09/26/2006 11:00PM

Five Pennsylvania tracks granted slots licenses


The Pennsylvania Gaming Control Board on Wednesday granted conditional approvals for five racetracks, including Philadephia Park and Penn National Race Course, to begin operating slot-machine casinos.

The board's approvals came more than two years after the Pennsylvania legislature passed a bill authorizing up to 61,000 slot machines at seven racetracks and seven other free-standing sites in the state. In addition to the state's two existing Thoroughbred tracks, the gaming control board granted conditional licenses to two long-time harness tracks, Pocono Downs and the Meadows, along with a new harness track south of Philadelphia, Chester Downs, that opened earlier this month.

With 50 percent of the revenues from slot machines retained by the operators, the casinos are expected to make millions of dollars for track and casino operators, fatten purses at Thoroughbred and harness tracks, and enable the state to cut property taxes. At 61,000 machines, Pennsylvania will have more slot machines than any other state other than Nevada.

Bob Green, a principal in the group that owns Philadelphia Park, said on Wednesday that he expects the track's temporary casino to open by the end of 2006. Philadelphia began a renovation project to convert the first two floors of its grandstand into a temporary casino this summer, and has plans to build a free-standing casino elsewhere on the 450-acre property.

"We've already done a lot of the preparation and construction, and we've already moved our racing operations to the third floor," Green said. "We're in very good shape in terms of putting the finishing touches on an opening."

Gary Luderitz, the general manager of Penn National, said on Wednesday that the track's casino should open "by late 2007 or early 2008." Penn National began a $260 million renovation project this year that entailed tearing down its old grandstand, in order to replace the building with a casino that will also include amenities for racing fans.

"It will be one totally integrated racing and gaming facility," Luderitz said.

The legislation earmarked 12 percent of the gross revenues from slot machines at all 14 facilities in the state to horsemen. Green has said that once all the casinos are open, purses at Philadelphia will likely top $400,000 a day. That would put Philadelphia Park in the top tier of racetracks in the U.S., by average purse distribution.

Green said that under an agreement with the group representing horsemen at the Philadelphia, the full purse subsidy would likely not be realized for "two to three" years after the casino at the track opens. Horsemen have been receiving an advance on the money that they are expected to reap from the machines for the past 18 months, and additional increases will be phased in gradually, Green said.

Fred Lipkin, a spokesman for Penn National, said that purses at the track, which currently run about $65,000 a day, "will easily double" at the time that the casino opens.

The Wednesday approvals will also facilitate Magna Entertainment's sale of the Meadows harness track to two developers. Magna, which has been struggling to turn a profit under enormous debt loads, reached an agreement last year to sell the Meadows for $200 million, contingent on the track receiving a gambling license.