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Seven Springs resort drops its bid for casino
Wednesday, October 18, 2006

You can forget about slots on the ski slopes. Seven Springs Mountain Resort has dropped its bid to build a small slot machine casino at its facility in Somerset County.

Seven Springs' longtime owner, the Dupre family, sold the resort in July to the Nutting media empire of West Virginia, the same family that is the plurality owner of the Pittsburgh Pirates baseball team. Because Major League Baseball forbids baseball investors from also running a casino, the Nuttings had hoped to arrange an ownership structure that satisfied both the baseball league and the Pennsylvania Gaming Control Board.

But months of negotiations, running through the end of last week, proved fruitless. Yesterday, at a hastily arranged news conference, the family and resort executives announced that Seven Springs was out of the running.

"We did everything that we could to make the proposal work," said Robert Nutting, chief executive officer of Ogden Newspapers and a member of the Pirates' four-man voting board,

"We were unable to come up with a package that fit."

The announcement was surprising, if only because Seven Springs was so far along in the planning process.

The new owners had already designed the $5.4 million parlor, unveiling drawings for an octagon-shaped casino in March. They'd tentatively partnered with Delaware North Cos., a New York hospitality and food service firm that specializes in managing sports venues and racetrack casinos, and announced that the casino would create 350 jobs.

They also had a rough blueprint of how to go about owning a casino and a baseball team at the same time. In Detroit, the Ilitch family, headed by Mike and Marian Ilitch, purchased the Tigers baseball franchise in 1992. The patriarch keeps his name on the baseball team, while the matriarch now runs the Motor City Casino.

But that wasn't doable in this case, said Mr. Nutting, because of the unique provisions of the state's 2004 gaming law.

The main sticking point was that the law prohibits the casino and the umbrella resort from having different owners, which rules out any kind of arrangement by which the Nuttings could parcel out the casino to a different, but related, ownership outfit.

"I think the reason that was not doable is that the [resort license rules] are so unusual and so specific; they simply didn't have a lot of flexibility or latitude," Mr. Nutting said. Pursuing a divestiture similar to the one that was drawn up by the Ilitch family, and approved by Major League Baseball, would have required a full overhaul of the Pirates' ownership structure.

The only other option would have been to keep the casino and sell its stake in the ball team, but that's something the Nutting family had no interest in doing.

Yesterday, Mr. Nutting downplayed the loss of the casino, saying the resort is still flourishing and that the casino, perhaps, wasn't worth the headaches.

"There's no question that it is an extremely burdensome process," he said. "I want to make sure that we all keep this in perspective. A 500-slot machine facility is a relatively small enhancement."

The 2004 law that legalizes slots gambling in Pennsylvania permits up to two "resort casinos," mini-parlors allowed to operate up to 500 slot machines. Because only two resorts had applied -- Nemacolin Woodlands Resort in Fayette County is the other -- the only hurdle for Seven Springs was its own license application.

But that hurdle couldn't be cleared, and that's good news for Nemacolin. Despite different clientele -- Nemacolin is generally viewed as more upscale than Seven Springs -- the two resorts are geographically close and would have been in competition for customers and gamblers.

"With them out of the mix, it changes that footprint." said Jeff Nobers, spokesman for the Nemacolin resort. "From a marketing perspective, it certainly changes the geography of the area we'd aggressively market."

It's also good news for resorts in the Poconos region of northeastern Pennsylvania, which had been monitoring the Seven Springs application process. Vacation Charters Ltd., which owns Split Rock Resort, had considered applying for a casino license by the Dec. 28, 2005, filing deadline, but backed out. The same was true of Fernwood Hotel and Resort.

Cove Haven resort, with more than 275 hotel rooms -- one of the criteria within the gambling law -- also could be eligible for a resort casino license.

Currently, two Poconos resorts -- Pocono Manor and Mount Airy Lodge, both in Monroe County -- are competing for a stand-alone casino license, which would permit the installation of up to 5,000 slot machines. If one of those applicants wins a stand-alone license, no other resort license could be located within 15 linear miles, according to the slots law.

Yesterday, a gaming board spokesman said that the board would reset the chase for the resort license sometime next year.

First published on October 18, 2006 at 12:00 am
Bill Toland can be reached at btoland@post-gazette.com or 412-263-1889.
Read the PG's Casino Journal by Bill Toland
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