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Justices hear Riverwalk's appeal for casino

The losing applicant said the Pa. gaming board had conflicts of interest and ignored the mayor's choice.

The Pennsylvania Supreme Court, an august institution, is accustomed to ruling on intricate questions of law that establish precedent for years, decades, sometimes for centuries.

So the seven black-robed justices are still settling into their new job as arbiters of just about everything involving the state's nascent slots gambling industry.

Yesterday, the court heard from a losing applicant for a Philadelphia slots license, whose lawyers argued over issues ranging from conflicts of interest to Philadelphia traffic.

Because the 2004 slots law directed appeals of all Pennsylvania Gaming Control Board licensing decisions to the court, justices now also have at least 12 other gambling-related cases before them.

"This is a strange kind of process that we're in," mused Justice Ronald D. Castille during yesterday's proceedings. "I don't know what we are - we used to be an appeals court."

Riverwalk Casino, the losing applicant, told the court that the gaming board's decision to award slots licenses in Philadelphia to Foxwoods Casino and SugarHouse Casino was illegal because two board members should have recused themselves from all license decisions.

They also contended the board inappropriately discussed the license awards in closed sessions.

Although the justices grew visibly testy when dissecting the minutiae of the cases, they appeared focused on the Gaming Control Board's conflict-of-interest policy, and appeared skeptical of whether it worked.

The "partial recusals" of Gaming Control Board chairman Thomas "Tad" Decker and member Joseph "Chip" Marshall III from certain licensing decisions failed to resolve what Riverwalk contends were conflicts of interest, Riverwalk argued.

Marshall, the chief executive officer of Temple Health Systems, bowed out of decisions pertaining to TrumpStreet, the Donald Trump casino proposal in East Falls and Nicetown, based on a business relationship between Temple Health and the real estate company that was going to sell Trump his land.

Decker recused himself from discussions pertaining to SugarHouse because Cozen O'Connor, the law firm he left as managing partner in 2005 to chair the Gaming Control Board, represented SugarHouse.

Both men stated at the time that they didn't believe the connections were real conflicts, that they simply wanted to avoid the appearance of one.

But the justices questioned how Marshall, for instance, could still participate in discussions involving other applicants when he possessed a veto power over a vote on any applicant.

All licensing decisions by the seven-member board require approval by all four legislative appointees - Marshall was one - and one of the governor's three appointees.

With five Philadelphia applicants in competition for two licenses, a board member who recused himself from on application could still help a favored applicant by exercising or threatening a veto on other applicants, the justices suggested.

"For a recusal to be effective, does it not have to be effective for all of them?" Justice J. Michael Eakin asked the Gaming Control Board's lawyer, Lawrence Hoyle. Hoyle replied that Decker and Marshall followed the board's rules.

It's unclear whether the court would overturn the Philadelphia licensing decisions even if it found the board's recusal process flawed. If any of the appeals are successful, the board would have to reconsider applicants and possibly reopen the whole process, delaying the arrival of gambling in Philadelphia possibly into 2009.

The court seemed less impressed with Miller's suggestion that the board's secret deliberations violated state open-meetings law.

Chief Justice Ralph J. Cappy suggested that the board was permitted secret deliberations as a court-like panel that dealt with sensitive, confidential company information.

William H. Murphy, another attorney for Riverwalk, also argued that Foxwoods had deceived the board by failing to disclose an agreement with MGM Mirage to consider development in the competing Atlantic City market, and that the board arbitrarily decided that North Delaware Avenue could not handle traffic from a second casino in addition to SugarHouse. Both Riverwalk and losing applicant Pinnacle Entertainment's proposals were off North Delaware Avenue.

Murphy also said it was "outrageous" that the board ignored Mayor Street's last-minute endorsement of Riverwalk, five days before the Dec. 20 licensing decision but more than six months past the deadline for public comment.

Decker told The Inquirer in December that he hadn't even read Street's 20-page letter because it came in too late.

Four other appeals of the Gaming Control Board decisions, including one from Philadelphia City Council and three others from city neighborhood and anti-casino groups, are also pending.

The casinos are hoping that the court will rule before June so they can begin construction this summer.