Did the PA gambling board make a mistake in giving Mount Airy a license?

Will state continue to roll the dice with Mount Airy?

Casino's slots revenues are disappointing, but it tells license review board it's improving, deserves more time.
The state gaming board is deciding whether to renew the gambling license…

By Matt Assad, Of The Morning Call

After four years in which Mount Airy Casino Resort has weathered scandal, criminal charges against its founder and disappointing revenues, the state finally has the chance to ask a difficult question: Did the gaming board make a mistake in giving Mount Airy a license?

"Well, that's why we're all here today, isn't it?" said Doug Harbach, spokesman for the Pennsylvania Gaming Control Board. "That's what this license renewal hearing is all about."

The three-hour license renewal hearing Thursday for the casino in Paradise Township, Monroe County, looked much like the hearings held in the past year for nine other casinos statewide. The board renewed all nine of those gaming licenses, but this was the first chance it got to re-examine the one casino that has been in question almost since it opened in October 2007.

And gaming officials acknowledged that Mount Airy is different. Soon after it was awarded a casino license, Dauphin County prosecutors filed perjury charges against Mount Airy founder Louis DeNaples, alleging the Scranton area businessman lied to a grand jury about his ties to organized crime figures.

In 2009, prosecutors dropped the charges in return for DeNaples giving up the casino he founded and personally financed. Mount Airy is now owned and operated by his daughter, Lisa DeNaples.

But the bigger problem for the casino is despite being arguably the state's most luxurious gaming hall, with a construction cost of $475 million, it is inarguably its worst performing.

Before licenses were awarded, a gaming board task force projected Mount Airy would be one of the state's most lucrative halls, pulling in a projected $269 million in slots revenues each year. When it opened four years ago as the first stand-alone casino, it had 2,500 slot machines and plans to increase to 5,000 within a year.

In the 2010-11 fiscal year, it brought in just $146 million, and last month it received approval to remove 200 more slot machines from its floor, dropping the count to less than 2,100. It now has the lowest revenues in the state, falling below Presque Isle Downs Casino near Erie, which was projected to bring in half the revenues of Mount Airy.

Even Mount Airy General Manager John Culetsu — its third chief operator in four years — could not emphatically say that the gaming board was correct in choosing Mount Airy for one of its coveted licenses.

He explained that its slot machine revenues have foundered because Mount Airy is the only casino in the state not in one of Pennsylvania's major population zones. Its two nearest large population areas, Wilkes-Barre and the Lehigh Valley, have their own casinos. As a result, Mount Airy's local market is half the size of its rivals at Mohegan Sun to the north and Sands Casino Resort Bethlehem to the south.

"I wouldn't say the board necessarily made a mistake," Culetsu said. "But the population disparity is a big hurdle to overcome. We're going to do it, but it's going to take some time."

What Culetsu was emphatic about was that Mount Airy deserves a three-year renewal of its license, to give it more time to tap into New Jersey and New York markets. He said it's already hosting roughly 40 out-of-state buses a day and the number is growing. Culetsu also said Mount Airy's 188-room hotel is running at more than 90 percent capacity, and it recently became the only casino in the state to be granted Four Diamond status by AAA.

More rooms and a swimming pool are expected to be added and Mount Airy is embarking on a $5.5 million marketing campaign to convince people from New Jersey and New York that it's not the dilapidated Poconos resort of the same name that closed in 2001.

"We still get calls from people asking if we have heart-shaped bath tubs," Culetsu said. "We definitely have some rebranding to do. We're not the Mount Airy they remember."

At the hearing in the Paradise municipal building, the gaming board's Harbach noted slot revenue is important because it is the primary driver of money that goes into tax relief, but it's not everything. Mount Airy's 1,350 workers, the thousands of tourists it attracts each week and the millions of dollars it has sprinkled around the community count, too.

"Have they created jobs? Yes. Do they have a good financial impact on the community? Yes," Harbach said. "Have they been a good neighbor to local charities? Yes. The board has a lot to look at."

And if it's up to the community, Mount Airy's license renewal is a slam dunk yes. Nine people testified during the hearings to commend Mount Airy for the way it treats employees like family and its involvement in the community. No one testified against the casino.

The board even got a letter of support from Sister Marion Reiersen from the convent across the street from the casino.

The gaming board will hold a second public hearing in Harrisburg, probably in February or March, before it makes its decision.

"We're going to get there, we really are," Culetsu said. "It's just going to take some time."