Grand Jury Report Sheds Unfavorable Light on SugarHouse

By Eric Augenbraun
Add Comment Add Comment | Comments: 5 | Posted Jun. 15, 2011

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It’s been nearly nine months since SugarHouse Casino opened for business on the Delaware riverfront in Fishtown. In recent months, the hostilities ignited by Philadelphia’s first casino have cooled, and SugarHouse has receded from the public view as a source of controversy. However, with a public hearing of the Pennsylvania Gaming Control Board convening this week to “gather evidence, including public comment, on the renewal of the slot machine operators’ license for the SugarHouse,” a new round of conflict has surfaced. To some anti-casino advocates who opposed SugarHouse before it was constructed and oppose the renewal of its license, a recent report of a Pennsylvania grand jury has confirmed suspicions that the PGCB is not really concerned with protecting the public.

Few issues in recent years have polarized Philadelphia as much as the arrival of casinos in the city. From the moment plans for its construction became public, SugarHouse sparked a bitter feud. “It tore the community apart,” says Sandy Salzman of the New Kensington Community Development Corporation. Salzman’s organization had a hand in negotiating a community agreement with SugarHouse executives—a set of promises made by the casino to the surrounding neighborhood that helped smooth the path to public approval of construction plans. But even within Salzman’s group, opinion on the casino was split. “It was like the Civil War here,” she recalls.

Both the support for and opposition to SugarHouse was far from homogenous. Defenders of the casino cited job creation, income provided to local businesses and tax revenue for both the city and state. Opponents ranged from those with relatively minor concerns about the proposed location to principled critics of all casinos. The latter cite the deleterious effects casinos have on the communities in which they are built and on the lives of those who fall prey to gambling addiction. Yet, with SugarHouse’s slot machines having devoured dollar bills for more than half a year now, activity on both sides of the divisive debate has scaled back.

Through its first months of operation, SugarHouse has seen mixed results. On the one hand, profits have lagged behind the first-year projections made by casino executives. On the other hand, as Maggie O’Brien, chairwoman of the pro-casino group Fishtown Action, maintains, SugarHouse has been nothing but a good neighbor in the community. “We sat down with the SugarHouse and we drew up this Community Benefits Agreement,” she says. “It took well over a year for it to be complete. We asked them to do certain things and they’ve been doing those things. They’ve been fulfilling the commitment that they made to us.” O’Brien plans to testify to that June 16 at the public hearing of the PGCB, to be held at the Philadelphia Convention Center.

Few doubt that the casino’s license will be renewed following the upcoming round of PGCB hearings or the release of the May 19 grand jury report. For advocates, this is an affirmation of the generally positive impact the casino has had in the community and the city. But for opponents, it points to fundamental flaws in the regulation process. “The grand jury report put more official, investigatory language to a process that everyone in Philadelphia knew from the beginning was a sham,” says Jethro Heiko, a Fishtown resident who lives just 300 feet from SugarHouse and who is a board member at Casino-Free Philadelphia, which opposes the renewal of SugarHouse’s license. Yet after attempting to engage with the PGCB over the past five years, Heiko says the group has no plans to participate in the hearing, calling it “a waste of time.”

The mission statement for the seven-person gaming board reads, “The Pennsylvania Gaming Control Board, guided by the Gaming Act and supported by a dedicated professional staff, will protect the interest of the public by ensuring the integrity of legalized gaming through the strict enforcement of the law and regulations, the licensing of qualified individuals and entities, and fulfilling the objectives of limited gaming in the Commonwealth.” However, the grand jury report found the PGCB’s actual behavior to be significantly at odds with its stated mission. The culmination of a two-year investigation, the 102-page report found that the patronage-laden PGCB had engaged in conduct that “failed thoroughly to protect the public from unlawful gaming practices; failed to maximize potential new revenue to the commonwealth to support property tax relief; allowed licensees to participate as a matter of right without requiring the minimum affirmative responsibilities on their part; and, otherwise engaged in activities which eroded, at a minimum, this grand jury’s confidence in the system.”

Painting a picture of a gaming board heavily skewed toward the interests of casinos, the report found it to be “preoccupied, fixated and singularly focused on making the licensing process fair to the applicants at the expense of adequately protecting the citizens of the commonwealth.” Although the grand jury did not investigate the licensing decision of SugarHouse, for anti-casino advocates in Philadelphia the report nevertheless casts doubts on the legitimacy of the license-renewal process.

