Maine tribes want shot at slots license

AUGUSTA – As Penn National Gaming took steps Wednesday to complete its acquisition of Bangor Historic Track, a new potential player in Maine’s fledgling racino industry emerged.

Representatives of the Penobscot Nation and Passamaquoddy Tribe announced Wednesday that they are asking state lawmakers to amend the governor’s emergency gambling bill to require an “open selection process” for slot machine licensees.

That, they said, would give Maine’s tribal people an opportunity to apply for a license to operate slots at Bangor Raceway, the historic half-mile dirt oval located at city-owned Bass Park.

The move puts the tribes in direct competition with Penn National, the Pennsylvania-based gambling corporation that is still in the process of attaining the rights to operate slot machines at Bangor Raceway.

According to Penobscot Chief Barry Dana, the two tribes began searching for new economic development opportunities after their bid to develop a tribal casino in southern Maine was defeated at the polls on Nov. 4.

The proposed amendment was distributed to members of the Legislature’s Legal and Veterans Affairs Committee during that group’s work session on emergency legislation proposed by the Baldacci administration.

Dana said that the tribes approached Bangor officials with a proposal in recent weeks, but that city officials said they needed to consult with their legal counsel before determining what, if any, action they might take.

As things stand, the Bangor track is the only commercial harness racing track in the state eligible for slot machines. Scarborough Downs was unable to win the needed local approval by the Dec. 31, 2003, deadline set in the citizen-initiated legislation Maine voters adopted on Election Day.

Officials from the southern Maine track, however, are trying to extend the deadline, as well as expand the 5-mile radius within which the track can relocate to develop a racino of its own.

Though specifics of the tribes’ proposal to the city remained under wraps late Wednesday, Dana and Donna Loring, the Penobscots’ representative to the Legislature, said that their plan would provide a greater percentage of slots-related revenue to the public.

The original legislation adopted by Maine voters earmarked 25 percent for various state social and agricultural causes, including the administration and regulation of slots.

The tribes’ proposal calls for the same, plus 5 percent for the host city, Bangor, and 10 percent for a regional economic development fund that would provide funding for projects designed to bring jobs and other benefits to the area, according to Loring.

“This amendment could make a lot of wrongs right,” Dana said Wednesday. For starters, he said, it would keep the bulk of the revenues generated by slots in Maine.

Loring said that the Maine tribes planned to partner with the Mashantucket Pequot Indian Nation, the tiny tribe that a decade ago opened Foxwoods Resort Casino in Ledyard, Conn., now among the world’s largest.

“We got them into gaming in the first place,” Dana said of the Pequots. “It’s time to return the favor.”

The governor’s bill would increase the state’s share from 25 percent to as much as half the income. Baldacci spokesman Lee Umphrey said that the state needed to at least break even on costs associated with administering the gambling operation.

Umphrey said that the governor had heard talk of the tribes’ interest in slots but was reserving a decision on his position until later. His priority has been, and continues to be, providing oversight to Maine’s emerging slots industry. His emergency legislation would, among other things, establish a gambling control board that would be administered by the Department of Public Safety.

Penn National Gaming Inc., a company that holds gaming licenses in seven states and Ontario, has nearly finished the process of acquiring Bangor Historic Track Inc., the company that has operated the city’s track for about the last decade, from entrepreneur Shawn Scott and his development firm, Capital Seven LLC.

Scott began the process of acquiring BHT more than a year ago and completed the purchase last month. Under pressure from the Maine Harness Racing Commission to meet licensing suitability requirements, Scott this month agreed to sell BHT for an undisclosed price to Penn National.

The parties involved expected to complete the ownership transfer by the middle of last week. The process proved more cumbersome than anticipated. As of late Wednesday, the transfer of stock had been completed and an amended license application had been submitted to the Maine Harness Racing Commission.

Commission members this month agreed to grant Penn National a conditional 2004 racing license for Bangor, upon receiving proof it had acquired BHT and an amended license application reflecting the ownership change. A permanent license and race dates will be issued if Penn passes the required background check.

The Penn purchase also is predicated on its ability to obtain a slots license and its own development deal.

Bangor City Solicitor Norman Heitmann said earlier that Capital Seven’s development and lease contracts with the city are transferable to Penn and that the city cannot “unreasonably withhold” that consent.

Under Scott’s $30 million deal with the city, Capital Seven was going to develop a year-round entertainment complex featuring as many as 1,500 slot machines. In December, Capital Seven conducted a $525,000 overhaul of the aging grandstand at Bangor Raceway, converting it into a temporary slots facility for 250 of the machines. The grandstand facility would have been replaced by a new one. A series of improvements and amenities also were proposed.

Though Penn National is still developing its plans for the Bangor site, the company’s current plans call for 500 machines initially, with 1,000 more to be added in a few years.

While Capital Seven’s deal guaranteed the city a minimum of $1 million in slots revenue a year, in addition to lease and property tax payments, the tribes have offered a $3 million minimum, according to their legal counsel, Barry Margolin of Boston, Mass. Margolin said Wednesday night that his association with the tribes dates back to the Maine Indian Claims Settlement Act, negotiated in the late 1970s and signed into law in 1980.