Pennsylvania Supreme Court to Hear Cordish Appeal of Bally’s State College Casino

Posted on: September 8, 2023, 02:07h. 

Last updated on: September 8, 2023, 02:07h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

The Pennsylvania Supreme Court this week agreed to consider an appeal of the Pennsylvania Gaming Control Board’s (PGCB) decision to move forward with licensing a Category 4 satellite casino near Penn State University at the Nittany Mall.

Pennsylvania Supreme Court Bally's State College
A rendering of the Bally’s State College casino plan the Pennsylvania Gaming Control Board approved in January 2023. The state’s decision, however, is being contested in court, and the case has now reached the Pennsylvania Supreme Court. (Image: Bally’s Corporation)

In January, The PGCB unanimously voted to issue SC Gaming OpCo, LLC, a Cat. 4 mini-casino license. The business is to be a Bally’s casino after a more than $100 million renovation of what was formerly a Macy’s department store at the Nittany Mall. The shopping center is less than five miles from the Penn State University Main Campus.

Bally’s didn’t qualify to bid on the Cat. 4 license when the PGCB held the auction round on Sept. 2, 2020. But businessman Ira Lubert did because of his small ownership position in Rivers Casino Pittsburgh.

Lubert, through his SC Gaming OpCo, won the auction with a $10 million bid. His tender outbid Baltimore-based Cordish Companies, which had sought to obtain another Cat. 4 license, gaming permits that were authorized through the state’s 2017 gaming expansion package. Cordish operates in Pennsylvania as Stadium Casino RE, LLC, and runs a full-scale Live!-branded casino in Philadelphia and a satellite location outside of Pittsburgh in Westmoreland.

Cordish believes the PGCB wrongly allowed Lubert to orchestrate a financing group to win the Sept. 2020 Cat. 4 auction. Cordish’s attorneys argue that the state’s own rules stipulated that only companies and key investors who held “an ownership interest in a slot machine license” in the commonwealth qualified to bid.

Cordish Appeal, State Response

Cordish alleges that prior to the bidding, Lubert brought on investors, namely fellow Pennsylvania businessmen Robert Poole and Richard Sokolov. Cordish contends that since Poole and Sokolov didn’t qualify to bid on the mini-casino license, Lubert’s tender should have been disqualified by the PGCB.

Their contributions were not mere loans made in the ordinary course of business; rather, the contributions bought the investors an interest in the Category 4 license for which Lubert would have the right to apply as the winning bidder,” Cordish attorneys wrote in their appeal. “Mr. Lubert … formed an investment group, parceled off ownership and control interests in that group, put forward an applicant (SC Gaming), and is seeking a license for interests that are substantively different from Mr. Lubert.”

Lubert has maintained that he only partnered with Bally’s after securing the license rights. The PGCB agreed, with regulators saying they did their due diligence and determined that Lubert bid on the casino license himself. But PGCB counsel admitted he had other sources of funding.

It is the position of the Board that the [Gaming] Act provides no explicit restrictions on how a winning bidder funds the winning bid, with the caveat that the source of any such funds used are always part of the pre-licensure investigation and can — and often times will — result in the licensure of financial backers as principals to the project,” a PGCB brief read. “Nothing in the Gaming Act mandates the winning bidder in a Category 4 auction to use his personal funds — or a loan obtain by him, personally — to pay the winning bid amount.”

Supreme Court Takes Jurisdiction

The Pennsylvania Supreme Court this week began the process of hearing Cordish’s appeal of the PGCB awarding the Cat. 4 slot machine license to SC Gaming. The Supreme Court additionally granted requests made by SC Gaming and the PGCB to transfer the lawsuit Stadium initiated in the lower Commonwealth Court to the state’s high court.

The Supreme Court has instructed Stadium Casino to file its appeal by Oct. 16. The PGCB and SC Gaming will then have 30 days after Stadium’s filing to submit their own briefs.