O’Brien acknowledges the possibility of improprieties in the licensing process, but has not let that interfere with her work at FACT. “Was the process flawed? I don’t know. But I know that a lot of things that involve the government are flawed. So God knows,” she says.

While a representative of the PGCB could offer no comment when reached, Chairman Gregory Fajt recently responded to the grand jury’s findings in a press release. “The Board has steadfastly and repeatedly said that we did our work well, we have protected the public, and the citizens of Pennsylvania are reaping tremendous dividends from our work,” he said. “After this grand jury met for more than two years, there were no arrests, no presentments, no indictments. They found no criminal activity because there was, in fact, no criminal activity to be found.”

Heiko maintains that such statements are just spin. “Fajt is a [former Gov.] Rendell crony,” he says. “His job is to put a good face on a damning report rather than looking at it honestly.”

Casino opponents point to an unhealthy amount of overlap between the casino industry and the body that has been tasked with regulating it. For example, evidencing a revolving door of sorts, Thomas A. Decker, the former chair of the PGCB, is now the president and CEO of the high-powered corporate law firm Cozen O’Connor, which represents SugarHouse.

“They’re an industry institution. The law was written by casino lobbyists. People on the board are casino people,” Heiko says.

Heiko and Casino-Free Philadelphia have vowed to continue to work toward “bankrupting the SugarHouse” by reaching out to gamblers and trying to draw their business away from the casino, but they have no expectation that the PGCB will be sympathetic to their concerns. However, the recent grand jury report paints a picture of a state without a trustworthy casino oversight agency, and, in turn, a public without an authoritative body to effectively defend its interests as long as casinos continue to have their licenses renewed. While in the case of SugarHouse the renewal is almost a certainty, and the public hearing a mere formality, continued controversy is evidence of a fight not yet resolved. ■

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Comments 1 - 5 of 5
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1. Dan said... on Jun 15, 2011 at 09:11AM

“"Good neighbor"? That's not the words I heard coming from the elderly man who stumbled across the street in front of SugarHouse as we waited to turn onto Frankford Ave the other night. He was screaming profanity at the top of his lungs, anguished that he had lost all his money. Not only was he devastated, but his angry rant was disturbing people all around him.”

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2. Shawn said... on Jun 15, 2011 at 10:09AM

“Would love to know how much of Sugarhouse's revenue come from Philadelphians versus out-of-towners and out-of-staters - because unlike every other city with casinos, ours was put in a neighborhood, far from visitor attractions. It's not "economic development" when a casino takes Philadelphians' money and hands it to Harrisburg and Chicago-based owners - it's a tax.”

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3. Anonymous said... on Jun 15, 2011 at 11:06AM

“sure... let's revoke the license. that way we can get rid of all those stupid people who make a living working at SugarHouse. who needs jobs nowadays anyway? the old guy losing his money is unfortunate, but that's the risk isn't it. there doesn't seem to be a problem with placing bars on every corner in Kensington & Fishtown and any other blighted areas. if it's not one vice, it's another...”

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4. Philly said... on Jun 17, 2011 at 07:02PM

“Since we have pathetically low expectations of government officials does that mean they haven't acted illegally or unethically?

Since we live in a city with rampant drug and alcohol abuse does not mean we should also turn a blind eye to the painful repercussions of gambling addiction?

Gambling addiction is not taken seriously because most people are ignorant of its impact on the lives of addicts, their families, and the larger community. It's also far easier to hide than drug and alcohol addiction, meaning that people don't have to come to terms with it until the addict has neglected their kids, embezzled or stolen money, becomes dependent on others, or kills themselves. (The list goes on, but hopefully you feel me.)

We need jobs that don't purchase our compassion for our brothers and sisters who suffer from addiction.”

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5. Anonymous said... on Feb 7, 2012 at 12:26PM

“My name is John Devine, I have worked inside Casino Rama for 15 years in the capacity of a dealer. I have kept a diary detailing the corruption in which Penn National the managers of Casino Rama, the Ontario Lottery Corproation, and the police of Canada have participated in. All of which the FBI and the SEC know about. Penn National is traded on the NASDAQ. Please reply with a contact name, and I will send documents incluidng a copy of my diary. John Devine 20 Lewsi dr. Orillia ont. Canada. L3V 7S3 705 325 5490”


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