The competition to secure the license for a standalone slot machine casino in Pittsburgh is heating up.

MTR Gaming, owner of Mountaineer Race Track and Gaming Resort in Chester, W.Va., definitely will seek the one state license available for the Pittsburgh casino and is looking at locations in the Strip District and on the North Shore near the Del Monte plant.

In an interview yesterday, Chief Executive Officer Edson "Ted" Arneault said that MTR not only will go after the license but also will pledge to earmark 2 percent of slots revenue, an estimated $6 million a year, to help build a new hockey arena.

He challenged other potential applicants -- which include Forest City Enterprises, the owner of Station Square, parking czar Merrill Stabile, and Beaver County developer Charles Betters -- to make the same commitment.

"This is a one-time shot that Pittsburgh has to really make the right decision, and you have to look at what's going to be a catalyst for all of Pittsburgh," he said.

MTR would be manager and "lead advocate" for the standalone casino but would be limited to no more than a one-third ownership share under state law, Arneault said. That's because MTR also will hold a slots license at a thoroughbred racetrack it is developing in Erie.

Arneault said MTR would assemble other investors with ties to the Pittsburgh community for the Pittsburgh casino. He would not identify them, saying the group hasn't been finalized.

He said he has talked to insurance broker William Lieberman and investor Charles Zappala, both of whom are seeking to invest in the Pittsburgh casino. But he added he has not been "actively talking to anyone" recently because the state Supreme Court hadn't ruled on a legal challenge to the state's slot machine law.

That changed Wednesday, when the court upheld the law, and almost immediately interest in the Pittsburgh casino, which will have up to 5,000 machines, intensified.

Betters, through his attorney, said he would seek the standalone license for his 635-acre Pittsburgh Palisades Park project in Hays. Arneault officially announced his intentions yesterday, though his interest in the casino had been reported in the past.

Arneault originally was mentioned as a possible partner with the Penguins and owner Mario Lemieux in the team's bid to secure the casino license to help fund a new arena. Lemieux has said that getting a new facility is critical to keeping the Penguins in Pittsburgh.

Yesterday, Arneault said he hasn't ruled out the possibility of working with Lemieux and the team, but he also made it clear that he was talking with other potential investors.

"Mario's a very close personal friend. A lot of it would depend on what he and I would want to do," he said.

A Penguins spokesman declined comment.

"I think Downtown needs the arena, not just for the Penguins. It needs the arena for the multitude of other uses that it brings," Arneault said.

He would not identify a location for the proposed casino, other than to say it would be "Downtown along the river."

He acknowledged that he has talked to the Buncher Co. about property it owns in the Strip District and the North Side. One potential site involves Buncher-owned property near the Del Monte plant. Buncher officials could not be reached for comment.

MTR joins Forest City (which is teaming with Harrah's Entertainment), the Penguins, Stabile and Betters as likely bidders for the slots license. Another possible applicant is Don Barden, a Detroit businessman who owns casinos in Las Vegas, Mississippi, Colorado and Indiana.

Because MTR is limited to one-third ownership, Arneault said he is willing to work with other potential applicants to put together a consortium to bid for the license.

"We're going to team up with the best partners to get it done," he said. "We think it's so important for the right location, the right facility, for all of Pittsburgh's future business. This can really be a catalyst that will change the dynamics of Downtown Pittsburgh."

Arneault is not the only one pledging to return a portion of casino revenues to the community in exchange for the license.

Stabile has promised to donate a portion of revenues each year to selected community assets. He also has offered to help finance a 1,240-space parking garage being built on the North Shore by the city-Allegheny County Sports & Exhibition Authority or to assume debt service payments if the garage is completed before a casino gets up and running.

The Pennsylvania Gaming Control Board, whose members have been appointed by Gov. Ed Rendell and state legislative leaders, will decide who gets the Pittsburgh license. Community benefit is one thing it is expected to look at.

Likewise, a local task force appointed by Mayor Tom Murphy to consider the impact of a casino also is looking at community support as part of its recommendations.

Asked whether he would embrace Arneault's challenge, Stabile replied, "I think everybody's going to have to be creative like that in order to make the best proposal. I don't want to say yes or no. I just want to say it's important to be thinking like this."

Both Thomas King III, attorney for Betters, and Al Ratner, board co-chairman for Forest City Enterprises, said it is premature to discuss such things given that the application process for the license hasn't been set up yet. However, King said Betters is willing to discuss a new arena as part of the application process.

s> The Meadows horse track anxious to get slot machines. Page B-1.