Pennsylvania firm seeks dismissal of racetrack suit

Grace Leong

Friday, Oct. 12, 2001 | 10:44 a.m.

Penn National Gaming Inc., a Wyomissing, Pa.-based racetrack and sports book owner, is seeking dismissal of a Las Vegas lawsuit challenging its rights to operate a racetrack in Charles Town, W.Va.

Showboat Development Co., a subsidiary of Harrah's Entertainment Inc. of Las Vegas, which agreed in 1995 to develop a casino at the Charles Town Race Track with Bryant Development Co., sued Bryant, three of its officers and Penn National on July 23.

Showboat said it assigned to Bryant an option to buy the racetrack but retained an option to manage the casino once legislation permitting casino gaming in West Virginia was passed. Showboat said it also had the right of first refusal to buy any interest sold in the casino. These rights are scheduled to expire in November.

But Penn National -- which became involved when Bryant brought Penn into the project in 1996 -- was accused of stealing Showboat's rights to manage the casino. Showboat said Bryant sold its interest in the racetrack to Penn in violation of Showboat's right of first refusal.

Showboat said it has the right to manage the racetrack because it believes West Virginia now permits extensive gaming in the form of "coin in, coin out video games, slot and reel machines," and that more than 1,500 slots are being operated at the racetrack.

But Penn National disagreed, saying West Virginia law still doesn't permit casino gaming or permit racetracks to use the word "casino" in their advertising. It also said the option doesn't specify which activities at the racetrack would constitute the operation of a casino.

While the racetrack features gaming activities including live horse racing, pari-mutuel wagering and state-owned video lottery games, casino activities such as table games, sports book and keno, still aren't permitted, Penn National said.

Penn National said if the suit isn't dismissed, it should be moved to West Virginia because of the additional expense and inconvenience it'll suffer from having to "litigate nearly 2,500 miles from both its headquarters and the (racetrack.)"

Penn National also cited concerns over air travel following the Sept. 11 terrorist attacks in New York and Washington. "While Penn recognizes that modern advances in transportation reduced the burden of litigating in different parts of the country, it is a reasonable assumption that air travel in the United States has been forever changed as a result of the tragic events on Sept. 11."