Rush Street Gaming

Taxes

At each of their four casinos, Rush Street Gaming has either fought to have its property assessment reduced, or threatened to reduce it:

  • As soon as Rush Street opened Riverwalk Casino in Vicksburg, Mississippi, it fought to have its property assessment reduced from $78 million to $30 million.1
  • Almost as soon as they opened Rivers Casino in Pittsburgh, they began lobbying to have their property assessment HALVED, and have continued to do it every single year.2
  • The city of Philadelphia also was involved in a legal dispute with Sugarhouse Casino over property tax.3
  • If the state (of Illinois) approves a Chicago casino or slots at horse tracks, then Bluhm wants to be able to add more slot machines and pay lower tax rates in Des Plaines. “We absolutely need both,” Bluhm said when asked whether he would accept one without the other. “We couldn’t possibly survive. The numbers won’t work. If we just lower tax rates and couldn’t expand, we would be crushed.”4

Fines

Rush Street has been fined a dozen times for violating gaming laws in Pennsylvania and Indiana, for a total of $483,000. Incidents include:

  • $105,000 fine for seven instances of allowing underage patrons to gamble at Rivers Casino in Pittsburgh (February 2011)5
  • $70,000 fine for seven instances of allowing underage patrons to gamble at SugarHouse Casino in Philadelphia6
  • $25,000 fine for marketing to people on the Indiana problem gambler selfexclusion list (March 2012)7
  • $15,000 fine for three cases of allowing three people who were banned from entering casinos to gamble at SugarHouse Casino in Philadelphia (December 2012)8

Rush Street has also been fined for illegal dumping in Philadelphia. “The owners of the SugarHouse Casino have agreed to pay $650,000 to settle claims that their workers illegally dumped material into the Delaware River as the building was being constructed in Fishtown, prosecutors said Monday.”9

Rush Street was also fined $5,000 for making a political contribution in violation of the Pennsylvania state gambling law.10


Crime

A nanny was allegedly gambling at SugarHouse when a boy who was supposed to be in her charge drowned:
“There is no dispute that Isear Jeffcoat, 7, drowned in a backyard swimming pool June 29 while frolicking with about 20 other students from Tianna’s Terrific Tots daycare center. “But what must be sorted out in a courtroom is if the North Philadelphia daycare’s operator, Tianna Edwards, is responsible for the boy’s death… “Edwards allegedly was gambling at the SugarHouse casino when Isear drowned.”11

There was a robbery spree at SugarHouse. They stole at least 44,500, and used a Taser on the victims, one of whom was a pregnant woman.12
“At least eight lucky casino winners who have left SugarHouse Casino with big smiles and bulging wallets since June didn’t have long to ponder how they’d spend their fortunes: Thugs followed them from the casino, ambushed them at home, and hustled off with their winnings.”13

Crimes associated with gambling addictions at Rivers Casino in Pittsburgh:
“In the most recent incident, a former midlevel manager with West Penn Allegheny Health System was arrested and charged Monday with stealing more than $713,000 that authorities say he gambled away. “Ira Johnson, 52, of Penn Hills is charged with 10 counts, including theft, receiving stolen property, theft by failure to make required disposition of funds, unlawful use of a computer, dealing in proceeds of illegal activity and misapplication of government funds. “Also on Monday, two Charleroi Area School District cafeteria workers were ordered to stand trial on charges stemming from the theft of $94,000 from the cafeteria they used to gamble on slot machines at the Meadows Racetrack and Casino.14


Broken Promise

Neighborhood Agreements. Rivers Casino in Pittsburgh “says it has ‘no current plans’ to extend or renew the agreements that gave $3 million each to the Northside Leadership Conference and the Hill District since the gambling venue opened in 2009. Both monetary agreements, which helped to fund a grocery store in the Hill District and neighborhood revitalization programs on the North Side, expired last year. The casino appears to be in no mood to increase the pot.”15

“A spokesman for one former ally of Bluhm’s in the bidding (for a Chicago-area casino) described him as ‘a fair-weather kind of guy.’ “’He’s with you one minute and then will leave for a better opportunity that might come along,’ said Gary Mack, spokesman for Rosemont Mayor Don Stevens, a Republican. Mack said Rosemont, which borders Chicago and O’Hare International Airport, was Bluhm’s first choice for a casino.
“’When he thought Des Plaines had a better likelihood of getting approved for a license, he bolted and went with Des Plaines,’ Mack said.”16

Hotels. SugarHouse Casino in Philadelphia was originally supposed to have a hotel. Even in its second phase, the hotel is not included.17

Scaling Back on Designs. Rush Street significantly scaled back on their plans for their Philadelphia casino, SugarHouse.

  • “Critics have ridiculed SugarHouse’s low-slung building as a ‘dressed-up Walmart or Home Depot.’18
  • The expansion plan was supposed to have a hotel tower, “equipped with a convention-quality ballroom and a concert venue.” None of this will be included in the casino’s expansion.19

Jobs/Labor.

