Is Foxwoods Going Down?

Because the news out of Connecticut just isn’t looking good:

On the brink of default, the Mashantucket Pequots are seeking to restructure $2.3 billion worth of debt, a senior adviser to the tribe said in interviews this week.

The debt is $1 billion more than the tribe's Foxwoods Resort Casino - North America's largest casino and once the world's most profitable - can sustain, the adviser said. . . .

In a letter distributed by e-mail last week, Michael Thomas, chairman of the Mashantucket Pequot Tribal Council, updated tribal members on the seriousness of the situation.

”Earnings are down considerably and there are no signs of immediate improvement,” he wrote. “... These are dire financial times for our Tribe.”

According to Bloomberg News, Foxwoods could be the largest tribal casino to default. So what to do?

Thomas – who faces tribal election this fall – apparently issued a letter saying he could give two cents about corporate rules and Malaysian investors and says he’ll pay his tribal members no matter how much debt he owes. And just to make super sure, Thomas states that he’s even passed a resolution calling upon the tribe to – and yes, this is a quote – put their "last borrowed dollars" into a lock box.

”Foxwoods is here to support our people not Wall Street,” he wrote. “Those who put the interests of bankers and bond holders ahead of our tribal community will have to answer to me. To make sure, I have introduced a resolution to take our last borrowed dollars and put them in a lock box only to be used for Government and Incentive.”

Now that’s a plan!

In case you’re wondering what type of mindset it takes to come up with a brilliant idea like that, it’s worth remembering that Thomas, a convicted felon who slid by gaming board rules against granting casino licenses to felons – is fighting a lawsuit on his own personal default of $5.2 million by claiming, and yes, again, this is a quote, he was bribed.

Glad to know that this is who Ron Rubin, City Council, the City Planning Commission, the Mayor, the Gaming Control Board, the DAG president, and a mess of others have lined up to back. Meanwhile, others who actually live with the consequences of these business ventures - like Gramercy and Foxwoods' former partners in Kansas - can't seem to put enough distance between them and this flailing company.

From Thursday's Daily News:

"We're acting on our own behalf, in our own best interest," Gramercy general counsel Edward Matey Jr. said this week. "None of our tenants favor a conversion of the use of the property from an office building to a mixed use, including a casino."

In following Foxwoods over the past year, I'm constantly reminded that this is not so much a powerhouse industry as it is a bizarre study of random and poor decisions and shady business dealings by folks like Thomas. From financing a $67 million road construction project to failed casino ventures in random spots like the Virgin Islands to a commitment to open a $225 million Kansas casino by 2010 - is it any wonder that the Market East project - once the city's biggest done deal - has been stalled since it was announced almost a year ago?

And the issue before all of us Philadelphians has less to do with what the Gaming Board rules on location or extension, than it does on emphasizing the bankruptcy of ideas – as well as literally finances – that has doomed gambling in Philadelphia from the start.

The Gaming Board will rule this Friday but, as I wrote about here, Foxwoods future hardly relies on them.

Somewhere a loud man with a terrible comb-over

is doing a happy dance.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Meanwhile, the Daily News calls it for South Philly

Brennan clearly calls it "back in play"

Way to stick your own spin on his words.

On the other hand if the tribe is broke, they are too broke for doing Reed St. at a level to generate the ammount of revenue the state desires as well. Who knows what they will do on Friday?

Who knows how well slot will work anywhere with 1,000 cops possibly laid off, for that matter?
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Meanwhile, at the bat cave...

it looks like Philadelphia will get to be the next Detroit after all. Dire budget, municipal services down the drain, no new revenue sources, no employers coming to the city.

If Foxwoods does build anything, it certainly won't be anything you'd want to write your friends about given their capital problems.

I meant to add

that the Daily News didn't report South Philly, it's just calling it without any sources to necessarily back it up. I agree that it's speculation right now.

It should be noted as well that Sugarhouse is financing its tent city slots parlor with a $180 million loan at 12.9% interest - which is a huge debt burden. There's no way that Foxwoods is in any position to do anything remotely like that.

