State regulators slapped Caesars Entertainment with a near-record fine on Thursday in response to the casino giant's failed effort to get out of paying a $50 million license transfer fee to the state.
In an agreement between Las Vegas-based Caesars and the Indiana Gaming Commission, the company agreed to pay $1 million to settle allegations that it violated public trust and confidence in the integrity of Indiana’s casino industry.
The settlement comes on the same day the gaming commission is expected to approve Caesars’ $1.7 billion acquisition of Centaur Gaming, which owns Indiana's two horse-track casinos.
The million-dollar fine is among the highest in state history and stems from Caesars' efforts to avoid a $50 million fee required as part of its acquisition of Centaur’s Hoosier Park Racing and Casino in Anderson.
Specifically, Caesars General Counsel Tim Donovan and the company’s outside lobbyist, Libby Cierzniak, threatened in March to cancel a planned $90 million project to move its Horseshoe Southern Indiana riverboat casino onto land unless the gaming commission agreed that the $50 million transfer fee for Hoosier Park did not apply.
Caesars also lobbied state lawmakers in the final days of the regular 2018 legislative session, prompting panicked calls from concerned legislators to gaming officials.
Gaming commission staff perceived Caesars’ actions as an inappropriate effort to pressure regulators into waiving a fee required by state law.
The settlement agreement, which gaming commissioners formally approved at their Thursday meeting, says the overall impact of Caesars’ actions “could serve to undermine the public’s confidence and trust in the integrity of the gaming industry in Indiana.”
The agreement was signed in late March by Caesers Entertainment President and CEO Mark Fissora and Indiana Gaming Commission Executive Director Sara Gonso Tait, but wasn’t made public until Thursday’s meeting.
Sue Carletta, a vice president for Caesars, told gaming commissioners on Thursday that the company accepts “full responsibility for the matters that led to the settlement agreement.”
In addition to the $1 million payment to the state, Caesars agreed to improve compliance training and enhance protocols for monitoring and vetting the communications of its employees and representatives.
Gaming commissioners are expected to vote later today on whether to approve Caesars’ acquisition of Centaur later during today’s meeting.
Despite the initial resistance, an attorney for Centaur told IndyStar earlier this week that the transfer fee would be paid. The proposed transfer of ownership that commissioners are expected to approve says the fee will be paid before or at the time of closing.
State law requires the initial holder of a racino license to pay the $50 million fee when controlling interest is sold.
The fee doesn't apply to the transfer of Centaur’s other flagship property, Indiana Grand Racing and Casino in Shelbyville, since Centaur acquired the property after the initial owners filed for bankruptcy.
But Centaur, led by CEO Rod Ratcliff, has owned Hoosier Park since its inception as a racino in 2008, though ownership was restructured after its own 2010 bankruptcy.
Centaur and Caesars have argued for months that the transfer fee should not apply because of the bankruptcy restructuring. But the Indiana Gaming Commission has maintained that the fee is applicable.
The disagreement prompted Centaur to threaten litigation in a March letter to the commission, and led to Ceasars threat to pull the plug on its expansion project in Southern Indiana.
Since then, though, Caesars has moved forward with that project and Centaur is taking a more conciliatory tone.
The gaming commission is also taking up two other acquisition deals, under which Boyd Gaming Corp. and Penn National Gaming Inc. will acquire Belterra Casino Resort in Florence and Ameristar Casino in East Chicago, respectively, from Pinnacle Entertainment.
Those deals, which don’t involve horse tracks, will each require a $2 million fee be paid to the state.
Together, the three acquisition deals and the settlement with Caesars will result in a $55 million windfall for the state.
The Centaur acquisition will make Caesars the largest casino owner in Indiana, giving the company control over four of the state's 13 casinos. In addition to the Horseshoe Casino in the southern Indiana city of Elizabeth, Caesars also owns a Horseshoe casino in Hammond.
As part of the deal, Caesars will also take over Centaur’s off-track betting parlors in Indianapolis, New Haven and Clarksville.
The $50 million from the license transfer fee will go into the state's general fund and could be used for any number of purposes.