  • Local and state officials who backed the Rivers Casino in Pittsburgh are now fighting to get workers the “good, familysustaining jobs” they were promised.20
  • “Union organizers are filing unfair labor practice charges claiming that officials at the casino are trying to stop some 800 workers from unionizing. … A total of 38 complaints against Rivers Casino have been filed by Unite Here Local 57 with the National Labor Relations Board.”21,22
  • An African American employee “claims that his race and prounion leanings cost him his job at the SugarHouse Casino.”23

Rivers Casino (Pittsburgh) salaries:

  • Housekeeping: $8 per hour
  • Security workers: $9.50 an hour24

SugarHouse Casino (Philadelphia) salaries:

  • Table Operator: $4 per hour
  • Player Services: $12 – $14 per hour25
  • “workers allege that many of them are paid less than $10.88 per hour”26

Neil Bluhm manages Casino Niagara and the Niagara Fallsview Casino. Recently, they offered buyouts to ALL of their 92 slots attendants, and are encouraging employees to go from fulltime to part-time.27

Economics. There’s been little neighborhood economic spinoff from SugarHouse. More than two years after it opened, the city of Philadelphia is hiring “financial consultants to work assessing the economic impact of each project, including the likelihood of spinoff development, which so far has eluded the riverfront SugarHouse Casino.”28

If the state of Illinois approves a Chicago casino or slots at horse tracks, then Bluhm wants to be able to add more slot machines and pay lower tax rates in Des Plaines. “We absolutely need both,” Bluhm said when asked whether he would accept one without the other. “We couldn’t possibly survive. The numbers won’t work. If we just lower tax rates and couldn’t expand, we would be crushed.”29

Ira Schulman, Neil Bluhm’s business partner in Walton Street Capital, called Rivers Casino in Pittsburgh “a terrible investment.” The Pittsburgh PostGazette reported that “as revenues fell short of projections, the ownership considered filing for bankruptcy before deciding to invest another $108 million in the project.”30

The owners projected that Rivers Casino in Pittsburgh would have $500 million a year in revenue.31 The casino actually has brought in far less – $291 million in 2010 and a budgeted $362 million for 2011. (In slots, they estimated they would bring in $427 million. They have only brought in $241.6 million in 2010 and $274.8 million in 2011.32

“In response to sagging performance, Rivers Casino asked the board to approve its application to eliminate 126 of its 3,000 slot machines.”33

Neighbor relations. Casino developer Steve Wynn referred to SugarHouse as one of the casinos that are “slots joints that cater to neighborhood people.”34

In 2011, “SugarHouse’s Wendy Hamilton told (an industry conference) that a large percentage of her players come three, four, five times a week.”35

Des Plaines ate the cost of getting emergency radio coverage in the casino. “All new buildings must have approved radio coverage for emergency responders inside the building based upon the existing coverage levels of the city’s public safety communication systems… “…emergency personnel were having communications problems when inside the fortresslike Rivers Casino soon after it opened in July 2011. City officials had not anticipated the problem when the $445 million casino was being built on 20 acres off Devon Avenue and Des Plaines River Road. “Des Plaines officials later agreed to pay half the cost to fix that problem roughly $49,000 in total to install upgraded telecommunications equipment inside the casino so police and fire radios can work indoors.”36

Financial Health
“SugarHouse has suffered a drop in slots revenue in five of the past six months compared with a year earlier.”37

In February, their slots revenue was down 9% from the same time the previous year.38

“We have more money in this project (SugarHouse casino) than we really want to have in the first place,” said Neil Bluhm, testifying in a trial where he was sued by fellow investors in SugarHouse. The judge in the lawsuit, Chancery Judge Donald F. Parsons Jr., said that “Bluhm and Carlin… were ‘careless’ in losing track of the budgeted development cost.”39,40

“Though SugarHouse has no competition in the city and a vast population to draw from, firstyear gross revenue was $212.2 million, less than half what market leader Parx generated and 40 percent less than at Harrah’s Chester Casino & Racetrack. “That’s a far cry from what owner HSP Gaming L.P. projected in late 2006. Back then, the company controlled by Chicago billionaire Neil Bluhm and chief executive Greg Carlin estimated that SugarHouse would open with 3,000 slot machines and generate $320.3 million in revenue in its first year, the most conservative projection among five applicants for two Philadelphia gaming licenses.”41

During the recent economic downturn, Neil Bluhm walked away from a $2.9 billion loan on West Coast properties that had become worth significantly less. His investors lost 42 cents on every dollar they invested.42