The best thing to do is revoke Foxwoods' license. There's no justification for their failure to build and their financial situation essentially sums up the state of gambling in America today.

Wouldn't Trump Entertainment

re-appeal in light of Foxwoods' massive debt load?

They don't have standing to appeal

unless there's a change in the license. If the license is revoked, then the license is revoked for Foxwoods. There would be questions about whether to reopen the bidding process and start over - or we could just say this isn't a viable environment for gambling and kill this license.

And by the way Sean

The headline at philly.com says : Looks like it's back to S. Philly for Foxwoods

And has as its first paragraph:

A GROUP of investors trying to open a casino in Center City will likely be instructed tomorrow to focus instead on its state-approved location on the Delaware riverfront in South Philly.

My comment about Brennan calling it for South Philly is hardly what I would call "spinning" words he isn't saying.

We don't disagree Sean that this is still speculation, but let's be clear about who's interpreting what. You think Market East is more likely and more desirable. I've said neither is viable or desirable.

Only marginally more desirable, maybe

"with some small potential to be less absolutely awful, depending on how it is implemented" has been my consistant line. The failure to come up with a realistic, detailed plan for how Market St. would mesh with the surrounding commercial district I think we both agree has been striking and irresponsible.

I think we also both agree if Foxwood's finances are indeed so poor that there is even less of a chance what gets built at either site won't be atrocious. Let's all cross our fingers for a total rebid.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Rather than a rebid, it is time to remove the licenses

It is time to get serious about removing Philadelphia licenses altogether. A careful analysis will likely show that:
-due to saturation the two philly casinos will not increase revenue
-due to an expanded Philadelphia Park and continuing dominance by the two suburban casnos the Philly casinos are too lat to the game, and with vastly scaled down and horribly designed projects (tents and boxes) will be failures if they ever open
-expansion in NJ, Delaware, MD and Ohio requires careful study and a plan to protect the State from a race to the bottom which is already beginning in other gambling districts (Indiana racinos for example are asking for their tax burden to be reduced)
-both proposed Philly casinos are rated at junk bond status, they are a risky investment and what Philly and the state need now are sound investments that move us towards the future, not lock us into the Gov's mid-90s pipe dream

The Philly casino mess could soon to turn into a big scandal. As the architect of the slots laws gets prepared to go to prison next week it is time to put an end to this chapter in bad planning, corruption and old way approach to development in our city. Let it die, bury it and grieve its passing.

i'm not as hopeful the state will give up on the revenue

even if as you suggest it turns out (quel suprise?) to be significantly less than originally promised. Might be very nice if that revenue source were well away from neighborhoods and had sufficient anti-addiction community programs in place, however.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

An irony

that Connecticut's governor called an emergency meeting to determine what to do about the Foxwoods situation. When you gamble on gambling, what happens when things utterly collapse? Meanwhile others here just dance on blithely.

Yeah that's some hard-hitting analysis

right there.

Native people bet on what little they have been given

Sounds like times are tough for the Pequots in Connecticut because gambling is neither recession proof nor a limitless market. Gambling as "easy money" seems to tend to almost breed political corruption and mismanagement. Still its slightly better than the 75% chronic unemployment common out on many reservations out West I suppose.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Easy Money

Easy money can always breed corruption if you let it run wild and nobody is looking, and that doesn't require gaming. It just requires money. I think because PA citizenry's natural tolerance for corruption, that concern was pretty valid. [On the bright side, we can't hold a candle to our friends in NJ]

Nevada figured out how to turn a vice into a controllable industry which then became a money machine for the state. That's why other states are so jealous.

Excluding Las Vegas and its small burbs, how else to manage a state with practically zero resources, a huge expanse of arid land and a very tiny population? Gaming was the jackpot.

no it would not be nice

Preying on citizens and relying on increased gambling addiction for revenues is not a progressive value nor good public policy. And to be very clear there is no plan to address the known negative harms that the industry relies on to make a profit.

