FOR IMMEDIATE RELEASE

August 8th, 2008

COMMONWEALTH OF PENNSYLVANIA

Pennsylvania Gaming Control Board
P.O. Box 69060
Harrisburg, PA 17106-9060

CONTACT

Doug Harbach or Richard McGarvey (717) 346-8321

PA Gaming Control Board To Continue Public Hearing On August 14th On Proposed Pittsburgh Casino Ownership Change

HARRISBURG: The Pennsylvania Gaming Control Board today announced that it will resume the hearing to consider a joint application to restructure the financing and ownership interests in the Pittsburgh casino project on Thursday, August 14, 2008.

The hearing is a continuation of the session begun on July 9, 2008 on the "Joint Application of PITG Gaming, LLC and Holdings Acquisition Co., L.P. for Approval of the Reorganization, Change of Control and Recapitalization of PITG Gaming, LLC and other Relief in Connection Therewith".

The hearing will begin at 10:00 am at the State Museum Auditorium, located at the corner of Third and North Streets in Harrisburg.  The public is welcome to attend.

Due to tremendous public interest, the Board will accept both oral and written public comment which will become part of the evidentiary record in this matter. Individuals and public officials who wish to address the Board in person at the hearing must contact Board Secretary Mickey Kane at 717-346-8300 by 5:00 pm August 12th to register as a speaker.  Written comments must be received by the Board Secretary by noon on August 13th.  Comments can be mailed to the PA Gaming Control Board, P.O. Box 69060, Harrisburg, PA 17106, Attention: Board Secretary, or faxed to 717-346-8350.

Key Milestones of the Pittsburgh casino license

•    December 20, 2006:  the Board granted a Category 2 License to the PITG Gaming Project.  That decision was subject to vigorous appeal by the losing applicants, Isle of Capri and Station Square/Harrahs, and was affirmed by the Supreme Court in July 2007.  As represented by the licensee, other delays and costs including appeals by the Pittsburgh Steelers and Pirates, issues with the nearby Carnegie Science Center, and the Riverlife Task Force have all contributed to delays in breaking ground or additional costs to the project.  In addition, economic and credit market conditions are asserted as having had a negative effect on the project.

•    December 11, 2007: after delays primarily associated with lawsuits pertaining to the Board decision and local matters on the facility design, construction begins.

•    April 17, 2008: PITG first filed a petition to modify its proposed facility and to address issues of refinancing.  As represented at that time in the filings and to the Board during public meetings, the delays in starting construction and the resulting downturn of the economy and credit markets had the effect of increasing costs associated with the project and had caused the need for restructuring the financing.  An amended petition was later filed and eventually PITG indicated to the Board during public meetings that it was in negotiations with other lenders and parties to structure the refinancing and become partners in the project with Mr. Barden.  Following the April filings of the original petition and then the amended petition, the Board received information from PITG concerning its petitions during a public meeting on April 24, 2008.

•    May 14, 2008: PITG provided an update to the Board during a public meeting as to the status of attempts to secure the financing needed to complete the project.

•    June 11, 2008: Mr. Barden and PITG Gaming again updated the board during a public meeting along with a group of investors led by Walton Street Capital Partners and one of its principals, Neil Bluhm. This was a precursor to the filing of the current Joint Application with the Board seeking approval of a refinancing of the project which calls for Mr. Barden taking in new partners who would have ownership interests and be engaged in the overall management of the project along with Mr. Barden.

•    July 9, 2008: PITG Gaming and Holdings Acquisition Company filed a Joint Application with the Pennsylvania Gaming Control Board.  This is a privately negotiated agreement with which the Board has had no involvement.  Pursuant to the requirements of the Gaming Act, the Board regulations and the Sunshine Act, this joint petition will be heard by the Board in open, public hearings. After the conclusion of the hearings, the Board will consider and deliberate on the merits of the case, vote, and eventually issue a written adjudication explaining the reasons for its decision. The Joint Application, which remains pending, seeks three specific things:

  • A reorganization and refinancing of the Category 2 license awarded in Pittsburgh;
  • A change of control slot machine license fee of no more than $250,000; and
  • Modifications to the Statement of Conditions presently associated with the PITG license.
The Board Process in this Matter

The hearing, now scheduled for August 14th,is for the purpose of completing the evidentiary record, and for the Board to obtain all information needed to rule upon the joint application.

Consideration of the joint application requires the board to engage in legal analysis under Section 1328 of the Gaming Act and Section 441a.17 of the Board's regulations relating to changes in the ownership or control of a slot machine licensee, and the fee to be charged should the Board approve such a change.  Additionally, a review under Section 1330 of the Act – which speaks directly to the issue of multiple ownership – is also at issue.

In addition to substantive statutory and regulatory sections at issue, all of the requested relief and modifications to PITG's statement of conditions require review by the Board within the rubric of more broad statutory, regulatory and due process requirements. Indeed, the Board's regulations devote six chapters to process and procedure in matters coming before the Board and the joint applicants are entitled to have the pending matter heard in the normal course.

Modifications to the original PITG conditions are:
•    postponing the opening of the facility's ballroom; and,
•    reducing the number of parking spaces presently required

The Board's primary objective, as is outlined in Section 1102 of the Act, is to protect the public through the appropriate regulation of gaming and to do so while considering the public interests of the citizens of the Commonwealth.  The Board is also charged in that statutory provision, with consideration of the General Assembly's interest in supporting property tax relief through gaming revenues; enhancing tourism in the Commonwealth; as well as other economically based goals.

Additionally, in the Gaming Act, the General Assembly mandated that the Board's actions include promoting and ensuring diversity in all aspects of gaming activities while working to enhance the representation of diverse groups in the ownership, participation and operation of licensed entities.

The Board has established regulations setting forth a procedural mechanism by which any matter involving a licensee must come before the Board.  If a licensee is requesting relief from the Board with respect to some aspect of its license or conditions, it must file a petition or application with the Board seeking that relief.  The filing of the petition of application triggers the Bureau of Licensing, Bureau of Investigations and Enforcement, the Office of Enforcement Counsel and any other affected Bureaus to examine the matter, conduct their due diligence and to present evidence and recommendations to the Board following that review.

It is always the licensee's burden to convince the Board through its documentary submissions, oral presentations and responses to Board questions that the relief it seeks is warranted.

With respect to the Joint Application now pending, this is the process which is currently ongoing.  The Bureaus and Enforcement Counsel are reviewing and examining the documentary submissions and preparing for presentations to the Board at a public hearing now being scheduled.

With respect to the hearing, public comment already submitted will be placed into the record and along with that of members of local and state government affected by the issues raised in the application.

Following the hearing, the Board will deliberate and decide whether to grant with no changes, grant with conditions, or deny the application.  An adjudication which sets forth its findings will be issued later and include both conclusions and rationale for the decision.

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