BANGOR – Penn National Gaming Inc.’s efforts to open a slots facility on Main Street ran into a problem Wednesday, after members of the Maine Gambling Control Board found themselves unable to issue one of Penn’s slot machine distributors the permanent license it was seeking.
The problem could temporarily affect the number of slot machines Penn National can operate at Hollywood Slots at Bangor, the interim gaming facility the Pennsylvania-based gaming and racing company is gearing up to open in the former Miller’s Restaurant.
It also could affect the timing of Hollywood Slots’ tentative early November opening.
“I’m not prepared to comment on it at this time,” Jon Johnson, general manager for Penn’s Bangor operations, said after Wednesday’s meeting.
At issue is Bally Gaming and Systems’ application for a state slots distributor license. Bally’s parent company, Alliance Gaming Corp. of Nevada, is one of three slots distributors Penn National has tapped to provide the 475 machines it has ordered for Hollywood Slots at Bangor.
The background investigations for Penn’s two other slots distributors, Aristocrat Technologies and International Gaming Technologies, both based in Nevada, were slam dunks. Both companies submitted complete applications. After financial and criminal background checks came back clean, they were granted permanent licenses in separate unanimous votes.
Bally’s application, however, proved different.
During a report on the company’s financial suitability, Andy Grover of the accounting firm MacDonald, Page, Schatz, Fletcher and Associates, the board’s financial consultant, said that he was unable to submit a complete report because Bally had not yet filed a required year-end earnings report with the Securities and Exchange Commission.
The company was on its third extension to date, this one expiring Sept. 28, Grover said.
In addition, state police said they have been unable to have a required face-to-face interview with one of the company’s key executives due to an illness prohibiting travel, though Bally otherwise received a clean criminal report.
Because of the missing information, the board lacked a legal basis for granting a permanent license, according to Assistant Attorney General Melissa O’Dea, the board’s legal counsel.
After an executive session during which the board received legal advice, members voted 3-1 to grant a conditional license, allowing the company to transport the machines to Maine and deliver them
to Bangor.
The machines, however, cannot “go live” until Bally submits the balance of the information needed to be eligible for a permanent license.
The late filing, as well as the fact that the company had no representative on hand for Wednesday’s meeting to answer questions, did not sit well with gambling board members, who noted that a Bally representative had attended a roundtable planning meeting the day before.
“I find myself in both cases not happy with that,” Chairman George McHale of Orrington said. To have a representative at the meeting to answer questions “would have been nice.”
He later said he was “furious” that Bally wasn’t represented during the meeting and that the only reasons he voted to grant the conditional license were that the state was protected and because he did not want to “hamper the good work that Penn National already had done.”
Board member Michael Peters also was unimpressed with Bally.
“I find it personally unconscionable that a company like Bally could not [submit a complete application package],” given the time and effort the board has devoted to the project, he said.
“This board has bent over backward to allow Penn to move forward and the whole project to move forward [in a manner] consistent with [state rules and laws] and that is the mandate [Gov. John Baldacci] gave us,” Peters said. “I also find it unconscionable that Penn National, knowing this a month or two ago, did not plan for this contingency.”
Board member Peter Danton of Saco, who voted against the temporary license, added: “We’re under a big magnifying glass in this state [because gaming is new to Maine].
“If their financial papers were in order today, they’d get an automatic four-zip vote,” he said.
Johnson, who previously served as CFO for a Penn casino in Tunica, Miss., said the late filing had little bearing on Bally’s overall financial condition.
“This is an accounting issue,” he said, adding that the issue wasn’t whether the company was making money, but rather a disagreement with auditors about how earnings should be reported.
“I don’t think there’s any concern that they’re not going to be an ongoing concern,” Johnson said.
Whether the report would be filed in time for Penn’s planned November opening was not a sure bet. A Bally spokesman said he would do all he could to get the earnings report filed by next week’s deadline.
“Yes, certainly that’s my goal, but nothing’s guaranteed in life ” Steven Des Champs, chief finance officer for Alliance, said Wednesday evening during a telephone interview. “It will be difficult [to meet the deadline], but we’ll be hard at work burning the midnight oil.”
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