Courts

Caesars Sues Massachusetts Gaming Commissioner Over Licensing Process


Caesars Entertainment (CZR) is crying foul over the process that left it pushed out of a Massachusetts casino project in October.

The Las Vegas-based entertainment and gaming company on Wednesday filed a lawsuit in federal district court in Boston against the chairman of the Massachusetts Gaming Commission, Stephen Crosby, alleging the state’s top gambling regulator improperly handled the process of considering partners for a proposed casino project in East Boston.

Caesars alleges that Crosby made untrue and misleading statements about the company’s suitability for the project and accuses him of “discriminatory, biased, and unfair disruption” of its partnership with Suffolk Downs, the owner of a site under consideration for a casino license from the state. Caesars had joined with Suffolk in 2011 to develop plans and proposals for the gaming and entertainment complex; it says it invested $100 million in the project.

The lawsuit also alleges that Crosby failed to disclose conflicts of interest in a casino project in Everett, Mass., another of three Boston-area venues vying for a single casino license to be granted by the agency. And, the complaint says, Crosby and the agency were tougher on Caesars in determining suitability than they were with other applicants.

Caesars withdrew from its partnership with Suffolk Downs on Oct. 19 after the gaming commission issued a report raising questions about the company’s suitability for the project. Some questions stemmed from a licensing agreement between a Caesars subsidiary and a hotel group, one of whose principals was alleged to have ties to Russian organized crime. Shortly after removing its casino license application, Caesars Chief Executive Officer Gary Loveman expressed disappointment that the company had not been given an opportunity to address the issue.

The lawsuit says the links to organized crime addressed in the agency’s report are unsubstantiated.

“The commission’s staff issued an incorrect and unprecedented recommendation that plaintiffs had not met their burden to establish their suitability, and Chairman Crosby and members of the commission’s staff have made untrue and misleading statements about plaintiffs and their affiliates,” the complaint states. Crosby, Caesars argues, deprived it of its due process and equal protection rights.

The company is seeking unspecified damages, as well as a declaration that the licensing process was constitutionally flawed and the suitability report is null; it also seeks to prohibit Crosby or others from sharing or distributing the report, which it wants permanently sealed.

The gaming commission issued a statement on Thursday afternoon in response to the lawsuit, saying it is without merit. Crosby, the statement says, “had no role in the investigation, report, or recommendations” covered in the suit.

Kessenides is an associate editor for Bloomberg Businessweek.

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Companies Mentioned

  • CZR
    (Caesars Entertainment Corp)
    • $16.0 USD
    • -0.46
    • -2.88%
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