The Illinois Gaming Board revoked a valuable state gambling license Tuesday from a bankrupt casino firm, contending a yearslong effort to move to Rosemont was tainted by deceptive owners and mob influence.
In their most significant vote to date on the controversial project, the five-member board unanimously endorsed the findings of an administrative law judge and stripped the state’s lone unused riverboat gambling license from Emerald Casino.
State officials and eager suburban leaders immediately revived talk of finding a new home for the license, touted as the most lucrative in the state, but Emerald representatives vowed to tie up the issue in appeals courts for years to come.
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Still, the regulators’ action marks the end of a major chapter in a political and legal saga that spans three governors, more than a dozen lawsuits and three complete overhauls of the Gaming Board’s membership. Along the way, the once clout-heavy Emerald investors watched their hopes for a gleaming casino dissolve, leaving them only with a rusting skeleton of metal beams along the Tri-State Tollway.
Board members acknowledged their decision could financially harm some of Emerald’s investors who did nothing wrong, including nearly 20 minority and women shareholders. But they argued the decision was necessary to finally get the long-dormant casino license operating.
Gaming Board Chairman Aaron Jaffe said Illinois has lost $500 million to $1 billion in tax revenue since 1997 while the license sat idle.
In their decision, the board agreed with the findings of retired federal judge Abner Mikva, who was appointed to conduct a summer-long administrative hearing on the case that Emerald officials blasted as a kangaroo court.
Mikva reported that Emerald Chief Executive Officer Kevin Flynn and other company executives conspired to move their failing casino from East Dubuque to Rosemont without telling the Gaming Board, then lied to regulators when they were discovered.
“Judge Mikva said it best, that the people who operated Emerald and who did this deal operated on the premise of catch me if you can,” Jaffe said. “My feeling is they were caught, they lost their game of catch me if you can.”
Board member Charles Gardner said the hearing showed “the people running Emerald are a stain on the gaming industry” and can’t be allowed to keep the license.
But Emerald’s attorney, Robert Clifford, argued that the board’s punishment was too harsh and that the administrative hearing improperly focused on alleged mob ties in Rosemont. “This hearing was all about preventing this casino from going to the village of Rosemont,” Clifford said.
Rosemont Mayor Donald Stephens has steadfastly denied the allegations of mob influence, and the village has contested the validity of the hearings in U.S. court.
`A morass of litigation’
Clifford said any investors that lied or misled regulators or had other ties that the board found objectionable were willing to drop out as investors, but that the board never considered that offer. Clifford said the state would have trouble getting maximum value from the license because Emerald’s appeals will leave the case in legal limbo for at least two more years.
“What investor in his or her or its right mind would want to buy a license that is so mired in litigation, in a morass of litigation?” Clifford asked.
Minority investors in Emerald who had been let in on the deal when legislation was passed to clear the way for the casino project complained that they were innocent victims of the board’s decision. Nearly two dozen minorities and women who invested $33 million in the project had asked the board to protect their investment, saying they did nothing wrong and legislators urged them to invest.
“Fifteen years there’s been gambling in Illinois and all the profits have been made by white men,” said Chaz Ebert, wife of Sun-Times movie critic Roger Ebert. “The first time that minorities get a chance to invest, what happens? We get steamrolled. I mean, this is an outrage. And I think the citizens of Illinois should be outraged.”
Critics responded that while minority investors may have thought they were betting on a sure thing, they were no different from others who gambled on the most topsy-turvy venture in the short history of the state’s riverboat gambling industry.
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The story of the Emerald Casino goes back to 1997, when Emerald’s predecessor, the Silver Eagle Casino, closed its riverboat in the northwest corner of the state amid financial struggles and tough gambling competition in Iowa. Eventually, state legislation passed in 1999 allowing the owners to move to Rosemont–the first time a legal gambling enterprise was allowed in Cook County.
Troubled history
When then-Gov. George Ryan signed the legislation, it appeared the deal could not be stopped. But the Gaming Board tripped up the plans when it raised questions about some of Emerald’s investors and said the casino was moving ahead without the board’s knowledge or consent. In 2001, the board voted down the proposal.
The appeal of that decision was delayed until Tuesday amid a series of lawsuits and counter-suits, including a successful attempt to force Emerald into bankruptcy.
Hovering over the project since 2001 were accusations made by the board that organized crime was trying to infiltrate Emerald from the start.
While the board’s decision didn’t directly take up the issue of mob involvement in its 37-page order Tuesday, it cited FBI allegations that two of Emerald’s investors–Joseph Salamone and Nick Boscarino–appeared to have ties to organized crime. Boscarino used to co-own a business with Stephens.
The board said it did not need to resolve conflicting testimony between Stephens and FBI investigators who said Stephens had met with mob figures.
“Mayor Stephens’ admitted friendship and association with certain of the resulting Emerald shareholders speaks for itself,” the board wrote.
Illinois Atty. Gen. Lisa Madigan, who opposed the Emerald venture, has said the state’s options include auctioning the license to another company or retaining ownership and hiring a private management firm to run a casino. Last year, Madigan blocked the Gaming Board’s plans to broker the sale of the license to Isle of Capri Casino Inc., citing concerns that the new company also wanted to build in Rosemont.
Cities around the state, including north suburban Waukegan and southwest suburban Summit, were already lining up to become the location of the next casino, which still promises big tax revenue for any municipality where it is located.
“This is such a valuable market to get into Cook County,” said Tom Grey, executive director of the National Coalition Against Legalized Gambling. “Rosemont was it and that has failed over a period of time. … Someone wants to crack this market.”
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