Iowa company jumps into racino contest

BANGOR – Just as the Nevada-based firm that wants to develop Maine’s first racetrack casino in Bangor appeared to be heading alone down the homestretch toward its goal, at least one other developer has arrived on the scene to mount a challenge.

Late Wednesday afternoon, Kehl Management Co., an Iowa-based casino management and development firm, announced its interest in bringing a racino to Bangor Raceway at city-owned Bass Park. It promised the city a better deal than the one offered by Nevada-based Capital Seven LLC, which has been pursuing the project for months.

The city also reportedly is talking with Penn National Gaming, though the scope and extent of those discussions could not be determined as of late Wednesday. Attempts to reach several key City Hall officials late Wednesday were unsuccessful.

Capital Seven is aware of the discussions with other firms, according to officials with the Nevada company.

“We have had a good working relationship for a year and a half with the city of Bangor,” said spokeswoman Victoria Scott, mother of Capital Seven owner Shawn Scott. “We have every expectation that our project will come to a successful conclusion.”

The announcement from Kehl Management came via fax from its Bangor legal counsel, Rudman & Winchell, on the eve of the City Council’s special meeting at 5 p.m. today. During the meeting, set for City Hall, a development contract and leases with Capital Seven will be considered. The city and Capital Seven previously had agreed to an Oct. 31 deadline to sign a contract.

According to Dan Kehl, vice president of the family-operated management company, Kehl Management has been watching the racino plan for Bangor unfold for several months. He said his company first learned of the opportunity from an associate who visited Bangor on business related to the city’s waterfront redevelopment program.

Asked about the timing of his company’s announcement, Kehl said, “We were concerned that the council would sign the development agreement without the public knowing that there was an alternative out there that was better for Bangor. We think the city needs to slow down and look at this more closely after the election.”

When contacted Wednesday, Kehl was on his way to an airport, where he planned to board a plane for Bangor. He said he would attend Thursday’s council meeting.

“I hope to say a few words if I get a chance to speak to the council,” he said. “I want to tell them that there’s really no rush” to enter a development deal for Bangor Raceway.

Kehl said that various principals in the company held gaming licenses in Missouri, Louisiana and Iowa but that the company would be new to the harness-racing arena. To that end, he said, Kehl plans to work with the management of Old Evangeline Downs, which operates a racetrack in Louisiana.

“We won’t spare any resources in making this work,” he said. He said the company would seek a harness-racing license in Maine.

In its announcement, Kehl Management said it would invest $40 million – $10 million more than Capital Seven proposed in its negotiations with the city. Like Capital Seven, Kehl would construct gaming, hotel and conference space if Maine voters give slot machines at commercial harness racetracks the thumbs up in a statewide referendum next Tuesday.

Unlike Capital Seven, however, the Iowa company would begin a series of capital improvements upon receiving access to the property at Bass Park.

Capital Seven’s proposal calls for developing the racino in two phases, with the bulk of the investment occurring in the second phase. The construction of the hotel, however, would not occur until after Capital Seven’s gross revenue – income after payoff to players – hit the $60 million mark.

Kehl said Wednesday night that the company also would pay the city more in rent, would guarantee the city a minimum of $1.5 million in “percentage rent” (a percentage of gross revenues from slots) as opposed to Capital Seven’s $1 million minimum, and would offer local investors the opportunity to acquire up to 35 percent interest in the Bangor project.

“I think our deal is probably more generous,” he said.

Capital Seven got the slot machine question on the Nov. 4 ballot through a citizen-initiated petition.

According to campaign finance reports filed with the Secretary of State’s Office on Wednesday, various companies owned by Scott have invested more than $1.5 million to allow slot machines to be installed at the state’s commercial harness-racing tracks.

In contrast, the Christian Civic League and its political action committee, the Christian Action League, which opposes slot machines and a proposed tribal casino that’s also on the statewide ballot, has raised $19,664 and spent $16,749 to defeat gaming.

One Maine-No Casinos, which also opposes the two proposals, raised $9,612 for the year, spending all but $1,037.

Keep Bangor on Track, another political action committee financed by Scott, spent almost $95,000 on getting the June citywide referendum passed in Bangor, according to the latest campaign finance report filed in July with the city clerk’s office. The report listed another $54,000 in outstanding debt to its then campaign strategist, Pierce-Atwood Consulting of Portland.

Despite Capital Seven’s assurances that Bangor Raceway remained the site of choice for its $30 million entertainment complex, the company has been involved in negotiations with the adjacent city of Brewer, where the company has bought an option on a backup site on outer Wilson Street.

The talks with Brewer have progressed to the point where Brewer officials agreed to put a referendum question seeking local approval for slots on the city’s Nov. 4 election ballot. As of Wednesday, the referendum was still scheduled to take place.

The slots bill voters will consider on the Nov. 4 election ballot, or Question 2, requires both state and municipal approval before the machines can be installed at Maine’s commercial harness-racing tracks. Bangor voters authorized slots in a citywide referendum in June.

Capital Seven’s project also is contingent upon Scott’s obtaining a license from the Maine Harness Racing Commission. The commission had been scheduled to consider the matter on Nov. 10 but now will address it in mid-December.