HARRISBURG - After questioning by a full panel of seven Commonwealth Court judges Wednesday, a lawyer for the Pennsylvania Gaming Control Board rejected the argument that the agency overstepped its bounds when it took away the license for the Foxwoods Casino project in South Philadelphia.
"The board was justified in saying, 'We've been down this road before and enough is enough,' " said James Eisenhower, an attorney for the gaming board.
The board members, he said, have a duty to provide tax relief to Pennsylvania communities through gambling revenues. "It's time to cut our losses, get a project moving, and award a license to a more deserving applicant," said Eisenhower.
The board made a summary judgment last December that the investors behind the Foxwoods project were no longer financially suitable to hold a gaming license.
The Foxwoods group won a license in 2006 but was set back by political and neighborhood opposition; economic problems for a main partner, the Mashantucket Pequot tribe; and a failed deal with the Las Vegas casino operator Steve Wynn.
A third casino operator - Harrah's Entertainment - tried to salvage the project, but the board instead revoked the $50 million gaming license.
Commissioners cited two main reasons: the Foxwoods group was not financially suitable, and had not fully complied with two board orders to have 1,500 slots operating by May 29, 2011.
Several judges questioned whether the board had acted too broadly.
Judge Mary Hannah Leavitt asked if the board had unbridled discretion to decide the parameters of a project's financial suitability or how long a group could hold onto a license?
"In a word, yes," Eisenhower said. "I don't think it's an abuse of discretion by saying they did too little too late."
Foxwoods' attorney, Stephen A. Cozen, told the judges that the investor group - Philadelphia Entertainment & Development Partners (PEDP) - should have had an opportunity to fully dispute those conclusions with testimony and expert witnesses.
"All of these things should have been in an evidentiary hearing," Cozen said. "This is law school stuff."
Cozen said PEDP could still develop and finance a casino on a 16-acre site on Columbus Boulevard between Tasker and Reed Streets.
The agreement with Harrah's, he said, has not been terminated. "If we get a determination from the court in our favor, we could still get this done and up and running," Cozen said.
Cozen said PEDP had commitments from banks for $200 million in construction loans. He added that local investors were willing to put up $31.5 million in additional equity - roughly half of what was needed. Those investors include Comcast-Spectacor chairman Ed Snider; insurance broker Manuel Stamatakis; developer Peter DePaul; and a charitable trust controlled by the daughter of New Jersey entrepreneur Lewis Katz.
A decision by the judges on the licensing issue could take two to three months. If the panel does rule in Foxwoods' favor, the group would not automatically get its license back. Instead, it would get a full hearing before the gaming board on whether it deserves to keep a gaming license.
Cozen said the failure of the Wynn deal in April 2010 was a setback beyond the control of the local investors.
"When Wynn dropped out, we had to get a new deal," Cozen said.
But that prompted Judge P. Kevin Brobson to ask who should be held responsible for the delay caused by the collapse of the Wynn deal, the investor group or the state.
"The problem I'm struggling with is, who should bear the risk that you were unable to build a casino?" Brobson said.
Cozen said both sides should.
He said PEDP tried to comply with the conditions set by the board to be operating 1,500 slot machines by May 29, 2011.
"We cannot ... be deemed to have been willfully violating an order because Wynn pulled out," Cozen said. "You can't revoke us for a knowing and willful violation of an order."