Cecil casino must meet goals for minorities, women 

Posted: 6:33 pm Mon, August 30, 2010
By Nicholas Sohr
Daily Record Business Writer

In Maryland’s nascent gaming industry, the struggle to meet set-aside goals for minority- and women-owned businesses extends beyond stocking new casinos with slot machines.

The Governor’s Office of Minority Affairs found that Penn National Gaming Inc., which is set to open the state’s first slots parlor Sept. 30, was far from the minority business, or MBE, participation goal for the construction of Hollywood Casino Perryville.

Through the first half of 2010, Penn National had doled out 18.3 percent of about $49 million spent on the Cecil County project to minority businesses. The company has a 25 percent MBE goal for the $57 million construction project.

Penn National’s subpar showing at the end of June followed a strong start in MBE participation last year and in early 2010, and then a “precipitous drop” in the late winter and early spring, according to the report.

The state criticized the company in the report for not making sure its contractors stuck to commitments to include minority businesses, and noted that communication with casino management indicates “the absence of a clear strategy” for reaching the MBE goals.

The report also calls for more oversight by the minority affairs office.

“Achieving maximum MBE participation in every possible area of slots activity is what we are all striving for,” Luwanda Jenkins, special secretary of minority affairs, said Monday. “With the opening of the [casino] just weeks away, I am encouraged by having achieved meaningful minority business inclusion in the construction of the facility and ongoing operations of the casino.”

Penn National shrugged off offers from the state to help identify possible MBE contractors until May, when the state demanded the company increase its minority participation, according to the report. The company did, however, request waivers for certain expenses in Perryville. Some were granted, but exemptions for costs including engineering and architectural work done before it was granted a gaming license and specialized software to be used in its slot machines were not.

Penn National spokesman D. Eric Schippers said the company has improved its participation numbers since the report was completed in July, with 22 percent of the contracts going to qualified MBEs after an “aggressive” outreach effort in the spring and summer.

Still, the state report said there was “little indication” that Penn National would hit the 25 percent MBE mark.

“It’s going to be a challenge,” Schippers said. “When we look at the available contracts left, it’s certainly going to be a challenge.”

The role of minority businesses in getting the state’s casinos up and running has been a source of friction among state officials and MBE advocates.

The state, which owns or leases all the slot machines at Maryland casinos, has committed $99 million to outfit the Perryville and Ocean Downs casinos with games. In doing so, the state fell short of its own 25 percent MBE goals, with the contracts for both casinos posting minority participation numbers around 20 percent.

Maryland’s only other casino under construction, Ocean Downs, got high marks from the minority affairs office. The Eastern Shore casino, which has seen its grand opening slide back seven months due to construction delays, had used minority businesses for 41 percent of the work done through the end of June.

Ocean Downs’ casino is scheduled to open Dec. 16.