A battle as tough as Philly itself

PHILADELPHIA

When the $550 million SugarHouse Casino opened 28 months ago on a Delaware River waterfront site in South Philadelphia, opponents of the project worried that local businesses would suffer.

Kathy Smith said she hasn’t noticed one bit of difference.

Smith, a tough-talking, streetwise native of South Philly, has spent 25 years working at the city’s cheesesteak landmark Pat’s King of Steaks, which opened in 1930 at the X-shaped intersection of Ninth Street and Passyunk Avenue.

The SugarHouse is roughly four miles from Pat’s. It doesn’t have a hotel and has few dining options. What the casino does offer are 57 table games and 1,600 slot machines, which produced the highest revenue per machine, per day of all Pennsylvania’s 11 casinos, state gaming regulators said.

On a chilly Tuesday afternoon last week, the SugarHouse was packed. With its location near Philadelphia’s Chinatown, the casino was doing a hefty business at its mini baccarat and pai gow poker tables.

The SugarHouse caters to a customer base that lives within a 20-mile radius of the property, including neighborhoods across the Benjamin Franklin Bridge in New Jersey, such as Camden.

In 2012, the SugarHouse took in more than $271 million in gaming revenues, statistics compiled by the Pennsylvania Gaming Control Board show.

That’s a lot of Cheese Whiz.

Pat’s has been in a cheesesteak war with its neighbor, Geno’s Steaks. Customers will line up at both locations daily and the feud between the owners is part of Philadelphia lore.

The SugarHouse hasn’t slowed the battle.

“Our customers are tourists, conventioneers and college students,” Smith said. “If I didn’t live near it, I wouldn’t even know it was there.”

Smith admitted she will venture into the SugarHouse once or twice a week to play the casino’s slot machines. But if she wants a real casino experience, she drives an hour southeast to Atlantic City.

“I’d rather go to Vegas,” she added.

Gaming still seems foreign to a city like Philadelphia despite the proximity of four casinos in the market.

Besides SugarHouse, Caesars Entertainment Corp. operates Harrah’s Philadelphia, a casino attached to a harness race track in suburban Chester, roughly 14 miles from South Philadelphia.

The Parx Casino is attached to a thoroughbred race track 15 miles from downtown Philadelphia in Bensalem. The small Valley Forge Resort Casino is about 22 miles east of Philadelphia, but still considered part of the market.

Meanwhile, six different groups and partnerships, including Wynn Resorts Ltd., Penn National Gaming, Isle of Capri Casinos and Cordish Cos., have applied with state gaming regulators for the right to own Philadelphia’s last casino license.

Two of the proposals want to place the casino in Philadelphia’s Center City area. Three of the proposals would put the casino on or near the city’s massive sports stadium complex off Interstate 95.

Wynn intends to build a 300-room destination resort hotel-casino a half-mile north of SugarHouse. In renderings released by the company, the project resembles a scaled-down version of the Encore at Wynn Macau. Wynn plans to use a vacant 60-acre site along the Delaware River that once housed a World War II era shipping yard for the casino.

That prospect of a glimmering new neighbor doesn’t sit well with Smith.

“That would change the area dramatically,” Smith said. “It will bring a lot more people down here. I’m not sure what that will mean for all of us.”

In 2012, nearly a decade after gaming was approved in Pennsylvania, the state’s 11 casinos produced nearly $3.16 billion in gaming revenues, surpassing Atlantic City’s $3.05 billion and becoming the nation’s No. 2 gaming market.

Hence, the heated interest in owning that last casino license.

SugarHouse, which is owned an investment group controlled by Chicago real estate magnate Neil Bluhm, wants to double the size of its casino floor and add more restaurants and other nongaming amenities.

Some Philadelphia residents, however, are oblivious to the city’s burgeoning casino market.

Steve Bolin, a sales representative, has been coming to Pat’s much of his life. He’s never been to SugarHouse and the only Pennsylvania casino he’s visited is the Mohegan Sun at Pocono Downs racetrack casino Wilkes-Barre in the northeast corner of the state.

“It really doesn’t interest me,” Bolin said. “I’d rather go to Atlantic City or Las Vegas.”

Philadelphians are not a shy bunch.

Philadelphia natives will tell you that Tony Luke’s has the best cheesesteaks, but it’s no longer a business centered on South Philly. The operation has branched out to more than a dozen locations throughout Pennsylvania, and neighboring states, including outlets at Harrah’s Philadelphia and the Borgata in Atlantic City.

So when it comes to casinos in the City of Brotherly Love, the debate is heated.

“People don’t come to Philadelphia for a casino, they come here for other reasons,” Smith said.

To Smith, Philadelphia’s draw is a cheesesteak, not a slot machine.

Howard Stutz’s Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com or
702-477-3871. Follow @howardstutz on Twitter.