A developer of a proposed casino mall in Hometown has filed a lawsuit against the Illinois Gaming Board claiming it exceeded its legal authority and violated the Illinois Open Meetings Act in denying video gambling licenses to businesses in the strip mall. The lawsuit also contends that the gaming board was influenced by lobbying campaigns launched by the casino industry and an organization representing other video gambling parlors in an effort to prevent a new form of competition.
The lawsuit, filed on behalf of two Hometown Plaza LLC and two video gambling cafes that signed leases with the plaza, Bella's and Gigi's, states that on Sept. 22, "in a complete about-face from its prior treatment of numerous identical applications," the Illinois Gaming Board voted unanimously to reject the applications for video gambling licenses submitted by Bella's and Gigi's and a third business not a party to the lawsuit, each of whom had leased space in the Hometown Plaza, located on Southwest Highway south of 87th Street in Hometown.
"This decision was not based on the merits of the individual applications," the lawsuit states. "Rather, bowing to political pressure and the negative publicity campaign generated by groups hoping to avoid competition, the Board openly admitted it was denying the applications collectively based on a brand new policy – purportedly based on the 'spirit' of the Video Gaming Act – prohibited what it called 'video gaming malls.'"
As I revealed in previous columns, developers in Hometown and Crestwood appear to be launching a new enterprise I dubbed "casino malls," marketing vacant space in existing strip malls to various independent business enterprises all interested in offering video gambling. Although each of the businesses are independently owned and operated and would have separate entrances, the chairman of the Illinois Gaming Board at a public meeting said the concept was an effort to create "backdoor casinos," violating the intent of both the Riverboat Gambling Act and Video Gaming Act.
Named as defendants in the lawsuit, filed in Cook County Chancery Court on Tuesday, are the Illinois Gaming Board, its chairman Donald Tracy, board members Hector Alejandre, Thomas A. Dunn, and Lee A. Gould, and Mark Ostrowski, gaming board administrator.The court filing contends that shortly after Bella's and Gigi's applied to the board for video gambling licenses in June, "competitors, owners of other video gaming locations and video gaming chains, mounted a lobbying and public relations campaign to urge the board to deny the applications."The lawsuit states that the president of Illinois Gaming Systems, an Illinois licensed terminal operator that also owns a string of video gambling establishments across the country, submitted a letter dated Aug. 18, 2015 to the board cautioning about "gambling malls." The lawsuit also states that the Illinois Retail Gambling Operators Association, a video gambling trade association, submitted a letter dated Aug. 20, 2015 to the board arguing that the contemplated development at the center ("and an unrelated development in another town") was a "video gaming mall" that violated the "legislative intent" of the Video Gaming Act.A hired lobbyist for the gambling operators association, according to the lawsuit, appeared at an open session of the gaming board in August and spoke against licensing the businesses at the Hometown Plaza."Not coincidentally," the lawsuit states, "a few weeks later, September 17, 2015, State Representative Bob Rita (D-Blue Island), a figure long associated with casino interests, introduced a House Resolution in the Illinois House of Representatives stating that, in approving legal video gaming, the Illinois General Assembly, 'did not envision allowing' and 'is not interested in seeing' what it termed 'casino malls'." That resolution was first reported in the Daily Southtown.The lawsuit seeks to overturn the Gaming Board's decision to deny licenses on three grounds. First, it contends the board's decision was "unauthorized by law, because the Video Gaming Act as actually passed by the Illinois General Assembly, which is the sole source of the Board's powers, does not mention, let alone ban "video gaming malls."Second, the new policy on which the board based its denials "is in fact unlawful," and, third, the board's action violated the Open Meetings Act, according to the lawsuit.David Israel, a Northbrook-based commercial real estate developer, contends that he invested more than $1 million in Hometown Plaza renovations after receiving assurances from the gaming board's chief legal counsel and other gaming board officials that his plan for a casino mall seemed to be in compliance with the Video Gaming Act. He told the gaming board during a public hearing that a marketing study he commissioned revealed that since Hometown is directly across the border from Chicago, which does not allow video gambling, placing numerous video-related enterprises within the mall would attract the most tenants and customers to the site.The attorney representing Hometown Plaza and the two video cafes named as plaintiffs in the lawsuit is William Bogot, a partner in Fox Rothschild LLP, who was the legal adviser to the Illinois Gaming Board for seven years, and is mentioned on the law firm's website as having "authored portions of the Illinois gaming regulations" and advised the governor's office "on all aspects of gaming law and regulation. Early in his legal career, he was the assistant general counsel to the Illinois House of Representatives and served as the judicial law clerk to Judge Aaron Jaffe, the former chairman of the gaming board. Bogot was no longer with the gaming board when Israel consulted its legal counsel on the legality of his casino mall concept.The lawsuit contends that the Video Gaming Act only places restrictions on video gambling near horse racing tracks, riverboat casinos or places of worship. The filing claims the law does not grant the board authority to limit the proximity between licensed video gambling locations, although it does grant the board the authority to limit the economic concentration of terminal operators "if it determines that an operator would have such actual or potential influence over video gaming terminals in Illinois as to (i) substantially impede or suppress competition among terminal operators; (ii) adversely impact the economic stability of the video gaming industry in Illinois, or (iii) negatively impact the purposes of the IVGA (Illinois Video Gambling Act)." The law also allows the gaming board to limit the number of video gaming terminals operator by a single terminal operator, the lawsuit acknowledges.However, the law does not grant the gaming board any authority to limit the number of video gambling establishments in a specific municipality or within a municipality, the lawsuit maintains.
None of the plaintiffs in the lawsuit are terminal operators, according to the legal filing.
The lawsuit claims the gaming board violated the open meetings act when it went into closed session on Sept. 21 to discuss "casino malls" which was not listed on the board's agenda and does not meet the requirements under the Illinois Open Meetings Act for closed meetings. The gaming board was required by law to meet in open session to discuss the casino mall concept, the legal filing contends.
While the gaming board voted against the license applications for the Hometown casino mall, the lawsuit claims "there are three licensed video establishment with the Villa DuPage Shopping Center in Village Park and two licensed video gaming establishment that share a common wall and are "directly adjacent to one another in a strip mall in Champaign, Illinois."
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