Bangor racino developer a ‘deal junkie’

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BANGOR – On Tuesday, voters here will consider a proposal to install slot machines at the Bangor Raceway.

The referendum is one of several steps in Nevada businessman Shawn Scott’s effort to transform the city’s struggling racetrack into a $30 million entertainment complex, an endeavor that also requires that Scott strike a development deal with the city, which owns Bass Park, and win approval for slot machines in a statewide vote Nov. 4.

Last fall, Scott’s company, Capital Seven LLC, approached the city of Bangor with a proposal to develop a “racino,” or racetrack casino. The idea is to bolster harness racing, which has been struggling, with revenue from slots.

Scott, 37, and his associates say the project would create hundreds of jobs and generate an estimated $75 million in annual revenue, one-fourth of which would go to the state to support a variety of agricultural, social service and educational programs.

Given the scope of the plan, the project could have far-reaching consequences for Bangor, perhaps as far-reaching as the construction of the Bangor Mall in the 1970s.

But with just days remaining before Bangor voters go to the polls to decide the fate of slots at Bass Park, Scott remains an enigma to many in the region.

Risky business

A self-made businessman, Scott has made tens of millions of dollars buying and selling underperforming gaming and hospitality operations and other real estate, primarily in Nevada, Louisiana and South Carolina.

An apparent risk taker, he invested in South Carolina and Louisiana video poker opportunities before those two states decided whether to allow the practice. Described by a business associate as a “deal junkie,” Scott said he prefers to think of himself as someone who is “enthusiastic for new and different transactions.”

Scott is perhaps best known for a multimillion-dollar deal in Vinton, La., where in 1999 he bought Delta Downs, a thoroughbred and quarter horse operation with a six-month live racing schedule and a year-round off-track betting facility that was on the verge of closing. Two years later, after improving the facility and winning voter approval to add slot machines, he sold Delta Downs for $130 million to industry heavyweight Boyd Gaming Corp.

More recently, he has set his sights on developing racetrack casinos in Bangor and at Vernon Downs in Vernon, N.Y. He is also one of three contenders for a proposed racino in Hobbs, N.M.

As things stand, Scott holds one disputed track management license in New York, though he has held other racing and gaming licenses in the past.

He is in the process of applying for racetrack management licenses in Maine and New York, where separate background investigations are under way. He plans to install up to 1,200 slot machines at Vernon Downs by the end of the year and would require a license to that end. He hopes to install up to 1,500 slots in Bangor, if slots are approved here Tuesday and statewide this fall.

A native of Southern California, Scott is single and has no children. He originally set out to become a veterinarian but changed his career path after earning a bachelor’s degree in biology and psychology at the University of Southern California and a master’s in biology from the University of California.

Scott said he ultimately discarded his career plans because California had only one veterinarian school. Given the stiff competition for a spot in the program, Scott turned to a business field he grew up around – real estate development. His first development deal involved building and selling single-family homes in the Las Vegas Valley region of Nevada, his primary residence. He eventually moved on to gaming and hospitality properties, an arena in which he has had mixed success.

From Vegas to Louisiana

Scott has held interests and ownership in a number of casinos and hotels in Las Vegas. According to the Las Vegas Review-Journal, a gaming license he held in Nevada was revoked for what regulators described as “sloppy accounting practices” at the Cheyenne Hotel & Casino, one of his former holdings. A memo from the New York State Racing and Wagering Board, however, noted that rather than Scott’s Nevada license being revoked, he was allowed to withdraw his application.

When asked about that matter, Scott said he had hired an accountant from a Nevada university and that the operation was audited about a half-year later. He added, however, that he has been licensed five times in that state.

In Louisiana, Scott once owned a chain of truck stops featuring video poker.

According to Gail Sherman, an attorney assigned to the Louisiana Gaming Control Board, Scott held licenses for the video poker operations as well as for off-track betting, also in a truck stop setting.

Scott sold Delta Downs before completing the application process for a license to operate slots there. According to reports published in the media there, Scott applied for a slot machine license but the process stalled during the background investigation because Scott reportedly did not provide that state’s Attorney General’s Office information it requested.

Scott disagreed. He said the licensing process wasn’t completed because he sold the track. He said he simply could not compete with some of the industry giants that owned gaming operations nearby.

“Delta Downs outgrew us, is actually what happened,” Scott said. He said selling the track was “one of the hardest decisions in my life. My heart was still in it.”

The Maine Attorney General’s Office also questioned recently whether Scott was cooperating with a background investigation, but withdrew a petition seeking to deny his track license application.

Close call in New York

Although Scott’s business associates in Maine have said he holds a track management license for Vernon Downs, spokeswoman Stacy Clifford of the New York State Gaming and Wagering Board said that what Scott actually holds is a “valid receipt,” which allows him to conduct racing pending the outcome of his background investigation.

Vernon Downs came close to not having a racing season this year. Negotiations with harness horsemen didn’t wrap up until March and racetrack operator Mid-State Raceway, Scott’s company in New York, didn’t receive its 2003 license until less than two weeks before the season’s May 1 opening date.

New York gaming authorities initially refused to issue Vernon Downs a license to conduct parimutuel harness because doing so “would not serve the public interest, convenience or necessity and the best interests of racing generally,” according to state documents. Mid-State also allegedly “failed to conduct racing in accordance with the terms and conditions of its 2002 track license and violated the orders of the board incorporated as conditions of licensing.” Hoolae Paoa, one of Scott’s key employees, said earlier that those conditions have since been met.

Clifford said the board also was concerned about Scott’s close business ties with John Baldwin, a business partner. The board wanted to conduct a financial background check on Baldwin. Baldwin initially declined but has since said he was willing, Clifford said.

Some concerns expressed by Thomas Casaregola, the New York racing and wagering board’s director of audits and investigations, in a June 2002 memo involved a history of poor record keeping and reporting, though he noted he found no suspensions, denials based on suitability, fines or sanctions.

Scott’s primary legal counsel, Martin J. Gersten, however, said that Scott holds a track management license and that Vernon Downs has a temporary conditional license with no expiration date. He said he has provided copies of those documents to the Maine Attorney General’s Office.

He also said that there is no ongoing investigation into Scott’s background in New York, although the state is looking into the narrow issue of whether Baldwin exercised any management control over Scott’s finances.

Missing in Bangor

In Bangor, Scott’s failure to keep dates with the City Council and other organizations has resulted in a credibility issue.

“We just weren’t as organized as we could have been,” Scott conceded. He said a combination of scheduling conflicts and crises involving his New York operation and his bid to build a racetrack-casino in New Mexico had kept him away more often than he’d planned.

Scott was away this week because of an illness in the family, but his spokesman, Daryn Demeritt of Pierce Atwood Consulting, said Scott hoped to return over the weekend.

“My plan is to spend whatever time I can in Bangor,” Scott said this week, adding, “I spent a fair amount of time in the last few months.”

Despite his history of buying and selling properties, Scott said he considers himself more of a racetrack operator than a developer.

When asked if he planned to hang onto his Bangor operation, Scott said, “Absolutely. My goal is to build a chain of racetrack casinos. Four or five would be perfect for us.” He said he had no immediate plans to acquire additional racing facilities. “We don’t want to grow too fast,” he said.