Caesars Sues Chairman of Mass Gaming Commission

On December 11, 2013, Caesars Entertainment filed a lawsuit against Stephen Crosby, the Chairman of the Massachusetts Gaming Commission claiming that the state’s top gambling regulator failed to disclose a potential conflict of interest in a timely manner and treated Caesars Entertainment unfairly during a background check.

Las Vegas-based Caesars had been a partner of the Suffolk Downs horse track in a resort casino bid, but it withdrew in October after concerns were raised during a background check by Massachusetts Gaming Commission staff.

The lawsuit, filed Wednesday by Caesars’ Massachusetts affiliate in U.S. District Court in Boston, challenges the “constitutionality, objectivity and fairness” of Caesars’ treatment by the commission’s chair, Stephen Crosby.  It alleges that Crosby’s intent was to block the impartial consideration of Suffolk Downs’ casino application.

The complaint seeks unspecified damages and was filed against Crosby both in his official capacity as chairman of the five-member panel and as an individual.  The company also asked the court to permanently block release of the full background investigation.

Caesars alleges that Crosby failed to disclose publicly, in a timely manner, his friendship and past business relationship with Paul Lohnes, a part owner of land in Everett on which Wynn Resorts hopes to develop a casino.  The Wynn proposal could have competed directly with Suffolk Downs for the sole eastern Massachusetts resort casino license available under the state’s 2011 gambling law.

Crosby, who served in the National Guard with Lohnes and had a business venture with him from 1983 to 1990, has said he disclosed the relationship to Gov. Deval Patrick and in two filings with the state Ethics Commission.  However, he did not publicly disclose the relationship until last week.

The lawsuit claims the commission was prepared to issue an “incorrect and unprecedented recommendation” that Caesars was not suitable to participate in gambling in Massachusetts.

A commission report, among other things, said it was concerned about Caesars’ now-ended licensing agreement for a Las Vegas hotel with a subsidiary of New York-based Gansevoort Hotel Group.  The report said a Gansevoort investor has been under scrutiny, though not charged, over alleged ties to Russian organized crime.

Caesars, according to the lawsuit, rebutted the findings but informed commission investigators it would be willing to restructure or even terminate its licensing deal with Gansevoort. Caesars, which claims to have invested $100 million into the casino proposal, later agreed to a request from Suffolk Downs to withdraw from the project.

Voters in East Boston recently rejected the proposed casino on November 5.  Suffolk Downs subsequently reached a partnership agreement with Mohegan Sun, which is pursuing a revised casino proposal that would be entirely in Revere, where voters had approved a casino.

The lawsuit could have an impact on the casino process in Massachusetts, especially for the award of a casino license for the eastern region, known as Region A.

The complaint, Caesars Massachusetts Management Company, LLC, et al v. Stephen P. Crosby, was filed in United States District Court, District of Massachusetts, Docket Number 1:13-cv-13144-NMG.

Click the following link to download copy of complaint: http://media.wbur.org/wordpress/1/files/2013/12/CAESARS-1212.pdf

For information on gaming law and casinos in Massachusetts, please feel free to contact Considine & Furey, LLP at 617-723-7200; and find us online at www.considinefurey.com

 Posted by Mark D. Donovan, Esq.

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