Caesars sues head of Mass. gambling panel

BOSTON (AP) — A lawsuit filed by Caesars Entertainment against the state's top gambling regulator alleges that failed to disclose a potential conflict of interest in a timely manner and treated the company unfairly during a background check.

Las Vegas-based Caesars had been a partner of the Suffolk Downs horse track in a resort casino bid but withdrew in October after concerns were raised during a background check by Massachusetts Gaming Commission staff.

The lawsuit, filed Wednesday by Caesars' Massachusetts affiliate in U.S. District Court in Boston, challenges the "constitutionality, objectivity and fairness" of Caesars' treatment by Massachusetts Gaming Commission chairman Stephen Crosby.

The complaint seeks unspecified damages and was filed against Crosby both in his official capacity as chairman of the five-member panel, and against Crosby in his individual capacity.

Elaine Driscoll, a spokeswoman for the commission, said legal staff was reviewing the suit and a statement would be issued later Thursday.

Caesars alleges that Crosby failed to disclose publicly, in a timely manner, his friendship and past business relationship with Paul Lohnes, a part owner of land in Everett on which Wynn Resorts hopes to develop a casino. The Wynn proposal could have competed directly with Suffolk Downs for the sole eastern Massachusetts resort casino license available under the state's 2011 gambling law.

Crosby has said he disclosed the relationship to Gov. Deval Patrick and in two filings with the state Ethics Commission, and he recently announced that he would recuse himself from a hearing the commission has scheduled for Friday on the Everett land deal.

The lawsuit also claims that commission staff was prepared to issue an "incorrect and unprecedented recommendation" that Caesars was not suitable to participate in gambling in Massachusetts.

A commission report, among other things, said it was concerned about Caesars' now-ended licensing agreement for a Las Vegas hotel with a subsidiary of New York-based Gansevoort Hotel Group. The report said a Gansevoort investor has been under scrutiny, though not charged, over alleged ties to Russian organized crime.

Caesars refuted the findings of the report but agreed to withdraw as Suffolk Downs' partner in the casino bid. Negative publicity from the separation was seen as a possible factor in the rejection of the casino proposal by East Boston voters on Nov. 5.

Suffolk Downs subsequently reached a partnership agreement with Mohegan Sun, which is pursuing a revised casino proposal that would be entirely in Revere, where voters had approved a casino.

In the lawsuit, Caesars said it was held to a different standard than other casino bidders in Massachusetts including MGM Resorts, which received a favorable recommendation from commission staff earlier this week following a lengthy background investigation.

Cox Media Group