“This guy ain’t now or ever will be in gambling. I don’t know if I have to put it in blood ... Would I sign I wouldn’t go into gaming? Yes.”
More than a decade later, Peterson’s position could not be more different. He has made a complete reversal, inking a deal with MGM Resorts for a casino at National Harbor and personally pushing legislators for a ballot referendum that could provide him with the license he needs.
The Peterson Cos. has spent $400,000 on an advertising campaign aimed at persuading voters to support the gambling expansion, and MGM has spent $8.4 million.
Peterson, 76, said circumstances have changed since he made his no-gaming pledge. It has been four years since Maryland legalized gambling, and newly built out-of-state casinos now draw thousands of Maryland visitors every year, dragging their dollars with them.
At the same time, there have been setbacks in the development plan, from turmoil in the housing market to a decision by The Walt Disney Co. to abandon plans for a 500-room destination resort. After building 423 condominiums, 91 town homes, 30 restaurants and six hotels, however, he said he has lost more than $10 million on the project to date — so much that he said a publicly held company would have walked away years ago.
The time has come, he said, to try something new.
A distaste for ‘slots barns’
Peterson, whose sons now run his company alongside him, does not take his about-face lightly. He acknowledges some risk in bringing gambling to a project that he has built piece by piece in hopes of becoming the envy of the county and the region, from the materials he uses in construction to the retailers and restaurateurs he pursues.
“People have a pride in National Harbor now, and we’re not going to do anything to take that pride away,” he said.
National Harbor marked a turning point for Prince George’s County, proof the county could complete a landmark development project. For much of the 1990s, the county had missed much of the surge in government and contractor jobs that drove economic growth elsewhere in the region.
When he first proposed the development, the state was still years from approving even slot parlors, something Peterson still considers too shabby for his project. Other than tribal casinos, there were no table games being offered in the Mid-Atlantic outside of Atlantic City.
The coming ballot initiative would allow for Las Vegas-style table games, which Peterson thinks will draw a wealthier, higher-end crowd the likes of which National Harbor’s shopping, restaurants and entertainment might attract.
“When the question was asked of me, all the gaming in the county was slots barns. We spent an extraordinary amount of time and effort to make sure that National Harbor was very special. This was Washington’s waterfront. And we did not want to do anything to denigrate that,” he said.
Hopes were high in December 2004 when the Gaylord National Resort and Convention Center broke ground, kicking off construction at the complex.
But the economic downturn that began in 2007 caused National Harbor to open in what Peterson called “the worst business climate of probably 40 or 80 years” and began to take its toll. Contracts to purchase dozens of homes in the project fell through. Rents that retailers and restaurants were willing to pay plummeted. Peterson’s prediction that increased security concerns following the Sept. 11 terrorist attacks would lead the government to move offices out of D.C. to sites such as National Harbor did not materialize.
More bad news came late last year when Disney indicated that it was backing out of its deal to build a resort on a grassy 15-acre plot at the top of the project’s main artery, American Way, a deal Peterson had nurtured for years. He is buying the land back from Disney for $11 million, the same price at which he sold it. There are no current plans for the property.
Gambling gains favor
As National Harbor was taking shape, attitudes on gambling around the country began to shift.
In search of dollars to fill cratering budgets and ways of adding new jobs, neighboring states aggressively expanded their gambling options. Pennsylvania legalized casinos in 2004, and by 2011 its venues produced $1.5 billion in tax revenue and more than 13,000 jobs, according to a report compiled by the gambling industry. West Virginia took in $406.5 million that same year, and Delaware, with three racetrack casinos, took in $230.16 million.
In the months before Disney announced its withdrawal, officials in the office of Prince George’s County Executive Rushern L. Baker III (D) began anticipating that legislative proposals for gaming in Maryland would re-emerge. Baker had opposed casino proposals as a legislator, and he and his staff were not enthused about the possibility of slots being added to Rosecroft Raceway. They fretted that the venue, located in a residential area served by a two-lane road, might become dependent on squeezing revenue from some of the county’s least well-off citizens.
