PlanPhilly

Casino Revolution steps before the gaming board

John O'Reardon, vice president and general council of PHL Local Gaming, told the Pennsylvania Gaming Control Board that "PHL Local is the clear choice in this competition and has a number of clear advantages over our four competitors." PHL proposes Casino Revolution at Front Street and Pattison Avenue.

He went on to outline them: A 24-acre site, adjacent to I-95, I-76 and the Walt Whitman Bridge. "Unmatched economic impact. We and only we can open six months earlier than anybody else." Those six months would generate an additional $60 million dollars for the state, he said.

The 24-acre site means Revolution can expand, O'Reardon said.

And Revolution has an experienced, diverse team, locally based and committed to the community.

The project would be "a catalyst for the transformation and economic revitalization of Lower South." The project is backed by Wells Fargo and Jeffries, he said.

The team showed a video about principal Joe Procacci's values and the creation of his produce empire.  And then Procacci spoke to the board himself.

"My word is my bond, my handshake is the contract," he said. "It's how I lived my whole life and how I do business. When three casino operators offered to buy our land for their casino project, I asked myself, why not develop my own casino project?"

Procacci said from there, he hired the best team he could find, as is his practice. "I love South Philadelphia. I"ve done business here for 66 years. I will build the project my team will describe. I will build a casino I will be proud of, and that you, my fellow Pennsylvanians, will be proud of. You have my word."

The Casino Revolution team, which also includes PHL Local Gaming President Joseph Canfora and the Lomax family, proposes transforming one of Procacci Bros.' existing warehouses into the casino, which it says gives it the distinct advantage of being able to open quicker than the competition.

They could turn the refrigerated building that has held watermelons, peppers and citrus fruit into a casino with 1,350 slot machines and 55 table games within nine months of receiving city permits. This, PHL claims, is about six months faster than the competition could open the doors of their proposals.

After that first part opens, construction would continue on a hotel tower and additional slots and table games, bringing those totals to 2,400 and 105 respectively. The team doesn't consider these project phases, though, because the proposal before the gaming board includes the entire project, and PHL Local would build the whole thing, with that first part opening early.

PHL also pledges that if it gets the license, the city will also get a new entertainment district with restaurants, retail, sports facilities, zip-lines, a golf driving range, a dry ski/skateboarding park, water park, and live music.

LoSo Entertainment Center (the first part of the namename is an abbreviation for Lower South), would sit adjacent to the proposed Casino Revolution, on land that the Lower South District Comprehensive Plan identifies as the Food Distribution area. About 25 acres are currently owned by Procacci, with additional acreage now owned by the city. The complex would be next to the casino, between the Stadium Complex, public park land, and FDR Park Golf Club in the west, and the Delaware river in the east.

Other planned amenities: Soccer fields, racquet sports facilities, an indoor swimming pool, and a place to rock climb.

PHL Local Board Member Bennett P. Lomax, who is president and chief executive officer of the Lomax Companies private investment firm, said that when his father met Joe Procacci, it was clear they shared the same values, including hard work and giving back to the community. Both families are adament that this project have a "Philadelphia first focus," he said. "PHL Local Gmaing is firmly committed that jobs be primarily available to immediate neighbors first" and then all Philadelphians, he said. And likewise, Philadelphia-based firms would get preferrential treatment for contracts.

The team's traffic engineer echoed the comments of Canfora, who described the proposed location as "close, but not too close" to the stadiums. This is where traffic is the worst, he said.  But PHL would provide shuttle buses to and from the Broad Street subway and the sports complex, and would investigate the possibility of a new I-76 on-ramp - something Hollywood Casino has committed to if it gets the license.

The two other South Philadelphia sites rely too heavily on local streets, where people live, instead of just interstates, he said. "Unlike the Center City sites, we will provide parking on-site."

Pete Ferro, president of Merit PHL, LLC. which would operate Casino Revolution, said one of the primary reasons that casinos fail is they are overbuilt, and the capital outlay is too much for the market to support. Since the suitability hearings opened Tuesday, the gaming board commissioners have seemed skeptical of any sort of phased approach. But Ferro  said all of Merit's projects have been expanded through phases "when and only when the market says the time is right." Several speakers underlined the site has room to expand, market willing, to 5,000 slots.

Cory Morowitz of Morowitz Gaming Advisors said his analysis considered three market segments that would drive growth: People who drive in from the surrounding area, people who stay overnight at nearby hotels or the on-site hotel and people who see the casino from the highway and decide to stop in. All together, this will bring in $358 million annually, Morowitz said, noting that is within the range of revenue of casinos already open in the area.

