SugarHouse: a legal blizzard

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Jan. 14

(To fully read legal documents see attachments at bottom of story.)

By Kellie Patrick Gates
For PlanPhilly

SugarHouse Casino developers want a say in a lawsuit that the TrumpStreet Casino partners filed against the Pennsylvania Gaming Control Board last month.

Trump and the other investors are suing the PGCB in U.S. District Court in Harrisburg on grounds that the board used faulty criteria to select two applicants to build casinos in Philadelphia. They have asked the court to declare the process invalid, and that would have a negative impact on SugarHouse, said spokeswoman Leigh Whitaker.

“The Gaming Act, as written, allows only two casinos in Philadelphia,” she said. So if the Gaming Control Board has to reconsider TrumpStreet, that would mean that one or both of the entities that were selected – SugarHouse and Foxwoods – could lose their status, Whitaker said. “We have a material interest in the outcome of those proceedings – whatever the outcome, it has an impact on our license.

SugarHouse filed a motion to intervene in the TrumpStreet lawsuit late last week. The Court has asked TrumpStreet for a response.

When the Gaming Control Board was deciding which applicants to select for Philadelphia, board members were concerned about Trump’s ownership of casinos in Atlantic City. Another applicant that was not selected, Pinnacle Entertainment, was also planning to build a casino in Atlantic City at the time (it has not been built). The reasoning? The Gaming Board members were worried that an operator with casinos in both states might try to get its Pennsylvania customers to go to New Jersey, where profits would be higher because of the tax structure here.

TrumpStreet’s lawsuit says that this rationale for denying an applicant is unconstitutional because it interferes with interstate commerce.

“We believe the process was valid and constitutional,” Whitaker said.

Foxwoods has not filed a motion to intervene at this point, spokeswoman Maureen Garrity said.

Both SugarHouse and Foxwoods are also likely to face opposition over their operating licenses from Trump and Company.

Once awarded an operating license, a casino has one year to get slot machines up and running. For SugarHouse, that time expired Jan. 11. Foxwoods’ year will be up in June.

SugarHouse has asked the Gaming Control Board for a 12-month extension. Assuming that Foxwoods isn’t up and running in six months, they would have to do the same. But depending on what happens with a proposal to change their proposed location from the waterfront to The Gallery at Market East, Foxwoods may be going before the Gaming Board to ask for an amended license that includes the Gallery location.

A Trump Entertainment spokesperson was not available for comment Wednesday. But vice president Bob Pickus recently told The Inquirer that TrumpStreet plans to ask the PGCB to take away Foxwoods’ license and maybe SugarHouse’s, too, for failing to meet the deadline. He also said TrumpStreet would oppose a Foxwoods’ petition to transfer its license to The Gallery.

SugarHouse’s request for an extension has already met with opposition.

The Gaming Control Board’s own Bureau of Investigations and Enforcement does not want an extension to be granted without first holding a hearing. Their filing states that SugarHouse has not proven the points it makes in writing concerning the delay.

A group of state lawmakers have petitioned to intervene, namely, Senators Lawrence Farnese Jr. and Michael Stack and Representatives Michael O’Brien, William Keller, Michael McGeehan and John Taylor.

The legislators have also requested that a separate hearing be held before a decision on an extension is made. At that hearing a discussion would be conducted to determine whether SugarHouse can actually get a casino up and running within the next 12 months. The legislators also want to explore whether a temporary casino should be opened to get slots up and running sooner, said Mary Isaacson, spokeswoman for Rep. Michael O’Brien.

SugarHouse has filed an objection to the legislators’ petition.

Whitaker said the casino would be up and running by now if it weren’t for delays and hindrances caused by the City of Philadelphia and some of the very legislators who want to intervene in the case.

To that end, SugarHouse recently asked the State Supreme Court to appoint a Special Master to help the city move things along. City officials say they have been careful and cautious, but not obstructionist.

Of the legislators, Whitaker said: “They have been actively fighting against us, and this is just another delay tactic on their part.”

The Bureau of Investigations and Enforcement has also objected to the legislators’ petition.

SugarHouse is not interested in opening any temporary casino, Whitaker said, because work needs to be focused on getting the permanent casino up and running. But SugarHouse’s approved plan of development does call for an interim facility. That facility would essentially be the opening of a portion of the first phase of development about 10 months prior to the completion of the casino, Whitaker said. The interim part of the casino would then become a portion of the permanent facility, she said.

Casino-Free Philadelphia has also filed a document related to SugarHouse’s extension request – a letter to the Bureau of Investigations and Enforcement’s chief enforcement counsel asking that the BIE ask the Gaming Control Board to require SugarHouse to provide more details before an extension is considered.

The letter says that the gaming concern’s petition should be dismissed for procedural reasons because it should be signed by SugarHouse officials, not just attorneys representing them. The signature provides verification similar to the way an oath would be used in a hearing, Casino-Free attorney Paul Boni said. Casino-Free also believes SugarHouse should have to demonstrate that they have the financing to fund the construction and operation of a casino. Financing was one of the things the GCB looked at when it made its selections originally, Boni said, and considering the current economic climate, it makes sense to take another look. Casino-Free also believes the GCB should require more information about what permits SugarHouse still needs and a timeline indicating when they expect to get them.

Whitaker said SugarHouse officials are confident they can get a casino up and running in a year. And they have the money to do so. “All of our investors are still on board,” she said. “It is true that financing in this market is more difficult, but not impossible. It also important to remember that Neil Bluhm was able to put together a financing package for the Pittsburgh Casino just a few short months ago.”

The longest extension that can be given to a casino is 24 months, and the legislators are questioning whether SugarHouse could even get up and running in two years, considering where they are in the process now.


Contact the reporter at
kelliespatrick@gmail.com

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