Bangor probes Penn on racino operations

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BANGOR – City officials asked pointed questions and learned a few things about the company expected to assume ownership today of Bangor Historic Track Inc., which operates Bangor Raceway.

A workshop Monday night presented city councilors their first chance to meet with representatives from Penn National Gaming Inc. since last week’s announcement that the company planned to buy Bangor Historic Track from entrepreneur Shawn Scott, who planned to develop a racetrack casino at Bangor Raceway.

Based in Wyomissing, Pa., Penn National owns several horse racing tracks, casinos and off-track betting facilities in the United States and Canada. Among its holdings are Penn National Race Course and Pocono Downs in Pennsylvania. It owns casinos in Colorado, Louisiana and Mississippi.

Penn’s holdings also include Charles Town Races and Slots in Charles Town, W.Va., a racino featuring 3,500 gaming machines, according to President and CEO Kevin DeSanctis, one of three company officials who met with municipal officials this week to discuss plans for the city-owned track.

The company is in the process of obtaining the necessary state licensing.

Perhaps the biggest remaining unknown for Penn National is how much money the state will require for administering slots. The law Mainers adopted Nov. 4 provided that the state receive 25 percent of the slots’ gross income (income after payouts to winners) for a range of social and agricultural needs.

That percentage, however, could change as a result of legislation proposed by the Baldacci administration.

“It’s not that difficult to regulate,” DeSanctis said of slots, given all of the technological means at regulators’ disposal. “Fear of the unknown – that is the biggest issue.”

While DeSanctis said he understood state officials’ concerns, he noted that if Bangor Raceway and Scarborough Downs are the only two sites at which slots will be allowed, it made little sense to develop an entire new bureaucracy to regulate them.

With licenses and facilities in seven states and the Canadian province of Ontario, Penn National is the nation’s seventh-largest gaming operator, with corporate revenues of over $1 billion a year, he said.

For the last three consecutive years, he said, Penn has been named to Fortune 500’s list of fastest-growing companies, he said.

“We like to think of ourselves as very good corporate citizens,” he said, describing Penn National’s corporate style as “decentralized,” with many decisions made locally.

Remaining unknowns include how much of the racino’s proceeds the state will want to cover its administrative costs and how much, if any, should be shared with other gaming venues, including Maine’s five off-track betting facilities.

Penn’s main goal is to achieve a 20 percent rate of return on its investments, DeSanctis said.

He later noted that the bigger the state’s piece of the revenue pie, the less development Penn would be able to complete.

Initial plans for Bangor

Penn National is still in the early stages of deciding what it will do, and when, at Bangor Raceway.

“We’d like to get open as quickly as we can,” DeSanctis said, but offered no projected opening date.

“We have not developed any definitive plan,” DeSanctis said. He added, however, that Penn planned to invest more than the $30 million Scott proposed in his deal with the city.

He said the company had not yet determined if a luxury hotel would be part of its Bangor plan. He said Penn needed to consult with local hoteliers and others before making a decision.

If the company developed a racino with “basic amenities,” its core market likely would be those residing within an hour’s drive of Bangor.

“I don’t want to promise you a destination resort. We’re just not doing that,” he said.

Penn politics

The extent of Penn’s involvement in the political side of gaming elsewhere also was a topic of interest to city officials.

When asked, DeSanctis acknowledged that Penn contributes to political campaigns, but that the donations didn’t appear to influence decision-making.

“Our No. 1 goal is to let the Legislature know what we believe the facts to be … to arm them with accurate information,” he said.

DeSanctis also fielded questions about the bitter feud between Penn and Capital Seven that turned into what one councilor called a “love fest” after Penn and Capital Seven announced their purchase agreement.

“I think the important part there is, as a company, we would prefer to find ways to find common ground,” he said. “I think at the end of the day it was in the best interest of Penn National and Capital Seven and clearly for Bangor.”

Social issues

The potential for increased crime was another area city officials probed Monday.

“Our experience has been that crime has been reduced,” said DeSanctis, who was a detective with the New Jersey State Police before joining that state’s gaming control division.

He noted that the company’s experiences in Charles Town suggested that most of the crime there was driven by high unemployment – a problem that Penn’s thoroughbred racetrack and 3,500-slot casino helped alleviate.

On the topic of corporate giving, DeSanctis said, “If we can find it within our budgets, we do it.”

Harness racing aided

As DeSanctis sees it, the revenues from slot machines will help bolster the state’s declining harness-racing industry by providing a badly needed infusion of cash. Increased race purses, he said, will help support not only horses but also those who depend on them as a livelihood.

“I think there’ll be a significant improvement here,” he said.

DeSanctis said, however, that it is not yet clear what changes Penn might make to the city’s historic half-mile oval or the facilities that support it.

Jobs and benefits

Asked how many new jobs Penn’s racino would bring to the area, DeSanctis estimated 300 to 500. All but a few of those positions will be filled locally. Spokesman Eric Schippers said last week that Penn expected to bring an experienced management team to Bangor to oversee operations.

Capital Seven representatives last year estimated that their Bangor project would result in 314 on-site jobs, most of them full time. More than 300 job hopefuls attended Capital Seven’s job fair in early December. A Capital Seven representative said last week that the applications collected there would be given to Penn, if the ownership transfer takes place as planned.

DeSanctis said there also would be opportunities for area vendors and that Penn welcomed inquiries from local goods and service providers.

He said that Penn provides its employees with health care and that all employees working at least 35 hours a week, including him, are eligible for the same health care plan.

Getting the word out

Councilors also wanted to know what Penn planned to do to promote the Bangor racino.

“From a corporate perspective, I think the world knows,” DeSanctis said. The twists and turns of the Bangor racino project – including Penn’s acquisition plans – have been reported extensively in the Maine media as well as in national-level trade publications.