Author: Casino Connection Staff

A prominent Pennsylvania businessman and shareholder in the Sands Casino Resort Bethlehem is suing the state to challenge the law’s prohibition on anyone associated with gaming making political contributions.

Pasquale (Pat) Deon Sr., a billionaire Pennsylvania businessman with diverse holdings including beer distributors and a radio station in addition to his stake in Sands, is suing to block the law’s prohibition on political campaign donations as discriminatory against the casino industry.

Deon is a Pennsylvania Turnpike commissioner, chairman of the Southeastern Pennsylvania Transportation Authority and was one of the state’s largest political donors before he bought his stake in the Sands. His lawsuit states that Pennsylvania’s 2004 gaming law’s prohibition on political donations violates his constitutional rights.

“Pennsylvania can neither demonstrate nor even plausibly assert that contributions create the reality or appearance of corruption, when it authorizes unlimited contributions outside the gaming industry,” the lawsuit says. “It is implausible to suggest that even a small contribution from a person affiliated with the gaming industry would create the reality or appearance of corruption.”

For the second time, New York Governor Andrew Cuomo vetoed a bill that would have granted official recognition to the Montaukett Tribe. The 1,500-member tribe, mostly residents of central Long Island, lost its official status under an early-20th century lawsuit that also deeded tribal lands in Montauk to a real estate developer. Cuomo wrote in his veto message, “Providing state recognition to an Indian tribe warrants thorough and careful consideration of all parties. However this bill would require the state to bypass such analysis and recognize the Montaukett Indian tribe as a nation, without any process.”

State Assemblyman Fred W. Thiele Jr., who co-sponsored the legislation with state Senator Kenneth P. LaValle, called the governor’s decision very disappointing. He urged the state’s executive branch and Department of State to produce their evaluation of the Montaukett’s official status, which was established by legislation passed in 2013 and modeled on the complex process used by the federal Bureau of Indian Affairs. Cuomo vetoed that bill, stating that process was too burdensome for the state. He added the Department of State would create its own process and conduct a review of the Montaukett’s status.

Thiele stated, “Four years ago, we put through a bill to create a procedure for the Montauketts to be evaluated for recognition, and the governor said, ‘I don’t like your procedure, I’m going to make my own.’ But there’s no evidence that they’ve done anything, so we put up a bill to recognize the Montauketts and they veto us saying we’re interrupting their process. If they’ve undertaken any kind of process, it doesn’t appear evident to anybody involved with the Montauketts.”

Cuomo responded the state “only recently” received some of the information it requested for an analysis of the Montauketts’ status. He also said he would again instruct the department to “pro-actively communicate with the Montaukett Indian tribe” to complete the review of their status “in a timely manner.”

The state officially recognized the Unkechaug tribe in 1971 and the Shinnecocks in the early 20th century. The Montaukett bill was modeled after the legislation that officially recognized those tribes. State recognition would make tribe members eligible for benefits including health care and education subsidies. However, tribal officials have said they’re mainly interested in righting a century-old wrong.

Montauketts spokesman Bob Pharoah said the legislature was using “smoke and mirrors.” He commented, “I’m not going to hold my breath” regarding finally being recognized. But if that happens, he said, “The fact that we would finally be vindicated, that we would have a gross injustice rectified and our wholeness as a tribe back, our status back, to know it would make my ancestors very happy.”

Thiele said he and LaValle will reintroduce their bills again in the next legislative session. “We will attempt to the best of our ability to hold the governor’s and Department of State’s feet to the fire to complete this evaluation that they say they’ve undertaken. If they say they want to complete the process, then complete it.”

Atlantic City’s seven casinos posted $252.5 million in profit for the third quarter, up about 21 percent over 2016.

Gross operating profit reflects earnings before interest, taxes, depreciation and other charges, and is a widely accepted measure of profitability in the casino industry.

According to an analysis by the Associated Press, Tropicana’s earnings were up 67 percent for the quarter, to $46.2 million. The Golden Nugget was up 15.4 percent to $12.8 million, and Caesars was up nearly 11 percent to $29 million.

