Deal struck to purchase Bangor track Pa. firm eyes racetrack casino

loading...

BANGOR – Representatives of Penn National Gaming Inc. confirmed Thursday that they have reached a purchase agreement with the owner of Bangor Historic Track Inc., operator of Bangor Raceway.

The Pennsylvania-based gaming company hopes to develop a racetrack casino at the city-owned harness racing track, as well as at Scarborough Downs in southern Maine.

The two commercial tracks won approval to install slot machines in a Nov. 4 statewide vote. Bangor voters approved slots in a local referendum in June.

The southern Maine track, however, was unable to win local approval in separate votes in Scarborough, Saco and Westbrook. To that end, Scarborough Downs and Penn are seeking an extension of the Dec. 31 deadline for local approval and an expansion of the five-mile radius set forth in the racino legislation Mainers approved on Election Day, Penn spokesman D. Eric Schippers said Thursday.

In related business, Penn National obtained an option to buy Las Vegas-based developer Shawn Scott’s controlling interest in Vernon Downs in Vernon, N.Y., one of eight New York tracks authorized to install slot machines. Scott also owns Bangor Historic Track.

Although the purchase price for the two tracks was not disclosed Thursday, it eventually will become public because Penn National is a publicly traded company and as such is subject to federal reporting requirements. The total price tag is rumored to be in the tens of millions of dollars. Scott spent an estimated $3 million to $4 million on the Bangor racino effort to date.

A Penn National press release noted that the purchase price included upfront cash, progress and milestone payments and a final payment subject to adjustment “based on the outcome of the various conditions and contingencies.”

Thursday’s announcement about the pending purchase came as members of the Maine Harness Racing Commission prepared to resume their hearings on BHT owner Scott’s application for a state harness racing license after a two-week break.

Stephen Langsdorf, a member of Scott’s legal team, asked for – and was granted – a 24-hour delay in order to nail down some of the remaining details, chief among them recommendations for the five-member racing panel to consider when it reconvenes at 9 a.m. today at the Augusta Civic Center.

According to Capital Seven LLC and Penn National, the purchases won’t be a done deal until Penn obtains the necessary state licensing as well as its own development deal with the city of Bangor.

Scott said Thursday that he would not withdraw his license application until the deal is completed.

Capital Seven, one of Scott’s numerous limited liability corporations, last month completed its acquisition of Bangor Historic Track, which operated in 2003 under a conditional license pending the outcome of a state background investigation.

The background check, paid for by Scott and conducted by the state attorney general’s staff, raised questions about Scott’s past business practices. It revealed, among other things, that one of Scott’s key business associates had a felony theft conviction and that Scott has a history of sloppy business and accounting practices.

After Thursday’s announcement, Scott said that the controversy surrounding his background check was a factor in his decision to sell to Penn.

Scott acknowledged he’d become a “lightning rod” for controversy and that he felt it would be best that he step aside for the good of the harness racing industry.

The New York Racing and Wagering Board recently denied Scott’s application for a license to operate a racetrack.

Schippers did not see licensing as a major hurdle for Penn, which is licensed in seven states and one Canadian province. He also said Penn welcomed Gov. John Baldacci’s efforts to tighten the racino legislation Maine voters adopted two months ago by way of a citizen-initiated petition led by Scott.

Schippers also said that while Penn understood the need to support the harness racing industry and the state’s effort to regulate slots, the company hoped the end result would be legislation that would allow its efforts in Maine to remain financially viable.

Scott and his associates have been working for more than a year to develop a racino at Bangor’s historic half-mile dirt oval. Scott’s development pact with the city called for a $30 million complex that would combine harness racing with year-round entertainment and slot machines, among other things.

Schippers said Thursday that it was “highly likely” that Penn would exceed that level of investment.

Bangor officials, who said they were briefed about the deal late Wednesday, tentatively planned to meet over the weekend to assess the potential impacts and ramifications.

“I think it may be a good deal for Capital Seven but it remains to be seen if it’s a good deal for the city,” Mayor Dan Tremble said Thursday, adding that the council’s main objective was to ensure a deal with Penn was in the best interest of the city, its taxpayers and its residents.

Though the deal with Capital Seven is transferable to another party, subject to city approval, Tremble said the city needed to do its due diligence and make sure any new deal was “as good or better.”

City Councilor Gerry Palmer was an early supporter of Capital Seven who has since become a critic because he believed the city acted in haste when it approved its development and lease agreements with Scott. He also wasn’t impressed by Capital Seven’s negotiations last fall with the adjacent city of Brewer.

On Thursday Palmer said a deal with Penn might be an improvement over the current one with Scott and company.

“I think the city could have negotiated better and would like to get the best deal it can,” he said. “I would also like to see [Penn] win, too.

“This is an opportunity for the city to perhaps find a partner we can work with,” he said. “We’re going to look at it very carefully.”

Palmer is among those who would like to see the city hold the state racing and gaming licenses. “I think it might give us some control and if we had the license, it puts Bangor in a stronger position,” he said.

Baldacci spokesman Lee Umphrey said Thursday that Penn National gaining potential entry into gaming and Capital Seven’s likely departure did not ease the governor’s concerns about the expansion of gaming in Maine.

“It’s never been about the operator – it’s been about the operation,” Umphrey said. “The governor wants to put a system in place that’s going to protect Maine people.”

The racino concept is new to Maine and the state “needs to be very careful and deliberate about how we move forward,” Umphrey said.

Umphrey did acknowledge that the governor found Scott’s record of past dealings “disconcerting and was glad that it finally became public so that the harness racing commission and others could make an informed decision.”

He noted that the bitter and very public dispute between former competitors Capital Seven and Penn did not help alleviate Baldacci’s concerns.

“It’s been a campaign of misinformation from the start,” Umphrey said. “What the people of Maine deserve is some clarity so that the wishes of the people of Maine are protected.”