PA Gaming Control Board Unanimously Approves Pittsburgh Casino Ownership Change

HARRISBURG: The Pennsylvania Gaming Control Board today approved the request to restructure the financing and ownership interests of the partially-constructed casino project in the city of Pittsburgh, a decision that can lead to the completion of the project substantially as approved by the Board in 2006. Completion of the project is expected in August, 2009.

The approval for reorganization, change of control and recapitalization of the Pittsburgh casino project was sought by Don Barden and PITG Gaming, LLC, which was awarded a Category 2 slot machine operators license in December of 2006, and Holdings Acquisition Co., L.P., a newly formed company which will now hold the license.

The Board also imposed a $2.5 million fee in connection with the restructuring transaction which brings additional owners into the project along with Barden. In doing so, the Board rejected a request to reduce the fee from the amount typically imposed.

The decision was made on a 7-0 vote after a nearly four-hour hearing in Harrisburg in which the Board received testimony and thoroughly questioned principles of the new ownership team, citizens, and Gaming Control Board staff who were involved in the review of the various elements of the deal.

Among those persons who testified were Mr. Barden; Neil Bluhm, Greg Carlin, and Robert Bloom of Walton Street Capital, LLC whose firm is a key investor in Holdings Acquisition; Dan Keating, CEO of the Keating Group, the construction contractor for the facility; Rich Stanizzo and John O'Brien representing Pittsburgh area unions; Dean Mosites representing 50 subcontractors who were forced to cease work at the Pittsburgh project until the new ownership structure and financing were approved by the Board; Adrian Anderson representing the Detroit Pension Funds that are investing in the project; various members of the public, and PGCB staff who were involved in the background investigation.

During the testimony, both Mr. Bluhm and Mr. Keating stated that construction of the nearly $800 million casino would commence as early as Monday, August 18, 2008 if the Board approved their request. The resumption of construction is expected to put about 800 workers back on the job.

Gaming Control Board Chairman Mary DiGiacomo Colins, along with fellow Board members, commented that today's decision came only after the PGCB conducted significant due diligence on information received during the past two months, the open public questioning of both PGCB staff and the key players in the reorganization deal, and review and joint deliberation over the testimony and evidence.

"The decisions of the Board are always made in a measured fashion weighing evidence with the intent and objectives of the Gaming Act," Chairman Colins stated. "In addition to the obvious economic benefits of assuring that this project is completed, this vote punctuates the integrity of both our process and of our role of overseeing legalized gaming in the Commonwealth."

The Board will be releasing an adjudication that will detail the reasons for the decision.

Acting Executive Director of the Gaming Control Board Frank T. Donaghue said the decision should be welcome news to both the Commonwealth and Pittsburgh-area citizens.

"The completion and operation of the Pittsburgh casino is a critical element of the promises made by the Legislature when it enacted the Gaming Act," Donaghue says. "While balancing our overarching objective to protect the public through regulation and policing of legalized slots gaming, our purpose is also to properly and legally oversee this new industry and provide a significant source of new revenue and jobs."

The approved deal preserves the original commitments mandated by the Board of PITG Gaming and principle owner Don Barden. These include:

•   A cash contribution of at least $7.5 million annually for a period of 30 years in support of the development and construction of a multi-purpose arena in Pittsburgh;
•   A $1 million annual grant for 3 consecutive years to Pittsburgh's Northside Leadership Conference;
•   A $1 million annual grant for 3 consecutive years toward the development of Pittsburgh's Hill Section;
•   Construction of the Phase One portion of the facility, as presented to the Board at PITG's 2006 hearings, includes an outdoor amphitheatre and riverside walkway. The only approved exceptions to this plan were postponing the opening of the facility's ballroom until a later phase and a slight reduction in the number of spaces in the parking garage.

A PowerPoint presentation made today to the Board has been posted on the PGCB web site. A link to the presentation can be found under the "What's New" section of the PGCB's home page, www.pgcb.state.pa.us.

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