Bally’s was up 10.7 percent to $18.1 million; Harrah’s was up just under 1 percent to $37.7 million, and Resorts was flat at $10.7 million.

Only the Borgata posted a quarterly loss, at less than half a percent, down to $81.8 million.

Among online companies serving the market, Caesars Entertainment-NJ was up 55.4 percent to $3.7 million, and Resorts Digital went from a $570,000 profit in the third quarter of last year to a $12.1 million profit in the third quarter this year, the AP reported.

Atlantic City’s casinos had an operating profit of $561 million for the first nine months of the year, up 19.8 percent from the same period last year.

Sports leagues soften as stakeholders prepare for legal sports betting

The eyes of the gaming industry are on Washington, D.C., as the United States Supreme Court hears arguments in Christie v. National Collegiate Athletic Association, New Jersey’s appeal in favor of its sports-betting law, which also challenges the constitutionality of the federal ban on sports betting.

The case before the high court is the second appeal from the state of New Jersey after the four major sports leagues sued to block a state-approved law authorizing sports betting at New Jersey casinos and racetracks. The court declined to hear the first appeal, affirming lower-court rulings that New Jersey’s law violated the Professional and Amateur Sports Protection Act (PASPA), the 1992 law that made sports betting illegal in all but four grandfathered states, with only Nevada permitted full-blown sports books.

The current case is the result of a law signed in 2014 by New Jersey Governor Chris Christie repealing the ban on sport betting in favor of self-regulated sports betting at the casinos. The 3rd Circuit Court of Appeals affirmed a lower court ruling that the new law violated PASPA, but in a surprise to many, SCOTUS agreed to hear New Jersey’s appeal, which argues that PASPA itself is an unconstitutional imposition of federal over state authority.

The American Gaming Association, which has filed an amicus brief in favor of New Jersey’s case and has put a repeal of PASPA at the top of its lobbying agenda, joined Spectrum Gaming last week for a preview of the hearing that featured talks from government officials educators, lawmakers and attorneys including Ted Olson, the partner in Gibson, Dunn & Crutcher that will argue New Jersey’s case before the Supreme Court.

Meanwhile, potential stakeholders in a legalized sports betting market publicly offered new opinions on the issue, not the least of which was one of the plaintiffs in the original lawsuit, the National Basketball Association. On ESPN Radio’s Mike Golic and Trey Wingo show last Monday, NBA Commissioner Adam Silver repeated his support of legalizing sports betting in the U.S.

Silver told hosts Golic and Wingo he’s in favor of lifting the federal ban on sports betting, but with a federal law to regulate it. He said any state should be able to decide if they want sport betting, but all under the same federal regulatory framework.

Silver, who first came out in favor of sports betting in a 2014 op ed piece for the New York Times, commented that his view on the subject is different than his predecessors who sued to block the first New Jersey law. “My position, which is a little different than my predecessors, has been that we should regulate it, we should legalize it,” he told the ESPN hosts. “Because it’s not to me an issue of whether I am ‘pro’ or ‘con’ sports betting. We know now that it goes on, largely underground, hundreds of billions of dollars are bet every year just in the U.S. on sports betting…

“It’s legal in most other jurisdictions in the world, particularly in Europe, where people bet on their smartphones throughout soccer games. It’s closely regulated, they can monitor if there’s an irregularity activity—something we cannot do right now because it’s largely all illegal.”

He added that he differs from New Jersey’s position in the current Supreme Court in that he doesn’t feel it’s a state’s rights issue, but in fact it should be under federal control. “I think there should be federal policy; it should be consistent from state to state,” he said. “I think states should be able to elect whether they want to be in or out. If a state doesn’t want to have legalized sports betting they shouldn’t be forced to do it, so I agree it should be a state decision.

“But I worry a little bit in terms of the monitoring of it, the integrity for the sports leagues…that if you have 50 states all competing against each other, it could be a bit of a race to the bottom in terms of ultimately how to do the best job protecting consumers, the people who place the bets, and protecting the integrity of our league.”

