Bangor’s racino a step closer to 2006 opening

BANGOR – A year to the day after Maine voters authorized slot machines for the state’s commercial harness racing tracks, the Maine Gambling Control Board on Thursday unanimously agreed to grant a conditional gaming license to Penn National Gaming Inc., the designated developer of the state’s first racetrack casino.

Penn National, the parent company of Bangor Historic Track, is seeking permission to install up to 1,500 slot machines in the $75 million racino it plans to build at Bangor Raceway, the only venue in Maine that has the needed local and state approval.

A state gaming license is one of two permits Penn needs. The other, a state harness racing license, was granted last month by the Maine Harness Racing Commission.

“This is an important step for Penn National, the city of Bangor and the gambling control board,” said George McHale of Orrington, who heads both the racing panel and gambling board.

“We’re now regulators,” he said. “They [Penn National] were a potential applicant. Now we’re in essence regulating them.”

Penn National submitted an application for a slots operator’s license, along with a nonrefundable $200,000 application fee, shortly after it received a permanent harness racing license from the Maine Harness Racing Commission on Oct. 14.

The conditions on its license are that Penn not operate slot machines until it receives a permanent, unconditioned license, which won’t occur until Penn submits a complete application.

That won’t occur until the Legislature closes a loophole that prevents the state from keeping confidential certain sensitive proprietary and personal information about the Pennsylvania-based corporation and its key employees.

As an interim step, Penn submitted a redacted corporate application containing only information it deemed public.

Penn plans to break ground on the Bangor facility in the spring, with the intention of opening the racino in the spring or summer of 2006, according to company officials.

The conditional gaming license comes on the heels of Penn’s announcement late Wednesday of its pending acquisition of Argosy Gaming Co. – a move that would propel Penn from the nation’s seventh-largest operator of gaming properties to No. 3.

Under the deal, subject to approval by federal regulators, Penn would buy Argosy, based in Ohio, for $1.4 million cash. While the acquisition would double Penn’s revenues, bringing them to a total of $2 billion, Penn also would assume $805 million of Argosy’s debt.

Jean Deighan, a gambling board member from Bangor, expressed concerns about Penn’s debt load during the board’s Oct. 28 meeting. Similar concerns were raised by two consultants asked to analyze Penn’s finances as part of the states’ suitability investigation.

On Thursday, Deighan asked how Penn planned to “digest” the additional debt.

“It’s a substantial undertaking for our company,” Steven Snyder, Penn’s senior vice president for corporate development, said about the Argosy deal. He said, however, that Penn had ample cash flow to cover its costs.

Snyder also said that the deal would have no adverse impact on the company’s plans for Bangor. He said the $75 million project budget has been built into Penn’s budget for the next 18 months

According to Snyder, Penn’s practice of “borrowing, buying and paying down debt” was what allowed the company to grow from owning a single racetrack in 1972 to 13 properties in numerous jurisdictions if the Argosy deal goes through.

“That is what we do, and this is what we’ve proven we do well,” he said.

Board member Michael Peters of Dixfield said he was satisfied Penn had met the requirements laid out in LD 1820, the state’s slots law.

“I think we’re making far too much of Penn’s debt load,” he said. “It’s not up to us to manage the company.”

After Thursday’s meeting, McHale said Gov. John Baldacci deserves much of the credit for getting the Bangor racino project to the point it is at today.

Despite his initial opposition to gambling, Baldacci this spring signed an executive order that jump-started the process by appointing an interim advisory board that began the job of developing rules and regulations, among other things.

Had Baldacci not done so, McHale said, that work would not have started until last month and a license could not have been granted until next year.