Guv warned not to bet on casino cash
By Bob Tita
Published July 23, 2003
Illinois Attorney General Lisa Madigan warned Gov. Rod Blagojevich in late May
not to count on money from the sale of the Emerald Casino license to help balance
the state budget, the chief deputy attorney general testified Tuesday during
a bankruptcy court hearing.
Barry Gross said Ms. Madigan telephoned the governor about week before the end
of the legislative session to outline her objections to a plan proposed by Emerald
Casino Inc. to sell its license and give the bulk of the proceeds to the state.
Ms. Madigan told the governor that the dispute over the license would likely
take years to resolve in court count on using the proceeds to help plug the
deficit in the state budget that began July 1, according to Mr. Gross.
Nevertheless, the state budget was approved with $350 million anticipated from
the sale of the stateıs 10th casino license. Mr. Grossı revelations further
undermine the foundation of a budget already heavily criticized for being built
on unreliable revenue sources.
A spokeswoman for the governor could not confirm whether the conversation between
Mr. Blagojevich and Ms. Madigan took place.
The govenor's office has some back-up plans in mind, however. The spokeswoman
said $400 million in federal aid to Illinois that was not included in the budget
could be used to replace the revenue anticipated from the Emerald license.
Mr. Gross' comments came during a lengthy hearing yesterday in U.S. Bankruptcy
Court on Emeraldıs request for an injunction to block the Illinois Gaming Board
from revoking Emeraldıs license. A ruling is expected Thursday.
Lawyers for the company argued that the license is Emeraldıs only asset and
revoking it would block shareholders and creditors from recovering their investment
for a sale. The Gaming Board found Emeraldıs principals, Donald and Kevin Flynn,
ineligible to operate a casino after they failed to disclose shareholders with
alleged ties to organized crime.
Ms. Madigan, who was elected in November 2002, has objected to a deal between
Emerald and the Gaming Board that would the allow the Flynns and other shareholders
to recover their investments, while leaving the bulk of the money from the license
sale to the state.
Ms. Madigan, who has the authority to reject any agreement between the board
and Emerald, maintains wrongdoers should not get their money back. She also
balked at giving the village of Rosemont at least $45 million from the sale
for a casino parking garage the village built in anticipation that the Gaming
Board would approve Emeraldıs plans to locate its casino in Rosemont.
Attorneys for Emerald charged that Ms. Madiganıs motivation for opposing the
plan stems from the stateıs desire to maximize the state's revenue from the
license by revoking it and denying Emerald shareholders and creditors of the
more than $150 million they invested in the casino venture.
³The ultimate goal of this is the transfer of the Emerald license to the state,²
attorney Robert Gasaway told U.S. Bankruptcy Judge Eugene Wedoff. ³The potential
revenues to the state are absolutely enormous.²
Lawyers for the attorney general and Gaming Board countered those allegations
with testimony from Mr. Gross, who said revoking Emeraldıs license would not
ensure a quick boost for anemic state revenues.
³Itıs my sense that more likely than not, whichever party loses will probably
take up an appeal,² he said about a license revocation. ³The matter would be
tied up in litigation for years.²
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