Casino Apr 07 P12 3/28/07 9:28 am Page 12
STATESIDE
Stateside
Star US correspondent Sharon Harris takes us
through some interesting law suits…
sn’t today’s gaming industry all about slots, table has petitioned the Pennsylvania Supreme Court to
I
games and luxurious non-gaming amenities? require challengers of their selected licensees to put
From the latest industry news, you might up big money to cover potential state revenue losses.
conclude that it is also about an increasing The legal papers are based on the premise that court
number of lawsuits. Here are some goodies from challenges will delay the opening of four of the state’s
just the past several weeks: freestanding slots casinos by six months, costing the
A New Jersey Superior Court ruled that former state approximately $280 million in revenue. In
Resorts Atlantic City President Audrey Oswell might addition to one battle in Philadelphia, there are also
proceed with her lawsuit against Wall Street giant two challengers in Pittsburgh and one in the Pocono
Morgan Stanley. She alleges that Morgan Stanley Mountain resort region.
promised her a high-power position at their The PGCB will refund the money to challengers if
proposed $1 billion gaming project – after she left they win. “We believe the taxpayers are entitled to have
Resorts – in return for helping them secure 20 acres some relief, because… they’re going to lose millions
of available land. Morgan Stanley claims Oswell and millions of dollars for each month that goes by,”
approached them as a potential casino investor. said Decker. “That is money you never get back.”
The case may rest on the validity of a binding non- The Supreme Court has scheduled oral arguments
compete clause, which Oswell was under while on May 15. The appeals were filed in early March.
president of Resorts. Labor lawyers state she must Another Philadelphia test comes from the public.
prove that a waiver existed, or she would have After citizen groups accumulated thousands of petition
ultimately been restrained from taking any job anyway. signatures, the Philadelphia City Council unanimously
Oswell, currently CEO of the Cosmopolitan Resort voted to compel placement of the issue on the May 15
Casino in Las Vegas, seeks unspecified damages. mayoral primary ballot. It will question whether voters
Resorts is also filing its own suit want to support or reject locating casinos within 1500
Resorts wants the parcel
against Morgan Stanley, alleging feet of a school, playground, church or home. That
interference cost them Oswell’s move would effectively stop construction of the two
placed in trust, plus a share
experience and management skills. Philadelphia casinos for at least several months.
of future casino profits.
Oswell left months ago, but the Almost immediately, the Pennsylvania Gaming
position remains vacant. Resorts Control Board (PGCB) vowed to sue the Council,
wants the parcel placed in trust, claiming that state law would trump a local statute.
plus a share of future casino profits. Philadelphia Mayor John Street promised to veto the
I recently reported on Philadelphia’s two new Council’s move. However, with such strong support,
licenses – Foxwoods and SugarHouse – and potential his veto would likely be overridden.
legal action. The Pennsylvania Gaming Control Board Finally, MGM Mirage has just won a 2.5-year
(PGCB) aimed to select operators without ties to lawsuit in Atlantic City. The case involved waterfront
Atlantic City. They feared Pennsylvania’s higher taxes property that Seaboard Towers Development Co., a
would encourage Atlantic City operators to steer their condominium developer, wanted to buy from MGM
customers away from Philadelphia toward their more Mirage for $22 million. Seaboard wanted to
lucrative Atlantic City properties. transform the land into a luxury hotel and condo
However, almost immediately, an April 2006 complex near the Borgata.
memorandum surfaced, stating that Foxwoods and In July 2004, Seaboard sued the MGM Mirage
MGM Mirage had discussed gaming sites for subsidiary, A.C. Holding Corp., claiming they reneged
potential joint development in Atlantic City. on their agreement to sell 14 acres. The land was
It was never disclosed or discussed. Chairman optioned to them in March 2004, but MGM
Thomas ‘Tad’ Decker said, “We didn’t know anything withdrew from the deal the following June after the
about it. Maybe we should have asked.” However, he expiration of the agreement’s extension.
cites several other factors affecting the Board’s The court cited Seaboard’s failure to prove A.C.
decision. As of press time, legal challenges will Holding was bound by the extension.
probably be filed. Next month: merger and buyout mania, and their
In anticipation of statewide legal action, the PGCB effects on operations and staff.
12 APRIL 2007
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