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.
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.
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.
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Last Comments ( 4 )
Andrew's comment is accurate and absolutely correct. This excerpt from 4 Pa.C.S. § 1305.2(c)(8) of the Pennsylvania Gaming Act states that, "...the second highest bidder shall be awarded the right to select a Category 4 location and apply for the Category 4 slot machine license, so long as the second highest bidder's bid amount meets the requirements of paragraph (5). If the second highest bidder declines the award or is ineligible to win, the board shall conduct another auction." There is no done deal. Don't expect to see a casino in Centre County, Pennsylvania.
Theo, you are absolutely correct that another casino is coming to Pennsylvania - state government leaders want more gambling tax revenue, and they will do whatever it takes to get someone to build a casino and collect it. However, it is not at all certain that the new casino will be built at the Nittany Mall location, or even in Central Pennsylvania. If Cordish wins the court case, their licensing process will start over from the beginning, and they will get to choose a location for their new casino all over again. It is unlikely that Lubert's team will just hand over the old Macy's site at the Nittany Mall so Cordish can build there after this legal battle is over. It is also questionable whether Cordish would even want to build in Central Pennsylvania anyways - Cordish has options to build in Philadelphia or Pittsburgh that were never even a possibility for Lubert because of the exclusion zones around Cordish's other already established casinos. Locations in either of these cities would likely be far more profitable for Cordish than a dying shopping mall in backwater Central Pennsylvania, even taking partial cannibalization of Cordish's existing casino revenues into account.
Not sure you read the article correctly Dan M. The fight is over who gets the license, and not whether a license is going to be granted. The two parties in the dispute both want the license, they are just arguing who has the right to it. The casino is coming. It is a “done deal.”
Everyone thought this planned casino in central Pennsylvania was a done deal. It is far from that. Watch as the Pennsylvania Supreme Court denies the issuance of this Category 4 casino license at the State College location just four miles from the Penn State University main campus at University Park. I wished Bally's good luck and best wishes. Both will be really needed in this legal battle that will be finally decided by the Pennsylvania Supreme Court. Don't plan on watching a ribbon cutting at their grand opening ceremony. Not going to happen!