Penn National Gaming Inc. said Monday that it wants to withdraw as operator of a proposed $225 million casino in Lawrence County, north of Pittsburgh, that is backed by Philadelphia-area investors.
"We are disappointed to be withdrawing from this project," B.J. Fair, chief development officer for Penn National Gaming, said in a statement.
"However, given the continued softness in the economy and the level of market saturation - not just in Western Pennsylvania, but across the commonwealth - we are regrettably unable to justify this investment at the statutorily required spending levels," he said.
Endeka Entertainment L.P., the partnership established to build Lawrence Downs casino and racetrack, would have to pay $50 million for a slots license and $24.75 million for a table-games license.
The casino would have to open with at least 1,500 slot machines, which would cost about $22.5 million alone, not counting a building to house them.
The Pennsylvania Horse and Harness Racing Commission in 2012 required Endeka to prove that it had a commitment of $170 million for the project, which in its latest iteration was projected to cost $225 million.
William Pietragallo, an attorney for Endeka, said the company was shocked by Penn National's move.
"We are troubled by the motivation behind this 11th-hour decision, and it would appear that Penn National Gaming is protecting its $250 million investment in an Ohio casino that is only approximately 20 miles from Lawrence County," said Pietragallo, managing partner at Pietragallo Gordon Alfano Bosick & Raspanti L.L.P., of Philadelphia.
Penn National is not the only one worried about the state of the casino industry in Pennsylvania.
Presque Isle Downs Inc. has asked the Pennsylvania Gaming Control Board for permission to reduce the number of slot machines and table games at its Erie casino, which has been hard hit by the opening of a casino in nearby Cleveland.
Presque Isle, which has fought the approval of the Lawrence Downs project, will make its case at a gaming board hearing scheduled for Tuesday.
The Philadelphia-area investors are insurance executive Manuel Stamatakis, builder Peter DePaul, lawyer Thomas Leonard, Flyers owner Ed Snider, and the Melissa Silver Trust, a charitable family trust controlled by the daughter of the late Lewis Katz, who was a co-owner of the parent company of The Inquirer, the Philadelphia Daily News, and Philly.com.
Each investor owns about 18 percent of Endeka.