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State Supreme Court sounds off on casino licensing process
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In an appeal of a Category 3 "resort" slots license before the Pennsylvania Supreme Court, some of the justices took an opportunity to challenge the state Gaming Control Board on ancillary transparency and due-process issues.
Mason-Dixon Resorts, which was denied an application to add slot machines to an existing resort near Gettysburg, was appealing the board's decision to instead grant an application to Nemacolin Woodlands Resorts in Fayette County.
When Mason-Dixon's attorney, Stephen D. Schrier of Blank Rome, began his argument, he noted to the justices that they had yet to reverse a decision by the Gaming Control Board that was brought before them on appeal.
His client's case, he said, should be the first.
The court's record on gaming appeals was raised later by Justice Seamus P. McCaffery during Gaming Control Board chief counsel R. Douglas Sherman's arguments in Mason-Dixon Resorts v. Pennsylvania Gaming Control Board.
"This court has been criticized as a quote-unquote 'rubber stamp' for the gaming board," Justice McCaffery said.
He also noted that the 31st Statewide Investigating Grand Jury, which issued a report in May 2011, criticized the board and its practices in awarding licenses and offered suggestions for recommendations. Justice McCaffery said one of his concerns is a "lack of transparency."
One of the grand jury's recommendations, Justice McCaffery said, was to prohibit board members from holding closed-door deliberation sessions except when they are discussing confidential information. He asked Mr. Sherman whether the Nemacolin decision was made behind closed doors, and whether the board has agreed to adopt the recommendation and prohibit such meetings in the future.
Mr. Sherman said the court could certainly understand the need to have full, frank deliberations among the board members when deciding on which applicant would get a license -- and that was done in private in Nemacolin's case.
Justice McCaffery asked twice more whether future meetings would be held in public, and Mr. Sherman said they would be held "within the law."
Justice Max Baer raised similar concerns about the board's processes but from more of a due process standpoint.
At the close of Mr. Schrier's arguments, the attorney noted that part of the record was sealed in this case. He said the state's gaming act threatens sanctions for those who share proprietary or confidential information publicly. Mr. Schrier said that provision effectively means the parties would not know all of the evidence being submitted by the other applicants, unless they appealed.
Justice Baer said the "whole sealing process" and the inability of counsel to engage in arguments on these issues is "bothersome" and "arguably unfair."
Mr. Sherman said applicants have no due process rights because they are merely applicants with a desire to get a license, not applicants with an automatic right to a license, he said.
After some more discussion, Chief Justice Ronald D. Castille said these issues made for "interesting discussion" but were not being challenged by Mason-Dixon in the case -- meaning that the issues were not before the justices.
In arguing for Mason-Dixon, Mr. Schrier said Nemacolin did not meet the Gaming Act's requirement for Category 3 licensees to put the slot machines "in" the hotel. He said the site would have a casino 1.2 miles from the Woodlands Resort lodge, on another part of the resort's property.
After some back-and-forth between the justices and Mr. Schrier about the difference between two buildings a mile apart and two rooms connected by a hallway, Justice Castille said, "We'll have to determine what the meaning of 'in' is," and moved the arguments along.
Mr. Schrier further argued there was no proof the townhomes within the resort's property were owned by Nemacolin, and therefore should not have counted toward the 275-room requirement for a Category 3 licensee.
Mr. Schrier's broader point was that Nemacolin was not financially sound and that, for the first time in awarding licenses, the board did not do its own independent financial analysis.
Mr. Schrier said the board was at a deadlock on the vote for this license for months. It was only after two members left and were replaced with at least one former legislator who helped craft the gaming law that the impasse was broken and Nemacolin was the victor.
First Published March 12, 2012 12:00 am
