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Best of Howard Stutz
Loveman still livid about Massachusetts rejection18 November 2013
The company was partnering with the Suffolk Downs Race Track on a proposed $1 billion gaming complex in Boston and had spent about $100 million on the development. Caesars had a 4 percent ownership stake and planned to manage the hotel-casino near Logan International Airport.
But state gaming regulators, based on concerns raised in a 600-page investigative report authored by an outside consultant, suggested to track officials that Caesars wouldn’t be found suitable. Caesars withdrew from the project, which is in limbo because voters rejected the development on Nov. 5.
Loveman, who said he spent 13 years lobbying Massachusetts to legalize gaming, is embittered. He lives near Boston, taught at the Harvard Business School, holds a doctorate in economics from the Massachusetts Institute of Technology and owns a minority interest in the National Basketball Association’s Boston Celtics.
What angers Loveman most is that Caesars, which is licensed for 50 casinos in 13 states, wasn’t given the opportunity to rebut allegations raised in the report.
“It’s not like we’re a new applicant with a great deal of uncertainty,” Loveman said. “We’re on display for examination every day.”
Wynn Resorts Ltd. seems to be the leading candidate for the sole Western Massachusetts gaming license.
“If Steve (Wynn) had put in a better proposal than us and they had chosen Wynn, then congratulations to Steve,” Loveman said. “It would have been a better result than this.”
Regulators, he said, fixated on the company’s unrelated partnership with the Gansevoort Hotel Group. The New York City-based boutique hotel operator was leasing its name to Caesars for the $185 million renovation of Bill’s Gamblin’ Hall on the Strip.
A Gansevoort investor is alleged to have ties to Russian organized crime. Caesars’ outside compliance committee knew of the allegations, but it wasn’t deemed an issue because Gansevoort was providing only its name and marketing ideas to the Strip project.
Caesars cut Gansevoort loose, but that wasn’t enough to satisfy the Massachusetts Gaming Commission.
“This was an inconsequential relationship with a guy who has never been found guilty and charged with anything,” Loveman said. “To make it worse, they wouldn’t let us cure it. In regulatory practice around the world, if there is a minor problem, you are given a reasonable chance to fix it. You’re not sent to the gallows because of a simple thing. We offered remedies, but they were stuck on this issue.”
Loveman said the Massachusetts Gaming Commission is “staffed by people who have never been in the (gaming) business.”
“If you form a regulatory body, and you argue the work is important, you might want to staff it with some people with some sort of expertise in the area,” Loveman said. “They ought to have some degree of intellectual modesty. If I’m a regulator and I know I’m completely new at the job and other jurisdictions have looked at these types of issues, I think I’d want to know (some background) before I was going to make a radically different decision.”
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Best of Howard Stutz