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Sunday, January 11, 2004
Earning praise, scorn ... and cash
Copyright © 2004 Blethen Maine Newspapers Inc. | ||||||||||
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Also on this page: In Depth: Gambling in Maine | |||||||||
Bangor City Councilor Gerry Palmer Jr. can't wait to see Shawn Scott and his Las Vegas development company leave town. He credits Scott with getting voters to legalize slot machines at the state's commercial racetracks, a move Palmer thinks will save Maine's harness racing industry. But he believes Scott did more harm than good to the reputation of the state's horsemen and left Bangor at a disadvantage in a deal to develop a racino at Bass Park. "If I could pay for his ticket, I'd be glad to, to get him out of the state," Palmer said. Scott apparently can afford his own ticket, following the announcement last week that he planned to sell Bangor Historic Track to a Pennsylvania-based gaming company. Gaming analysts estimate Scott could receive $30 million from the sale, or nearly 10 times his investment in Maine. Neither Scott nor Penn National Gaming, a publicly traded company, would put a price on Scott's interest in Bangor Historic Track. The sale is not final; Penn National will not complete the deal unless the track operator receives state racing and slot licenses, and a development contract from the city of Bangor. The Maine Harness Racing Commission on Friday laid the groundwork for Penn National to get a conditional racing license for the 2004 season, with a full license pending the successful outcome of an investigation into the company's moral and financial suitability. That decision concluded a similar suitability report on Scott. A report prepared by the racing commission's executive director, Henry Jackson, raised concerns about Scott's business associates and projects in other states. It pointed to the criminal record of Hoolae Paoa, onetime chief executive officer of Scott's Las Vegas-based company, Capital Seven, and "demonstrated sloppy, if not irresponsible, financial management" of some of Scott's companies. Scott approached Bangor city councilors in 2002 about putting slots at the city track. During his short time in the state, he successfully sponsored a $1.5 million referendum campaign that put into a place a law that allows the racino operator to keep 75 percent of gross slot machine revenues. He spent $90,000 on a successful referendum campaign in Bangor, securing the voter approval needed under state law before a racino operator can install slots. Scott bought out the investors of Bangor Historic Track for $1 million, giving him sole ownership of the company licensed to hold races at the city-owned track. He secured a development contract with the city of Bangor, agreeing to make $30 million in capital improvements and share 3 percent of slot revenue with the city. He spent an unknown amount on political campaigns in southern Maine, opposing an effort by Scarborough Downs and Penn National to open a racino in Westbrook or Saco. And he racked up an unknown amount in legal fees, hiring lawyers from some of Maine's top firms to represent him in court cases and before the Maine Harness Racing Commission as he sought a racing license. Fred Nichols lost his 11-year job as general manager of Bangor Historic Track last month when Scott became the sole owner of the company. But he described himself as "on the periphery, rooting and encouraging" the project to work. Nichols praised Scott for risking millions of his own dollars on a campaign for slot machines at racetracks, knowing that state voters rejected a similar proposal two years before. "He took an interest in a track scrambling to make ends meet, and there was no guarantee he could get it passed. He knew it would be expensive, but he did it and worked hard at it," Nichols said. Scott, through Capital Seven, crafted a referendum question that arranged for a track license holder to retain 75 percent of gross slot profits. The remaining 25 percent would go to the Maine Harness Racing Commission for disbursement to state scholarships, an agricultural fair support fund, prescription drug cost relief, administrative expenses and various segments of the harness racing industry. The law was approved in November on a 53 percent to 47 percent vote. Bangor City Councilor David Nealley, an executive vice president of Capital Seven, said he thinks Scott gave voters a way to create new jobs and preserve a traditional industry. "We believed his project would be good, not only for Maine's harness racing community, and not only for the raceway, but for the whole state of Maine," he said. Sebastian Sinclair, president of Christiansen Capital Advisors of New Gloucester and New York, said he believes the referendum campaign on the casino proposed by two Maine Indian tribes allowed the racino question to "slip under the radar. I think it was luck. I think he's lucky this bill even passed. If the casino question hadn't been there, I don't think it would have," Sinclair said. James Melcher, an assistant professor of political science at the University of Maine at Farmington, said the campaign leading up to the state vote was low-key and emphasized the benefits racinos would give the harness racing industry. A subsequent campaign to build a racino in southern Maine was more intense, Melcher said. The racino law approved by state voters required tracks to get local approval for slot machines by the end of 2003. It also included a clause allowing a track to relocate within a five mile radius of its 2002 location. Bangor voters gave their approval in June, but Scarborough voters said no to the machines in November. That left Scarborough Downs with just over a month to find a nearby community to accept a racetrack with slot machines. Capital Seven said it had a verbal agreement with Scarborough Downs to work together to build a southern Maine racino. When the Downs teamed up with Penn National, Capital Seven filed suit. City officials in Saco and Westbrook agreed to schedule referendum votes, resulting in TV, radio and newspaper ads. Some of the ads financed by Capital Seven and its associates bothered Mainers, Melcher said. One was an ad campaign run by a group called Good Morals for Maine, urging potential host communities to vote against the Downs' proposal. Scott was linked to the campaign, but denied personal knowledge of the organization and said it was formed by an overzealous employee. Another ad, run by a group funded by Scott, told a story of a Virginia family whose car was hit head-on by a drunken driver. The ad blamed the accident and resulting injuries in part on Penn National because the driver had been drinking at a racino that Penn National owns in West Virginia. "Maine doesn't see that kind of backroom politics very much, compared to some other places. I think that bothered people in Maine more than it might have some people in other places," Scott said. Dennis Bailey, the spokesman for the anti-racino group Casinos No!, said the campaign turned nasty and personal. "There's nothing in Maine that compares to that. We have issues ads that go back and forth, but not attacks on a business," he said. Bailey said Scott's pledge of commitment to Bangor, and resulting agreement to sell to Penn National, shows he was in the project for a profit and not the health of the harness racing industry. Palmer, the Bangor city councilor, said he questioned Scott's commitment to Bangor when Scott began courting the neighboring community of Brewer as a possible place to relocate. "His business background and dealings are less than desirable, in terms of a partner Maine people are looking for," he said. But Ival "Bud" Cianchette, former president of Bangor Historic Track, said Scott was vilified by people who do not understand the industry. "Mr. Scott is a perfect gentleman, and he has been painted as something in my opinion that he definitely is not, a devil with the horns and everything else. I think that's kind of why he gave up and sold and left, in good part, because he did not want to be involved in all this controversy," Cianchette said. Cianchette said the industry was able to get tracks, owners, breeders, drivers and other factions to work together. "Certainly the harness industry owes him a debt of appreciation for what he's done for us, with the legislation as it was passed," he said. Staff Writer Grace Murphy can be contacted at 282-8228 or at:
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