Centaur Inc. denied temporary license for Lawrence County racetrack/casino
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HARRISBURG -- The state Gaming Control Board yesterday denied Centaur Inc.'s request for a temporary slots license so it could start building Valley View Downs, a $425 million racetrack/casino in Lawrence County.
Centaur Chief Executive Officer Rod Ratcliff, joined by lawyers Adrian King and William Lamb, told the board that time is critical because Centaur could lose the financing for the project unless it has a conditional, or temporary, license by Tuesday.
Mr. King, of Ballard Spahr in Philadelphia, is a former top aide to Gov. Ed Rendell, and Mr. Lamb is a former state Supreme Court justice.
"We are clearly disappointed with today's decision," said Valley View spokeswoman Susan Kilkenny. "We will continue to work with our lenders to find a solution that will position us to bring this opportunity to Western Pennsylvania."
Centaur officials said credit markets have gotten tougher recently and if they lose their current $425 million in financing, they might not be able to get new loans and the whole racetrack/casino project could be in jeopardy. They said the new racetrack/casino, to be built west of New Castle near the Ohio line, would provide at least 1,000 construction jobs and 1,000 permanent jobs.
Normally, the board holds a "suitability" hearing before issuing a license, to hear testimony on whether a slots applicant has disqualifying financial, social or criminal background problems for a license. Centaur was asking the board to alter that procedure to speed up issuance of the license.
All three Lawrence County commissioners came here yesterday to support Centaur's bid for a license, as did building trades officials from Lawrence County.
However, two Duquesne University students, Matthew Pacella and James O'Neill, were present here yesterday, holding a sign opposing the Centaur license.
Mr. Pacella said the board should investigate large political contributions that Centaur officials or their relatives had made to state politicians, including $292,500 to Gov. Rendell, $2,500 to House Democratic leader Bill DeWeese and $42,500 to former House Democratic Whip Mike Veon of Beaver County.
Mr. Veon, who is now facing charges by state Attorney General Tom Corbett as part of a probe into the use of taxpayer dollars to underwrite political campaigns, had been a strong supporter of Centaur's original racetrack/casino plan, which was to be built in Beaver County. Mr. Veon lost re-election in November 2006 and Centaur last year decided to build in Lawrence County.
An extensive dossier is now being circulated among lobbyists, politicians and journalists, titled "Why Centaur Should Not Be Given A Gaming License in Pennsylvania."
The documents note Centaur officials' campaign contributions to Pennsylvania politicians, all of which were made prior to the passage of the 2004 gaming law, which forbids campaign contributions from would-be gaming applicants.
The documents also question Centaur's debt levels, its ties to Stephen Hilbert's and John Menard's MH Equity Investors, and its relationship to the Pennsylvania Real Estate Investment Trust headed by Ronald Rubin.
Mr. Hilbert is the Indiana businessman who was co-founder and former chief executive officer of Conseco Inc., a publicly traded insurance and investment giant whose value plunged after he acquired a mobile home lender. The dubious investment prompted a drop in per-share price from a $58 high to $5.62 by April 28, 2000 -- the day Mr. Hilbert was jettisoned.
PREIT, which owns the Beaver Valley Mall, was initially to develop the Centaur casino at its preferred Beaver County site, and now is in line to be the main developer of the Lawrence County track.
The source of the dossier is unknown, but the numbers it includes correspond with PREIT's Securities and Exchange Commission filings, which say that in 2004, Centaur's Valley View agreed to lease a number of Beaver County properties assembled by PREIT, on which the casino and racetrack would be built, a deal consummated with an initial payment of $983,000 from PREIT to Centaur.
But because a 2007 compromise between Centaur and the Carmen Shick family (which wanted to build the racetrack/casino on land it owns in Lawrence County) meant that the casino would no longer be built in Beaver County, that $983,000 payment was refunded to PREIT.
"PREIT has waived and terminated its rights to purchase the property contemplated for the racetrack and casino or to purchase an alternative location, and its right to ground-lease such site to Valley View," the SEC documents say.
But there's a consolation prize: "In consideration of PREIT's waiver and termination, Valley View [will pay] PREIT $57 million over nine years, payable $250,000 per month from March 1, 2010 to February 1, 2019, plus a final payment of $30 million payable on March 1, 2019," according to the SEC documents.
In addition to that, PREIT is in line to win a contract for "customary management services for all aspects of the development and construction phases of the racetrack and casino," a $3 million contract.
Says the dossier: "In less than four years, PREIT and Rubin will have made $57 million on a $928,988 investment, while putting virtually no money or property at risk."
Mr. Rubin, head of PREIT, has made political contributions to Mr. Rendell, state Sen. Vincent Fumo, Mr. Veon, Mr. DeWeese and state Rep. John Perzel over the years, along with many other Philadelphia-area politicians and party campaign committees. PREIT is based in Philadelphia, and the Rubin family is also invested in the would-be Foxwoods casino project in Philadelphia.