Illinois regulators mull new Emerald deal

Nicole Ziegler Dizon

Friday, May 10, 2002 | 9:54 a.m.

CHICAGO -- The Illinois Gaming Board met in closed session Thursday to consider a new settlement offer from Emerald Casino Inc., just days after top aides to Gov. George Ryan summoned board members individually for a lesson on the state's budget crisis.

But members were tight-lipped as they walked out of the 4 1/2-hour meeting, and declined to comment on what was discussed and what, if any, decision was made. Some members, including board Chairman Gregory Jones, said they did not feel pressured by the governor.

Emerald has been battling for board approval to sell its casino license to Las Vegas casino giant MGM MIRAGE for $615 million.

Emerald's attorneys sent letters to the board and to Ryan's office last week laying out a deal that would immediately pour $330 million into the cash-strapped state's coffers. The board previously rejected offers of $160 million and $300 million.

After the letters were sent, Ryan chief of staff Robert Newtson and his budget chief, Steven Schnorf, asked for meetings that were held Monday with the four board members. A copy of the men's prepared remarks show they stressed that they were not trying to pressure the board into making a decision, although they did talk about the state's $1.2 billion budget hole.

Jones said Thursday that the meetings were not inappropriate, and he did learn new things about the budget process. But he said the state's fiscal condition will not affect his decision about any Emerald offer.

Both Jones and board member Elzie Higginbottom said they did not feel pressured by Newtson and Schnorf.

"You guys all know me. You know I'm hard to pressure," Higginbottom told reporters as he went into the closed meeting.

Emerald's casino license has been in limbo since January 2001, when the board rejected the company's request to build a new casino in Rosemont, alleging that company executives Kevin and Donald Flynn had lied to investigators and that some shareholders had ties to the mob.

Ryan has replaced all but one of the Gaming Board members involved in the original decision. The term of that member, Jones, expires this summer, and he said Thursday he had not yet decided whether to ask the governor for another term.

Emerald has appealed the board's decision, and the board is scheduled to begin presenting its case against the company before an administrative judge on May 20. On Thursday, Administrative Law Judge Herbert L. Holtzman denied Emerald's motion to delay the hearing.

Attorney General Jim Ryan said Thursday that the hearing should go forward before the board considers settling with Emerald. Ryan said he would attempt to block any offer that allows the Flynns to profit before a hearing takes place.

"If the allegations of the petition are proven and are true, the Flynns should not make a dime in profit," he said.

But C. Barry Montgomery, an attorney for Emerald, said it is in the best interest of the state to settle so a casino can quickly be built and start generating tax revenue.

"Every day that goes by, the state is losing revenues," Montgomery said.

In their presentation to board members, Newtson and Schnorf pointed out that the license could be tied up in court for four or five years if the board does not settle. They said they wanted to inform the board about how legislative proposals -- such as increasing riverboat taxes -- could affect an Emerald settlement.

"That, in turn, may influence your decision on whether or not to negotiate an agreement, based on this latest Emerald proposal," the statement said.

If the board accepts Emerald's offer, the administrative proceeding would not go forward.

Ryan spokesman Dennis Culloton said the governor's aides requested the meetings because the General Assembly needs to finish the budget in the next few weeks, and an Emerald deal, if approved, would affect those negotiations.

"We'd like to know one way or the other so the Legislature knows exactly where things stand," Culloton said.

Senate President James "Pate" Philip said he sees nothing improper about Ryan's aides discussing the issue with members of the Gaming Board.

"I think they ought to encourage them to look at it. Quite frankly, it might help the budget crunch," said the Wood Dale Republican.

The board meets again Tuesday, but the agenda has not yet been set, board spokesman Gene O'Shea said.