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Len Wolman, Sol Kerzner and Private Equity Firm Starwood Capital Group Wager Hundreds
 of Millions on Tired Rhode Island Dog Track; The Greyhounds Are Still There Along
 with a Planned 4,752 Slot Machines

By Mark Peters, The Hartford Courant, Conn.McClatchy-Tribune Business News

Apr. 7, 2007 - LINCOLN, R.I. -- Developer Len Wolman has made a huge bet on New England gamblers before.

The wager: spend hundreds of millions of dollars on stylish design, finely appointed restaurants and a sea of flashing slot machines.

The possible payoff: large crowds and lucrative returns for years to come.

A decade ago, it was Mohegan Sun in southeastern Connecticut. Now Wolman -- along with two high-profile partners -- is taking a similar approach in nearby Rhode Island.

Wolman's firm and its partners bought a tired dog track a few miles north of Providence that had slot machines for years -- a lucrative franchise, one of only two slots venues in the Ocean State. With a $655 million outlay including the purchase and renovations, they turned it into a Las Vegas-style casino, vastly expanded with entertainment and glitzy restaurants.

The old Lincoln Park is now Twin River. Greyhounds? They're still there, as an afterthought, a state requirement for Twin River to maintain its slot machines.

Wolman's partnership -- which includes Sol Kerzner, an international casino developer who was his partner at Mohegan Sun, and Greenwich-based private equity firm Starwood Capital Group -- outbid gaming giant MGM Mirage. The partnership, BLB Investors, now holds a gambling monopoly in the turf between Boston and Providence.

"We are opportunists. We are always looking," said Wolman, chairman and CEO of Waterford Group, a hotel management and development firm that is also master developer for Adriaen's Landing in downtown Hartford.

Whether the venture represents competition for Foxwoods Resort Casino and Mohegan Sun remains an open question. The tribal casinos in Connecticut certainly draw from Rhode Island and Boston, but the target customer isn't necessarily the same. Regardless, the accepted view in the casino industry -- and one Wolman clearly endorses -- is that the New England market has plenty of room for more gambling.

Rhode Island law forbids table games. But BLB convinced Rhode Island legislators to allow more than 1,000 additional machines at the track, for a total of 4,752 planned by the end of this year. Only three other U.S. casinos have more machines -- Mohegan Sun, Foxwoods and Bally's in Atlantic City.

A new, main casino opened last month. On Monday, cast members of "The Sopranos" will gather for the first meal at a cavernous, 480-seat version of the New York City restaurant Carmine's.

The first concert at a 2,000-seat hall, the Goo Goo Dolls, will follow later this month.

Twin River will draw some customers who would otherwise go to Connecticut. Foxwoods particularly relies on Massachusetts and Rhode Island, with an estimated 49 percent of customers coming from the two states, according to an annual study by the Center for Policy Analysis at the University of Massachusetts Dartmouth. Both Connecticut casinos are in the middle of massive expansions totaling more than $1.4 billion.

"The market is big enough for us all to co-exist," said John O'Brien, president of Foxwoods.

Wolman's approach in Rhode Island remains the same as when he first developed Mohegan Sun with Kerzner and the Mohegan Tribe a decade ago: Spend big at the outset to create a glitzy draw. The native of South Africa bristles at what the dog track looked like under his predecessors, Wembley PLC -- including a loading dock next to the main entrance.

Wembley sold the track when two former executives were indicted and convicted of conspiring to bribe a speaker of the Rhode Island House of Representatives.

The $220 million expansion, on top of a $435 million purchase price, brings a radical change from the seedy Lincoln Park. A two-story lighthouse replica rises above a bar and stage in the middle of the new casino space, mimicking the layout of the Wolf Den at Mohegan Sun. The casino's Irish pub was built in Ireland, shipped to Rhode Island and assembled at the track. Dark wood and large wine racks dominate the steakhouse, where an entree costs $30 to $40.

"It goes down to the details. The logo is on every garbage can," said Wolman, pointing to the two squiggly lines for Twin River.

The approach was successful at Mohegan Sun. The Wolman-Kerzner partnership, Trading Cove, built the original casino with the Mohegan Tribe. It also oversaw its more than $1 billion expansion at the casino in 2002.

The tribe bought out Trading Cove, but the partnership still receives 5 percent of gross revenue from Mohegan Sun until 2014. That equaled $75 million last year, according to the federal filings by the tribe.

Lincoln Park's gaming revenue last year totaled $329 million, compared with $818 million at Foxwoods and $892 million at Mohegan Sun, for slots alone, according to state figures. Wolman would not reveal his projections for Twin River.

One issue for "racinos" -- racetracks with casino gambling -- is that only about a quarter of gamblers go to them, said Clyde W. Barrow, director of the UMass Center for Policy Analysis, which conducts the annual casino studies. They're viewed as a local stop, while most players want the attractiveness and size of a larger casino, he said.

"They are not the high-end market the casinos capture," said Barrow, who said he expects Twin River to take only a few percentage points of the tribal casinos' business -- more from Foxwoods than Mohegan Sun.

One self-proclaimed Foxwoods patron, Richard Giannangelo of the Hyde Park-section of Boston, was at Twin River on Thursday afternoon because, he said, he wanted to gamble for a couple of hours without spending an extra hour on the road. He prefers Foxwoods' points reward program and its larger casino.

"The only reason I'm here is because it's closer," Giannangelo said as he walked into Twin River.

Wolman sees convenience and location as two major advantages of the expanded racetrack. The Twin River partners want to extend the venue's reach of typical customers from 15 miles to 50 or more miles and drop the average age of customers from the mid-50s to the low 40s. That's why their plan includes restaurants, bars, a comedy club and the multipurpose hall for concerts, conventions and sporting events such as boxing.

Mitchell Etess, president and CEO of Mohegan Sun, knows what Wolman and Kerzner can do. And he said there is no doubt they will increase competition for an expanding New England gambling market.

Wolman drew a comparison to Las Vegas. He likens Twin River to the Station Casinos, a company that caters to a local audience. Mohegan Sun and Foxwoods, on the other hand, are the large mega-resorts like The Palms or Bellagio.

"One could argue the new potential here is pretty significant," Wolman said.

Contact Mark Peters at mrpeters@courant.com.

-----

Copyright (c) 2007, The Hartford Courant, Conn.

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