Commission OKs Bangor track sale

AUGUSTA – Though it took some last-minute legal wrangling, representatives of Bangor racino developer Shawn Scott, his apparent successor, Penn National Gaming, and state racing officials struck a deal Friday that will allow a proposed Bangor racetrack casino – and this season’s harness racing meet – to move forward.

The arrangement, hammered out during a 21/2-hour recess of a Harness Racing Commission hearing, won the unanimous approval of the five-member commission. It calls for the expedited transfer of Bangor Historic Track, operator of Bangor Raceway, to Penn National, a transaction attorneys for both sides said will be completed by Wednesday.

The agreement means patrons could be playing slot machines at Bangor Raceway as early as late February.

A key factor in the commissioners’ decision was their shared desire to ensure racing would take place at Bangor Raceway this year.

William Hathaway of the Maine Harness Horseman’s Association told commissioners that the 26 days of racing at Bangor were “crucial and critical to the harness racing industry in Maine.”

“We’re here because we want to race at [Bangor Raceway] in 2004 and we see that opportunity slipping away,” Hathaway said, noting Scott’s Capital Seven LLC had run a successful meet last year. If there were to be racing this year, he said, horsemen needed to know by next month because it takes at least six to eight weeks to condition horses.

Under the compromise, the commission agreed to issue Bangor Historic Track a conditional racing license for 2004 upon Scott’s transferring ownership to Penn National and BHT’s submission of an amended license application reflecting Penn National’s ownership. A permanent license and race dates will be issued if Penn passes the required background check.

Financial terms of BHT’s sale to Penn were not disclosed.

The Penn purchase is predicated on its ability to obtain a racing license, as well as a development deal with the city of Bangor, which owns the track. Commissioners and officials from the state Department of Agriculture, which oversees harness racing, expressed concern about moving forward without first clarifying the ownership of BHT.

Under the racino law Maine voters adopted Nov. 4, Penn will be able to install slot machines at Bangor Raceway upon receiving a state racing license.

The legislation takes effect next month; however, alternate legislation crafted by the Baldacci administration could bring about stricter regulations, including the creation of a five-member gambling control board and tightened slots regulations. A public hearing on Baldacci’s bill was held this week and a work session is set for Wednesday.

The Maine Harness Racing Commission met Friday to set a course of action in the aftermath of Scott’s announcement Thursday that he had engineered the sale of BHT to competitor Penn National.

The announcement came as commissioners prepared to resume their hearings on BHT owner Scott’s application for a state harness racing license after a two-week break.

Scott said Thursday that he’d decided to sell to Penn because he had become a “lightning rod” for controversy and thought it would be best for the state’s harness racing industry if he stepped aside.

After the announcement about the pending purchase agreement, Assistant Attorney General Ruth McNiff, who has been presiding over Scott’s racing license proceedings, granted a 24-hour delay to allow lawyers representing Scott, Penn National and the state to come up with a proposal for how to proceed.

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.

Scott and his associates had 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.

On Friday, a spokesman for Baldacci said the governor remains concerned about the manner in which the racino effort is moving forward.

“The governor has asked his legal counsel to look into the specifics of this deal and remains concerned that an agreement was made while he and the Legislature are still putting together stricter regulations,” Baldacci spokesman Lee Umphrey said Friday.

“This whole process has been full of twists and turns,” he said. “The governor wants to make sure that [the Bangor track agreement] is fair and in the best interest of the people of Maine and, in this case, the people of Bangor who have a vested interest in this.”

Umphrey said the speed at which Friday’s deal was reached reinforces Baldacci’s sense that Maine needs a strong regulatory system for gaming and that “the process may have been circumvented by the sale of Bangor Historic Track.”

Bangor officials will hold a special meeting at 3 p.m. today at City Hall to discuss its rights and obligations with regard to the Penn purchase of BHT and the governor’s proposed legislation.