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York Capital may join bid for Baltimore slots

The developers of a proposed Baltimore casino are in talks with a multibillion-dollar investment group to provide cash for the slow-starting project, according to sources familiar with the discussions.

The Baltimore City Entertainment Group included the name of York Capital Management on a letter sent last week that sought to reassure the state slots commission that the 3,750-slot-machine project is moving forward.

York has hired the prominent Annapolis lobbying firm Alexander & Cleaver, which includes former House Speaker Casper R. Taylor Jr., to work on its Maryland efforts. Taylor and his partners are assisting York with "economic development projects including [slot machine] locations," according to lobbyist registration forms filed Monday.

If it gels, the partnership could be vitally important for the city casino group, which has missed several self-imposed deadlines for paying $19.5 million in required fees. Under state law, the group would be required to spend at least $187.5 million on construction if it secures a slot machine license.

Impatient state officials have raised the possibility of rejecting the Baltimore group's license application and seeking new bidders if it can't demonstrate it can complete the project.

One of York's managing partners bailed out of Maryland's horse-racing industry in the 1990s.

Before joining York in 2008, Luis Medeiros was managing director of Leucadia National Corp., which in 1998 purchased substantial shares of both Pimlico Race Course and Laurel Park at a time when they were in financial danger. Medeiros, who works out of York Capital's Washington office, could not be reached Tuesday.

A spokesman for York also declined to comment. The company's Web site says it was founded in 1991 and manages more than $9 billion in assets for institutions, individuals and others.

Robert R. Neall, a former state senator and member of the panel awarding Maryland's five slots licenses, expressed skepticism about the Baltimore group's latest supposed partner.

"The posture we've taken is, until the money lands on our desk, it's not real," Neall said. "We've gone around this barn entirely too many times for me to get excited that someone is floating a name."

The Baltimore group's delays are another sign that tax revenues from the fledgling gambling program could be further out on the horizon than anticipated.

Maryland voters approved five casinos last fall. State lawmakers pitched the gambling program as a way to save horse racing and bolster education funding.

The cash-strapped state could receive tens of millions of dollars in taxes from the facilities. Baltimore's elected leaders are also hungry for the expected gaming revenues, which Mayor Sheila Dixon says would fuel a seven-cent reduction in the city's property tax rate.

Three licenses have been awarded, and one site - at Rocky Gap State Park in Western Maryland - attracted no complete bids when applications were due in February.

The commission has asked the Baltimore developers to give a presentation Thursday - at its final meeting of the year - about why an extension should be granted.

"We have expressed concerns repeatedly about the unmet promises for plans and the licensing fee," said Donald C. Fry, chairman of the slots commission. "It has been increasingly frustrating to us."

He called Thursday's presentation "critically important."

The Baltimore group initially said it would build a 500-machine parlor, but city officials said the low revenues from that proposal made such a project unworkable. The developers said they would amend their plans to expand slot machines sixfold, but have not paid the fees associated with the higher number.

Toronto-based developer Michael Moldenhauer, who has a 93 percent stake in the Baltimore venture, declined to comment Tuesday. Other principals in the group either declined to comment or did not return calls or e-mails.

M.J. "Jay" Brodie, president of Baltimore Development Corp., said the Baltimore City Entertainment Group is in "serious talks" with an investor, though he cautioned that such talks do not always lead to a deal. He said the representatives from BCEG are speaking with city officials daily.

The entertainment group also has had conversations with Las Vegas gambling giant Harrah's, according to sources familiar with the discussions. Gary Thompson, a spokesman for Harrah's, would not confirm those talks. "We typically don't discuss who we are talking to," he said.

"Whenever a new jurisdiction opens up, we always take a look at expanding our footprint," Thompson said. "There is a lot of study that has to take place."

Moldenhauer is also attempting to build a racino with 600 slot machines in New Mexico, and has said a temporary gaming facility will open at the end of January.

New Mexico Gaming Board spokesman Greg Saunders said little progress has been made at the site, near the Colorado border northeast of Albuquerque. "They've moved some dirt around," he said, "but no construction has occurred."

The other large proposed casino in Maryland is also on hold.

This month, the state slots commission approved a license for a facility at Arundel Mills, but the developers, the Cordish Cos., have yet to obtain necessary zoning approval. The Anne Arundel County Council, which is divided about slots, has delayed voting on the issue for months. It is set to take up the matter next week.

David Cordish has also submitted a bid for Laurel Park, which is being auctioned next month because its owners are bankrupt. Another interested party, Baltimore lawyer and Orioles owner Peter G. Angelos, did not submit a bid for the track, said John Franzone, chairman of the Maryland Racing Commission.

Baltimore Sun reporters Laura Smitherman and Andrea Walker contributed to this article.

York Capital Management •Investment firm working with institutions, endowments, foundations and individuals

•Manages more than $9 billion in assets

•Founded in 1991

•Offices in New York, Washington, Hong Kong and London

Copyright © 2014, The Baltimore Sun
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