Foxwoods Casino has agreed to work with state and city leaders to move its long-delayed slots parlor planned for the South Philadelphia waterfront to the Gallery at Market East, The Inquirer has learned.

Two sources familiar with the agreement, struck between Foxwoods and Gov. Rendell and Mayor Nutter this week, said the plan was to revive a vision for a downtown casino built over the Gallery.

The sources spoke on condition of anonymity before Rendell and Nutter were scheduled to announce the plan at a 1 p.m. news conference today at City Hall.

Although the Gallery was once considered a prime site for a downtown casino, the latest plan would still face a variety of obstacles, including potential neighborhood opposition.

Rendell could not be reached for comment last night. Nutter, Foxwoods, and State Rep. William Keller, whose district includes the South Philly location, declined to comment. A spokesman for City Councilman Frank DiCicco, whose support would be critical to the Gallery site, said he was not aware of an announcement.

The Gallery has been the subject of buzz ever since Rendell elicited a promise from Foxwoods last month to consider alternative sites.

In December 2006, Foxwoods won permission to build a $670 million facility on Columbus Boulevard in the Pennsport neighborhood. Construction, however, has been delayed due to the efforts of neighbors, state legislators and city officials, who have maintained that the site is too close to homes and would create traffic nightmares.

In some ways, the choice of the Gallery is not a surprise. Casino industry visionary Steve Wynn told The Inquirer in 2005 that he wanted to build on the Gallery but was discouraged by Mayor John F. Street.

The Gallery, on the north side of Market Street near Ninth, is joined with SEPTA'S Market East Station, abuts the Convention Center, and is close to the Vine Street Expressway and I-95. It is owned by the Pennsylvania Real Estate Investment Trust, whose chairman and CEO is Ronald Rubin, who is part of a local group behind Foxwoods. Others include Comcast/Spectacor chairman Ed Snider, and Connecticut's Mashantucket Pequot Tribal Nation. Rubin is also a close ally and campaign contributor to Rendell, whose tax-relief plan depends on 14 casinos statewide, two in Philadelphia.

In July, Rendell agreed to ask Foxwoods to move as part of a deal with local state legislators who were holding up legislation as leverage against Rendell and Foxwoods.

Any development of the Gallery would likely call for a larger plan for redevelopment of the sagging Market East corridor, which includes the 2.8-acre parking lot at Eighth and Market, and the 3.7-acre Girard Estate property, a full block from 11th to 12th Streets, between Market and Chestnut. Those parcels were also cited as possibilities in the 2005 Gaming Advisory Task Force study.

Huge hurdles remain if the deal is to go through, and sources cautioned that Rendell's announcement would begin a long and complex process without guarantee of success.

Observers say Foxwoods will demand as part of any move a smoother approval process than it has experienced at its current site. That will require cooperation from surrounding neighborhoods, most notably Chinatown, which killed a downtown sports stadium proposal in the 1990s, and also Washington Square, Center City and even Society Hill. It might also raise protests for its proximity to Independence Mall.

Any neighborhood opposition is likely to be joined by Casino-Free Philadelphia, the anti-casino group that has helped stall Foxwoods with sophisticated politicking and protests.

Foxwoods may demand protection against lawsuits filed by any of three competitors who lost their bids for slots licenses in 2006.

Foxwoods and SugarHouse Casino - another planned parlor to be built on the waterfront, on Shackamaxon Street in Fishtown/Northern Liberties - won the two available licenses for Philadelphia slots parlors in December 2006, beating out three other partnerships. The Pennsylvania Gaming Control Board's choice of SugarHouse and Foxwoods was predicated largely on their locations.

Foxwoods could also ask for tax breaks and/or compensation from abandoning the site on Columbus Boulevard, a former industrial parcel for which it paid $67 million.