There are not going to be sufficient addiction programs or adequate law enforcement. There never was such a plan and there certainly isn't now. Our time is better spent on things that reduce poverty, crime and addiction rather than it continue to go down the unsustainable and destructive hole that the casinos bring. Forget rebidding, let's get rid of these proposed casinos once and for all.

Maybe you should move to

Maybe you should move to West Oak Lane and run on that.

Politicians like taxes they can pretend are not taxes. I'm not sure why I'm a bad guy for saying that. Acknowledging that the same motivations that passed this (awfully) existed and would continue to exist whether Vince Fumo was in still the Senate or whether he OD's on one too many Xanax tomorrow should not be a controversial statement. The man is far, far from the complete sum of the problem and maybe looking at the wider problem helps, maybe not. Its not a vote of support, its supposed to be an acknowledgement of the depth of the challenge to overcome.

In general the proposals that get cooked up by Harrisburg will improve in exact proportion to the amount of transparency and small "D" democracy in how it conducts business. But thats a long slow slog and most people don't even consciously vote for any state office besides Governor. In Philly we sometimes seem to believe either the Mayor or the President is completely responsible for everything that happens and otherwise just vote for the people on that white card the guy outside the polling place thrust in your hand.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

all good points except...

I am not running for anything. It is clear that introducing state-sanction predatory gambling does not reduce property taxes (NJ). It is clear from states that have had it for some time that states are put in a tough position once things go bad (CT, NJ, IN). I understand the slow slog, it is how I run (it is short for slow jog), and am excited that after three years of fighting casinos that many people agree that casinos have increased corruption in the state and city, are horribly planned, are risky businesses, are not fair or progressive approaches to raising state revenue. The slow slog of change and development of small "d" democracy is what organizing against casinos is all about. Whether or not Harrisburg cares to notice is something that is measured over time, more on a 30 year scale than one election cycle. I could say much more but have to talk to some anti-casino forces gathering strength in Bluhm's home state of Illinois where he is trying to open up another casino (in Des Plaines, just outside of Chicago). Thanks.

Please, the issue isn't what your sense of "reality" is

it's pushing what type of reality we're creating for our future. You can sit on the sidelines and moan about how this vote isn't going to move here or there and how you need to do this or that to get this compromise now, but that says little about how you're controlling the future direction of this debate.

Sheesh Sean, the cynicism is seriously depressing. When I signed your Pileggi petition, I didn't ask myself, is this realistic? Will I cry if the stadium money doesn't get held up? It's that small acts lead to bigger ones later. If there's one thing we know about politics it's that nothing is for certain, and political wheelings and dealings are temporal and always shifting.

OK right

I'm sure that during the current state budget situation that if the state were to reopen gaming law tommorow the obvious solution our current elected officials would come up with is to build no casinos in the city of Philadelphia.

Will from now on just keep cynical comments to myself. You may not understand this but I'm trying to support the issue as much as I can with sincerity because I completely agree with the analysis of how damaging casinos can be. Thats apparently not good enough.

BTW, you weren't the one who signed as "Edward G. Rendell - catch me on Comcast Live. Go Eagles", were you? ;)

Look as means of apology to this and recent budget related threads. I worry about this stuff. I think these issues really matter. If I didn't care I wouldn't comment. Sometimes I'm challenging because I want to see the argument depthened and strengthened because I think others response will be harsher than mine but they just won't tell you. Its a challenge meant to sharpen your spear against the rock of what I think is pragmatism, not wear you down. I will try to refrain in the future for anything other than "Go Team", I guess.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Errr . . believe me

no one's pulling their punches with Chinatown. I can assure you that everyone from the Mayor down has kicked this community to the curb without much thought.

I don't want a "go team" but rehashing what everyone has said - it's a done deal, fergetta bout it, Chinatown has no power, you'll never get a vote - isn't doing us a favor nor is it attaching unique analysis to the situation. And again, it's my opinion that change doesn't start at the top with what the electeds think. It's what's happening at the base that matters first, esp. when you're going up against an issue like gambling for budget dollars.

