Park Place casino spinoff dispute heard by Louisiana court

Alan Sayre

Thursday, Sept. 6, 2001 | 11:18 a.m.

NEW ORLEANS -- A long-running dispute involving Bally's riverboat casino in New Orleans landed Tuesday before the Louisiana Supreme Court with state gambling regulators the target of allegations that they did not do their jobs.

Metro Riverboat Associates Inc., which owns 50.1 percent of the floating casino, contends that the Louisiana Gaming Control Board acted illegally when it approved the transfer of gambling assets once held by Hilton Hotels Corp. to Park Place Entertainment Corp. of Las Vegas.

Hilton controlled a subsidiary of Bally Entertainment, which owns 49.5 percent of the boat and runs it. Metro said the gambling board allowed the stock transfer to the Park Place spinoff company without a background check or a public hearing.

A state district judge in Baton Rouge and the 1st Circuit Court of Appeal have agreed with Metro, a decision that gambling board Chairman Hillary Crain has said could effectively stymie all gambling regulation.

Metro, which is controlled by New Orleans businessman Norbert Simmons, has been involved in a long-running business dispute with its partner over how the casino is run. Metro went to court after the gambling board refused a company request to call an investigative hearing into the Park Place spinoff.

Assistant State Attorney General Rand Davis said no public hearing was needed because all of the casino officials of Hilton who moved over to Park Place already had been deemed suitable to conduct gambling business in Louisiana. Officials who come on board later have to pass suitability checks, he said.

Davis said the lower courts made a mistake by treating the spinoff as an application for a casino license, rather than a stock transfer. Crain has said that the lower court decision would allow anyone to complain about a license for any reason and receive a hearing by an administrative law judge.

Metro's attorney, Thomas Tucker, argued that a hearing and background check were needed because Metro could be held accountable if its new partner committed any illegal acts.

"If no one says that an application for suitability has been filed or an investigation has been performed, how can someone say this company is free of taint?" Tucker said.

The gambling board's action could threaten the long-term viability of the New Orleans riverboat's license, thus denying Metro its constitutionally protected property rights, Tucker said.

The loss of Bally's in New Orleans would potentially benefit Harrah's New Orleans Casino, which has a state-granted monopoly on land-based casino gambling in Orleans Parish, Metro's brief said.

Allowing the gambling board's decision to stand "will exemplify the utterly corrupt image this state holds with regards to casino gambling," Metro's brief said.

The high court did not indicate when it would rule.