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Gaming board fighting 'meritless' appeals
Friday, March 16, 2007

HARRISBURG -- Two weeks ago, four casino applicants who failed in their license bids filed lawsuits against the Pennsylvania Gaming Control Board, challenging its decisions.

Yesterday, the gaming board struck back, asking the state Supreme Court to order the four losers to post bonds totaling $364 million to compensate the state for gambling revenues that will be lost as the court cases drag on.

 
 
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"We have a fiduciary obligation to the taxpayers of Pennsylvania to take this action,'' said gaming board Chairman Tad Decker. "The state and its taxpayers have been damaged because of these casino appeals," which he called "meritless."

The gaming board is asking the Supreme Court to grant an application for special relief and order both losing casino applicants from Pittsburgh -- Station Square and Isle of Capri -- to post bonds of $84 million each.

Based on projected gross terminal revenue from the 3,000 machines initially planned at the winning Pittsburgh casino, Don Barden's Majestic Star, Mr. Decker claims the state will lose an estimated $84 million over six months. That's a "conservative" estimate of the losses due to the estimated delay in opening Majestic Star caused by the appeals filed by Station Square and Isle of Capri, he said.

The two lawsuits also will cause a delay in the state receiving Mr. Barden's onetime license fee of $50 million. The board will lose the interest it would have earned on that money over six months, the board said.

Each of the two losing applicants is being asked to post the full $84 million bond so that the state would get the full amount of lost revenue if either Station Square or Isle of Capri drops its lawsuit against the board, said board spokesman Doug Harbach.

Pittsburgh attorney Arthur Stroyd, representing Station Square, declined to comment about the gaming board's request for bond. "Our response will be filed in due course with the Supreme Court," he said.

Isle of Capri spokeswoman Jill Haynes also declined comment.

The board contended that it eventually will defeat the Station Square and Isle of Capri lawsuits, which also are filed with the Supreme Court. The two challengers have asked the court to overturn the board's decision to give the slots license to Majestic Star.

If the challengers were to win their case -- and the board is told to reconsider who gets the Pittsburgh license -- the challengers wouldn't have to pay the money to the board. If they lose, the board would receive the amount of the bond to cover losses.

Oral arguments on their lawsuits aren't to be heard until mid-May and the high court could then take several months to issue its opinion. That would delay the board from issuing the slots license to Mr. Barden for about six months, the board contended.

The gaming board also took aim at two other losing casino applicants, one in Philadelphia and one in the Poconos.

It asked the high court to order Riverwalk Casino, which lost out on a stand-alone casino license in Philadelphia, to post a $138 million bond to compensate the state for tax revenue that will be lost by six months of delay in getting Philadelphia's two casinos licensed and operating.

And it wants Pocono Manor Casino to post a $58 million bond for the same reason -- to compensate the state for delays in getting the licensed Mount Airy Casino up and running.

The board issued five stand-alone casino licenses in late December -- to Majestic Star in Pittsburgh, SugarHouse Casino and Foxwoods Casino in Philadelphia, Mount Airy in the Poconos and Sands Bethworks in Bethlehem. The Sands Bethworks casino is the only license not being challenged.

The four lawsuits filed by losing applicants aren't the only fights the board is facing due to its decisions on the casino licenses. Philadelphia City Council yesterday sided with citizens groups that are fighting the decision to place two casinos along the Delaware River. Council agreed to hold a citywide referendum May 15 on whether casinos can be built within 1,500 feet of churches, schools or homes -- a rule that would knock out both Philadelphia casinos if it survives a legal challenge.

First published on March 16, 2007 at 12:00 am
Bureau Chief Tom Barnes can be reached at tbarnes@post-gazette.com or 1-717-787-4254.
Read the PG's Casino Journal by Bill Toland
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