If National Harbor landed a casino with table games, however, the officials felt it could tap into the 18 million tourists who come to the District every year and the millions more who arrive for business.
“The county executive believed that a high-end destination resort at National Harbor that would attract tourists from around the globe with a hotel, shopping, and entertainment options, as compared to a slots barn at Rosecroft, was preferable and would have less of a direct negative impact on our communities,” Baker spokesman Scott Peterson, who is not related to Milton Peterson, said via e-mail.
Baker’s staff approached Peterson when he arrived for a meeting with Baker, and asked if he would reconsider opening a casino.
Despite his upbringing in the church, Peterson didn’t say no. The family had not had a firm rule about gambling since he was a kid. Peterson remembers his son, Steven, president of the company, asking him what he thought his grandmother, who died in the 1980s, would think about the prospects. Peterson, recalling that his father occasionally visited racetracks later in his life, suspected his mother probably would have come around.
When Baker raised the issue directly, it helped that the conversation now centered on a high-end table games facility, not a slots-only venue. “Year after year after year they would say gaming and we would say no and finally, Rushern Baker, after asking numerous times, said ‘You know Milt, what if the vision ... was for a lot of amenities: spa, resort, high-end restaurants, retail and one of the amenities was a casino?’ ”
He told Baker he was in.
Rolling the dice
Peterson signed an agreement with MGM Resorts International, which operates casino brands Bellagio, MGM Grand and Mandalay Bay. An MGM Resort would occupy 22 acres at National Harbor beside the Beltway, where a tent featuring Cirque du Soleil shows currently operates. MGM officials say the project would include a hotel, gaming floor, fine dining, entertainment and retail, and would create 4,000 jobs.
The future, though, is tied to a ballot initiative on gaming to be decided on Election Day in November. Opponents say building a casino in the county will do little to benefit the county economically. Donna F. Edwards, who helped bring a lawsuit aimed at preventing National Harbor’s construction before becoming a member of Congress in 2008, wrote in a recent op-ed with a local minister that gaming was “suspect as a cornerstone of economic development” and that it could lead to increased crime.
Del. Melony G. Griffith (D-Prince George’s), who chairs her county’s legislative delegation to the Maryland House of Delegates, said she was opposed to the idea regardless of Peterson’s or Baker’s flip-flop on gaming. “It is supposed to be an open bidding process, and I don’t put much weight in one person flipping his position,” she said.
But Peterson’s partners on the project remain steadfast. Tanger Factory Outlet Centers plans to opens dozens of stores at National Harbor next year. Greenbelt-based home builder Bozzuto Group is in the final stages of planning a 371-unit apartment building, the Esplanade, with construction set to begin in the spring.
Toby S. Bozzuto, president of Bozzuto Development, said the casino plan — which he learned about shortly before it became public — would have no effect on his relationship with the Petersons.
“The apartments that we build are going to be something that the Bozzuto family and the Peterson family would like to hold forever,” he said “So we are planning accordingly.”
Bozzuto said the Petersons could have sold the apartment site to them outright to raise the cash, but wanted to retain a stake in it. “They could sell every parcel there. But they’re not,” he said.
Even the National Children’s Museum, which is building a permanent venue that will open there later this year, does not have a problem with an MGM casino. “I have no opinion on that, and we are not taking a position on that,” said Willard Whitson, the museum’s president and chief executive, of the prospects for a casino.
If voters at both the state and county level approve Question 7, it will allow a casino license for a swath of the county that many observers believe National Harbor is destined to win.
When it opens, as early as mid-2016, it would be the first MGM-operated venue on the East Coast, featuring 4,000 slot machines and 250 table games, including blackjack, roulette and Peterson’s personal favorite — craps. “I like to roll dice,” he said.