By Annie Linskey, The Baltimore Sun
8:30 PM EDT, September 22, 2011
Two developers say they are planning to submit bids Friday to operate a casino in Western Maryland, and the head of the state slots commission said there are "multiple people interested" in the Baltimore slots license.
Developers with ambitions to run a casino in Maryland must show their cards Friday, the deadline in the state's third and, officials hope, final round of bidding for licenses.
Still on the table are two venues — the casino planned for Russell Street in Baltimore, intended to be the state's second-largest, and a smaller operation at the troubled Rocky Gap Lodge & Golf Resort in Western Maryland.
While no group has said publicly that it would bid for the Baltimore license, the slots commission chairman sees the possibility of a competition. But Donald C. Fry said he won't get his hopes up until he sees the proposals and the millions of dollars in fees due on application.
"I won't take anything for granted," he said.
Neither Baltimore nor Rocky Gap managed to attract a qualified bidder in the first two rounds of bidding. And credit remains tight, making new projects — particularly those with nine-figure price tags — difficult to finance.
Bethesda developer Nathan Landow said this week that he would submit a bid for Rocky Gap.
The resort on Lake Habeeb in Allegany County boasts a Jack Nicklaus Signature Golf Course and a stunning wooded setting, but it has never become a popular destination.
Two rounds of bidding for a slots license at Rocky Gap, in February 2009 and November 2010, failed to attract a qualified developer, leading lawmakers to reduce the state's share of slots revenues from 67 percent to 50 percent and add sweeteners to make the deal more palatable.
Landow, whose interest was first reported by The Washington Post, said he envisions "a true destination resort" that could be "a real landmark" for the state.
Paragon Project Resources, based in Dallas, has long expressed an interest in the site and has reiterated its intention to bid. Paragon lobbyist Ivan Lanier said his group is "definitely excited" and wants to "keep the promise to Maryland" that Rocky Gap will have a vacation getaway feel.
No group has said publicly that it would bid on the Baltimore slots license. Of the five locations in the state approved for slots casinos, the city would have the highest tax rate, at 70 percent.
At that rate, some say that only a well-financed national conglomerate would be able to compete. Such a developer, the thinking goes, might build an inexpensive venue for slots, betting that the state would eventually expand its gaming program to allow poker, roulette and other table games.
The 70 percent tax rate would not permit the type of high-end casino found in Las Vegas, said Jeffrey Hooke, an industry analyst.
"You can't afford marble floors and crystal chandeliers," Hooke said. "It will still be nice-looking and respectable."
He pointed to Penn National's Hollywood Casino Perryville, the first of Maryland's slots operations to open, as a possible model for Baltimore. The hulking casino off Interstate 95 in Cecil County opened a year ago. After the first few months, it has consistently fallen short of state revenue projections.
A small group of firms has been circling the Baltimore deal for months, attending meetings with regulators and other officials, asking questions and lobbying for changes to the terms.
Fry said he's heard that at least two groups would bid, but none would confirm that to The Baltimore Sun.
Local developer William "Hassan" Murphy III, who had partnered with Mohegan Gaming Advisors, which is owned by the operators of the Mohegan Sun casino in Connecticut, took himself out of the competition this week. He said the tax rate and other terms make it impossible to operate "the kind of first-class casino that our city deserves."
Local developer Patrick Turner and entrepreneur Jim Seay had considered a bid with MGM Resorts International.
Alan Feldman, a senior vice president for public affairs at MGM, said Thursday that his group would "love to do business in Maryland" but the tax rate left "little room for investment in anything other than a simple building with slot machines."
With MGM and Murphy out, the most talked-about potential bidder is Caesars Entertainment, which runs casinos in Las Vegas and Atlantic City, N.J.
A Caesars spokesman declined to comment on the company's plans. But he scoffed at the notion that the company would build a subpar casino if it did decide to bid.
"Caesars Entertainment isn't interested in building 'cheapo venues' that would dilute the value of our brands," spokesman Gary Thompson said in an email.
Canadian homebuilder Michael Moldenhauer headed the group that in February 2009 offered the sole proposal for a Baltimore slots parlor. That bid was rejected after the slots commission became frustrated with his group's failure to meet deadlines, pay required fees or provide clarity about who would control the project. Moldenhauer has filed several lawsuits seeking to overturn the decision.
Moldenhauer said Thursday that he would not bid on the Baltimore site but would continue his legal battle.
Other developers who have shown interest but now say they will not bid include Empire Resorts, which runs a casino in New York, and Lerner Enterprises, the Rockville firm responsible for Dulles Town Center and parts of Tysons Corner in Northern Virginia.
Bids must be submitted to the Department of Legislative Services by 2 p.m. Friday. Officials will announce the bidders by the end of the day.
"What is really important is making sure you have one solid, qualified bidder that has the financial wherewithal and experience to do the job," said Fry, the slots commission chairman. "Hopefully, we will come out of this process with that situation."
Baltimore Sun reporter Hanah Cho contributed to this article.
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