Maine Casino Measure Buried; Atlantic City Gets New Mayor

It wasn’t the busiest election season for gaming, but there were two races that may impact the industry. The sound that international casino developer Shawn Scott heard in Maine Tuesday night was his proposed third casino being forcefully flushed down the drain—by a margin of 83 percent to 17 percent. In New Jersey, a new governor, Phil Murphy (l.), and a new mayor for Atlantic City could have implications for the industry there.

In an off-year election, there weren’t many races that impacted gaming, but gaming experts were concentrating on two states where results could impact the casino industry.

After a costly election in which supporters of a third casino in Maine vastly outspent the opposition by 15-1, Question 1 Tuesday went down in one of the most one-sided election results in recent, or even non-recent history. The measure, proposed by international casino entrepreneur Shawn Scott, was defeated 83 percent to 17 percent.

Scott and Progress for Maine had spent about $8.8 million over the last two years to qualify the measure for the ballot. Opponents, who called Scott and his proposal “wicked shady,” spent $676,609. Most of that money came from one of the casinos already established in the state, the Oxford Casino, owned by Churchill Downs.

If he had won, Scott, or a company owned by him, would have had exclusive rights to build a $200 million casino in York County. As it was, he didn’t win that right, although he did get handed a $500,000 fine for a campaign ethics violation, the biggest such fine in the state’s history. Four campaign PACs was nicked for missing deadlines to disclose campaign finance disclosures.

Results were known an hour after the polls closed. Scott told his supporters as the results were coming in: “We really love this state, it’s a great place and it will always be special in our hearts, it will continue to be. That being said, the results don’t look encouraging and we are, of course, disappointed with the outcome. I want to thank everyone for joining in what we thought, and still believe, is a great project for Maine.”

Roy Lenardson, a spokesman for A Bad Deal for Maine, a PAC that led the effort to defeat Question 1, hailed the victory: “We’ve heard a lot lately about voters being tricked by ballot questions, but this is vindication of the Maine voter.” He added, “As much as I would like to take credit for this, it’s a case of democracy working. Everybody did their job, from the governor to the Legislature to the Maine ethics commission to the media, who dove into this story. Voters got the information they needed and they made a good decision.”

Rep. Louis Luchini, who is chairman of the House committee that oversees casinos, reflected that voters had turned their backs on out-of-state-money. “It’s good to see tonight that Mainers aren’t OK with that and will vote against projects that don’t benefit us, but that are funded by out-of-state people,” he said.

Scott lives on Saipan, in the middle of the Pacific Ocean.

Two years ago, Scott’s sister, Lisa Scott launched the bid with a signature gathering campaign that had one false start when the Secretary of State’s office decertified more than half of the signatures she turned in. The second attempt succeeded in gathering the requisite number of the signatures early this year. The proposal was advertised as a “gaming and entertainment center” that would generate 2,000 permanent jobs and $45 million in annual tax revenue. Proponents also said it would direct money to schools, veterans and seniors.

Eventually, as her personally finances came under the scrutiny of the Maine ethics commission, Lisa Scott withdrew from the campaign and returned to Florida, leaving her brother to become its very public face. This may have been a significant factor in many no votes, as voters cited his history of suing and being sued and controversies over other licenses.

Obviously, when an initiative loses this badly, the reasons for people voting against it will vary.

Evan Burnham told the Press Herald that he opposed the casino because “I grew up in Connecticut near Mohegan Sun and Foxwoods” and they caused traffic problems. He said he didn’t want that duplicated in Maine.

Others said that two casinos in the state were sufficient.

Denise Dionne told the Herald, “I don’t want it. Go somewhere else. Do they have to be everywhere?”

Polling suggests that many more voters were turned off by Scott’s dodgy past and the fact that the initiative was written so that no one other than he could have applied for a license.

Many were also influenced by the $500,000 fine against the campaign by the Maine Commission on Governmental Ethics and Election Practices, a fine ten times as high as any imposed by the commission in its history. The fine was imposed after a series of 4-1 votes on the five-member panel. The campaign initially reported that all of the donations had been from Lisa Scott, but later had to amend its filings to show that funds also came from a series of companies owned or with ties to Shawn Scott.

The commissioner who voted to oppose the fine amounts, Bradford Pattershall, several times called the fine amounts “grossly disproportionate” to the offenses, and also commented, “I find all of the evidence here makes out a far less nefarious plan here than some people are hinting,” and added that she thought Lisa Scott’s testimony about the issue had been truthful.

Commissioner Meri Lowry disagreed. “There was an undertaking to not disclose other sources and that was reflected in the emails and responses to the press, to questions asked, there was a steady deflection that was part of a program and a plan,” Lowry said.

