More broken promises

The Columbus Dispatch
March 27, 2011
Misplaced Blame
Penn National, not city, at fault for casino construction delay

"Before the May 2010 election, Penn National repeatedly supplied the public with tax-revenue projections for Columbus should Issue 2 be approved. In each instance, these projections were based on the casino being within the city limits, so that Columbus would realize "host-city" tax revenues.
Those revenue promises were published in Penn-approved campaign literature, Penn-approved TV ads and even in PowerPoint presentations made by Penn executives themselves.
Columbus and central Ohio officials, voters, taxpayers-and one would think, labor leaders, as well- should expect and demand that Penn National honor its promises."

Governor O'Malley as does the legislature owes, no is mandated, to investigate any potential problems with corporate entities that seek out taxpayer's subsidies.

Ohio cancels check to Casino Operator

The Ohio Governor believes Casino's have enough money and do not need help from the State's taxpayers. Governor John Kasich blocked 2.5 million in additional development incentives for Penn Gaming.
Should Maryland be allowing it's Governor to continue handing out subsidies for Casino operators?

Kasich cancels check to casino

Yet another busy aide through O'Malley's revolving door

Michael Enright, Governor O'Malley's former Chief of Staff and long-time friend, left the Governors office to become the managing director of an energy firm that will be competing for the Billion dollar, offshore  wind Farm proposed by the O'Malley Administration. While the company still has to compete for approval, having Governor O'Malley's ear is quite an advantage. Sean Malone, a lobbyist for Penn Gaming, had similar access to the Governor. Penn Gaming has become almost a pet project for the Governor, receiving potentially favored Corporate welfare.
Hopefully the wind farm project will not become a rabbit hole for consumer and taxpayer money.
 Read this article for more information:

For O'Malley and friend, interests align in offshore wind bill

Stop O'Malley's offshore wind folly now, not later

Corporate constitutional rights and a city's health

In a follow-up to a previous posting, The City of Colombus found good news in a State EPA memo that may require Penn Gaming to use the City's sewage system. The EPA memo was in response to a memo by Penn Gaming that  said it was within Penn Gaming's constructional rights to dig a well to inject the raw sewage from their casino. Penn Gaming also wanted to dig a well on the same site to provide drinking water for the same patrons.
Should Governor O'Malley be so cozy with a company that uses tactics that jeopardizes the health and welfare of people for their own corporate greed? Penn Gaming is following similar tactics in Maryland by holding the Horse Racing Industry hostage by manipulating the Governor.

Read the article on EPA's response to the Penn Gaming memo ... City finds good news in EPA memo to casino builder

UNITE HERE!

UNITE HERE!  distributed the following facts to our elected representatives in Annapolis that lists O'Malley's friend, Penn National Gaming's national trail of broken promises and hardball tactics. Do Maryland taxpayers really want to trust a Company with this kind of track record?

Broken Promises and Hardball Tactics

Legislative Research Report                                    Roxie Herbekian

March 14, 2011                                                          (301)651-8526

                                                                                    rherbekian@unitehere.org

Penn National Gaming has a history of breaking promises and using hardball tactics against states and local governments.  On February 3^rd of this year, Penn National Chairman and CEO Peter Carlino said, “We planted a large flag in Maryland, and we’re there for the long haul.”  But Penn National’s commitment to Maryland has been “on” one minute and “off” the next.  According to the Washington Post, the pattern of broken promises started in 2007 when Penn National initially committed to buy Rosecroft Raceway, promising that the purchase was “not contingent on the approval of video lottery terminals at the track.”  Then, Penn National withdrew its offer when the track did not get slots.

In 2010 Penn National joined in the Maryland Jockey Club’s attempt to wrest away a slot license from the Arundel Mills Casino.  According to the Baltimore Sun, when the Maryland Lottery Commission discussed taking action in response, Penn National took the unusual step of asking the commission to delay issuing its Perryville license.  By threatening to delay the opening of its Perryville casino, Penn risked depriving the Maryland Education Trust Fund of $6.5 million in revenue from the casino’s opening through November 1^st, 2010. 

Despite agreeing to the terms before it “planted its flag” in Maryland, Penn National sought to have a competing casino eliminated.  Maryland is not a unique case:  Penn National has a history of conflict with governments in other jurisdictions, including Ohio, Kansas, and Illinois:

•  Penn National is considering moving Raceway Park away from Toledo after promising the

   city it would keep the track open, according to the Toledo Blade

•  Penn National is demanding $8 million in annual tax breaks for its casino in Columbus after

   spending $24 million to win the right to operate slots in the state, according to the

   Columbus Dispatch

•  Penn National benefitted from a legislative push to overturn an Illinois Gaming Board ruling

   requiring it to divest itself of some of its casinos, according to the St. Louis Post Dispatch

•  Penn National allegedly broke a commitment to build a $250 million casino in Cherokee

   County, Kansas

“I Was Basically Lied to”

Rosecroft is not the only race track Penn National suddenly changed its plans for.  Penn National owns Raceway Park in Toledo, Ohio, and recently announced that it is investigating the possibility of relocating the racing license.  According to the Toledo Blade, fifteen months ago Penn National “unequivocally” stated they “have no plans to close Raceway Park.”  Toledo District 6 Councilman Lindsay Webb says that “I was basically lied to on the record,” by Penn National.

