From Crain's Chicago Business
July 24, 2003
Regulators can rescind Emerald license: judge
By Kelly Quigley
A U.S. Bankruptcy Court Judge on Thursday cleared the way for the Illinois Gaming
Board to revoke Emerald Casino Inc.’s riverboat casino license, which allows
the state to move forward with plans to sell the license to another operator.
After taking in hours of testimony from both sides over the past two months,
Judge Eugene Wedoff denied Emerald’s request for an injunction to block
the gaming board from revoking the state's 10th casino license.
Attorneys for the gaming board said they were “very pleased” with
the judge’s ruling and expect the board to go forward with the revocation.
Gaming board officials are scheduled to meet Monday morning to plot their next
move.
However, more legal battles are likely to follow as Emerald attempts to hold
on to its only asset, which the state values upward of $350 million. The company
is expected to appeal Judge Wedoff’s ruling, though Emerald attorneys did
not immediately return calls today seeking confirmation.
Emerald was in the midst of building the state’s 10th casino in Rosemont two years ago when the Illinois Gaming Board halted the project on the grounds that company executives lied to state gaming board regulators and had links to organized crime. After legal wrangling and other troubles, the company subsequently filed for Chapter 11 bankruptcy protection.
The board and Emerald later reached an agreement under which Emerald’s casino license could be auctioned off, allowing Emerald’s shareholders and its two principals, Donald and Kevin Flynn, to recover their investments but leaving the bulk of the sale proceeds to the state.
Illinois Attorney General Lisa Madigan recently objected to that deal, maintaining that Emerald’s “wrongdoers” should not get their money back. But Emerald attorneys argue that her real motivation is to prevent the state from using the proceeds to fill its unprecedented budget hole.
Ms. Madigan warned Gov. Rod Blagojevich in May against relying on the money to fill the budget shortfall because the matter is likely to be tied up for years in court, according to testimony from Chief Deputy Attorney General Barry Gross (ChicagoBusiness.com, July 23).
The governor apparently has some contingency plans in place, according to a spokeswoman who said Wednesday that $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.
Ms. Madigan has the authority to reject any agreement between the board and Emerald. She plans to meet with gaming board officials today to discuss Judge Wedoff's ruling and next steps.