Morowitz said Casino Revolution offers significant advantages over the competition:

It's a single-level casino with an opportuinty to expand, also on one level. "We find multi-level casinos perform poorly, due to poor flow," he said.

He also cited ample, on-site parking, and a larger hotel that is managed by the same company as the casino operation. In reference to the Market8 proposal that earlier today described a condominium approach to ownership, where separate companies would own and operate the hotel and the casino, Morowitz said such arrangements create "operational challenges" due to "misalignment of objectives."

Morowitz said being outside Center City is also an "extremely important" advantage, as casinos in cities tend not to perform at levels the surrounding population would indicate, he said, due to traffic concerns.

Eugene Christiansen, Chair of PHL consultant Christiansen Cap Advisors, said that based on annual, per-person spending on gaming in other cities with legalized gambling, there's a “substantial unsatisifed demand for gaming in Philadelphia”  of $300 million to $400 million annually, or more.

The PHL team and their consultants made the longest presentation to the PGCB yet: More than two hours. They wrapped up at about 4:15 p.m. and the board began asking questions.

O'Reardon said that while the traffic consultant said they would consider a westbound I-76 ramp, in fact, the team is committed to building it if they get the license.

Chairman William Ryan wished Procacci a happy birthday. It's Friday. The birthday boy got a round of applause.

In response to a question from Commisisoner David Woods, the Revolution team said of the total $327 million in annual revenue, $103 million would have otherwise been spent at another existing casino: $36 million at SugarHouse, $45 million at Harrah's and $25 million at Parx. They see little impact on Valley Forge.

Woods called Revolution "a beautiful casino" in a great location, but asked if people might avoid it because it's in a warehouse district. He asked if they needed the LoSo Entertainment District to end the public's perception that they'd face trucks related to food distribution. O'Reardon said they didn't, and pointed out that the LoSo site is currently empty.  Woods said he could see that LoSo would attract people, but questioned whether they were the same people the casino would be targeting. O'Reardon said it's all about increasing traffic to the area, and offering more and more options for visitors, who then may decide to stay in Philadelphia for additional days because there's more to do.

Team members said they anticipate two-percent of visitors would take public transportation.

O'Reardon said the shuttles that would pick people up at the subway would also pick up people from the stadiums, and also take them to stadiums. Event-goers could park at the casino, and that would help with existing congestion, he said.

Commissioner Greg Fajt questioned the assertion that the gaming market here is not saturated. "We heard that this morning also, but the facts say otherwise," he said, noting that gaming revenue dipped statewide in 2013, and that Harrah's revenues are "dropping fairly precipitiously." 

Morowitz said that Revolution would "geographically not be next to other casinos, but is located between them."  He said evidence shows that when markets are flat, adding another venue grows the market.

"Is that long-term, or just because there's a new thing to go to?" Fajt asked. Morowitz said the growth was "sustainable." Another team member added that the dip, after years of growth, in Pennsylvania gaming revenue means only that the market is maturing, and that means its time for additional investment.

Fajt noted that the location isn't within a signifant population base. He said he understands that the site has good access from the highways, but people traveling on them would be coming from population centers closer to Harrahs, SugarHouse and Parks. He asked what would entice those people to drive past a closer casino to go to Casino Revolution.  Morowitz replied that there is a significnat population base in South Jersey and a mile or two away from the site in Pennsylvania that lives much closer to the Revolution site than to existing facilities.

PennDOT's Francis Hanney said that with promised mitigations and recommended improvements, the roads around the project could handle the extra traffic. He said he was very pleased to hear the team make a new committment to build, not just study, an I-76 westbound ramp. "It's a tremendous improvement." he said.

Read and watch videos of what the team told PlanPhilly and and other media about their project here. Read about LoSo Entertainment Center here. Go to the Casino Revolution website here. Watch  a video of the hearing at the gaming board website, here.


About the author

Kellie Patrick Gates, Waterfront, casinos, planning reporter

Kellie Patrick Gates writes about planning, neighborhood development and the Central Delaware Waterfront. A journalist for more than two decades, she  worked for daily newspapers in Central Pennsylvania, Upstate New York and South Florida before coming to Philadelphia in 2003 to write for the Inquirer. Her work has appeared on PlanPhilly since 2007, and she also writes Love, the Inquirer's weekly wedding column. A native of Elk County, Pa., Kellie lives with her husband, Gary, and their dog and two cats.

Follow her on Twitter @KelliePGates



blog comments powered by Disqus

Logging in via Facebook

Log in

Subscribe to the PlanPhilly Mailing List