Bangor hears racino pitches

BANGOR – Three companies that want to operate a racetrack casino at Bass Park made their pitches to the City Council Monday.

During a special meeting at City Hall, city officials heard brief presentations from representatives of Iowa-based Kehl Management Co., Delaware North Companies, based in Buffalo, N.Y., and Penn National Gaming Inc., headquartered in Wyomissing, Pa. All three companies are interested in stepping in should Capital Seven LLC, the company that is currently seeking use of the track, be unable to meet the terms of its agreement with the city.

In related business, a resolution urging Gov. John Baldacci to move quickly to put gaming rules and oversight into place failed as the result of a 4-4 tie vote.

Monday night’s presentations came at the request of Kehl Management. The other two companies were invited to make presentations at the suggestion of Mayor Dan Tremble.

While the details of the city’s $30 million development deal with Capital Seven are now part of the public record, the presentations by the company’s potential competitors were general in nature.

Although all three companies went on record as being interested in stepping in should Capital Seven not receive a state harness racing license, which would entitle the company to install slot machines at Bangor Raceway, none was willing to show all of its cards at this stage.

The councilors did not act on the proposals Monday night but did ask numerous questions, including queries about whether the companies would be willing to operate a racino if the city held the harness racing license. All three of Capital Seven’s competitors said they would.

Last year, representatives of Capital Seven, one of several companies owned by Hawaiian entrepreneur Shawn Scott, approached Bangor with plans to develop a “racino,” or racetrack casino, at city-owned Bass Park, home of Bangor Raceway and the Bangor Auditorium and Civic Center. The plan appears close to fruition, with only state licensing to be cleared. However, a state-mandated background check of Scott and his businesses remains to be reviewed by the Harness Racing Commission.

Scott won approval in a citywide vote in June and has struck a development deal with the city. Maine voters on Nov. 4 authorized slots for Bangor Raceway and Scarborough Downs.

Capital Seven’s plans call for developing the racino in two phases, with the bulk of the investment occurring in the second phase. The construction of the hotel, however, won’t occur until after Capital Seven’s gross revenues, or income after payoff to players, hit the $60 million mark.

During an appearance before Bangor officials in late October, just before the council’s 5-3 vote to enter the development pact with Capital Seven, representatives of Kehl issued a statement announcing their desire to partner with Bangor.

In their initial announcement, Kehl officials said the company would invest $40 million in the Bangor project, or $10 million more than Capital Seven agreed to spend.

Family-owned Kehl holds gaming licenses in Missouri, Louisiana and Iowa, but the company would be new to the harness racing arena. To that end, Kehl officials said earlier that they would work with the management of Old Evangeline Downs, which operates a racetrack in Louisiana. Kehl operates riverboat casinos in Clinton and Dubuque, both in Iowa.

The other two potential racino operators, Penn National and Delaware North, said they would work closely with the city but offered no dollar figures or specific plans for investments. Both are publicly traded and, as such, are regulated by the U.S. Securities and Exchange Commission.

An industry heavyweight, Penn National owns and operates several casino and resort facilities, a riverboat gaming facility in Baton Rouge, La., two racetracks and 11 off-track betting facilities in Pennsylvania, and a racino called the Charles Town Races & Slots in West Virginia. It owns half of Pennwood Racing Inc., which owns and operates Freehold Raceway in New Jersey and manages Casino Rama, a gaming facility about 90 miles north of Toronto, Canada.

Established in 1915, Delaware North employs 28,000 in a variety of venues, including Yosemite National Park, Kennedy Space Center and ballparks, airports and stadiums worldwide. It both owns and manages properties and has annual revenues of $1.5 billion. Some of its clients are The Delta Queen Steamboat Co. and the FleetCenter in Boston. Its specialties include retail and hospitality industries in the United States, Canada, Australia and New Zealand, according to its corporate Web site.

The council considered the resolve for state oversight of gaming at the request of Rep. Patricia Blanchette, D-Bangor, who asked city officials to look at it as an emergency measure. Monday night she said she was disappointed but not entirely surprised it did not pass.

“If anything, I’m disappointed,” said Blanchette, a former Bangor mayor and councilor. “I really thought I was giving Bangor the opportunity to come out as a leader on this issue … I hope they thought really carefully about it because the next time a resolve from the city lands on my desk, I’m going to take a very close look at it.”

The legislation voters approved on Nov. 4 authorizing the slot machines places authority over them with the Maine Harness Racing Commission. Blanchette said that is not adequate, given the amount of money at stake and the commission’s lack of experience with gambling regulation.

She also noted that the vote went more or less along party lines, with Democrats Anne Allen, Gerry Palmer, Geoffrey Gratwick and Mayor Dan Tremble voting in favor of it, and Republicans John Cashwell, Richard Greene and Frank Farrington voting against it. Peter D’Errico, who also voted against the resolve, is not registered in either party.

Councilor David Nealley, who is employed by Capital Seven, did not vote.