Penn National is apparently trying to squeeze Columbus taxpayers to add to their casino profits

First, Penn National spent over $24 million to back an Ohio State Constitutional Amendment legalizing casinos.  Then, the company asked Columbus for tax breaks for its casino, including $8 million annually to fund road work and other infrastructure for the project.  The request caught the city by surprise.  Prior to the referendum legalizing slots in Ohio, Penn National “repeatedly said it would pay for any necessary public improvements,” according to the Columbus Dispatch.  The city has so far refused to give Penn National the tax breaks.  Now, Penn National says it may oppose Columbus annexing its casino site, costing the city millions of dollars in lost revenues annually.  Penn National’s site is not covered by Columbus’ water and sewer services, according to the Columbus Dispatch.  Instead, Penn National filed permit applications with the Ohio DEP to drill wells to provide water for the casino.  According to the Columbus Dispatch a nearby city was approached by an ‘anonymous client’ – represented by Penn National’s project manager – who wants to truck in 120,000 gallons of raw sewage daily.  The Columbus Mayor’s spokesman Dan Williamson responded, “if they’re looking for leverage, maybe something less ridiculous.  It doesn’t pass the smell test.”

Penn National promises compliance with regulatory agreements – until they can get them overturned

As a condition of Penn National’s buyout of Argosy Gaming, the Illinois Gaming Board required that Penn National had to sell two riverboats in Illinois.  Penn National could ask the board to re-consider.  But according to the St. Louis Dispatch, in 2007 a bill filed with the legislature was amended to “overrule state gambling regulators who’d ordered the company to sell.”  The legislative effort failed, but ultimately the company got the regulatory decision it wanted and kept the casinos it had promised to divest.

Penn National “Bailed Out” on Cherokee County

Penn National planned to build a casino in Cherokee County, Kansas.  On April 9, 2008 the Kansas City Star reported that “Penn National Gaming is pressuring Kansas to back off a requirement in state law that companies invest at least $250 million in state gambling casinos.”  The Associated Press reported that Penn National sought the changes because of competition from a nearby casino owned by the Quapaw Tribe.  Penn National COO Timothy Wilmott said “we applied before the Quapaw were on anybody’s radar screen.”  But the record shows that the Quapaw Tribe broke ground for their casino on July 31^st, 2007, thirty days before Penn National filed its proposal on August 31^st of the same year.

The legislature rejected efforts to change the law, and Penn National cancelled the project.  According to the Kansas City Star, Penn National argued the casino “required too large an investment.”  Kansas State Representative Doug Gatewood disagreed, saying “I think they’re just making excuses right now.”  Cherokee County sued Penn National on September 11, 2008, seeking $53 million in damages alleging breach of contract.  According to the Associated Press two mediation sessions between the parties failed to reach a settlement, and the case will likely go to trial.

The Baltimore Sun: “Be skeptical about whether Penn National is the right partner”

After cancelling its deal in 2007, Penn National announced it acquired Rosecroft Raceway on March 1^st, 2011.  The Baltimore Sun reports that Penn National wants slots at Rosecroft, and is looking at selling its share of the Maryland Jockey Club.  An editorial in the Baltimore Sun written after Penn National announced its investment in the Jockey Club strikes true – “Horsemen should be skeptical about whether Penn National is the right partner, or if it’s just another entity looking to cash in on Maryland slots.”

_______________________________________________________________________________

UNITE HERE! is the hospitality workers union that represents workers in the gaming industry across the country.  The Research Department provides research on the gaming industry from the perspective of those who work in the industry.

O'Malley for President?

Is being the Chairman of the Democratic Governor's Association the next step for a Federal run? Governor Martin O'Malley has run out of room at the State level when he finishes his term as Governor. It certainly looks like he is aiming for the national spotlight by just watching his actions and listening to his non-talk.
Governor O'Malley is against the death penalty yet refuses to commute any sentences. O'Malley is against big business yet he wants to hand over business to non-Maryland Companies.
Governor O'Malley wants to save the Preakness and the Horse Racing Industry yet he allows it to be pillaged by unscrupulous casino operators and foreign billionaires.
Governor O'Malley will NOT promise NOT to raise taxes AGAIN, but will sign any "user fee" put in front of him.
Governor O'Malley has supported sanctuary city policies, including drivers licenses for illegal immigrants and funding Casa Maryland in his budget.
The Governor appears to have mastered the art of political double-speak necessary for his national political ambitions. O'Malley for President? It has a frightening similarities to the current political situation in DC.

