Lawmakers call for investigation of Pa. casino operator that withdrew from $225M project

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Slot machines at Sands Casino Resort Bethlehem. Pennsylvania's increasingly saturated gaming market was cited as one reason for Penn National Gaming's withdrawal from a casino project in western Pennsylvania.

(AP File Photo)

A group of lawmakers has called for an investigation of Penn National Gaming, which pulled out of a $225 million horse racing track and casino project in Western Pennsylvania last month.

The casino operator cited the state's increasingly saturated gaming market for its withdrawal from the proposed Lawrence Downs Casino and Racing Resort, located in Mahoning Township between Erie and Pittsburgh.

That action has already resulted in a lawsuit from the project's developer, Endeka Entertainment, which alleged that Penn National committed fraud and was pulling out of the project in order to protect another casino property in Ohio.

Now, six state lawmakers--most of them from the area near the proposed casino--have called upon Attorney General Kathleen Kane to investigate the situation.

"State and local officials have invested time and energy to bring this project to the area," said Sen. Elder Vogel, Lawrence County. "We want to make sure that the entire process has been conducted in an honest manner."

Eric Schippers, Penn National's senior vice president of public affairs, said the allegations against the company were baseless.

"This is nothing more than a commercial dispute between two private parties," he said. "There was never an agreement of any sort between Penn National and Mahoning Township or Lawrence County."

He went on to say that the company had a "contractual right" to pull out of the project.

"We have been completely open with our partners, the county and the state about the multiple financial challenges of this project at every juncture," Schippers said, pointing to the financial difficulties faced by other casinos, particularly in the western portion of the state.

Shortly after Penn National's announcement, the state Gaming Control Board allowed Erie's Presque Isle Downs and Casino to decrease the number games on its casino floor. In February, that casino had seen flat table games revenue last month and lost nearly 12 percent of its slots revenue.

Endeka, however, has pointed to the fact that Penn National was involved in the development of another casino project 25 miles from Lawrence Downs in Austintown, Ohio. Its lawsuit alleges that the company made false representations via a series of assurances that Penn National would fund the Pennsylvania project.

"Clearly, the citizens of Lawrence County would be harmed by lost tax revenue, economic stimulus and jobs if these allegations prove true and if the project were lost," said Rep. Chris Sainato, D-New Castle.

The Attorney General's Office has not taken a public stance on the issue thus far.

"We will review the letter and act accordingly," said spokesman Jeff Johnson.

Schippers, meanwhile, said his company would "vigorously defend" its reputation.

"We fully recognize and regret the disappointment our withdrawal has had on Lawrence County, but to politicize this and raise it to the level of criminal allegations is completely irresponsible," he said.

This story was updated to include new information from the Attorney General's Office. It has received the lawmakers' letter.

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