The Pennsylvania Gaming Control Board (PGCB) hearing for the proposed casino at the Nittany Mall in State College was held today in Harrisburg. Ultimately, the board granted the right for Stadium Casino RE, LLC to intervene in the matter of SC Gaming’s mini-casino application hearing, but denied it the right to introduce limited discovery.
Douglas Harbach with PGCB said the granting of intervening status means Stadium Casino will be heard on the issue of whether the board has the authority under the Gaming Act to consider the SC Gaming application which Stadium believes to be invalid. SC Gaming is winning bidder Ira Lubert‘s casino development LLC entity, whose license application is in question.
The board placed a condition that Stadium Casino only provide filings and limit any verbal argument to the board to 15 minutes during the SC Gaming application hearing next year.
This legal matter will continue on into 2023.
PGCB grants State College Casino petition
Attorney Mark Aronchick, representing the non-winning bidder (Stadium Casino), said that on Jan. 4, 2021, “after the bid, before the application, they (Bally’s) signed a framework agreement with real estate developer Lubert to jointly design, develop and construct and manage a casino.”
Bally’s is not licensed in Pennsylvania.
“The company will maintain a majority equity interest in the partnership–that’s ownership. Now we don’t have that document. We don’t see what that actually says,” Aronchick told the board. “That should be litigated; that should be addressed because that is the definition of an ownership interest.”
Aronchick said that between the bid and the application, Lubert brought in other interests on this project and “they are people clearly who have interests that need to be looked at carefully as ownership interests. Because if they are ownership interests, they weren’t allowed to bid, and they shouldn’t be in this project and this application shouldn’t be considered.”
Aronchick questions some of the proof backing up Lubert and his net ownership in the application for SC Gaming. Aronchick mentioned there’s lots of ownership interest in the casino outside of having 100% of the common stock.
If it’s proven that other parties are involved in ownership, then their bid could get thrown out as illegitimate.
Nittany Mall Casino application hearing will include arguments by Stadium Casino
With Category Four casinos in PA, Aronchick mentioned regulation dictates there should be no cannibalization of the existing market. So no new outside unlicensed operators were allowed to bid on a mini-casino license.
“It’s clear that that was the intent and it’s never changed in the various iterations of the Category Four statute,” he said. “Only existing companies could bid on those licenses with one exception. That’s important for you to understand and deliberate on.”
Aronchick pointed out that Lubert was allowed to bid due to his ownership interest in an existing PA casino entity.
“He has a small ownership interest in Rivers. The problem is not what happened at the bid. The problem is what happened after the bid, before the application,” Aronchick told the board. “Mr. Lubert, after the bid, but before the application entered into all kinds of arrangements, several arrangements with other entities and people that create our contention that this has to be looked at closely – ownership interests in this facility. And they are entities or people who are not licensed and don’t operate in Pennsylvania. There’s no statutory authority to consider that application.”
Ira Lubert’s SC Gaming rep offers rebuttal
Stephen J. Kastenberg, a partner with Ballard Spahr that is representing SC Gaming OpCo, said the question of statutory authority is a purely legal question.
“It is not a question that requires discovery. It is a legal question. The question of intervention is one of the board’s sole discretion.”
Kastenberg states that Stadium is attempting to tie multiple things together in regards to the legal issue of statutory authority.
“Petitioner actually offers no evidence,” he said. “They offer a lot of citations, but those citations are to a petition that they filed in Commonwealth Court. Statutorily this board is not simply allowed to decide eligibility. It is compelled by its own regulatory code and by statute to decide eligibility.”
Ashley Gabriel with the Office of Enforcement Counsel (OEC) recommended to the board that they deny Stadium’s request for discovery.
We will continue to update this news and anything surrounding the State College Casino application process.