Investors in Terre Haute, Gary casinos sue gaming commission over emergency rule

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Investors in two Indiana casinos have filed a lawsuit against the Indiana Gaming Commission, alleging the entity overstepped its authority with an emergency rule adopted late last year.

Stakeholders in Spectacle Entertainment’s Gary casinos and spinoff Lucy Luck’s Terre Haute property claim in an April 21 filing in Marion Superior Court that they were targeted by the rule, which requires additional transparency, licensing and regulation tied to the buying and selling of casino licenses and those investing in gambling projects.

The plaintiffs include End Game Holdings LLC of Lafayette; Laelaps LLC and MD Twenty-Twenty LLC of Schererville; Daniel J. Hasler of Florida; longtime local business executive Stephen C. Hilbert of Carmel; and Statehouse lobbyist and former house member Matthew D. Whetstone of Brownsburg. Windy City H&C Investors LLC also joined as a plaintiff in the case on April 22. The lawsuit does not specify the ownership stake of each investor.

The investors allege the new rule—implemented in March—caused them “immediate and irreparable harm,” according to the complaint. They are asking the court to determine the veracity of the emergency rule, along with a stay to the rule until the court’s final ruling.

The complaint argues the gaming commission is not permitted to require investors to acquire a Level 1 occupational gambling license, which requires the collection of extensive financial and personal information that would not necessarily be kept confidential.

The 38-page disclosure form calls for 20 years of employment information, along with details of business relationships and involvement in other casinos or gaming entities. It also includes lengthy sections requiring details on criminal history, assets and taxes.

Additionally, the investors expressed concern over rules that would further regulate how certain casino licenses can be bought and sold.

Brent Embrey, an attorney representing the plaintiffs, told IBJ the investors “face potentially significant financial harm for no particularly good reason” because the lawsuit could decrease the value of their ownership stakes.

Embrey said the lawsuit is equally about the legality of the emergency rule and about its contents. Under state statute, an emergency rule requires an agency to prove an emergency exists—something Embrey said the gaming commission has not yet done.

“This is about the fact that the gaming commission has to follow the rules the same as everyone else,” he said. “In my view, everything else is a sideshow.”

Embrey, based in Carmel, chaired the transition team for Indiana Attorney General Todd Rokita.

According to state records, two of the complaining entities—Laelaps LLC and MD Twenty-Twenty LLC, are registered to Daniel Dumezich, a former Indiana Republican Party treasurer and state representative. This was first reported by the Northwest Indiana Times.

The lawsuit comes nearly two months after former Spectacle CEO Rod Ratcliff was permanently banned from the state’s gambling industry as part of a settlement agreement to a lawsuit he filed against the Indiana Gaming Commission in January.

The state agency had been investigating Ratcliff and his companies after he was connected to a federal campaign finance scheme. Ratcliff has not been charged with any crimes.

A spokesperson for the Indiana Gaming Commission confirmed the agency is aware of the lawsuit but does not comment on pending litigation. The commission has formally requested approval for outside counsel with Rokita’s office, but has not yet received a response.

Embrey said while the hope is to settle the dispute with the commission through negotiation, a strategy is being developed for if the matter goes to court.

“There’s two options here: negotiate or fight,” he said. “I believe the former is the adult option, but we’re ready for the latter.”

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