Silver’s views on sports betting are indicative of a general softening on the position by major sports leagues—except for the National Football League, which has remained steadfastly opposed to legal sports betting despite locating a franchise in the gaming capital of Las Vegas.

AGA President and CEO Geoff Freeman said in an interview last week with the Associated Press that even the NFL is more open to taking a second look at sports betting laws.

“I think there are multiple signs of the sports leagues, including the NFL, are taking a fresh look at this issue,” Freeman said. “You don’t place a team in Nevada, in Las Vegas, without an understanding that the issue is changing. Frankly, you don’t play games in Wembley Stadium, where most of the people in the stands are betting on their phones during the game, without an understanding that things are changing. For those that want to see sports betting, the trajectory is in their favor.”

Freeman has said a repeal of PASPA is coming soon, even if the Supreme Court rules against New Jersey and upholds PASPA. However, if the court holds that part or all of the sports-betting ban is unconstitutional, several states are expected to rapidly pass laws creating sports-betting programs. Online betting is expected to come with that, so online gaming legalization is likely to follow sports betting in many states.

Although a decision in the case is likely to take several months, some operators are already preparing for the court to dump PASPA by preparing for legalized sports betting.

In New Jersey, Monmouth Park racetrack has reportedly announced a $1 million sports betting lounge, in a deal with British bookmaker William Hill, and MGM Resorts International is planning construction of a $7 million sports book at its Borgata casino in Atlantic City.

At Monmouth Park, at least part of the facility is already built. The racetrack created a sports-betting lounge four years ago, when the first New Jersey sports-betting law was winding its way through the courts. After New Jersey lost the case, the track turned the facility into a sports bar.

Curwensville, Reading also seeking satellite facilities

As municipalities across Pennsylvania pass resolutions to opt out of the mini-casino provision in the new gaming expansion law—banning the satellite facilities in their jurisdictions—some areas are actively pursuing the new facilities.

Among the first to court a mini-casino was Lawrence County in the western part of the state, home to the decade-long, beleaguered and ultimately canceled Valley View Downs/Lawrence Downs project. Valley View Downs was among the first batch of Category 1 racetrack casino licenses awarded after the state’s gaming law was passed in 2004. However, following a breakup of the first partnership that was granted the license, the project went through a parade of licensees that failed to arrange financing for the project, located near the town of New Castle. Ultimately, the Pennsylvania Gaming Control Board pulled the license, which ultimately was dubbed Lawrence Downs. The license has yet to be rebid.

A dozen years from the inception of Valley View Downs, Lawrence County officials are putting out the word to the 10 current eligible licensees to submit bids for one of the mini-casinos to be located in the county. “We intend to communicate to those 10 casinos and tell them our community would welcome them,” said Dan Vogler, chairman of the Lawrence County commissioners, in an interview with the Pittsburgh Post-Gazette.

“We want to strike while the iron is hot. Hopefully, our phone will ring, and we’ll welcome any of them with open arms. We’ll take them around and show them potential sites and hope to convince them it will be conducive.”

The mini-casinos under the new law will be bid on beginning January 15 by current Category 1 (racino) and Category 2 (stand-alone casino) licensees. (The two smaller Category 3 resort casinos do not qualify.) Each new facility will serve as a satellite location of the current licensee, with a maximum 750 slot machines and 30 table games. Licenses will be granted by auction, with a minimum bid of $7.5 million. Mini casinos must be located at least 25 miles from any current casino. Municipalities (except for counties) can pass a resolution to ban the satellite casinos by December 31.

Mid-sized cities such as Reading, Lancaster, Altoona, Williamsport, Gettysburg and State College have been cited as possible mini-casino locations. Within Lawrence County, only the small Little Beaver community has opted out. Penn National Gaming, which draws most of its business from outside of the law’s 25-mile buffer zone, is contemplating a lawsuit to block the satellite provision.

