2002 - Harness Tracks of America, Inc.

HARNESS TRACKS OF AMERICA
Executive Newsletter
A daily fax and e-mail report on racing and gaming developments in North America and beyond
Stanley F. Bergstein, Editor June 28, 2002
INDY DOWNS INVESTIGATION
Joe Gorajec, executive director of the Indiana
Horse Racing Commission, has notified Indianapolis
Downs, currently building a track near the capitol
city, that it is under investigation and that he
has recommended it be fined $1.2 million for nondisclosure
of information that has “seriously tarnished
the reputation and the image of the Commission.”
The allegations concern seven findings of fact
charging nondisclosure involving the role and actions
of Larry Mohr, who the commission says
acted as advisor and consultant for Indianapolis
Downs during its license application hearings. The
allegations contend Mohr had improper communications
with commission members on at least five
occasions during that period. The track contends
Mohr’s services and those of DSB Associates, the
firm with which he was affiliated, were “fully disclosed
to the Commission in Indianapolis Downs’
February 2001 Shelby county permit application.”
Gorajec calls that statement “an insult to the intelligence
of the Commission, its staff, the horse
racing community in Indiana and the general public,”
and says “There is simply no reasonable way
to arrive at the conclusion suggested by Indianapolis
Downs when a fair and objective analysis
is made of facts which have been long known to
them but which have only recently been provided
to the Commission.”
Gorajec’s recommendation to the Commission
calls for a $1 million fine for nondisclosures, and a
$200,000 fine for “attempting to perpetrate a misrepresentation
on the Commission.” His letter to
Indianapolis Downs’ attorneys called the charges
“a very serious offense,” and he closed his letter
by saying, “When it comes to disclosing
required information, you don’t play ‘hideand-seek’
with the Indiana Horse Racing
Commission.”
HOW ABOUT A BILLION?
As expected, the Illinois Gaming Board unveiled
a plan yesterday to hold an open, competitive auction
of the state’s last gaming license, one that
could bring a casino to the immediate Chicago area.
The auction sale, regardless of what it brought,
would compensate the investors in the embattled
and stalemated Emerald Casino only what they had
invested, and no more. The gaming board is expected
to vote on the proposal next Monday. While
new money would not enrich the original investors,
the proposal calls for the successful buyer to pick
up as much as $150 million in lawyers’ fees and
other liabilities incurred by Emerald during the last
three years of bitter litigation. That money includes
a parking garage already built and a steel skeleton
of the stalled casino in suburban Rosemont,
which may or may not be the location of the casino,
when it finally gets built. No commitment
has been made on that, but the fact that the successful
buyer would have to pay for the garage
and existing steel structure, and has a favorable
city management behind the idea, now makes it
seem that Rosemont may wind up with the casino
after all. Gaming board chief Philip Parenti thinks
the bidding process will determine if the $669 million
offered earlier by MGM/Mirage could be “the
high water mark or whether it could be higher,”
and the attorney for the board thinks the license
might be worth a billion dollars. The managing
director of J.P. Morgan in New York, Harry Curtis,
disagrees strongly. He says, “if they think they’re
going to get someone to pay a billion dollars in a
state where the legislature is clearly anti-gaming,
then they’re smoking something. For them to use
the gaming industry as a whipping boy by taking
their tax rate up 10% is going to scare any potential
buyer from paying a premium for that license.”
MGM/Mirage already dropped out of the bidding
after the tax hike on riverboat casinos.