Next week Maine voters will decide whether an initiative that would give one individual, Shawn Scott, or a company owned by him, the right to build the state’s third casino—in York County—will pass muster. Hanging like a Sword of Damocles over the campaign is the possibility the state’s ethics commission could levy a fine of as much as $4 million on it days before the vote.
So far, the pro Question 1 campaign has outspent the opposition by a factor 7 to 1 or $9 million to $600,000, in spite of the fact that the opposition includes the owner of a casino that would probably be financially harmed if a competing casino opens.
The first $4 million was spent on the effort to qualify the measure by gathering signatures. During the election campaign itself, Maine Public reports that Progress for Maine has spent $1.7 million on television ads, $127,000 on radio ads and $700,000 on a Washington-based consulting firm: Goddard Gunster—the same one that guided the successful Brexit effort last year in Great Britain. It is providing consulting services, is guiding social media, website creation and maintenance and producing ads for television and print.
The international firm is one of the winningest ballot measure consultants in the world. Besides its Brexit campaign, it has also helped fight efforts to tax sodas in the U.S.
Progress for Maine has also paid former Maine Attorney General Andrew Ketterer to represent it and paid $25,000 to the Aroostook Band of Micmacs to be campaign consultants.
A Bad Deal, the main group fighting the measure, has spent more than $600,000, most on TV ads. Its funding comes from a subsidiary of Churchill Downs, the owner of the Oxford Casino.
The fact that Question 1 made it to the ballot has not stopped the investigation of the Maine Ethics Commission from continuing full speed ahead due to the murky funding of the initial effort to gather signatures last year. That funding, which came from Scott and companies he either owns or is associated with, was kept hidden for more than a year.
Last week, in the last stages of the probe, the commission took 10 hours of testimony and cross-examined lawyers for Lisa Scott, Shawn Scott’s sister, Augusta lobbyist Cheryl Timberlake, who was the campaign’s treasurer, and donors to the campaign. Timberlake and Scott each tried to say that the other was at fault for not reporting donations from companies that operate outside of the U.S.—something that is illegal—and domestic firms. All are connected to Shawn Scott in some way.
For more than a year Lisa Scott was listed as the only donor to the campaign. Then, in April 2017 a filing revealed that several companies were involved. Initially she and her attorneys rejected subpoenas from the commission and only agreed open private financial records as long as records that had not connection to the campaign were kept sealed.
Timberlake protested that she knew nothing about other donors to the campaign, describing them as a “corporate veil,” and claimed that Lisa Scott was “the face and manager of this initiative.” She said she didn’t know about other fund transfers.
Lisa Scott’s attorney claimed that she relied on Timberlake’s counsel and added that everyone in the Horseracing Jobs Fairness campaign knew that the companies involved were Scott’s companies. The attorney, Bruce Merrill, accused Timberlake of pretending not to know this fact in order to escape being fined. He declared, “I don’t think Cheryl would admit that today is Halloween if either myself or Mr. Mina asked her that question. I believe she’s scared. I believe she’s afraid and I believe she’s put herself in a position that she can’t extricate herself from.”
Ethics director Jonathan Wayne noted that Timberlake and Scott had given testimony that clearly differed widely, but told the five-person commission it didn’t matter.
“Because the burden is not on you to figure out any particular state of mind,” he said. “You don’t have to decide who’s lying or who did this intentionally, or who did this carelessly. You just need to know that reports have not been filed on time and consequences to the public were significant.” State law stipulates that if a fine is recommended, it could be as high as the amount that was hidden, or $4 million.
In late August, as the ethics investigation heated up, Lisa Scott left the campaign, moving back to Florida and her brother became the actual and public head of the campaign.
The commission was scheduled vote on the fine five days prior to the election. The Progress for Maine campaign has asked that any fines imposed be done after the November 7 election.
Rebecca Foster, a spokesman for Progress for Maine, last week published an op-ed in several Maine newspapers, challenged the assertion that “only one person will benefit” from the York casino by declaring, “This project will create some $175 million in new capital investment, thousands of jobs and an estimated $45 million in annual tax revenue, which, by law, would help fund a host of state priorities. It also would create new opportunities from non-gaming ventures with the Aroostook Band of Micmacs, a Maine tribe with a long history that, to date, has been denied any benefits from the state’s gaming industry.”
On October 12 Progress for Maine issued a press release announcing the tribe’s support of Question 1. It quoted Tribal Chief Edward Peter-Paul: “We’re proud to support Yes on Question 1 because the backers of the measure have made a commitment to the tribe – to help bring new economic opportunity to us so that we can continue on our path towards achieving self-reliance,” who added, “Though we are a federally recognized tribe, we receive no funding from the Oxford Casino and its Kentucky-based ownership – Churchill Downs Inc. Yes on 1 wants to fix that for us.”
Progress for Maine promises that it will generate $11 million for public education, $3 million in property tax relief, $3 million for scholarships, $1.2 million for the host community, $15 million to benefit the horse racing industry plus some money for the general fund and veterans.
This is the second time that Shawn Scott has led a casino election campaign in Maine. The first time was 2003 when voters authorized transforming the racetrack in Bangor, the Bangor Raceway, into the state’s first slots parlor. It eventually became Hollywood Slots and is now called Hollywood Casino. Scott sold the rights to that casino to Penn National Gaming for $51 million after racing officials began an ethics investigation.
This time the license could be valued as much as $200 million, according to state officials.
One of the major critics of the initiative is Governor Paul LePage who declared recently: “Maine’s referendum process has been hijacked by big money, out-of-state interests hoping to pull the wool over your eyes.”
As the day for balloting approaches Maine legislators are calling for reforming the initiative process that would make it harder for an out-of-state operator such as Scott, to “hijack” the process and qualify a measure that would benefit just one person. And that person doesn’t even live in the state, they point out. Scott is a resident of Saipan, a U.S. territory. Other backers come from Japan, California, New York, Miami and Las Vegas. The New York-based back, Atlantic and Pacific Capital Realty LLC, directed $1.8 million into the campaign during 47 days this summer.
The chairmen of the state’s powerful Government Oversight Committee are calling the Question 1 effort a “case study” that shows how easy it is the bend the process to benefit a special interest.
Senator Roger Katz supports a proposal to direct the committee’s investigative staff to review the initiative process and make recommendations to the committee on how to reform the process or even call on the voters to amend the state constitution.
Katz said he’s not concerned about more gaming in the state, per se, but rather how the process can be manipulated by a single special interest. Most initiatives are funded by interests within the state, although many attract funding from out of state interests.
Although the signature drive was successful last year, it was actually the second effort to qualify the casino vote for the ballot. The first time, in 2016, the state Secretary of State’s Office rejected more than half of the 91,294 signatures that were turned in. The campaign had to start again from scratch and in January of last year turned in more than the 61,000 that were needed.
Maine has two casinos already, Bangor’s Hollywood Casino, owned by Penn, and the Oxford Casino, owned by Churchill Downs. The latter collected more than $761 million from slot machines last year and paid $29.8 in taxes. It collected $15.6 million in table games and paid $2.5 million in taxes.
Hollywood Casino collected $43 million from slots in 2016 and paid $15.3 in taxes. It took in $9.1 million from table games and paid $1.4 million in taxes.
As noted above, the Oxford Casino has paid $600,000 to fund A Bad Deal for Maine.
