In a surprising twist, Stadium L.L.C.'s application to operate a casino hotel in South Philadelphia was sent back to the Pennsylvania Gaming Control Board on Tuesday by the state Supreme Court, which said the board must take a closer look at the company's ownership structure.
The Gaming Control Board's approval of Stadium's application was appealed by casino operator SugarHouse HSP Gaming L.L.P. and by Market East Associates, which had sought the license to operate a casino in Center City.
In November 2014, the gaming board chose Stadium's Live Hotel & Casino project as the city's second casino operator. It plans to build a $450 million complex at a Holiday Inn site at Ninth Street and Packer Avenue, in the city's stadium district, with a 2,600-car garage, a 200-room hotel, 2,000-plus slot machines, more than 100 table games, restaurants, and other features.
The project is a joint venture of Cordish Cos. of Baltimore, formally Stadium Casino Baltimore Investors LLC, and Stadium Casino Investors L.L.C., which will be two-thirds owned by Greenwood Racing Inc. after a license is issued. Greenwood Racing is also the ultimate parent company of Parx Casino owner Greenwood Gaming & Entertainment Inc.
But in its unanimous opinion, the state Supreme Court said Tuesday that the gaming board had failed to scrutinize whether Greenwood's primary backer, Watche "Bob" Manoukian, would have an ownership interest exceeding the 33.3 percent limit imposed by state law.
Manoukian, an Armenian born in Lebanon who made a fortune as an agent for the royal family of Brunei, owns 85.84 percent of Parx, and his ownership interest in a second casino in Philadelphia would be limited by law.
The decision marks another turn in the long and tortuous process that has marked the proposed Live Hotel & Casino project since its inception. After the board's 2014 approval, the developers won the support of the city Planning Commission as well as community organizations. But it had to beat back concerns about traffic and accusations that Cordish, one of the developers, had discriminated against black patrons.
In approving Stadium L.L.C. for the casino license in 2014, the gaming board said the project was properly sized for Philadelphia and thus would not saturate the market. It also noted Greenwood had a proven track record in the region by making Parx a top-producing casino and said Cordish had been successful in the broader entertainment industry.
But all that came to naught in the state Supreme Court's Tuesday analysis of Stadium's application.
In its challenge to the license, Market East accused Manoukian of engaging in sham transactions, some of which were subject to court seal, that were intended to make it appear that his ownership interest in the Stadium project was below the legal threshold.
In its 39-page ruling, the court expressed no opinion as to the merit of those claims but found that the gaming board had failed to adequately explore how the restructuring of various entities in which Manoukian held an interest, during the application process, would impact his stake in the Stadium project.
"We must remand to the board for further proceedings with respect to this question," the court said.
An earlier version of this story gave incorrect information about the owners of the joint venture.