When in Doubt, Litigate

We live in a litigious society and we have an adversarial legal system. We go to court and argue about almost everything and that includes casino licenses. Take Massachusetts and New York for example; they are the latest states to issue casino licenses. They are also home to the most recently filed litigation over licenses. There are suits over the process of awarding the licenses, the potential impacts of a casino and the effects of losing a license or a casino. Indeed, going to court is a grand tradition in our country and our industry.

In 1989, Professor William Eadington staged the first national conference on Indian gaming. The National Indian Gaming Regulatory Act (NIGRA) had just passed and hundreds of people gathered to discuss the Act and its meaning. Every lawyer and every tribal leader, and there were lots of both, had an opinion. After three days of heated debate, Professor Nelson Rose put the act and the debate in perspective for me. During his presentation, Nelson said no one could know what the act meant until it was litigated. In his opinion, the litigation could take years. Twenty-six years later the NIGRA is still being litigated and its meaning is still being refined in court.

The gaming industry is getting a taste of the process of litigating legislation in Massachusetts and New York. Both states have a number of suits and counter suits in process. In my opinion, the litigation will not accomplish much. It is rare for a license to be taken back and given to another bidder and even rarer to overturn the enabling legislation. It may fail at overturning anything, but the litigation can accomplish a couple of things. The law suits delay the construction and completion of new casinos and drastically increase the costs. The courtroom battles also drag some dirty laundry out into the public view.

In Massachusetts, Steve Wynn’s laundry is out in public at the moment due to the mayor of Boston, Martin Walsh. The mayor appears to feel he and his city have been slighted. Not receiving the respect due to his exalted office and the famous city, Mayor Walsh ran to court to stop the Wynn property and/or collect as much money for his city as possible if the casino is built. He has gotten some help from an anti-gambling attorney general.

Attorney General Maura Healey has made it clear she does not approve of gaming. Before Penn opened its racino in Plainville she sent an army of law enforcement officials to watch every move Penn National made; implying in the process that all gaming operators were crooks and gangsters. Lately, she called for a denial of environmental approval of the Wynn project. Wynn of course threatened to sue if he was denied the approval. All told, the law suits over the enabling legislation, the individual licenses, the regulatory process and the actions of individual gaming commission members will cost the state hundreds of millions of dollars in lost tax revenue, according to some estimates.

Boston and two nearby cities, Revere and Somerville, filed separate lawsuits challenging regulators’ decision to give Wynn the only casino license for eastern Massachusetts. Boston’s objections to the project have been particularly intense; some elected officials there believe the Massachusetts Gaming Commission unfairly favored Wynn during his application for the casino license. J. D. Morris, Las Vegas Sun, 8-24-15

Massachusetts’ Attorney General called for state environmental officials to deny the company a crucial environmental permit for its $1.7 billion casino project. Friday’s correspondence from Healey to the state’s environmental affairs secretary contends that traffic issues surrounding the notoriously congested area around Boston’s Sullivan Square need to be addressed by Wynn before the permit is issued. Bulletin Leader, 8-24-15

The Wynn casino is the only casino in court Massachusetts at the moment. But, there is one license left to be awarded and of course that could lead to further litigation. However, a law suit in Connecticut is related to the casinos in Massachusetts. The Indian casinos in Connecticut have been hit very hard by casinos in other states. The casinos in Massachusetts might further cut their revenue by as much as thirty or forty percent. The delays have allowed the tribes to develop a new strategy. Mohegan Sun and Foxwoods want to expand their operations to the border between the two states. The Connecticut legislature is sympathetic and passed a special law allowing the tribes to combine and open at least one more casino on the border. Not so quick guys, first it is off to court we must go.

MGM is suing the governor of Connecticut and a couple of other state officials over that law. MGM claims the Connecticut law discriminates against non-Indian casino operators who might want to bid for any new licenses. MGM is trying to cover all of the bases. It has a license for Springfield. If there is going to be a casino in Connecticut to compete against its Springfield casino, MGM thinks it should be the operator.

New York has not yet proved to be half as interesting as Massachusetts. But it is demonstrating Professor Rose’s principle that we never know what a law means until it is litigated.

Eight months after a small Finger Lakes farm town was recommended for one of three New York casino licenses, the battle over the $425 million development is ratcheting up again. A recent appeals court ruling involving state environmental review law has suspended site construction in Tyre, between Rochester and Syracuse along the Thruway. Lago Resort & Casino supporters say the ruling was based on a procedural misstep that is being addressed by restarting the review. Michael Hill, Associated Press, 8-24-15

In New York, the dissidents and would-be licensees are doing what they can to take away licenses that have been granted and even to have the original gaming legislation repealed. The chairman of the state gaming commission has resigned to pursue other opportunities. He says he did not resign over the threat of any legal action; but if he was watching the investigations and law suits the gaming chairman has endured in Massachusetts it is bound to have weighed on his mind. When he was lobbying for casinos in New York, Governor Andrew Cuomo had hoped to have seven licenses awarded by September and to have shovels in the ground by January 2016. At most four licenses appear to have been awarded – I say appear because we have to await the outcome of the litigation to know the number for certain. The Seneca and the Oneida Indian tribes and the racetrack at Saratoga are taking advantage of the delays by expanding their own operations. The costs of the delays have not reached the level of Massachusetts yet, but they could. As Professor Rose so wisely said in 1989, until the courtroom dust clears we do not know what to expect. And if you are dissatisfied, litigate – it’s the American way.

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