Vicious cycle of Corporate Welfare

A deal being brokered by Governor O'Malley to subsidize the owners of the racetracks was succinctly described by Jay Hancock of the Baltimore Sun.

Horse tracks seek even bigger trophy from taxpayers

Penn Gaming spends millions upon millions of dollars through the Maryland Jockey Club that delays slot proceeds to the Horse Racing Industry and then wants subsidies? How can they justify spending over 11 million dollars on Rosecroft racetrack if the rest of the tracks are losing money? Penn Gaming only offered unaudited financial statements. Financial statements that include payments to lobbyists such as Sean Malone, payments to attorneys to block casino development, payments to put a referendum on the ballot to stop and then steer casino license to their location. 

The subsidy as crafted by O'Malley's staff gives the owner of the tracks the money that was supposed to be used to fix the tracks. The owners are all out of Maryland so basically, the subsidy is just Maryland money that is thrown across the border to Pennsylvania and Canada. There is no incentive to fix the business plan, in fact this subsidy is a dis-incentive. Fix the business and the subsidy goes away. In three years, if casinos are not built at the tracks, Penn Gaming will abandon the properties and move on to their next victim. 

The president of Penn Gaming has stated unequivocally that Penn Gaming is not in the business of running racetracks or even supporting racetracks. Have we not learned anything from the TARP business of the past few years? Add milestones, conditions, clauses on these subsidies. Don't just require the Maryland Jockey Club and Penn Gaming to show pretend financials. If Penn Gaming is serious, make them put up Pimlico and the Preakness as collateral.

Penn Gaming and the "Free Press"

Penn National has problems with the media/"Free Press" at most of their locations. Penn National takes offense whenever the media points out where Penn's broken promises. Perhaps if they want to control the media's First Amendment rights they should stick to building casinos in Macau, China. Case in point; Penn National in Columbus, Ohio where Penn National took offense to the Columbus Dispatch's questioning the pumping of raw sewage so close to drinking water and the Baltimore Sun's questioning of Penn National's trying to take the license from a successful, Baltimore based casino developer.

Columbus Dispatch- Suit asks Court to force casino-site annexation 3/10/2010 (by Doug Caruso) 

Dispatch Printing, which publishes this paper, also asked Franklin County Common Pleas Judge David W. Fais  to declare trucking sewage from the casino or burying it onsite a nuisance and to halt construction until Penn National agrees to annex and hook up to city sewer and water lines.

A spokesman for Penn National called the court filing bizarre.

"It should be obvious at this point to any thinking person that The Dispatch has gone far beyond any definition of journalistic integrity and has simply decided that, instead of reporting the news, it intends to create its own news to reflect its owners' personal opinions," said Bob Tenenbaum, a spokesman for Penn National.

"it now appears that the jobs and the tax revenue notwithstanding, the newspaper itself is going to do everything in its power to prevent the casino from ever being built."

Excerpt from Penn National's Earnings call transcript 10/21/2010:

Peter Carlino- "Yes, one of the problems for us has been the Baltimore Sun, which is completely in the back that they reported. Their behavior through this process has been virtually scandalous. I don't think ever in our experience around the United States in any of these efforts have we ever seen the most outrageous behavior by a newspaper. To say it flatly, it's been amazing, and it sort of shocked us everyday. So that's been sort of a difficult process, the free press can't stop the fight.

In bed with the devil?

One of the Governors best corporate friends is showing their true colors in Ohio. Penn Gaming made a lot of promises to Franklin County, Ohio constituents if a casino was allowed. Now that a casino has been approved, Penn Gaming is saying not only do they not want to pay taxes, they want subsidies. In order to get around paying taxes, Penn Gaming is going to inject the sewage from the casino into a well. On the same property, Penn Gaming is going to drill a well for patron consumption.

Casino ponders sewage 'well'

Laurel Racetrack and Pimlico are crying poor, search their couch cushions and find enough change to buy Rosecroft racetrack. Tell their friend, the Governor to give them money. The Governor relies on unaudited financial reports to give himself political cover and proposes a taxpayer bailout. The Maryland legislature should not fall for this ruse and rely on "Unaudited Financial" reports provided by Penn Gaming. Maryland taxpayers deserve and should demand better! Penn Gaming has a history of breaking promises and using hardball tactics against states and local governments as outlined in Unite Here's (hospitality workers union that represents workers in the gaming industry across the country) March 14th legislative report, Penn National Broken Promises and Hardball Tactics.