Cleveland casino's license approved
Consultant urges OK of Toledo's
5/3/2012EDITOR'S NOTE: This version corrects the name of Steve Ingis from Spectrum Gaming.
COLUMBUS -- State regulators approved Ohio's first casino operator license for Cleveland on Wednesday and set the stage to do the same next week for the state's second casino in Toledo.
Rock Ohio Caesars plans to open its $350 million Horseshoe Casino inside an old downtown department store building on May 14.
Penn National Gaming Inc. plans to open its new $320 million Hollywood Casino on the East Toledo riverfront on May 29.
The Ohio Casino Control Commission unanimously approved the license for Cleveland hours after the company wired a $50 million license fee to state coffers. It then provisionally approved a separate license for a Rock Ohio Caesars subsidiary, Horseshoe Management LLC, to run the Cleveland casino, pending confirmation that the firm has wired $3 million in licensing and application fees.
Steve Ingis of commission consultant Spectrum Gaming Group LLC generally praised Penn National's positive financial outlook, stability, and integrity as he recommended issuance of Ohio's second casino license.
"Penn National enjoys a stellar reputation for business integrity among the gaming and business communities," he said. "There are no material issues that surfaced pertaining to Penn National's record of regulatory compliance, its dealings with its vendors and business partners."
He recommended the issuance of a license despite red flags again raised about New York-based Fortress Investment Group LLC, which owns a small piece of Penn.
After unsuccessfully fighting the commission on whether some of its board members should be required to undergo background checks as part of Penn's licensing process, Fortress announced in January that its chief executive officer, Daniel H. Mudd, had resigned.
Mr. Mudd faces fraud allegations by the U.S. Securities and Exchange Commission in connection with his prior tenure as president and chief executive officer of mortgage giant Fannie Mae.
A look at the numbers at Hollywood Casino Toledo.
2,002 slot machines
80 table games
290,000-square-foot facility
120,000-square-foot gaming floor
44-acre site
$270 million for construction, land, equipment, engineering, design, etc.
$50 million state licensing fee
$193.9 million spent as of March 31
2,291 construction jobs
1,329 permanent jobs
$40,000 average annual compensation (wages, tips, benefits)
Mr. Ingis questioned how open Fortress was about Mr. Mudd, noting his resignation took effect a month later than the commission was led to believe and that Mr. Mudd continued to draw his salary during that time. He noted that, on top of his salary, Mr. Mudd walked away with $1.25 million in cash and stock options worth $14 million.
In the meantime, the commission had agreed to drop Mr. Mudd from its list of key Fortress players to be investigated, unaware that he was still on the payroll.
"Spectrum is particularly troubled by Fortress' apparent lack of forthrightness and candor in failing to properly and timely apprise the commission of the full details and circumstances pertaining to Mudd's employment status and the ongoing situation with the SEC …," Mr. Ingis said.
"We would expect that a public company such as Fortress would be more cognizant of its communication responsibilities in dealing with licensing and regulatory agencies," he said.
Mr. Ingis told the commission that Fortress and its board were fully cooperative after Mr. Mudd's resignation. "If they had not, we would have noted that and emphasized that, and our recommendation would have been different," he said.
The state's action to formally award a license fewer than two weeks before Ohio's first casino will open demonstrates how the state has raced against the clock to set up a regulatory framework for what is still essentially an unknown industry in Ohio.
"We have moved faster than any other jurisdiction that I've ever worked with," Tim Wilmott, Penn's president and chief operating officer, said.
The 2009 constitutional amendment approved by voters authorized four casinos on specific parcels of land. Rock Ohio Caesars owns or has options on the parcels in Cleveland and Cincinnati while Penn has those in Toledo and Columbus, but that did not guarantee them licenses to operate those casinos.
Hollywood Casino Toledo has tentatively set May 24 for its controlled demonstration, five days before its anticipated opening the day after Memorial Day. The private event is designed to create as realistic a game-day environment as possible to work out any last-minute bugs in casino and state controls.
Contact Jim Provance at: jprovance@theblade.com or 614-221-0496.