. Craig said.

"The General Assembly was concerned about [slots applicants] overpromising on the license fee and getting themselves into financial difficulty," he said.

That happened in New Orleans, he said, where Harrah's promised the state a high license fee, received the license and then found itself unable to pay the fee it had promised.

But Mr. Craig said that section 1313 "does not preclude gaming applicants from making commitments to local governments for whatever improvements that governments would want, such as rehabilitating a section of a city, improving roads, making a park or promising to build a sports facility."

First published on February 25, 2006 at 12:00 am
Mark Belko can be reached at mbelko@post-gazette.com or 412-263-1262. Harrisburg Bureau Chief Tom Barnes can be reached at tbarnes@post-gazette.com or 1-717-787-4254.