Casino bidder offers hundreds of millions in profits to Prince George’s hospital, teachers

October 21, 2013

Penn National Gaming is betting it has an offer Maryland can’t refuse: The gambling operator — one of three companies vying for the state’s sixth and final casino license — says it plans to distribute “100 percent of its profits back to the Prince George’s County community” if it wins the bid.

The company offered its ­profit-sharing proposal Monday, shortly before its formal presentation to the Maryland Video Lottery Facility Location Committee. Penn wants to build a $700­­ million Hollywood Casino at Rosecroft Raceway, with at least 3,000 slot machines, 100 live-action table games and a 40-table poker room.

The Pennsylvania-based company said it would give $100 million to the county hospital system over nine years and an estimated $219 million over 14 years for the creation of a ­retirement-benefit plan for county educators. An additional $200,000 would “be committed annually to community organizations and nonprofits” in County Council District 8, where Rosecroft Raceway sits.

The set-aside for community organizations and the retire­ment-benefit plan would exist in perpetuity, company executives said.

Penn National would make money two ways from a casino at Rosecroft, said Karen Bailey, vice president for public affairs for Penn National. A real estate investment trust the company is spinning off would receive rent payments from the casino. And Penn National Gaming would receive pre-profit management fees from the facility.

See previous stories in an occasional series exploring the changing casino industry and gambling culture in Maryland.

The company is proposing a similar plan in Philadelphia, she said, “though it’s only two-thirds of profits there.”

During the company’s formal presentation to the commission at Friendly High School, President and Chief Operating Officer Tim Wilmott stressed that the profit-sharing plan would account for “all of the cash” after expenses, which would include interest payments and operating expenses, including labor, utilities and marketing.

A commissioner asked: Why share all the profits?

The management fees and interest payments, Wilmott said, would provide “adequate return to our shareholders.”

Formal proposals for the license were submitted in May, but Monday was the first the commission had heard of the profit-sharing idea.

Penn National, which opened the state’s first casino in Perryville in 2010, spent more than $40 million trying to persuade Maryland voters to defeat last year’s gambling-expansion plan. Analysts believe that the company was trying to protect its profits at Hollywood Casino in Charles Town, W.Va.

David G. Schwartz, director of the Center for Gaming Research at the University of Nevada at
Las Vegas, said the profit-sharing proposal might have been made to maintain Penn National’s profits elsewhere.


“Given the company’s other interests in the region . . . they may be content to have P.G. County be a ‘push’ that doesn’t earn them a ton of revenue rather than having a strong rival operator enter the region,” he said.

Bailey rejected the notion. “Absolutely not,” she said, adding that Penn National “chooses each property as a stand-alone” casino.

A spokesman for Prince George’s County Executive Rushern L. Baker III (D), who has voiced his support for an MGM-run casino at National Harbor, declined to comment on the Penn National proposal.

“We’ve said routinely throughout the process that we’re not going to be actively engaged as the state is making its decision,” Baker spokesman Scott L. Peterson said. “The administration has full faith in the state commission to make their decision in the best interests of Prince George’s County and the citizens of Maryland.”

During the commission’s tour of Rosecroft on Monday afternoon, Chris McErlean, Penn National’s vice president for racing operations, laid out the company’s facility plans: a 258-room, 16-story hotel tower; a 2,500-
capacity concert and events center; a 3,145-space parking garage; a new grandstand and apron area for the old racetrack; and a casino covering more than 300,000 square feet. The casino would employ about 1,600 people.

Construction on the 125-acre property could be finished in 22 months, with minimal impact on the racing schedule.

Lewis Robinson, the executive director of the Prince George’s County Educators’ Association, said Penn National’s amended plan was unexpected.

“It was surprising,” Robinson said. “It could have a significant impact on the school system’s ability to recruit and retain teachers.” Robinson said the union supported the effort to bring gambling to the county. It did not take a position on one company over another.

Rosecroft, the 1949 track that Penn bought out of bankruptcy in 2011 for $11 million, is back up and running, with 54 live ­harness-racing dates and off-track betting most of the rest of the year. As the commission toured the facility, about two dozen men placed wagers and watched simulcast races on televisions.

“Welcome Back Racing Fans!” a billboard on the infield said. Another billboard advertised the Hollywood properties in Perryville and Charles Town.

The company’s presentation is the first of three being made this week to the casino location commission. A newly formed subsidiary of Greenwood Racing, which wants to build an $800 million Parx Casino Hotel & Spa on 22 empty acres in Fort Washington, presents its plan Wednesday. MGM Resorts International, which is proposing an $800 million casino and resort at National Harbor, will take its turn Friday.

Ovetta Wiggins and Leah Binkovitz contributed to this report.

J. Freedom du Lac is the editor of The Post's general assignment news desk. He was previously a Local enterprise reporter and, before that, the paper’s pop music critic.
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