Hard Rock Reiterates Support for Gary Casino Project, Indiana Investigates Spectacle

Posted on: October 5, 2020, 11:11h. 

Last updated on: October 6, 2020, 01:25h.

Steve Bittenbender Read More
Expertise: Legislation, Sports Betting, Horse Racing.

As the Indiana Gaming Commission continues its investigation into Spectacle Entertainment, Spectacle’s operating partner in a $300 million Gary casino currently under construction has reaffirmed its dedication to the project.

Hard Rock Spectacle Gary
Hard Rock International COO Jon Lucas, seen here at the January groundbreaking for Hard Rock Northern Indiana, said his company remains committed to the Gary casino project, even as its partner faces an investigation from the Indiana Gaming Commission. (Image: Casino.org)

That’s what Jon Lucas, the chief operating officer for Hard Rock International, told Casino.org in a statement Monday. It comes a week after a federal grand jury indicted John Keeler, Spectacle’s vice president and general counsel, on election campaign finance violations.

We take integrity and compliance extremely seriously and are closely monitoring the situation in Northern Indiana,” Lucas said. “Recent stories pertaining to Spectacle Entertainment have no bearing on Hard Rock International’s commitment to the Gary community. We look forward to opening a Hard Rock Hotel & Casino in 2021 as previously announced.”

The IGC announced its investigation into Spectacle in late January, just a couple weeks after Spectacle and Hard Rock officials broke ground on the inland casino project in the northwest Indiana city just outside of Chicago. The IGC investigation deals with Centaur Gaming, which owned the state’s two racetracks before selling them to Caesars Entertainment in 2018, and its connection to illegal campaign contributions uncovered in a federal probe.

Rod Ratcliff served as Centaur’s chairman and CEO and founded Spectacle after that sale. Keeler also served as Centaur’s vice president and general counsel and took leave from Spectacle after being charged.

Charges of Conspiracy, Corruption

In 2015, federal prosecutors allege campaign consultants for an Indiana congressional candidate devised a scheme with Keeler and an unnamed Centaur executive to submit phony invoices to the gaming company. The funds from those bills were then used to repay contributors to the campaign of Brent Waltz, a then-Indiana state lawmaker seeking the Republican nomination in the state’s Fifth Congressional District.

Federal authorities also charged Waltz in connection to the scheme last week. Two campaign consultants have already pleaded guilty and have been sentenced.

According to federal documents, Keeler, 71, faces charges of conspiracy to make corporate campaign violations, making corporate contributions, submitting false statements, and falsifying records. He faces up to 20 years in prison and a fine of up to $250,000.

In a statement last week, IGC Executive Director Sara Gonso Tait called the investigation into Spectacle a highly serious matter.

“The ability for this company to continue to hold an Indiana gaming license is in question,” she said. “The remaining Board of Managers have urgent questions to answer.”

Investigation Delayed Hard Rock Indiana Project

After selling Centaur’s properties to Caesars, Ratcliff created Spectacle to purchase the Majestic Star Casino in Gary. Spectacle officials then lobbied the state to move the Gary casino inland. The Indiana General Assembly approved that plan last year as part of an expanded gaming bill.

The Majestic Star uses two licenses, one for each boat on the property. As part of the state law, Spectacle agreed to turn in one of the licenses to the state. Indiana officials then earmarked for Vigo County. Last November, Vigo County voters approved a referendum to allow casino gaming.

A month later, Spectacle submitted the only application for the license. They planned to partner with Hard Rock on that venture in Terre Haute, the Vigo County seat located about 160 miles due south of Gary. But the IGC investigation delayed its consideration of that $120 million casino project as well. Commissioners eventually approved the license in May, but did so only after Keeler and Ratcliff divested from it.

Although federal court documents did not mention Ratcliff, he quietly stepped down as Spectacle Entertainment’s chairman, CEO, and board member in June. He still maintains an ownership stake and performs investor relations work for the company. However, Tait said he’s no longer allowed to “exert any control or management” over the Majestic Star.

Land Deals Previously Held Up Gary Casino Project

The investigation by Indiana officials is not the first time that Hard Rock’s Gary casino project has come under question.

In August 2019, the IGC approved plans for the land-based casino in the Rust Belt town. However, before Spectacle Entertainment and Hard Rock finalized their agreement, questions arose about land tracts purchased at a government tax sale near the location for the casino. That sale included property owners who were trying to sell to a company tied to Spectacle.

Hard Rock International asked its compliance committee to review the development. Two months later, Hard Rock found no wrongdoing on the part of Spectacle, and the project moved forward. However, it did require the IGC to reapprove it in December.

5Dimes Attorney May Join Keeler’s Defense

Keeler’s legal team may soon include a Washington, DC attorney fresh off another case with gaming ties.

On Thursday, Keeler’s attorneys filed a motion to add Barry Boss of Cozen O’Connor to the litigation team. Boss serves as the DC firm’s co-chair of its commercial litigation and white-collar defense practice groups.

The day before that motion, the US Department of Justice announced a historic $46 million agreement with offshore sportsbook 5Dimes to settle a case initiated by the US Attorney for the Eastern District of Pennsylvania. It was a settlement Boss and other Cozen attorneys helped facilitate, representing the company and Laura Varela, the widow of 5Dimes founder William Sean “Tony” Creighton.

In the settlement, 5Dimes agreed to stop taking bets from US customers and refund their accounts. In addition to forfeiting assets, the Costa Rican sportsbook also agreed to pay a $15 million lump-sum fine.

It has since filed corporate paperwork in Delaware and plans to launch legitimate sportsbook operations in the US.

“This unique settlement is the first of its kind in the United States,” the firm said in a statement. “5Dimes is now positioned to apply for entry into the US regulated sports wagering industry. As her advisers, we at Cozen O’Connor could not be more excited for its next chapter and to see how many other offshore companies follow the same path.”