I love Chinatown, but...

I hate to say it for those guys... they should have approved a couple of mega high rise condo and apartment towers that were proposed to go in their neighborhood even though they object to any development that's not generated from within their own community. If they had boosted their resident count... then their voices would be a bit louder [plus more obvious on the skyline].

They didn't follow NYC Chinatown's example and use development dollars, loans and business opportunity grants to start annexing property north of Vine. That's why Little Italy has practically disappeared in NYC and is now Chinatown Annex.

I never said "its a done deal"

or belittled Chinatown's political determination. Not my style at all. I encourage fighters, even the one's I strongly disagree with.

I may be misunderstood but I am always trying to say "yeah but this exists because of this larger problem, how do you deal with that larger problem in your analysis other than simply resorting to NIMBY". I was trying to ask for stronger answers and back-up plans but I'll stop. The one comment in this thread I did try to be as 100% positive as possible jennifer mocked me for it.

Ok got it. Proceed.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

not sure how my points are NIMBY

I am not sure how my points are NIMBY although you may be referring to Chinatown and Helen's comments only. Working with Helen as I have I know full well that she is not NIMBY and her arguments never strike me as such. She has been a strong advocate for her community against predatory gambling and provided city-wide leadership on a critical issue.

But to answer your point about the larger issues. I see many larger issues, all of which are consistently being referenced by those of us fighting casinos. They include:
-casinos increase corruption. if you want to stop corruption and strengthen gov't stopping casinos is your friend
-casinos increase poverty. if you want to lessen the gap between rich and poor and raise wages stopping casinos is a very good friend
-casinos increase addiction. I don't think addiction is good, let's not increase it
-casinos cost us jobs no matter where in the city, state or nation they are located. let's have more jobs so let's stop casinos

Now when it gets to alternatives there are many. There are land use alternatives. There are economic development tools and plans alternatives. There are public policy alternatives. All of these things could be debated openly and publicly, now that is a good alternative to what we have seen. I think it is great that you want to help strengthen arguments and am very open to that. And arguments are important. But no one is arguing that casinos are good for Philadelphia, if they were it would be a much more enjoyable victory once we win.

Thats a start

ultimately this issue is a symptom of the problem of responsible economic development and how you pay for government. Lack of transparency in how Harrisburg works is another huge component.

I fear you may be entirely right about the results of casinos but I think the root causes are actually a lot scarier than the symptoms.

For better or worse, for a lot of people the pocketbook issue (which gaming industry folks oversell and misrepresent) on gambling trump the "profiting on others illness and suffering" angle.

Some people, sadly, even like it precisely for that reason. "Let the losers and poor and elderly pay, so I don't have to". Thats actually exactly what appeals to them. People prone to gambling addiction in their world view need to "pull themselves up by their bootstraps" or else they are fair game.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Chinatown

isn't totally hopeless. IIRC the neighborhood was almost wiped off the map for a Phillies stadium.

Throughout the entire casino drama the delays haven't really been directly attributable to NIMBY uprisings, as loud as they have been. Keep in mind Mayor Street was 100% pro-casino. Nutter and most of Council is pro-casino, except they treat the subject as an "eventuality", hence the Supreme Court battle over the City's right to deny zoning which it lost a couple summers ago.

It may work out that the delays and sheer luck have successfully killed off Foxwoods since the tribe is now in very bad financial shape.

But AFAIK, Sugarhouse is still slated to open.

I didn't mock anyone!

Oh except the reporter's press-release style of business journalism.

Poof

I meant to post this printer extract an other thread. My bad.

A couple of other ideas

From the "No Blank Checks Campaign" by the No Casino in the Heart of Our City Coalition (on AAU's website):

15 Things Your City Councilperson Could Do to Protect Philadelphians
They have the power. Why won’t they use it?

1) Introduce and enact legislation that prohibits tax breaks, abatements or City subsidies of any kind for casinos.

2) Introduce a bill to restrict the hours for serving food and alcohol within a CED (gambling zone). Requiring a 2 a.m. closing time on food and alcohol is a way to discourage all-night gambling, a notorious habit for problem gamblers.

