Construction hasn’t started, as the project is snarled in
the court system.
It’s
been more than three years since the state accepted applications to build
a second casino in Philadelphia, and more than a year since the winner of
that application faced concerns about racist business practices.
At
this point, construction still hasn’t started on the nine-acre plot of land in
South Philadelphia that’s set to become the state’s newest casino: the Live!
Philadelphia hotel and casino project. That’s because developers, owners and
other stakeholders are waiting on the court system to make up its mind — and
precedent shows that’ll likely go in their favor.
Stadium
Casino, LLC, the group that controls the casino project, is waiting on the
Pennsylvania Supreme Court to rule on a lawsuit challenging whether or not the
state Gaming Control Board should have awarded a license to Stadium. That suit
was filed by SugarHouse Casino, the other casino in Philadelphia and a
competitor of any second casino in the city, and a group that lost out for the
license.
So
for now, developers are in a holding pattern on the half-a-billion-dollar
project until the court rules. The timing on that is difficult to predict. A
spokeswoman for Cordish Companies, the developer working on the Live!
Philadelphia project, said this week there’s “no update” on the status of
construction. Other stakeholders, including lawyers representing both sides,
didn’t respond to messages seeking comment on where the project stands.
Here’s
what we know: Construction won’t begin until at least a few months after
the suit’s settled. And it could be another year or more after that until the
massive casino becomes a reality.
The casino project specs
Once
construction actually occurs, Live! Philadelphia will be a
two-million-square-foot, towering complex in South Philly. In October 2015, the
City Planning Commission approved project plans to put the casino and its
corresponding hotel in the Philadelphia Sports Complex area, just off of
Interstate 95 at Darien Street and Packer Avenue. Plans for the casino include: A
325,000-square-foot casino with 2,000 slot machines, a 300,000-square-foot and
18-story hotel and some 3,000 parking spaces in garages and structures next to
them. There are also plans for restaurants, music venues and a spa.
Stadium
Casino, LLC is a business operation that’s actually a partnership between two
separate entities: Cordish Companies, the Baltimore-based development company behind
Xfinity Live!, and Greenwood Racing Inc., which owns Parx Casino in
Bensalem, routinely the highest-grossing casino in the state. Greenwood owns
two thirds of Stadium Casino, LLC.
Plans
for the construction of the building are set, zoning has been adjusted and the
Planning Commission has awarded its approval. But there are plenty of critics.
Some
neighborhood groups don’t want a massive casino complex in South
Philadelphia, though five community groups threw their support behind
developers in fall 2015. Other groups have concerns about adding more gambling
in the city. SugarHouse Casino, just about six years old itself and located
along the Delaware River in Fishtown, says the market is saturated and another
casino in the city of Philadelphia will be detrimental for the other four
casinos in southeastern Pennsylvania and the remaining seven in Atlantic City.
The lawsuit
The challenge filed against Stadium Casino and
the Gaming Control Board has been a ping-pong game for the last two years, as
both plaintiffs are working to stall the planned project.
It
was filed by not only SugarHouse, but also Market East Associates, one of four
groups that also applied for a casino license and, in November 2014, lost out
to the Stadium Casino group. Market East Associates wanted to build a $500 million casino at Eighth and Market
streets in Center City, where a 300-space parking lot currently
sits.
The
plaintiffs claimed one of the primary beneficiaries of the Live! Philadelphia
project, Watche “Bob” Manoukian of Greenwood, would have an ownership interest
that’s above the threshold allowed under state law. Details of the business
transactions he made that are in question were mostly redacted from court
filings.
In
June 2015, the state Supreme Court — in what was somewhat of a win for the
plaintiffs — sent the decision for the approval of the casino license
back to the Gaming Control Board, asking the board to do its due
diligence in investigating Manoukian’s business dealings and how much ownership
he’d be allowed under state law. A year later, the Gaming Control Board
said it still stood by its decision: The casino license and the ownership
structure of Stadium Casino, LLC was kosher.
