Caesars caught off guard by Mass. gaming commission’s conclusions

Caesars Entertainment photo via commons.wikimedia.org
Massachusetts gamblers may not get a chance to hear Caesar sing. Credit: WikiMedia Commons

Left behind as Suffolk Downs continues its pursuit of the lone eastern Massachusetts casino license, Caesars Entertainment says it was also taken aback by an Oct. 2 meeting with regulators that prompted Suffolk to bring in legal help.

Suffolk Downs attorney Tom Reilly, the former attorney general, said Tuesday that Suffolk was “blindsided” when the Gaming Commission’s Investigations and Enforcement Bureau discussed, among other issues, a licensing agreement between Caesars and Gansevoort hotels, which has an owner who a background report said “has been the subject of considerable media and law enforcement scrutiny over the past several years for alleged ties to Russian organized crime.”

“Caesars shared all pertinent information regarding the suitability investigation with Sterling Suffolk. Caesars was equally surprised by the IEB’s posture at the Oct. 2 meeting,” Caesars said in a statement. “As is customary during a suitability investigation, hired investigators questioned Caesars officials about a wide range of topics. The idea that being questioned about an issue constitutes adequate notice of a potential negative IEB recommendation five months later is absurd.”

Using news stories and investigative reports, the IEB report documented connections between Arik Kislin, a Gansevoort Hotel Group partner, and people reputedly involved in organized crime, including his uncle, and a man named Mikhail Chernoy, who is wanted by Spain for alleged “money-laundering and organized crime-related charges.”

Caesars dropped its licensing agreement with Gansevoort after reading the report.

A public relations representative for Kislin said that purported links to organized crime are false, and the businessman helped redevelop New York City’s Meatpacking District, including the Chelsea Market, an indoor food mall.

“Caesars was well aware of the so-called rumors about Arik Kislin from information and full disclosure that Kislin himself provided to the company as he was negotiating the deal,” Kislin’s spokesperson, Juda Engelmayer, of 5W Public Relations said, going on to suggest the consternation about Kislin was an attempt to “cover up” other problems with Caesars.

“The fact that there are no ties at all to organized crime, just innuendo and tenuous associations at best, seems to have been left out of the paradigm to cover up for the real issues that Caesars had its own set of serious problems enough to sink the deal without having to blame it on Kislin,” Engelmayer said.

Caesars, a company founded by William Harrah in Reno, Nev., in 1937 that now plays a role in 52 casinos in the United States and seven countries, was described in the report as a “highly leveraged entity,” carrying $23.7 billion in debt.

In their last debate before the election, both finalists for mayor of Boston, Councilor John Connolly and Rep. Martin Walsh, said the Caesars situation was “disturbing,” and deferred to the residents of the East Boston neighborhood in deciding whether to support the proposal.

Walsh said he would vote in favor of the Suffolk Downs proposal if he had a vote, and said if his Savin Hill neighbors supported a casino, he would welcome one in his own neighborhood as well.

Connolly said he would not support a casino next to his house in West Roxbury, and though he refused to say how he would vote if he lived in East Boston, he said he was “deeply troubled” by the circumstances of Caesars’ departure and said that would color his thinking.

Having parted with Caesars, Suffolk Downs is looking for a new casino partner and will put its proposal before voters next Tuesday. The Gaming Commission plans to vote on Suffolk’s suitability Wednesday.

Meanwhile, a Holliston lawmaker has raised concerns about the plans for a Foxwoods Massachusetts casino in Milford, which abuts her district.

Rep. Carolyn Dykema said a recent chairman of the Foxwoods management council was federally convicted last July of embezzling $100,000 over two years, and the treasurer resigned in October and pled guilty to embezzling $700,000, and she said the current chief of staff, who oversees the police force among other responsibilities, has been convicted of a criminal offense “at least” three times.

The Democrat, who is in her third term, also highlighted a Foxwoods bankruptcy, where creditors were paid “cents on the dollar,” the entity’s current debt of $1.7 billion and a CCC+ credit rating from Standard & Poor’s.

In a statement, Foxwoods indicated the issues Dykema raised in her letter have also come up in the Gaming Commission’s vetting process, which the company expects to pass.

“Everything in Rep. Dykema’s letter has been or is being considered and thoroughly vetted by the Massachusetts Gaming Commission,” said Foxwoods President & CEO Scott Butera. “To think that these issues aren’t being addressed is not accurate. At the end of the day, we believe our best practices will stand up at the suitability hearing.”

According to Dykema, in 2010 Pennsylvania took back a gaming license it had awarded Foxwoods in 2006 because there “had been no progress” on the development, and claimed Foxwoods has yet to engage neighboring municipalities in surrounding community agreements.

Foxwoods, which has partnered with Crossroads Massachusetts, will put its proposal before Milford voters Nov. 19.

Steve Wynn, a casino magnate and the third contender for the eastern Massachusetts license, has complained about “irresponsible newspaper reporting” and “rumor” painting an inaccurate picture of his operations in Macau.

Wynn previously butted up against Boston Mayor Tom Menino, a Suffolk backer who claimed the Everett development included a piece of Boston land. Boston later dropped its jurisdictional claim after a meeting with the Gaming Commission.

Follow Metro Boston on Twitter: @MetroBOS


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