Pennsylvania gaming board has heard Foxwoods’ license testimony; ruling to come in November

During more than two hours of oral arguments before the state gaming board Wednesday morning, attorneys for the board’s enforcement arm argued that Foxwoods Casino has made so little progress toward its spring 2011 opening that its license should be immediately revoked.

“We maintain they cannot build that facility in the time they have available to them,” said Deputy Enforcement Counsel Dale Miller.  “They are not financially suitable, they have no funds, no backers, and they can’t build within a suitable time.”

But Foxwoods attorneys argued that the evidence shows they have made remarkable efforts under extraordinary economic, political and other circumstances during the past four years, including bringing two top casino operators – Steve Wynn and now Harrah’s, with whom Foxwoods has signed a term sheet – to the table as potential partners.

Attorney Stephen A. Cozen said he understands that the board is frustrated that there is no casino in South Philadelphia, but that frustration is not a reason to revoke. To do so, he said, would in essence say, “We’re upset you haven’t performed as expected even if you were victimized by the city, by Steve Wynn … and by economic conditions.” Wynn withdrew from the project after signing a term sheet and providing drawings earlier this year.

But Miller and his boss, Chief Enforcement Counsel Cyrus Pitre, told the board Foxwoods’ plans with Harrah’s could not be considered since no petitions for a change of ownership have been filed, nor have a timeline or site plans been provided.

“PEDP can come in here and say we have new plans, all kind of plans,” Miller said. “But right now, all you can do is act on the plans you approved. And they can’t do it. They absolutely can’t do it.”

Pitre noted that other casinos around the state also faced political opposition and tough financial situations, yet are open.

Miller’s arguments were much shorter than Cozen’s, and centered around the facts that Foxwoods has not started construction, despite receiving its license back in 2006, and that Foxwoods has failed to meet board requirements all along the way.  When the board granted Philadelphia Entertainment Development Partners a previous deadline extension, Miller said, it did so with a list of requirements. Among them: Foxwoods had to provide drawings and a detailed time line leading up to opening day. Foxwoods has still not met this requirement, Miller said.

Cozen pointed out that when Wynn was in the picture, the casino team was substantially in compliance with the board orders. But Wynn’s surprise departure changed the situation, he said, and that is not Foxwoods’ fault.

The Gaming Board was not sympathetic on this. Foxwoods has been paying a $2,000 per day fine for each day it is out of compliance with the board orders, and with a vote Wednesday, the board told Foxwoods they needed to pay $362,000 by November 12.

When Cozen got the floor, he told the board they should dismiss the bureau of investigations and enforcement’s complaint calling for license revocation because the gaming law that applies is unconstitutional.

Foxwoods must know the legal standards by which they are being judged, he said. But the BIE complaint uses the term “maintenance of financial fitness and suitability,” – a term that has not been defined.

“I dare you to find that language in any of the statutes cited, or in any condition of our license. BIE has refused to define financial fitness and suitability,” Cozen said. Cozen told the board that the only reference to the term in the gaming act applies to applicants, not license holders, so it does not apply to Foxwoods. “That statute provides no meaningful guidance whatsoever as to what a licensee must do to maintain financial fitness and suitability, or how the board is to evaluate it,” he said.

Cozen said Foxwoods’ ability to attract first Wynn then Harrah’s to the project shows that they have the “wherewithal” to complete the project.

Although Miller had spoken first, he knew, based on the documents, that Cozen was going to make this argument. He pointed out that Foxwoods never objected to the ‘suitability’ language when it got the license, nor at any point since, until their license was threatened.

That and the “Steve Wynn pulled out and it isn’t our fault. We tried,” stuff are “not defenses, but pleas for sympathy so that (the board) will lessen sanctions,” Miller said.

Several board members questioned whether the financial fitness and suitability requirements that applies to applicants wouldn’t still apply to licensees. Cozen argued that it would not, that applicants bear a higher level of proof. Miller and Pitre said that Foxwoods signed documents when they got the license promising to continue to maintain suitability.

Board Member Gary Sojka asked Cozen how the term “wherewithal” that Cozen kept using in his defense as a substitute for “financial suitability” was any less vague than the term that is in gaming law.

Cozen said that it is the legislature and the board that have the responsibility to define terms that will be used to uphold gaming law.  Sojka asked if Cozen would be using similar arguments if the BIE complaint used the word “wherewithal” instead. “Probably,” Cozen replied. The audience chuckled.

Another of Cozen’s arguments about why the board shouldn’t yank Foxwoods’ license were based on what happened with Rivers Casino in Pittsburgh. Rivers’ original financier ran out of money. Chicago-based Neil Bluhm – also an investor in Philadelphia’s SugarHouse Casino – came to the rescue.

Rivers’ license was never taken away, Cozen said, so how could Foxwoods be in such similar circumstances?

The BIE, which acts similarly to a prosecutor in a court case, never filed a complaint for license revocation in the Pittsburgh situation, Board Member Kenneth Trujillo said in reply.

Cozen said that was his point, exactly. Pitre, who said little until the end of the proceeding, said the Foxwoods and Rivers situations were totally different. Rivers “had a petition pending for change of ownership and control,” he said. “There has never been a petition pending in this matter. Not with Wynn, not with Harrah’s.”

All the board could consider was the current situation, Pitre said. “As the record stands today, they have until May 29, 2011 to open a casino. That cannot be done. Is there a chance they could do it by December 2012? Yeah. But those petitions have not been filed.”

After a break in the proceedings, the board decided to wait on a decision, taking everything heard Wednesday under advisement for an announcement at its November 18 public board meeting.

Cozen told reporters that in the meantime, Foxwoods would be filing documents relating to a change in ownership, and that it would ask for an extension to open in December 2012.

The day’s proceedings were to hear testimony on two petitions seeking summary judgment – a ruling that can be made when a court determines that there is no dispute among parties on the relevant facts in a case, and no further information needs to be gathered through a hearing.

Many of the filings related to the Foxwoods license revocation case have been deemed confidential, and Foxwoods asked the Pennsylvania Gaming Control Board to make all items related to summary judgment confidentail as well. The board did not grant blanket confidentiality, and said items would be considered on a case-by-case basis. Foxwoods’ and the office of enforcement counsel’s summary motions are attached here and here, with information deemed confidential under gaming law whited out by gaming board staff.

The board has several options for its November decision. It could decide a summary judgment is possible, and make one in favor of Foxwoods (they would keep their license) or in favor of the OEC (the license would be revoked.) The board could also decide that it needs to have a full hearing to make a decision about the casino’s license. Or, it could decide that some material facts are indisputed and clear, but a limited hearing should be held so it can hear testimony on some others.

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