Since
then, both SugarHouse and Market East have continued to object, including to
how the Gaming Control Board went about its subsequent investigation without
holding additional hearings. Final arguments to the judge were due in October, and
the last movement in the case was Dec. 2 when lawyers notified the court they’d
submitted and received necessary documents. Lawyers representing both sides
didn’t respond to requests for comment.
Now,
it’s a waiting game until the court makes its ruling. It’s likely the court
will rule in favor of Live! Philadelphia. Every winning casino project in the
state has faced lawsuits and challenges from competitors and losing applicants,
and every time the courts ultimately sided with the winning casinos and the
Gaming Control Board.
And
for what it’s worth, the Live! project isn’t all that far behind. SugarHouse
Casino won its license in 2006, and its doors didn’t open until four years
later.
Allegations of racism
It
was two summers ago when a representative from Al Sharpton’s National Action
Network planned to interrupt a city Planning Commission meeting about
the casino in order to air concerns about allegations of racist business
practices by Cordish Companies. That includes lawsuits Cordish has faced
alleging discrimination against black people in Kansas and Louisville.
One
lawsuit, filed by the Kansas City Human Relations Department, alleged
discriminatory dress code practices at Kansas City’s Power & Light
District, which is similar to Xfinity Live!.
Cordish
agreed to change its dress code, and the matter was settled in 2009. In
depositions for a case that was dismissed last year, former Power & Light
employees testified they were told to limit the number of black patrons in the
venue. And in 2015, a man filed a lawsuit against Cordish saying its employees
at Fourth Street Live! in Louisville targeted black patrons and picked fights
with them to have them removed.
Since
the movement in the summer of 2015, it’s been largely quiet. The lawsuits
dropped out of the news in Philadelphia after the Black Clergy and the NAACP
conducted an investigation and came out with a statement saying the racial discrimination
claims against Cordish were bogus.
It
was Paula Peebles, chairwoman of the Pennsylvania chapter of the National
Action Network, who spoke out about the lawsuits back in 2015. She didn’t
respond to a request for comment, but said in an emailed statement at the time:
“Any move to advance this casino without a full investigation of these claims
is nothing more than a whitewash – absolving the company of any potential
wrongdoing they may have committed and the city of its responsibility to
uncover the truth about who they are choosing to do business with.”
No
one from the National Action Network responded to an inquiry from Billy Penn
about whether or not they’ve made any progress in the last year when it comes
to Cordish.
Cordish,
for its part, has claimed no wrongdoing in the discrimination
cases.
The revenue effect
The
longer the project is stalled, the more the state government is missing out on
potential revenue. The largest of that is $75 million in licensing fees owed to
the state by Live! Philadelphia before operations commence — a one-time fee the state factored into its 2016-2017
budget.
As
long as the courts rule and the fee is paid before the end of this fiscal year
on June 30, the state will be on track. But if it’s delayed past that, the loss
of those fees could put the balancing of the budget in jeopardy.
Those
one-time fees come on top of the revenue the state isn’t receiving from
taxes paid by both casinos and winners. Every day the South Philly casino
project is delayed, the potential revenue to the state plummets.
Casino
earnings are subject to Pennsylvania’s personal income tax, and the Gaming
Control Board reports that more than half of what’s made on slot machine pay is
returned to Pennsylvanians in the form of property tax relief, wage tax relief
in the City of Philadelphia and padding the state’s Economic Development and
Tourism Fund. A portion of table games revenue also goes directly to the
state’s general fund.
In
fiscal year 2016, SugarHouse Casino made more than $177 million in revenue and
paid upwards of $60 million in state tax, according to the Gaming Control Board’s revenue figures.
Parx Casino, one of the highest-grossing casinos, paid $132 million in state
taxes alone in the same year.
Source: Billy
Penn
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