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Developer Bluhm gets control of Pittsburgh casino

HARRISBURG - Billionaire Neil G. Bluhm won control of his second casino in Pennsylvania yesterday when the state Gaming Control Board voted unanimously to give him control of a troubled Pittsburgh slots parlor.

HARRISBURG - Billionaire Neil G. Bluhm won control of his second casino in Pennsylvania yesterday when the state Gaming Control Board voted unanimously to give him control of a troubled Pittsburgh slots parlor.

Not even warnings by three anti-casino activists from Philadelphia, who told the board of Bluhm's casino troubles in this city and his close ties to Gov. Rendell, could sway the board. Bluhm and his three children control 60 percent of the $700 million SugarHouse Casino planned for North Delaware Avenue at Shackamaxon Street.

Yesterday, Bluhm said he was pumping in additional money to pay contractors and vendors, raising his personal investment to $205 million, up from $130 million, in the Pittsburgh project formerly called the Majestic Star Casino.

Under the takeover plan, his Chicago-based Walton Street Capital L.L.C. would control about 56 percent of the Pittsburgh casino; Bluhm and his family would have about 20 percent; original developer Don Barden and his investment group would retain 20 percent; and other investors the remaining 4 percent.

"In addition to the obvious economic benefits of assuring that this project is completed, this vote punctuates the integrity of both our process and of our role of overseeing legalized gaming in the commonwealth," board Chairwoman Mary DiGiacomo Colins said in a statement.

Construction on the casino, whose new name has not been decided, stopped July 1 because of lack of financing by Barden, then its majority owner and developer.

Since construction was suspended, hundreds of vendors and subcontractors had not been paid for work done in April, May and June, said Daniel J. Keating, who heads Philadelphia's Daniel J. Keating Co., the lead contractor for the Pittsburgh casino. After the seven-week delay, the casino was now budgeted for $780 million.

Yesterday, several union and trades leaders testified about the turmoil the suspension of work had caused for their companies and 800 construction workers. They warned that rebidding the city's sole slots license might mean no casino in downtown Pittsburgh for at least three or four more years.

Greg Carlin, new chief executive officer of the Pittsburgh casino, said construction could resume as early as next week. Carlin, also CEO of the proposed SugarHouse Casino, said the Pittsburgh casino could open in a year, with 3,000 slot machines.

The most drama arrived from Philadelphia.

Jethro Heiko, accompanied by his 10-week-old daughter, testified that Bluhm and his Philadelphia casino company had misinformed the gaming board about his casino's impact on surrounding neighborhoods, including Fishtown, where Heiko lives.

Bluhm's SugarHouse Casino and the proposed nearby $670 million Foxwoods Casino have not broken ground on the waterfront since securing the two city slots licenses in December 2006. Both operators continue to face political and legal challenges and community opposition.

"They should not be believed. Mr. Bluhm has already proven not to be credible," said Heiko, his baby wailing throughout his three-minute testimony. "They don't have political support in Philadelphia to build a casino."

At that point, Colins interjected: "Mr. Heiko, your three minutes are up, and your baby appears to be unhappy" - eliciting chuckles from the audience.

Lily Cavanagh, 23, an organizer for Casino-Free Philadelphia, contended that Rendell had helped Bluhm win the casino licenses because of Bluhm's political contributions to Rendell's campaigns.

"He gave thousands of dollars to Gov. Rendell," she said. "Rendell is endorsing this transaction."

Rendell, in the past, has dismissed any suggestion of favoritism. As governor, he appoints three members to the seven-member board, but has no formal vote himself on license approvals.

Bluhm, who was seated next to Barden, responded to the allegation by saying he had been a contributor to the Democratic Party and Democratic National Committee "long before there was gambling in Pennsylvania."

Paul Boni, an attorney for Casino-Free Philadelphia, said he was not surprised by the outcome. He told the board that by giving Bluhm control of the Pittsburgh casino, it was risking "an Enron-like" situation, since Bluhm's true control would be hidden behind Walton Street, which is listed as the majority owner.

"It's a corrupt process," he said. "Was there ever a doubt?"

The board said it would soon release an adjudication detailing the reasons for its decision.