The partners behind the TrumpStreet casino project yesterday sued current and former members of the Pennsylvania Gaming Control Board, alleging discrimination against Donald Trump and Trump Entertainment Resorts for their business interests in New Jersey.
Keystone Redevelopment Partners, in a complaint filed in U.S. District Court in Harrisburg, accused the Gaming Control Board of practicing a form of illegal protectionism by favoring companies without Atlantic City casinos.
Keystone's investors include Trump, Trump Entertainment Resorts, formers Sixers' president Pat Croce, restaurateur Pete Ciarrocchi, and Brian P. Tierney, chief executive officer of Philadelphia Media Holdings, which owns The Inquirer and the Philadelphia Daily News. Keystone proposed the TrumpStreet casino and entertainment complex at the old Budd industrial site in Nicetown/East Falls.
R. Douglas Sherman, acting chief counsel for the Gaming Control Board, said in an e-mail statement that he had not yet received the complaint and couldn't comment on it. "We do note, however, that the Board's decisions were appealed to the Pennsylvania Supreme Court, which affirmed the decisions of the Board - finding them both lawful and supported by the evidence."
Others, however, immediately accused Trump of seeking to delay the building of casinos in Philadelphia to protect his remaining two casinos in Atlantic City.
SugarHouse yesterday suggested that Trump - whose Atlantic City properties have been hurt by new casinos in Eastern Pennsylvania - would win with any delay in the process.
"Given Trump's financial situation, it's certainly in his interest to further delay casinos in Philadelphia," SugarHouse spokeswoman Leigh Whitaker said.
Foxwoods declined to comment.
But Richard Sprague, a SugarHouse owner, called the suit "an absurdity."
"When the matter is finally over," Sprague said in a statement e-mailed by Whitaker, "Mr. Trump will be told, 'You're fired!' "
In its published decision awarding gambling licenses to SugarHouse and Foxwoods casinos on Dec. 20, 2006, the Gaming Control Board made it clear that competing proposals by TrumpStreet and Pinnacle Entertainment were hindered by their properties in Atlantic City.
The board reasoned that Atlantic City's lower tax rate - 9.25 percent versus Pennsylvania's 55 percent - would encourage those companies to funnel affluent customers from Pennsylvania to New Jersey, where they enjoy larger profit margins. Trump owned three Atlantic City casinos at the time and Pinnacle had recently purchased the former Sands property for a new casino which has yet to be built.
That's a "protectionist barrier" and violates the U.S. Constitution, which prevents states meddling with interstate commerce, TrumpStreet argued.
The Gaming Control Board's action "intended to protect the Philadelphia gaming market and impair interstate commerce," attorneys John P. Krill Jr. and David R. Overstreet argue in the complaint.
The complaint landed just two days before a two-year statute of limitations ran out. It is the first of what Trump Entertainment vice president Bob Pickus says will be a three-pronged offensive against the awarding of the licenses, and a proposal to move Foxwoods from its planned site on the Delaware River waterfront to the Gallery in Center City.
TrumpStreet will ask the Gaming Control Board to invalidate licenses for Foxwoods and perhaps SugarHouse because the companies have failed to meet building requirements within a one-year time frame, Pickus said.
TrumpStreet will also oppose Foxwoods' expected petition to the Gaming Control Board to transfer its license from Columbus Boulevard to the Gallery.
Gov. Rendell and Mayor Nutter have supported the transfer as a solution to the serious traffic implications of Foxwoods' waterfront proposal. Both men have also said that the Center City location would help develop the Market East corridor.
A Pinnacle representative declined to comment yesterday. Of the unsuccessful bidders, Pinnacle has shown the least interest in challenging the gaming board's decisions.
Riverwalk Casino, another unsuccessful bidder, has said it is keeping its options open should Foxwoods seek state approval for a move.
If delay is the goal of the suit, yesterday's complaint may work, said Bruce Ledewitz, professor of constitutional law at Duquesne Law School.
"I think it's a reasonable argument to say you can't deny me the right to do business in Pennsylvania because I do business in another state," said Ledewitz, who predicted that a judge is likely to at least consider the issue. "They're not going to get this complaint dismissed just like that."