1 http://msgaminglaw.com/wpcontent/uploads/2009/09/Vicksburggaming9.18.09.pdf
2 http://www.post-gazette.com/stories/local/neighborhoods-city/rivers-casino-assessment-to-create-120000-in-taxes-for-city-schools-650398/
3 http://www.lawyersandsettlements.com/settlements/08402/casino-property-tax.html
4 “’Ones to Watch’ in 2013”, Chicago Tribune, January 6, 2013
5 http://www.telegram.com/article/20130403/NEWS/104039906/1116
6 “$128,000 in Fines Levied Against Two Casinos by the Pennsylvania Gaming Control Board For Violations”, Targeted News Service, May 23, 2012
7 http://www.telegram.com/article/20130403/NEWS/104039906/1116
8 “Casino operators agree to pay banned gambler fines”, Harrisburg PatriotNews, December 16, 2012
9 “SugarHouse to pay out over dumping charge”, Philadelphia Daily News, 16 April 2013
10 http://articles.philly.com/2006-12-05/news/25399550_1_contributions-foxwoods-development-tad-decker
11 “Daycare operator faces more charges in boy’s drowning”, Mensah M. Dean, Philadelphia Daily News, 5 March 2013
12 “Police say robbery ring preys on SugarHouse patrons”, Joseph A. Gambardello, Philadelphia Inquirer, 22 September 2012
13 “8 casino winners wind up losers”, Dana DiFilippo, Philadelphia Daily News, 23 September 2012
14 Source: “Theft just one sign of gambling addiction”, Pittsburgh PostGazette, Feb 26, 2013
15 http://www.post-gazette.com/stories/business/news/rivers-casino-wont-extend-agreement-with-pittsburghs-north-side-hill-district-683920/
16 http://articles.philly.com/2006-10-27/news/25417631_1_casino-license-mgm-tower-buildings
17 http://articles.philly.com/2013-04-20/news/38677053_1_sugarhouse-second-casino-next-casino
18 http://www.pressofatlanticcity.com/news/breaking/article_5397f0e2-ba28-11df-9a86-001cc4c002e0.html
19 Philadelphia Inquirer Changing Skyline column, by Inga Saffron, 19 April 2013
20 http://www.unitehere.org/detail.php?ID=3672
21 http://wesa.fm/post/workers-elected-officials-call-rivers-casino-let-employees-organize
22 http://wesa.fm/post/rivers-casino-workers-file-federal-complaints-allege-intimidation-management
23 “Fired SugarHouse worker alleges racism, antiunion bias and asks for his job back”, Suzette Parmley, Philadelphia Inquirer, 7 March 2012
24 http://www.bizjournals.com/pittsburgh/stories/2009/11/23/story3.html?page=all
25 http://www.glassdoor.com/Salary/SugarHouse-Casino-Salaries-E449676.htm
26 http://www.bizjournals.com/philadelphia/print-edition/2012/02/24/union-courtship-of-sugarhouse-casino.html?page=all
27 http://www.stcatharinesstandard.ca/2013/02/01/slot-attendants-offered-buy-outs-from-niagara-casinos
28 “Keep tight rein on casino plans: City officials this time need to get in front of the process to choose a second casino operator”, Philadelphia Inquirer editorial, 6 January 2013
29 “’Ones to Watch’ in 2013”, Chicago Tribune, January 6, 2013
30 http://www.post-gazette.com/stories/business/news/key-owner-says-rivers-casino-is-terrible-investment-633146/
31 http://www.post-gazette.com/stories/opinion/editorials/weak-hand-the-rivers-casino-should-live-up-to-its-promises-629954/#ixzz2R8XFmVqP
32 http://www.alleghenyinstitute.org/government/gaming/943-was-the-rivers-casino-a-lemon-of-an-investment.html
33 http://www.spectrumgaming.com/news/?action=viewarticle&pubid=58&articleid=298
34 “Casino Developers Show Their Hands”, Chris Brennan, Philadelphia Daily News, 13 February 2013
35 “Another casino in Philly? Its a sure losing gamble”, Monica Yant Kinney, Philadelphia Inquirer, 6 May 2012
36 Source: “Radio problems in casino spur amplifier requirement”, Daily Herald, 5 September 2012#
37 “Pennsylvania casinos showing signs of a slots slowdown”, Donald Wittkowski, Press of Atlantic City, 6 March 2013
38 “Slot Machine Revenue in Pennsylvania Drops 9% in February”, PR Newswire from the Pennsylvania Gaming Control Board
39 Sources: “Trial testimony reveals that SugarHouse casino was almost never built”, Jennifer Lin, Philadelphia Inquirer, 18 August 2012
40 “SugarHouse partners spar in court over expansion’s scope”, Jennifer Lin, Philadelphia Inquirer, 5 October 2012
41 http://articles.philly.com/2011-09-25/news/30201033_1_slot-harrah-s-chester-casino-gaming-control-board
42 Source: “A Rare Misstep for Tycoon Bluhm,” Crane’s Chicago Business. June 4, 2012 http://www.chicagobusiness.com/article/20120602/ISSUE01/306029934/a-rare-misstep-for-tycoon-bluhm

Comments

  1. Deb Cary

    April 29, 2013

    Ths is frightening information- it is very disconcerting and re-enforces the need to keep this company out of Worcester!

  1. Rush Street Gaming | Nicole, Worcester04-24-13

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