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Caesars files lawsuit against chairman of Massachusetts regulator

13th December 2013 9:11 am GMT

US casino operator Caesars Entertainment has filed a lawsuit against the chairman of the Massachusetts Gaming Commission after the company decided to withdraw from the state when the regulator raised concerns over its suitability.

Caesars had a partnership with Gansevoort Hotel Group, and a management agreement related to operating a casino with Sterling Suffolk Racecourse in Boston, Massachusetts.

But Caesars withdrew from Massachusetts after the regulator made what the company considered were “unreasonable” demands for licensure. These demands included the questioning of the suitability of interactive chief Mitch Garber, the CEO of Caesars Acquisition Company, about his past roles as CEO of PartyGaming and Optimal Payments.

Caesars has now filed a lawsuit against Massachusetts Gaming Commission chairman Stephen Crosby, alleging that the Commission raised unfair questions about its suitability and that Crosby failed to reveal a conflict of interest during the casino licence process.

It alleges that Crosby favoured an application from rival Wynn Resorts, having been involved with one of the owners of the plot of land no which Wynn intended to build on.

Crosby said earlier this month that he would recuse himself from the Commission’s decision-making process involving Wynn’s land option.

“During the course of the background investigation involving Wynn MA LLC, it was brought to my attention by our investigators that the land ownership, (which involves, among others, an individual with whom I had a business relationship 23 years ago) seemed to involve a possible hidden ownership and/or other difficult issues which could threaten the public trust in this process, and which make the Commission’s deliberations particularly important and sensitive,” he said.

“Because of my prior business relationship with one of the parties, I immediately recused myself from all Commission and staff deliberations on this matter, and filed the required disclosure documentation with my appointing authority, the Governor, and with the State Ethics Commission.”

In the complaint, Caesars also alleges that the Commission raised unfair questions about its suitability by holding it to a high standard that other applicants.

“The lawsuit filed by Caesars is without merit,” said Elaine Driscoll, director of communications for the Massachusetts Gaming Commission. “The Investigations and Enforcement Bureau (IEB), comprised of seasoned investigators, acts independently to protect the public interest.  

“The IEB is ultimately responsible for the report it presents to the Commission. The facts in that report are the basis for the IEB’s recommendation. Chairman Crosby had no role in the investigation, report or recommendations.”

Caesars is seeking unspecified damages as well as a declaration that the licensing process was constitutionally flawed.

Shares in Caesars Entertainment Corporation (Co. Data) (NASDAQ:CZR) closed yesterday at $20.02 per share in New York.

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