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Isn’t today’s gaming industry all about slots, table games and luxurious non-gaming amenities? From the latest industry news, you might conclude that it is also about an increasing number of lawsuits. Here are some goodies from just the past several weeks:
A New Jersey Superior Court ruled that former Resorts Atlantic City President Audrey Oswell might proceed with her lawsuit against Wall Street giant Morgan Stanley.
She alleges that Morgan Stanley promised her a high-power position at their proposed $1 billion gaming project – after she left Resorts – in return for helping them secure 20 acres of available land. Morgan Stanley claims Oswell approached them as a potential casino investor.
The case may rest on the validity of a binding non-compete clause, which Oswell was under while president of Resorts. Labor lawyers state she must prove that a waiver existed, or she would have ultimately been restrained from taking any job anyway.
Oswell, currently CEO of the Cosmopolitan Resort Casino in Las Vegas, seeks unspecified damages.
Resorts is also filing its own suit against Morgan Stanley, alleging interference cost them Oswell’s experience and management skills. Oswell left months ago, but the position remains vacant. Resorts wants the parcel placed in trust, plus a share of future casino profits.
I recently reported on Philadelphia’s two new licenses – Foxwoods and SugarHouse – and potential legal action. The Pennsylvania Gaming Control Board (PGCB) aimed to select operators without ties to Atlantic City. They feared Pennsylvania’s higher taxes would encourage Atlantic City operators to steer their customers away from Philadelphia toward their more lucrative Atlantic City properties.
However, almost immediately, an April 2006 memorandum surfaced, stating that Foxwoods and MGM Mirage had discussed gaming sites for potential joint development in Atlantic City.
It was never disclosed or discussed. Chairman Thomas ‘Tad’ Decker said, “We didn’t know anything about it. Maybe we should have asked.” However, he cites several other factors affecting the Board’s decision. As of press time, legal challenges will probably be filed.
In anticipation of statewide legal action, the PGCB has petitioned the Pennsylvania Supreme Court to require challengers of their selected licensees to put up big money to cover potential state revenue losses.
The legal papers are based on the premise that court challenges will delay the opening of four of the state’s freestanding slots casinos by six months, costing the state approximately $280 million in revenue. In addition to one battle in Philadelphia, there are also two challengers in Pittsburgh and one in the Pocono Mountain resort region.
The PGCB will refund the money to challengers if they win. “We believe the taxpayers are entitled to have some relief, because… they’re going to lose millions and millions of dollars for each month that goes by,” said Decker. “That is money you never get back.”
The Supreme Court has scheduled oral arguments on May 15. The appeals were filed in early March.
Another Philadelphia test comes from the public. After citizen groups accumulated thousands of petition signatures, the Philadelphia City Council unanimously voted to compel placement of the issue on the May 15 mayoral primary ballot. It will question whether voters want to support or reject locating casinos within 1500 feet of a school, playground, church or home. That move would effectively stop construction of the two Philadelphia casinos for at least several months.
Almost immediately, the Pennsylvania Gaming Control Board (PGCB) vowed to sue the Council, claiming that state law would trump a local statute. Philadelphia Mayor John Street promised to veto the Council’s move. However, with such strong support, his veto would likely be overridden.
Finally, MGM Mirage has just won a 2.5-year lawsuit in Atlantic City. The case involved waterfront property that Seaboard Towers Development Co., a condominium developer, wanted to buy from MGM Mirage for $22 million. Seaboard wanted to transform the land into a luxury hotel and condo complex near the Borgata.
In July 2004, Seaboard sued the MGM Mirage subsidiary, A.C. Holding Corp., claiming they reneged on their agreement to sell 14 acres. The land was optioned to them in March 2004, but MGM withdrew from the deal the following June after the expiration of the agreement’s extension.
The court cited Seaboard’s failure to prove A.C. Holding was bound by the extension.
Next month: merger and buyout mania, and their effects on operations and staff.
Will the plans for Russia's 'remote' gaming areas go ahead as the State Duma has described?
- 27 - 29 January, 2009
International Casino Exhibition 2009 - UK
