PGCB says Last “NO!” to Endeka’s Slot Machines request

For the last three and a half years, the Pennsylvania Gaming Control Board (PGCB) has poured over hundreds of pages from application submissions by Endeka Entertainment, LP. The company, which has been licensed licensed to host a harness racing track in Mahoning, PA since October 2012, has yet to build it. That’s because they’d rather go the full stretch, constructing a complete Mahoning Casino alongside the track.
For that, they’ll need a Category 1 slots license, but it’s become quite clear, at this point, that they don’t have a clear plan as to how to do it; or more specifically, how to pay for it. And the PGCB is clearly fed up with it.

As regulators have already done on several previous occasions, Endeka’s latest application for slot machines was denied earlier this week. The Board slammed the company for its incompetency throughout the proceedings, repeatedly lacking the proper evidence of reliable financial backing, and wasting numerous granted extensions to sort it out.

The PGCB has become so disinclined with the Mahoning Casino proposal that, this time around, the company’s application was denied “with prejudice”, meaning the company cannot receive any further extensions, or submit a new application. The PCGB has officially washed it’s hands of the situation.

PGCB Slams Endeka’s Methods

“Throughout this process Endeka has paraded various funding sources before the Board and continuously failed to provide financial backer information that assures the Board, by clear and convincing evidence, of the stability and integrity of the backers,” read the Boards judgment of the Mahoning Casino proposal, published on Monday.

“It has also failed to show it has obtained definitive financing, and it has not provided evidence of the viability of the Project,” the PGCB report continued. “Therefore it has not met its burden to show that it is financially suitable to obtain a Category 1 Slot Machine License.”

The document listed the entire process, dating back to Endeka’s original slot machines license application in May, 2013. That section alone was over 7 pages, and 53 parts, long.

One of the Board’s key arguments against granting the slot machine license was Endeka’s repeated failure to provide suitable financial backing, going so far as to provide false information on several occasions.

At one point, Endeka was given a 6 month extension to gather proper documentation regarding a suitable backer. 14 months later, the company requested another extension, for the exact same purpose, having failed to make any use of the original extension.

Later, the Board said that Endeka filed documents stating Legado Investment Group would provide financing, and that the investor was up to date on all implied responsibilities of doing so. But that was not the case.

Most recently, the company stated it had made arrangements to secure a $205 million loan from Merrill Lynch/Bank of America. At a regulatory hearing on July 13, Endeka said it would use $65 million to cover the licensing fees, and the other $140 million to build the Mahoning Casino and Racetrack, complete with 1,500 slot machines, 38 table games and three restaurants.

That was all well and good, until ‘Jeffrey Fitz‘ testified at that hearing. Fitz said he was an employee of Merrill Lynch/Bank of America, but that he was “not a decision maker”, therefore could not provide a timeframe for the loan. In fact, he seemed to know very little regarding the details of the Mahoning Casino project, as he hadn’t “done any due diligence yet”.

But Wait, It Gets Better…

As a notation in the PGCB’s rejection notice – written after the judgment of denial was finalized – it was pointed out that regulators were contacted two days after the July hearing by a representative of Merrill Lynch/Bank of America’s Real Estate, Gaming and Lodging Investment Banking Group.

“A member of that group had read a media account of the Board’s July 13^th public hearing and was inquiring as to the name of the individual providing testimony on behalf of Merrill Lynch/Bank of America, as such participation was unbeknownst to anyone in that arm of the institution, which provides gaming related extensions of credit,” read the PGCB report.