Gaming Act Slot Machine License Standing to Intervene in Proceedings Ownership Interest in Licensee

SugarHouse HSP Gaming, L.P. v. Pa. Gaming Control Bd., PICS Case No. 17-1051 (Pa. June 20, 2017) Todd, J. (51 pages).

Category 2 slot machine license application remanded for reconsideration by Gaming Control Board after it failed to consider whether a post-licensure capital infusion by one of the applicant's affiliates would cause his stake in the licensee to exceed the 33.3 percent threshold. Order of the Pennsylvania Gaming Control Board reversed, case remanded for reconsideration.

SugarHouse HSP Gaming, L.P. and Market East Associates, L.P., petitioned for review of the supplemental adjudication of the Pennsylvania Gaming Control Board. The board's supplemental adjudication followed remand from the court, which affirmed in part and vacated in part the board's previous order awarding the last remaining Category 2 slot machine license provided for under the Gaming Act to Stadium Casino, LLC. The court remanded for the board to consider the issues of whether Watche Manoukian, an individual who was an affiliate of Stadium, was eligible for apply for a Category 1 slot machine license at the time of Stadium's application, and whether after the issuance of the Category 2 license to Stadium, Manoukian would possess a financial interest in Stadium greater than 33.3 percent, both in violation of the Gaming Act.

The board had previously awarded one of the 2 Category 2 slot machine licenses authorized under the Gaming Act to SugarHouse, which opened an "interim" casino. Thereafter, four entities, including Stadium and Market East, filed applications for the second Category 2 license. SugarHouse filed a petition to intervene, arguing that a second license would saturate the gaming market and cause SugarHouse economic harm, that Stadium was precluded from a Category 2 license because one of its affiliates already owned or operated a facility with a Category 1 slot machine license, and affiliates, owners, or financial backers of Stadium, Market East, and the other applicants had financial interests in existing licensed gaming facilities greater than the 33.3 percent threshold permitted by the Act. The board permitted SugarHouse to intervene only on the saturation issue.

After a hearing, the board awarded the Category 2 license to Stadium. SugarHouse and Market East petitioned for review, and the court remanded to the board for consideration of the issues raised by Market East as to whether Manoukian was eligible to apply for a Category 1 license at the time of Stadium's application and what his financial interest would be in Stadium post-license since he had pledged to make a capital infusion in a trust that would purchase an interest in Stadium.