Federal Court Rules Against Caesars in Lawsuit Against Massachusetts Gaming Commission

Posted on: February 19, 2015, 11:33h. 

Last updated on: February 19, 2015, 11:33h.

Casino.org Staff Writer Read More

Expertise: Commercial Gaming.

Caesars Entertainment Corporation has suffered a courtroom loss in their lawsuit against the Massachusetts Gaming Commission that claimed the board had been biased in favor of Wynn Resorts in the battle over the Greater Boston casino license.

In a decision reached last Friday, the First Circuit Court of Appeals dismissed Caesars’ lawsuit against two Massachusetts officials that was based on allegations that they were biased against Caesars during the process.

The lawsuit was targeted against state gaming commission chairman Stephen Crosby and Karen Wells, the director of the Investigations and Enforcement Bureau.

A Federal District Court had already reached the same decision to dismiss the lawsuits last May.

Caesars Hoped to Build Casino at Suffolk Downs

Caesars was the group originally behind a plan to build a casino in conjunction with the Suffolk Downs racetrack in Boston. However, the company withdrew from the race after the gaming commission released an investigative report that found Caesars to be an unsuitable operator for the casino.

In particular, the report raised questioned about Mitch Garber’s suitability to receive a license, since he had previously been the CEO of two online gambling companies that had to reach agreements with the US Attorney’s Office in New York to avoid prosecution.

Ultimately, that casino project was rejected by East Boston voters, and was replaced by an alternate plan in which Suffolk Downs would partner with Mohegan Sun to build only on the Revere side of the track’s property. That was approved by Revere voters, but a Wynn Resorts proposal in Everett was awarded the only area casino license.

Caesars argued that Crosby had urged Wynn Resorts to remain in the race for the license when the company was considering dropping out due to issues with the process. The company also claimed that they did not have enough time to appeal the commission’s ruling, depriving it of a property interest.

Bidding for License Didn’t Create Property Rights

In the most recent ruling, Judge David H. Souter found that the state commission was charged with making “highly discretionary” decisions, meaning that Caesars’ equal protection claim could be dismissed, and that simply bidding for a public contract did not create a property right. The ruling cited a similar Supreme Judicial Court ruling as precedent for that finding.

“The issue…is whether Massachusetts law would recognize in the request for action by the commission a source of expectable value sufficiently reliable to be protected as property,” wrote Souter. “The licensing cases point to a negative answer, and the casino licensing law does the same with unmistakable emphasis.”

With no protected property interest for Caesars, the court dismissed Caesars’ claims that their rights to procedural and substantive due process had been violated.

Through a spokesperson, the Massachusetts Gaming Commission said it was pleased with the decision to dismiss the case.

“Chairman Crosby and director Wells, along with the commission appreciate the court’s careful consideration of the issues raised by the parties and the court’s recognition of the broad discretion granted to the commission by the Legislature,” said commission spokesperson Elaine Driscoll. “The Commission looks forward to continuing to protect the interests of the Commonwealth and its citizens as expanded gaming is introduced to the Commonwealth.”

The ruling should also be welcomed by Wynn Resorts, as it removes a potential complication as they move to begin building their resort in Everett.