Pennsylvania casino regulators (a term that's quickly become oxymoronic) will be looking into whether a transfer of ownership at the momentarily defunct Majestic Star project enables the state to collect an additional $50 million license fee. Meanwhile, local legislators are understandably fuming over the fact that the casino has passed from Don Barden to Neil Bluhm as though the state's regulatory framework didn't even exist.

Barden, for sure, is getting a sweet deal out of this. He's able to convert his casino license into a 25% share of the completed casino: an (at least) $195 million value for a fourth of the price. And if he ever does find a buyer for the downtown Vegas Fitzgeralds, he could rack up as much as another 19%, presumably at discount rates, too. For a guy who looked like a laughingstock a week ago, Barden's about to make out like a bandit.

Pittsburgh's savior?

The elephant in the middle of the room is that the deal would turn de facto control both Majestic Star and one of Philadelphia's slot parlors over to a single investor. While this deal has been structured to comply with the letter of Pennsylvania law, it doesn't comport well with its spirit.

While Bluhm would only directly own 1% of Majestic Star, he's the co-founder of the fund that will hold the remaining 74%. Anyone not born yesterday is going to know who'll be calling the shots at Majestic Star ... unless regulators demand the erection of a so-called "Chinese wall" whereby Bluhm could own a piece of the casino but would have no input into its operation.

Or, with his Philadelphia casino project (SugarHouse) intractably stuck in the mud -- through no fault of his own -- perhaps Bluhm could make a counterproposal. If he sells down his share of SugarHouse to 33.3%, he can own as much of Majestic Star as he likes. And, considering that Majestic Star is at least partly built while not so much as one shovel has gone into the ground on SugarHouse, Bluhm is a lot closer to seeing a return on his investment if he switches his primary allegiance to Pittsburgh.

For all its back-room coziness, the Barden-to-Bluhm swap offers several advantages. Bluhm is already on the scene, he's licensed, he's got casino experience and access to capital, and he's somebody who can get big projects done. Unless a first-rank casino operator wants to help themselves to Barden's leftovers, Bluhm looks like Pittsburgh's best bet.