Penn National Gaming may bid on new casino in Prince George’s

December 20, 2012

Penn National Gaming, which spent more than $40 million trying to persuade Maryland voters to defeat a gambling expansion plan, said Thursday it is considering a bid to operate a new casino in Prince George’s County allowed by the measure’s passage.

The move would set up another round in the high-stakes competition over the Washington market between two out-of-state gambling behemoths: Penn National, which owns Rosecroft Raceway, and MGM Resorts, which is angling to build a high-end casino at National Harborand had spent $40 million urging voters to approve the ballot measure.

A state commission plans to solicit bids next month with the aim of awarding a license by the end of the year.

“We are considering it,” Penn National spokeswoman Karen Bailey said in an e-mail. She declined to elaborate on the company’s plans.

For much of the fall, a barrage of TV ads funded by Penn National argued that politicians who supported the expansion plan were peddling false promises about education funding and that the plan was too generous to “casino special interests.”

Analysts said Penn was motivated by a desire to protect a casino the company owns in Charles Town, W.Va., that stands to take a hit from a new Prince George’s location.

“There is irony here, but I’m not surprised,” said William Eadington, an economist at the University of Nevada at Reno who follows the gambling industry. “It’s a very lucrative location with a lot of potential. There’s sort of a ‘Why not?’ element to this.”

The new casino, the sixth authorized by Maryland voters, was the centerpiece of Question 7 on the November ballot. The measure also allows previously designated slots locations to add Las Vegas-style table games, such as blackjack and roulette, and to expand to 24-hour operations.

Round-the-clock hours will begin at the state’s three existing casinos Dec. 27, with table games probably arriving in two of the facilities in the spring. A Prince George’s location is expected to open in 2016.

Penn National, which operates 29 casinos and racetracks, bought Rosecroft, the once-storied harness racing track in Fort Washington, at a bankruptcy auction in early 2011 with the aim of building a casino on the property.

Those plans were dealt a blow this year when Prince George’s County Executive Rushern L. Baker III (D) endorsed National Harbor,the 300-acre mini-city on the Potomac River, as his preferred casino location. The developer of National Harbor subsequently announced MGM as its chosen operator.

MGM was the largest funder of this fall’s campaign to pass Question 7, contributing about $40 million of the $46 million raised by a pro-expansion committee. The $93 million raised by all ballot-issue committees shattered previous records for spending on a Maryland political campaign.

MGM has promised an $800 million “luxury resort” with a hotel, high-end restaurants and retail, an entertainment venue, a spa and other attractions. Gordon Absher, an MGM spokesman, said Thursday that the company remains “enthusiastic” about bidding for the Prince George’s license.

Penn National has said less about what it envisions at Rosecroft. In a letter to Gov. Martin O’Malley (D) in the summer, the company’s chairman and chief executive pledged a $500 million investment if allowed to build at Rosecroft.

That would be on par with what was spent to build Maryland Live, the state’s largest casino, which opened in Anne Arundel County in June.

Donald C. Fry, the chairman of the commission that picks Maryland gambling locations, said Thursday that Penn National’s efforts to defeat the ballot measure would have no bearing on the bidding process, which is guided by factors spelled out in law.

“Obviously, the ultimate goal is what’s in the best interest of the state,” Fry said.

Jeff Hooke, a Washington area gambling consultant, said he considered it “logical” for Penn to compete for the Prince George’s license.

If the state picks MGM instead, it would give Penn more leverage to challenge the decision in court, he said, potentially delaying the opening of a facility at National Harbor.

“Every year they postpone it, it’s another year they make large profits at Charles Town,” Hooke said.

Penn National currently owns one casino in Maryland: Hollywood Casino Perryville, in the northeastern corner of the state.

Under current law, companies can hold only a significant stake in one Maryland casino. Penn National, however, has recently announced plans to split into two public companies by placing most of its properties into a new real estate investment trust.

Stephen L. Martino, director of the Maryland State Lottery and Gaming Control Agency, said the split could aid Penn’s ability to hold a Prince George’s license.

John Wagner has covered Maryland government and politics for The Post since 2004.
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