Gaming firm gets harness license

By MARK PETERS, Portland Press Herald Writer

Copyright © 2004 Blethen Maine Newspapers Inc.

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KEY RACINO EVENTS June 10, 2003: Bangor voters approve a racino in the city. Nov. 4: Voters approve a statewide bill for slot machines at racetracks in Scarborough and Bangor. Scarborough voters reject it in a town vote. Dec. 30: Voters in Westbrook and Saco defeat proposals that would have allowed Scarborough Downs to operate a racino in either community. Feb. 17, 2004: The state gives Penn National Gaming a conditional harness racing license for Bangor Raceway that may let the company install slot machines there. April 12: A bill to regulate slot machines receives preliminary approval in the state House of Representatives. April 27: A bill that strengthens the state's oversight of slot machines goes to Gov. John Baldacci for his signature after its approval by the state Senate. The Senate votes 29-3, with three members absent, to create a five-member Gambling Control Board. An $8 million annual racino tax remains in the bill, despite the objections of the harness-racing industry and Penn National. May 7: Baldacci signs the racino bill and issues an executive order creating the Gambling Control Advisory Council to get the regulatory process under way. Oct. 14: The Maine Harness Racing Commission approves a permanent racing license for Penn National. The license is a prerequisite for a slot operator's license. To top of story

AUGUSTA — Penn National Gaming received a permanent harness racing license for Bangor Raceway on Thursday, completing a key step to becoming Maine's first operator of slot machines. Although the Pennsylvania-based gaming company has the blessing of the Maine Harness Racing Commission, it still must get a slots license from the Maine Gambling Control Board before 1,500 machines can start spinning at the racetrack. A decision on that license could come later this month.

"We are optimistic we will change the face of harness racing in Maine," said Steven Snyder, senior vice president of corporate development for Penn National.

The so-called racino is expected to provide an economic boost to Bangor and revive the state's struggling harness racing industry. Those pushing for the project hailed Thursday's decision, but cautioned that Penn National still must go through more regulatory steps and build a gaming center before the slots open in mid-2006.

In issuing a racing license, the commission had to determine whether Penn National is financially responsible and whether its top officials are of good moral character. Members voted after hearing testimony from a Maine State Police lieutenant who investigated Penn National, an independent accountant who studied the company's finances, and the company.

The state police review found Penn National and its top executives have a sound record void of licensing problems and criminal convictions. Investigators received positive reports from other states and Canada, where the company operates casinos and racetracks. A review of several criminal databases, and trips that investigators took to Colorado and Ontario to review the performance of two Penn National-run casinos, found no problems.

Investigators had one concern. The U.S. Securities and Exchange Commission filed a civil complaint against Snyder in 2001 for participating in "yield burning" when he worked at Meridian Capital Marketing. Snyder reached an agreement with the SEC to pay a civil penalty and various claims. He admitted no wrongdoing in the settlement.

Officials for Penn National said Meridian helped government entities reduce their yield on certain investments because the federal government got any returns above a certain percentage. Snyder and the firm for which he worked were among those targeted when the SEC cracked down on the common practice.

Christian Smith, the independent accountant hired by the commission, gave an overview of Penn National finances, but did not reach a conclusion whether Penn National met the financial responsibility standard. He said he needed more information from the company, including its federal tax returns.

Assistant Attorney General John Richards urged the commission to postpone its vote until Smith reviewed more information. Penn National and state officials recently reached an agreement to provide Smith access after a delay related to the company's concerns over confidentiality.

"We may find nothing. We may find something else," Richards told the commission.

A majority of commissioners decided they had enough information and voted 4 to 1 to approve the license. Commissioner Anne Jordan wanted more information and voted no.

"If there was an issue, they would have turned it up," said commissioner Norman Trask.

Concerns about confidentiality had held up what has been a closely watched process of getting racino regulations in place and Penn National licensed. Bangor officials, members of the harness racing community and lawmakers have been pushing for the process to move along as quickly as possible after voters legalized slots at commercial tracks last November.

The commission seemed ready in September to issue the permanent racing license, a prerequisite for a slots license. But Penn National's concerns about how the state would protect trade secrets and company officials' personal and financial information pushed the decision to Thursday.

The gambling board that will consider Penn National's slots license will take a similar look at the company to see if it meets new state standards that cover everything from its finances to the drug habits of its top executives.

D. Eric Schippers, vice president of public affairs for Penn National, said the company plans to apply shortly. The application will come before the gambling board at its next meeting Oct. 28.

Public Safety Commissioner Michael Cantara said Penn National probably will request a provisional slots license because of continuing concerns over confidentiality. The full license will come after the state Legislature expands confidentiality laws, allowing Penn National to turn over a lengthy application that its top executives must fill out as part of the licensing process.

Staff Writer Mark Peters can be contacted at 791-6325 or at: mpeters@pressherald.com

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