Regulators to Foxwoods: ‘Our patience is finished’

HARRISBURG - State gaming regulators Wednesday unequivocally warned the Foxwoods Casino investors that they will strip the project of its license unless the developers quickly submit specifics about a proposed South Philadelphia casino.

At a hearing here, the state's seven-member Gaming Control Board unanimously voted to punish Foxwoods with a $116,000 fine and set a hearing for March 3 to consider further sanctions, including revoking the project's license.

The action came in response to Foxwoods' failure to meet a Dec. 1 deadline to submit to the gaming board drawings of the proposed casino. The board made the fine retroactive to Dec. 1 and will continue to fine Foxwoods $2,000 a day - a rate twice what the board's staff was recommending as punishment.

"Our patience is finished," said Gregory Fajt, chairman of the gaming board.

Since winning a gaming license in December 2006, the Foxwoods developers have been unable to get the project off the ground.

F. Warren Jacoby, an attorney for Foxwoods, had no comment after the board ruling. But he spent much of his testimony trying to persuade the board that the Foxwoods project was close to receiving an infusion of money from an unidentified new partner.

Jacoby refused to identity the potential investor. But in an interview last week, Gov. Rendell told The Inquirer that another Foxwoods lawyer, Stephen A. Cozen, had mentioned the Las Vegas gaming business of Steve Wynn as being interested.

During more than an hour of testimony and questioning, board members did not hide their frustration with Foxwoods. Fajt told Jacoby that the board felt like it was being "jerked around" and no longer had faith that the developers would follow through on commitments.

"If I were Foxwoods, I would look at this as my last opportunity," said Jeffrey Coy, a former lawmaker from Franklin County.

Jacoby testified that the Foxwoods developers last Thursday received a 14-page proposed agreement - a so-called term sheet - from the unidentified investor.

Lead local investors for the project were presented with the proposed deal Tuesday, Jacoby said, and a decision should be reached on final terms by the end of the week.

Jacoby also disclosed to regulators that the Foxwoods project has enlisted a construction company controlled by Daniel Keating to build the proposed project in South Philadelphia. Representatives for Keating recently met with the unnamed investor to discuss the project, Jacoby said.

Keating's company is building the SugarHouse Casino on a parcel in Fishtown and Northern Liberties, and the firm constructed the Rivers Casino in Pittsburgh. Keating also is an investor in SugarHouse.

The lead local investors include New Jersey sports-team owner Lewis Katz, Center City developer Ron Rubin, and Comcast-Spectacor chairman Ed Snider. The three have a partnership representing their family charitable trusts and jointly control 42 percent of the project.

The Mashantucket Pequot tribe controls 30 percent of the project and was supposed to manage the casino. But the tribe, which operates the Foxwoods Casino in Ledyard, Conn., is facing financial problems. Jacoby testified that the new investor will take over the role of managing the casino.

Last August, the gaming board granted Foxwoods a two-year extension on its license until May 29, 2011, to have 1,500 slot machines in operation, but set deadlines for updating regulators on the progress of the project. The Foxwoods developers missed a deadline of Dec. 1 to share artist renderings and engineering plans, arguing that uncertainty over legislative action to add table games made it difficult to finalize financing.

Now that the General Assembly has passed table-games legislation - signed into law by Rendell on Jan. 7 - Jacoby said the developers are close to recasting their project with new money and a new design.

Under questioning from Fajt, Jacoby confirmed that the lead local investors - Katz, Rubin and Snider - have met four times with the unnamed investor. He later clarified his remarks in follow-up questions from The Inquirer, saying that it was only Katz and Rubin.

Fajt said he asked the lawyer specifically about the three investors to gauge the seriousness of negotiations with the unnamed partner.

In questioning after the hearing, Fajt said he considers the three Philadelphia men - who have never testified before the Gaming Control Board and actively try to distance themselves from the project - as "the current principals" of Foxwoods.

"If I heard that they had not had a face-to-face [with the unnamed investor], I would have seriously doubted that their term sheet had been finalized," he said.

Jacoby said Katz and Rubin had been "very active" in moving the project forward.

Jacoby said the possible investor was a person of "vision" who anticipated building a casino covering 200,000 square feet of space with up to 2,700 slot machines and 80 to 100 table games. The project would also include a hotel and separate parking garage.

He said if the deal is finalized, the new partner would ask for an extension on the Foxwoods license beyond May 2011. Under the new gaming law, the project could seek an extension to Dec. 31, 2012.

Board members repeatedly asked Jacoby about Foxwoods' role in lobbying the General Assembly to get an extension for licenses written into the new law.

The Inquirer reported last Sunday that Cozen, another Foxwoods lawyer, had approached Rendell as well as top lawmakers about supporting an extension, and even suggested language to include in the law.

When asked if Foxwoods actively sought to have the extension, Jacoby said, "I'm not in position to answer the question. I was not involved."

Jacoby's evasiveness irritated board members, particularly Fajt, who later accused him of "playing cute."