It’s been more than three years since the state accepted applications to build a second casino in Philadelphia, and more than a year since the winner of that application faced concerns about racist business practices.
At this point, construction still hasn’t started on the nine-acre plot of land in South Philadelphia that’s set to become the state’s newest casino: the Live! Philadelphia hotel and casino project. That’s because developers, owners and other stakeholders are waiting on the court system to make up its mind — and precedent shows that’ll likely go in their favor.
Stadium Casino, LLC, the group that controls the casino project, is waiting on the Pennsylvania Supreme Court to rule on a lawsuit challenging whether or not the state Gaming Control Board should have awarded a license to Stadium. That suit was filed by SugarHouse Casino, the other casino in Philadelphia and a competitor of any second casino in the city, and a group that lost out for the license.
So for now, developers are in a holding pattern on the half-a-billion-dollar project until the court rules. The timing on that is difficult to predict. A spokeswoman for Cordish Companies, the developer working on the Live! Philadelphia project, said this week there’s “no update” on the status of construction. Other stakeholders, including lawyers representing both sides, didn’t respond to messages seeking comment on where the project stands.
Here’s what we know: Construction won’t begin until at least a few months after the suit’s settled. And it could be another year or more after that until the massive casino becomes a reality.
The casino project specs
Once construction actually occurs, Live! Philadelphia will be a two-million-square-foot, towering complex in South Philly. In October 2015, the City Planning Commission approved project plans to put the casino and its corresponding hotel in the Philadelphia Sports Complex area, just off of Interstate 95 at Darien Street and Packer Avenue. Plans for the casino include: A 325,000-square-foot casino with 2,000 slot machines, a 300,000-square-foot and 18-story hotel and some 3,000 parking spaces in garages and structures next to them. There are also plans for restaurants, music venues and a spa.
Stadium Casino, LLC is a business operation that’s actually a partnership between two separate entities: Cordish Companies, the Baltimore-based development company behind Xfinity Live!, and Greenwood Racing Inc., which owns Parx Casino in Bensalem, routinely the highest-grossing casino in the state. Greenwood owns two thirds of Stadium Casino, LLC.
Plans for the construction of the building are set, zoning has been adjusted and the Planning Commission has awarded its approval. But there are plenty of critics.
Some neighborhood groups don’t want a massive casino complex in South Philadelphia, though five community groups threw their support behind developers in fall 2015. Other groups have concerns about adding more gambling in the city. SugarHouse Casino, just about six years old itself and located along the Delaware River in Fishtown, says the market is saturated and another casino in the city of Philadelphia will be detrimental for the other four casinos in southeastern Pennsylvania and the remaining seven in Atlantic City.
The challenge filed against Stadium Casino and the Gaming Control Board has been a ping-pong game for the last two years, as both plaintiffs are working to stall the planned project.
It was filed by not only SugarHouse, but also Market East Associates, one of four groups that also applied for a casino license and, in November 2014, lost out to the Stadium Casino group. Market East Associates wanted to build a $500 million casino at Eighth and Market streets in Center City, where a 300-space parking lot currently sits.
The plaintiffs claimed one of the primary beneficiaries of the Live! Philadelphia project, Watche “Bob” Manoukian of Greenwood, would have an ownership interest that’s above the threshold allowed under state law. Details of the business transactions he made that are in question were mostly redacted from court filings.
In June 2015, the state Supreme Court — in what was somewhat of a win for the plaintiffs — sent the decision for the approval of the casino license back to the Gaming Control Board, asking the board to do its due diligence in investigating Manoukian’s business dealings and how much ownership he’d be allowed under state law. A year later, the Gaming Control Board said it still stood by its decision: The casino license and the ownership structure of Stadium Casino, LLC was kosher.
Since then, both SugarHouse and Market East have continued to object, including to how the Gaming Control Board went about its subsequent investigation without holding additional hearings. Final arguments to the judge were due in October, and the last movement in the case was Dec. 2 when lawyers notified the court they’d submitted and received necessary documents. Lawyers representing both sides didn’t respond to requests for comment.
Now, it’s a waiting game until the court makes its ruling. It’s likely the court will rule in favor of Live! Philadelphia. Every winning casino project in the state has faced lawsuits and challenges from competitors and losing applicants, and every time the courts ultimately sided with the winning casinos and the Gaming Control Board.
And for what it’s worth, the Live! project isn’t all that far behind. SugarHouse Casino won its license in 2006, and its doors didn’t open until four years later.
Allegations of racism
It was two summers ago when a representative from Al Sharpton’s National Action Network planned to interrupt a city Planning Commission meeting about the casino in order to air concerns about allegations of racist business practices by Cordish Companies. That includes lawsuits Cordish has faced alleging discrimination against black people in Kansas and Louisville.
One lawsuit, filed by the Kansas City Human Relations Department, alleged discriminatory dress code practices at Kansas City’s Power & Light District, which is similar to Xfinity Live!. Cordish agreed to change its dress code, and the matter was settled in 2009. In depositions for a case that was dismissed last year, former Power & Light employees testified they were told to limit the number of black patrons in the venue. And in 2015, a man filed a lawsuit against Cordish saying its employees at Fourth Street Live! in Louisville targeted black patrons and picked fights with them to have them removed.
Since the movement in the summer of 2015, it’s been largely quiet. The lawsuits dropped out of the news in Philadelphia after the Black Clergy and the NAACP conducted an investigation and came out with a statement saying the racial discrimination claims against Cordish were bogus.
It was Paula Peebles, chairwoman of the Pennsylvania chapter of the National Action Network, who spoke out about the lawsuits back in 2015. She didn’t respond to a request for comment, but said in an emailed statement at the time: “Any move to advance this casino without a full investigation of these claims is nothing more than a whitewash – absolving the company of any potential wrongdoing they may have committed and the city of its responsibility to uncover the truth about who they are choosing to do business with.”
No one from the National Action Network responded to an inquiry from Billy Penn about whether or not they’ve made any progress in the last year when it comes to Cordish.
Cordish, for its part, has claimed no wrongdoing in the discrimination cases.
The revenue effect
The longer the project is stalled, the more the state government is missing out on potential revenue. The largest of that is $75 million in licensing fees owed to the state by Live! Philadelphia before operations commence — a one-time fee the state factored into its 2016-2017 budget.
As long as the courts rule and the fee is paid before the end of this fiscal year on June 30, the state will be on track. But if it’s delayed past that, the loss of those fees could put the balancing of the budget in jeopardy.
Those one-time fees come on top of the revenue the state isn’t receiving from taxes paid by both casinos and winners. Every day the South Philly casino project is delayed, the potential revenue to the state plummets.
Casino earnings are subject to Pennsylvania’s personal income tax, and the Gaming Control Board reports that more than half of what’s made on slot machine pay is returned to Pennsylvanians in the form of property tax relief, wage tax relief in the City of Philadelphia and padding the state’s Economic Development and Tourism Fund. A portion of table games revenue also goes directly to the state’s general fund.
In fiscal year 2016, SugarHouse Casino made more than $177 million in revenue and paid upwards of $60 million in state tax, according to the Gaming Control Board’s revenue figures. Parx Casino, one of the highest-grossing casinos, paid $132 million in state taxes alone in the same year.