Caesars-Suffolk split shows casino board is doing its job
WHEN CAESARS Entertainment abruptly withdrew from the Suffolk Downs casino bid last week, it was a backhanded compliment to theMassachusetts Gaming Commission. The panel had already shown it would closely scrutinize companies seeking to open casinos. So when a “suitability assessment” by commission investigators raised questions about a Caesars business partner in a Las Vegas project, it was enough to prompt Suffolk Downs to push out Caesars, one of the best-known casino operators in the world.
That, in turn, led Gary Loveman, Caesars’ top executive, to blast state regulators for “unprecedented” licensing standards. “It’s going to be very difficult for sophisticated, multi-jurisdictional operators to tolerate the environment this commission has created,” warned Loveman. His disappointment is understandable. But the commission’s desire to apply a tough character test to all casino bidders is to the panel’s credit.
The commission itself had not ruled on Caesars’ suitability. And Caesars had gone so far as to cut its Las Vegas ties to Gansevoort Hotel Group after investigators questioned the alleged ties between Russian mobsters and one of the Gansevoort principals. But rather than wait for an Oct. 29 gaming commission hearing on the matter, Suffolk Downs asked Caesars to withdraw. No doubt, Suffolk Downs feared the effect of the hearing on East Boston voters, who are set to vote up or down on the proposed casino the following week. (It’s unclear whether a US Treasury money-laundering investigation, which Caesars publicly disclosed Monday, played any role in the situation.)
The gaming commission’s investigative team— which includes state troopers, former prosecutors, and former IRS agents— spent six months conducting checks on bidders for the three casino and one slots parlor licenses. The checks cover personal and business integrity, as well as financial stability. It’s an intentionally demanding process. Indeed, Vornado Realty, Suffolk Downs’s biggest investor, transferred its interest to a blind trust rather than participate.
The commission’s standards are hardly impossible. So far, five entities have passed its suitability test; and the panel demonstrated flexibility in dealing with one bidder who was deemed unsuitable. Ourway Realty, the initial applicant at Plainridge Racecourse, was disqualified after state investigators discovered that a member of the company had withdrawn more than $1 million from the struggling track. But after that finding, a hastily arranged alliance between Plainridge and Penn National Gaming Inc. won commission approval.
Loveman argues that his company’s efforts to address the Gansevoort issue would pass muster in other jurisdictions. But given the checkered history of gambling in the United States, including links to organized crime, Massachusetts is right to set a higher standard.