3) Call for the enactment of basic consumer protections against predatory gambling practices and don’t grant zoning for either casino until basic consumer protections are enacted. Consumer protections can and should include: a ban on free alcohol services, on-site lending prohibitions, mandatory casino closing times, and restricted zoning to limit the spread of negative spin-off businesses.

4) Refuse to grant zoning for the casinos’ cheapened new plans. Force them to put together the financing for the expansive plans they pitched in order to get their licenses in the first place.

5) Refuse to pass zoning for the Center City Foxwoods casino until Foxwoods has submitted a full plan for the public to review. Thus far they haven’t shown even a scrap of paper to deserve such privileged zoning rights.

6) Commission a study to determine the accuracy of a state agency’s statement that the two casinos could cause as much as a $200 million increase in annual law enforcement costs.

7) Demand that the City of Philadelphia contract for independent economic and social impact studies by experienced academic researchers prior to granting zoning for the casinos.

8) Hold a public safety hearing and ask the Police Department as well as gambling and crime experts to testify about how much it would cost to police casinos in Philadelphia and whether location is a factor in the cost.

9) Hold a public hearing about slots machine technology and invite experts from both sides. Specifically engineered slot machines aren’t based on luck. In fact, slots are often called the “crack cocaine” of the gambling industry because of their addictive features. People deserve to know the product they’re getting.

10) Demand public disclosure of the casinos’ marketing plans targeting of people of color.

11) Submit statements to the Pennsylvania Gaming Control Board opposing any future requests for license extensions by casinos seeking to come into Philadelphia.

12) Introduce a City Council resolution denouncing predatory gambling practices and hold investigatory hearings on the predatory practices of casinos and appropriate governmental response.

13) Work with state legislators, specifically Senator Larry Farnese and Representative Mike O’Brien, to enact state-level protections against predatory gambling in Philadelphia.

14) Assert that Councilmanic prerogative does not apply in the case of bringing the predatory, new business of slots gambling to Philadelphia since it will impact all Philadelphians.

15) Take a public stand, challenging those public officials who maintain that slots parlors will be good for Philadelphia.

Good stuff

#12 might be fruitful to expand - like an independent group that the casinos fund and do mandated periodic reports analyzing how effective gambling addiction prevention strategies are working - maybe run anti-gambling addiction PSA's kind of like we make tobacco companies fund PSA's on smoking related health risks

#14 might be hard to get since "councilmanic perogative" is only an informal tradition anyway. Really its asking members of council not to punish their colleagues that dare to violate their unspoken Omerta-like "code".

Can we apply #1 retroactively to Harrah's in Chester, too? ;)
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

Foxwoods tribal chair ousted

Foxwoods tribal chair ousted

And he was so much fun too:

Any man who responds publicly to concerns about gambling addiction with: "You call it an addiction, I call it a client base" and, facing potential financial collapse, decides to write a public letter pledging to put the tribe's "last borrowed dollars" in a lock box - Malaysian investors and Wall Street be damned - or who personally spends $12 million to have a clinic name something after his grandmother while he himself faces a $5.2 million lawsuit - well what else is there to say?

Read more here.

He was fun

but whether it was lip-service populism to cover for financial mismanagement and personal corruption or not, I continue to have a twinge of discomfort with mocking the guy that much. Saying he's in business to look after the Pequot people first, not Philadelphians, not Malaysian investors makes sense for a certain style of populism. “Foxwoods is here to support our people, not Wall Street,” is a statement of principles to be respected at a certain level - even if ultimately its probably just Thomas covering for self-serving on his part.

And it lets Philadelphians know where all the casino operators are really coming from. They are out to make money off you, not help you out or spur sustainable development.

The real question is whether the Pequots can patch up their finances soon enough to pull out of the tailspin. For the sake of Philadelphia I kind of hope not. For the Pequots, its more a mixed bag.

This is big news.
-Sean
MrLuigi, my cat, actually only types half as badly as I do.

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