Meanwhile, two other municipalities have come out in favor of hosting mini-casinos. Members of the borough council of Curwensville, north of Altoona in west-central Pennsylvania, commented in their meeting last week that several locations within the borough would be perfect for a satellite casino. “There is good and bad with everything,” said Council President Tommy Wingard, addressing potential ill effects of a casino. “If we want business, we will have to deal with it. It would help the town out.”

And the city council of Reading, in the east-central part of the state, is expected to vote today to seek to host one of the mini-casinos. “The administration—I’ve talked with the mayor about it—has no problem with a casino being located within the city,” city Managing Director W. Glenn Steckman III said at last week’s council meeting. “He recognizes, obviously, that there are sometimes social issues that come with it, but he’s also looking for employment opportunities for city residents.”

U.S. Rep. John B. Larson, whose district includes East Windsor, has belatedly added his voice to that of Connecticut’s two U.S. senators and Rep. Joseph D. Courtney, asking that the Department of the Interior publish approvals of amendments to the tribal state gaming compact with the Pequot and Mohegan tribes.

The tribes need that approval in order to safely move forward with building the state’s third casino, a satellite casino, and most salient to the point: a commercial casino. It is the commercial nature of the casino that makes it vital for the Interior Department to sign off. If the casino goes forward, it would be the first commercial casino operated by a gaming tribe, or in this case, two gaming tribes. Since the un-amended compact says that if the state allows a commercial casino to operate that would violate the exclusivity clause that guarantees that only Foxwoods and the Mohegan Sun can offer gaming. If that clause is violated they are not required to pay 25 percent to the state.

The Indian Gaming Regulatory Act (IGRA) requires that the Department either approve or reject compact changes within 45 days. If that deadline is not met, the law says the changes are “deemed approved.”

MGM Resorts International has fought a long and bitter battle to prevent the tribes from building a third casino, which is meant to blunt the effects of the MGM Springfield on Indian gaming. It has been lobbying the department to keep it from issuing an approval.

Larson speculated that intervention by the congressional delegation of Nevada, where MGM is based, might also have an effect.

So far, the Department has done nothing.

Before Larson joined the effort, Senators Richard Blumenthal and Christopher S. Murphy, plus Courtney, had sent a letter to Secretary of the Interior Ryan Zinke. Larson excused himself for not writing before by saying that he had been busy fighting the GOP’s tax bill.

Commenting on the hoped-for action, Larson said, “I don’t know why they would hold this up. They should publish these.” He noted that the residents of East Winsor voted to support the casino at a special town meeting. This was followed by a vote of the state legislature. “I totally support the people of East Windsor and the state’s decision, and the two tribes’ compact,” he said.

Caesars Entertainment is acquiring 18.4 acres on the Las Vegas Strip for a new convention center as part of a $1.14 billion sale of Harrah’s Las Vegas to VICI Properties, the real estate investment trust spun off in the gaming giant’s bankruptcy reorganization.

The all-cash transaction will see VICI take ownership of the real estate assets comprising Harrah’s, which Caesars will lease from VICI and continue to operate as part of its corporate portfolio, including the casino, the hotel and all other operations. The lease will run 15 years initially at an annual rent of $87.4 million that scales up in subsequent years. Caesars will have the option to extend the lease an additional 20 years in five-year increments.

Proceeds from the sale will supply the bulk of the $1.7 billion Caesars is paying to acquire Centaur Holdings and its two Indianapolis-area racinos, Hoosier Park and Indiana Grand. The acquisition, announced last month, will add 4,000 machine gaming and e-table positions to the two casinos Caesars already owns in Indiana.

Caesars President and CEO Mark Frissora said the twin deals “demonstrate our commitment to pursuing growth opportunities while maintaining balance-sheet discipline”.

The convention center parcel is adjacent to Harrah’s, and the agreement calls for VICI ultimately to buy the convention center and lease it back to Caesars to operate. A 300,000-square-foot facility is planned for the center Strip location, outfitted with the latest technologies and the largest column-free ballroom in the United States.