AUGUSTA — Nearly eight months after winning voters’ approval to build a casino resort in Oxford County, the project’s investors have yet to choose a gaming company to operate the facility.
While the investors say they will announce a partner this summer, their opponents and some industry experts doubt they will find one because the business plan has become too risky.
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They say proposals for gambling facilities in Lewiston and Biddeford, which are closer to Maine’s population centers, threaten the viability of a casino planned for the rural town of Oxford.
Faced with competition for market share, any casino proposed for Oxford would have be scaled back significantly, said Sebastian Sinclair, president of Christiansen Capital Advisors, a New Gloucester-based management consultant firm whose clients include gaming operators, banks and venture capital firms.
The unpredictable future of gambling in Maine makes investment here risky, he said. “There is no certainty of where and when other forms of gaming will be authorized in the future.”
He said casinos draw most of their customers from their immediate areas, and a casino in Lewiston, near the Maine Turnpike and less than 30 miles from Oxford, would pose the biggest threat to Oxford’s casino.
During last year’s referendum campaign, the investors in the Oxford casino talked about building a $165 million resort facility. They are now moving forward on Phase 1, a 65,000-square-foot facility including a gambling area, a dining facility and a lounge.
Phase 1 would cost $45 million to $60 million, said Rob Lally of Black Bear Entertainment, the casino investment group. It would be built on a nearly 100-acre site on Route 26. The company has cleared the land but has yet to start construction.
Lally said potential gaming partners and other investors have told his group that the site is an excellent location for a casino.
He said Phase 1 is designed to be successful even if gaming facilities are built in Lewiston and Biddeford. “This thing is sized for competition.”
The only uncertainty the group has encountered, he said, is an appeal of the construction permits granted by the Maine Department of Environmental Protection. The appeal was filed by a group of local residents and the Androscoggin River Alliance, which argued that the state was so eager to grant the permits quickly that it accepted an incomplete application.
The Board of Environmental Protection ruled against the appeal last week and is allowing the project to move forward. However, it gave Black Bear Entertainment 90 days to prove there is sufficient water at the site. It also said that Black Bear Entertainment cannot work on the project, other than conducting groundwater testing, until it provides evidence of its financial capacity, including the cost of the project and evidence that a bank has given it a line of credit or a loan.
Lally said his group includes people who have substantial assets and will easily be able to show it has the financial capacity to complete the project. He said his group will provide the necessary information before July 7, when the BEP ruling becomes effective.
Before the project is allowed to proceed, Black Bear Entertainment should show evidence that it has an experienced operating partner, because it will never get a license to operate the casino without one, said Steve Hinchman, a lawyer for the Androscoggin River Alliance.
A new casino in a former factory in Lewiston or near the Maine Turnpike in Biddeford would pose much less environmental risk than one in Oxford, near four lakes that face water quality problems because of development, Hinchman said.
This November, voters will decide on a citizens initiative that would allow the casino in Lewiston.
It appears likely that voters will also vote on slot machines at horse racing facilities in Biddeford and in Washington County. Although the House and Senate approved those gambling operations in preliminary votes, Gov. Paul LePage has said he will veto the bill and send the issue to voters.
The Legislature is expected to take final action next week on the bill, which is the product of a petition drive.
Stavros Mendros, manager of Great Falls Recreation and Redevelopment LLC, which is proposing to build a casino and convention center in Bates Mill No. 5 in Lewiston, said all three gambling projects can coexist if investors don’t overbuild.
He anticipates that the Oxford casino’s proponents will campaign against the Lewiston and Biddeford projects.
“The casino in Oxford just needs to be built smaller, but they won’t because they are going to fight to protect their monopoly,” he said.
Sinclair, of Christiansen Capital Advisors, said Maine would be better positioned to take advantage of gambling revenue if it established a statewide plan. Once casinos are built, he said, it’s too late to do any planning.
“Whether you are in favor of it or against it, gambling is a resource that can be tapped,” he said. “People like to gamble. But it can be only tapped and utilized once.”
MaineToday Media State House Writer Tom Bell can be contacted at 699-6261 or at: tbell@mainetoday.com
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