|By Matt Assad, The Morning Call,
Allentown, Pa.McClatchy-Tribune Regional News
Jun. 8, 2010--Mount Airy Casino Resort is Pennsylvania's worst-performing gambling hall, but like a blackjack player convinced he's holding a winning hand, CEO George Toth is about to double down.
Mount Airy will wager more than $100 million that it can relive the property's pre-casino heyday, when people in New York and New Jersey got away from life in the city by taking "a fling in the spring in the Poconos."
Toth said Mount Airy plans to invest the money in the next year to add table games, a swimming pool and 200 more hotel rooms, and to expand its conference facility while luring a second hotel, several new businesses and a concert arena to the Paradise Township property off Interstate 80.
Pumping that kind of cash into a casino that is performing well below expectations might seem like a risk, but Toth doesn't see it that way.
"Three years from now, when you look at this property, it will be a very different place," Toth said. "We intend to make it a destination. People will come to realize this is not the old Mount Airy Lodge. It is the most beautiful casino in Pennsylvania."
Gamblers certainly have not treated it that way. Since opening in 2007, Mount Airy has become the state's worst-performing casino. Mount Airy developers persuaded the Pennsylvania Gaming Control Board to award it a gaming license, in part, by projecting the casino would bring in $313 million a year in gross terminal revenue, which is all the state-taxed money left in the slot machines after all winners are paid.
Instead, in the past year, Mount Airy's revenue has been $151 million, last in the state. Just 28 miles away, near Wilkes-Barre, the Mohegan Sun at Pocono Downs is bringing in $225 million, even though it was projected to make half as much as Mount Airy.
Some of that can be blamed on legal issues faced by Mount Airy founder Louis DeNaples, who had faced criminal charges that have since been withdrawn in return for his turning control of the casino over to his daughter, Lisa.
But the bigger problem, Toth acknowledges, is that Mount Airy is the only casino not in one of the state's major population zones. Instead, it's in sparsely populated Monroe County, surrounded by casinos near Wilkes-Barre, Harrisburg and Philadelphia, as well as in Bethlehem.
That's where Toth's plan and another giant investment by the DeNaples family come in. He's hoping to entice millions of gamblers from New York and New Jersey to spend their weekends at Mount Airy, playing the table games, swimming, golfing or shopping.
"It may not seem like the best time to be putting that kind of money into that property, but actually it makes sense," said Grant Govertsen, co-founder of Las Vegas-based Union Gaming Group, analysts for the worldwide gaming industry. "In fact, in Mount Airy's case, it might even be necessary for survival."
That survival will require that Toth walk a fine line. On one hand, he wants out-of-state residents to remember the 1970s, when they were enticed by the ever-present commercials to "take a fling in the spring in the Poconos," whether for a honeymoon or just a weekend away from the stresses of the city.
On the other hand, Toth wants those same out-of-state people to forget the tacky, outdated, tattered hideaway that Mount Airy Lodge became before closing in 2001.
What he wants them to see is the glitzy casino that sits there now, with restaurants, a conference center, 2,200 slot machines and a golf course. This year, DeNaples, while not permitted to attend executive meetings or make decisions, was allowed to put up $35 million to add 68 table games and an Olympic-size swimming pool and to upgrade the golf course.
By summer's end, Toth said, he hopes to begin a more than $20 million project to add 200 hotel rooms to the 188 existing rooms he says are fully booked each weekend, and to add tennis courts. In addition, Mount Airy is negotiating with a yet-to-be-named national hotel operator that would build a 200- to 400-room hotel on the 1,500 acres of former resort land that surrounds the casino.
By next summer he plans a more-than $75 million project to add a 2,000-space parking deck and restaurants and to expand the gambling floor space and the conference center space to make it more attractive to corporate conventions.
Toth wouldn't discuss exactly who will pay for all that, but DeNaples guaranteed the initial $360 million to build the casino, he funded the $35 million being spent now and there's nothing to suggest he won't continue to use his considerable wealth to build up the casino resort.
"The DeNaples family is in this for the long haul," Toth said. "They believe in the Poconos and they believe in this resort."
On top of the DeNaples family investment, Toth said Mount Airy is attracting developers to fill the acreage around the casino with retail shops, restaurants and an arena that would host 2,000 to 3,000 people for concerts and events.
No one will be rooting for Mount Airy more than Paradise Township. After the casino opened in 2007, the township lowered real estate taxes 22 percent and began paving more roads. With new revenues due as Mount Airy expands, it's already considering adding a community center or giving residents free trash pickup. And that's all happening at a time when other municipalities are cutting budgets and raising taxes. All of a sudden, Paradise Township is recession-proof.
"We're considering a survey to ask residents how they'd like to spend the extra money," said Reda Briglia, township secretary, treasurer and supervisor. "Obviously, we're in a better position than most of our neighbors because of Mount Airy."
Turns out, Mount Airy's plan to reintroduce the Poconos as the place to visit for city dwellers from the East mirrors the latest efforts by the Pocono Mountain Visitors Bureau, where the catch phrase is: "It's Time for the Pocono Mountains."
The difference is, the visitors bureau doesn't have the $100 million-plus to back up such ambitions.
"This is big," said Carl Wilgus, visitors bureau president. "I love people that think big, dream big and do big."
And in this case, bet big.
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