Regulators accept Emerald settlement

Nicole Ziegler Dizon

Tuesday, July 2, 2002 | 9:49 a.m.

CHICAGO -- The Illinois Gaming Board voted Monday to end its 1 1/2-year fight over a proposed casino in Rosemont, accepting a settlement from Emerald Casino Inc. that would put the state's 10th casino license up for grabs.

The board voted 4-0 with one abstention in favor of the settlement, which gives Emerald's investors their money back but allows for no profit. Under the agreement, the board would decide the buyer and location of a new casino.

The decision, though, may not be the final word in the case. Rosemont has sued in federal court to force Emerald into bankruptcy, a claim that could trump any settlement agreement. And Attorney General Jim Ryan could decide to block the settlement. Ryan's office said he is studying the proposal and would comment publicly on it within a few days.

Board members said they wanted to make sure the process was fair, open and competitive and felt the settlement achieved those goals.

"In any settlement, it's never perfect. You try to get the core principles that you think are in the interest of the public," board Chairman Gregory Jones said.

Board Administrator Philip Parenti said rebidding Emerald's license could earn the financially strapped state hundreds of millions of dollars.

Emerald attorney C. Barry Montgomery said the company was eager to put the case behind it and hoped to find a buyer by the end of the year.

"It's not the best settlement in the world by any means, but no settlements are," Montgomery said.

The vote came after 21 people, the majority against the settlement, raised their concerns to the board. Minority and women investors in the Emerald project said they weren't getting a fair shake under the deal, while anti-gambling activists asked the board to go ahead with a postponed public hearing to revoke Emerald's license.

"The laundromat ... That's the answer. Except you can't get the stain and the stench out," said the Rev. Tom Grey, director of the National Coalition Against Legalized Gambling.

The stage for the long battle over the license was set in 1999, when the Illinois Legislature passed a sweeping gambling law that permitted dockside gambling and greased the skids for Emerald's move to Rosemont.

The board decided the law did not take away its authority to vote on Emerald's request to move its license from a failed casino in East Dubuque to Rosemont, a suburb near O'Hare International Airport.

The board voted against the move in January 2001, claiming top Emerald executives Donald and Kevin Flynn lied to Gaming Board investigators and that some investors had mob ties.

Cook County Circuit Judge Sophia Hall ruled Monday the board was within its rights to reject the move. She said the 1999 law did not take away the board's regulatory power.

That law required 20 percent ownership in the new casino by women and minority investors. Under the settlement, those shareholders would have the right to reinvest in the new project, with the board to work out the details.

But representatives of several of the investors told the board Monday that the settlement offers women and minority shareholders fewer benefits than it does to the Flynns.

"Some of the settlement proposal now puts people who have been called wrongdoers in a better position ... than minority investors who came to this deal with clean hands," Chaz Ebert, one of the investors, said.

Ebert noted the new casino owner would have to absorb the attorneys' fees and interest accrued by Emerald, while no such provisions are made for women and minority shareholders.

Under the agreement, Emerald would present possible buyers and locations to the board. Parenti promised the process would be open and said any evidence gathered in the course of the original investigation would be made public if it were pertinent.

Before the revocation proceeding was stopped, the board indicated it investigated deals struck to give friends of Rosemont Mayor Donald E. Stephens shares in the new casino.

Frank DiCastri, an attorney representing Rosemont, threatened legal action to prevent the settlement from taking effect.

In the federal bankruptcy filing, Rosemont attorneys claim Emerald owes the village $44 million for breaching a lease agreement. Five businesses claim they are owed an additional $2 million in fees and expenses for work begun after the 1999 law passed.

DiCastri said the board's action interferes with the bankruptcy proceeding. He also said the board has no right under state law to oversee the auction of a casino license.

Board attorney Robert E. Shapiro said the settlement does not provide for an auction, but rather allows the board to approve the new casino owner, something it has the right to do.