Ill. officials aim for quick sale of Emerald license

Nicole Ziegler Dizon

Friday, Aug. 9, 2002 | 9:54 a.m.

CHICAGO -- Illinois gambling officials approved a deal Thursday that bars Emerald Casino's owners from doing gambling business in the state and puts its license up for sale, setting the stage for a bidding war.

Attorney General Jim Ryan, who had threatened to block any settlement, edged toward accepting the deal -- eliminating the biggest hurdle for the new casino.

"This agreement, we believe, has protected the integrity of gaming and allows us to move forward with a new casino in the foreseeable future," Gaming Board administrator Philip Parenti said.

The settlement is meant to put to rest a legal battle with Emerald that began in January 2001, when the board rejected the company's application to build a casino in Rosemont, a Chicago suburb near O'Hare International Airport.

At the time, the board said Emerald executives Donald and Kevin Flynn had lied to Gaming Board investigators and alleged that some investors in the project had organized crime ties.

Emerald appealed, and the board began laying out its case in an administrative hearing this spring that was put on hold because of the settlement.

Under the deal approved Thursday, the Flynns could not participate in any gambling business in Illinois.

Emerald would ultimately be responsible for its own sale, although the Gaming Board would direct the process.

An independent sales agent would seek bids from companies interested in the license. The board plans to quickly submit up to three agent names from which Emerald could choose, said Robert Shapiro, an attorney representing the board. He said the license could be up for bid by late September.

The agent would collect sealed bids, then present them to the Gaming Board. All proposals would be made public, and the Gaming Board would choose the buyer. Bids could come from anywhere in the state.

Parenti said the board would consider potential buyers' economic development and affirmative action plans, their commitment to charity and to compulsive gambling programs and how they would fulfill a state requirement for women and minority investment.

"It's not just the highest price that's going to win the day here," Parenti said.

Investors in the ill-fated project would get their money back, and female and minority shareholders -- required by law to get a 20 percent stake in the new casino -- could buy back in.

The new company would take on about $100 million of Emerald's liabilities, Parenti said. The buyer would pay legal fees for the company but not for individual investors.

Ryan had expressed concerns about the new company taking on the liabilities of alleged wrongdoers. In May he declared that he was prepared to block a settlement and couldn't conceive of a deal his office could approve. He said it was important that a hearing be held to inform the public about any wrongdoing by Emerald owners.

On Thursday Ryan said he is willing to forgo a public hearing because the owners will not make any money. He denied that letting them recover their investment and legal fees sends a message that it is OK to lie to the Gaming Board.

"The disincentive is that they walk away without making a dime in profit," he said.

Ryan said he was still ready to stop the process if it "veers off course." But the Republican gubernatorial nominee also took credit for producing a better deal for the state with his "aggressive stand."

"It is not a perfect agreement, but it is one that could be in the state's best interest, provided its terms are adhered to and aggressive oversight is in place," Ryan said earlier in a prepared statement.

The village of Rosemont filed an involuntary bankruptcy lawsuit against Emerald and wants to ensure the new casino is built there. If Rosemont prevails, the settlement might become moot.

Either party could back out of the agreement if a sale is not completed within 18 months, Shapiro said.

Gov. George Ryan praised the Gaming Board on Thursday but questioned opening the license to bidding.

"It sounds good in theory, but I don't know whether it will work in practice or not," Ryan said.

The governor said he wants "to see the best deal we can get for the state that's going to bring the money in."

"That license has been vacant now almost since I've been in office, never really produced any revenue, and I think we've lost a couple hundred million dollars in taxes as a result of not having that license up.

"It may have made a difference in some of the things we had to cut in the budget this year if we had had that income."