A spokesman for the campaign, Bruce M. Merrill, promised an appeal and said that the commission was attempting to influence the vote. “The only beneficiaries of today’s ruling are the opponents of the Question One initiative, who are bankrolled by the owners of the Oxford casino,” he said. “In short, the Maine Commission on Governmental Ethics and Election Practices acted today to squarely put its thumb on the scale of Tuesday’s election based on the content of the proponents’ message, and not on the nature of any violation of the campaign finance laws.”

The commission released email records pertaining to the case to the public before the election.

After the emails were released Rep. Luchini told U.S. News and World Report, “Mainers are still in the dark about who was actually financing this campaign, and there is no doubt this absolutely violates the spirit of the citizens’ initiative process.”

Two weeks out from the election Maine Governor Paul LePage heavily criticized the proposal and had argued that the state couldn’t support a third casino without cannibalizing the other two. He called the proposal “another case of big-money, out-of-state interests using Maine voters to get a sweet deal.”

The pro-casino campaign aimed attacks at many of its critics, such as the governor, who, it said should think “about Maine first and not his friends in Kentucky, because gaming is a competitive industry and Massachusetts is gearing up to capture as much revenue as possible from neighboring states.” The Kentucky influence the ad alluded to was Churchill Downs, which has donated large sums to the governor’s campaigns in the past.

A late entry into the campaign was the state’s Indian tribes.

On the Thursday before the election the chiefs of the Penobscot Nation and two Passamaquoddy communities issued statements opposing the York County casino. “If approved, Question 1 would stand to directly injury the Passamaquoddy Tribe and the Penobscot Nation by significantly reducing financial support that the tribes currently receive under a voter-approved revenue sharing agreement with Oxford Casino,” they said.

“This arrangement is written into state law and is intended to strengthen tribal governments and communities,” they said. “However, the York County casino backers have put our communities’ stability in danger without our permission by undermining the existing revenue sharing agreement.”

The week before another federally recognized tribe, the Aroostook Band of Micmacs, had done a TV ad in favor of Question 1. The tribe had negotiated an agreement with Scott. The tribe wouldn’t have gotten money directly from the casino, but Scott had promised to “create new non-gaming economic development opportunities for the tribe.”

The Micmacs do not benefit from the state’s Bangor and Oxford casinos, unlike the two larger tribes. “Question 1 affords us an opportunity to work with our fellow tribes and elected leaders to ensure that all Native American tribes in Main can benefit from the gaming and entertainment industry,” Aroostook Band tribal chief Edward Peter-Paul had written in October.

The other tribes said they saw no evidence that their tribes would benefit from a York County casino.

Maine has a total of four tribes. They have tried several times in the past to persuade voters or the legislature to authorize slots or table games on the reservation. Their failure has created friction between the tribes and state government.

Scott’s first electoral experience in Maine went considerably better. In 2003, he successfully pushed a campaign to add slots to a racetrack in Bangor. This brought the first casino to the state. Scott sold the rights to Penn National Gaming for $51 million, which still operates the Hollywood Casino.

In New Jersey, Democrat Phil Murphy swept to victory over Kim Guadagno, the state’s lieutenant governor under Chris Christie, who was no eligible to run again. But Christie’s huge negatives kept Guadagno’s campaign grounded and Murphy won in an landslide.

Under Christie’s administration, Atlantic City was forced to submit to a state takeover of city government, hoping to get the city’s out-of-control finances in order. The state imposed a PILOT (payment in lieu of taxes) program on the city which allowed casinos to pay a set amount to the city for the next 10 years, removing the threat of massive tax appeals, which were always won by the casino.

Murphy—and Guadagno—support the expansion of gaming into North Jersey. In last year’s election, state voters overwhelmingly rejected that idea by a 70 percent to 30 percent margin. Since Murphy has full control of the state legislature, it’s likely that measure could return to the ballot in 2018 or even be imposed via loopholes in the state’s gaming laws.

Meanwhile in Atlantic City, Don Guardian’s rare Republican hold on the mayor seat lasted only one term as he conceded the post to his Democratic challenger on Election Day.

Frank Gilliam Jr. defeated Guardian who was the first Republican to lead Atlantic City in a generation. Guardian’s term, however, was extremely troubled as five casinos in the resort closed and the city flirted with declaring bankruptcy in the face of crushing debts caused, in part, by a string of successful casino tax appeals. The state of New Jersey eventually stepped in and took over running the city’s finances and later the entire government.

Gilliam made his first run for mayor and capitalized on resident’s anger over the state takeover. He charged that Guardian was either unable or unwilling to make the hard choices necessary to solve the city’s debt crisis.

“Atlantic City’s voters have spoken very loudly and clearly,” Gilliam told the Associated Press. “You can’t say ‘yes’ when you mean ‘no.’”

Guardian conceded quickly on election night and saying his campaign trailed by about 100 votes among those counted on voting machines, but trailed by an unsurpassable margin among absentee ballots delivered to county election officials in advance, the AP said.

Guardian has charged that many absentee ballots collected by Gilliam’s campaign were fraudulent, but Gilliam said his campaign conducted a legal collection of the absentee votes.