State responds to city casino developer suit

Opposes delay in new bidding requests

May 02, 2011|By Frank D. Roylance, The Baltimore Sun

Maryland Attorney General Douglas F. Gansler says would-be casino developer Michael Moldenhauer should have to post a bond to cover lost gambling revenues if he is granted a motion to block the state from seeking new bids to build and run a Baltimore casino.

The gross gambling revenue losses could run about $48 million a month, according to the state's response to Moldenhauer's request for an injunction in Baltimore Circuit Court.

Gansler argued in his answer to Moldenhauer's motion that an injunction would hold the casino development process "hostage" for an "indeterminate" length of time while Moldenhauer appeals the rejection of his proposal during the initial round of bidding in 2009.

The casino legislation was passed, Gansler argued, "to raise revenues for certain of the state's public school programs, construction and capital improvements. … It cannot be fairly said that the public interest is served by granting injunctive relief that means an [indefinite] delay."

In seeking the injunction, Moldenhauer's lawyers said his company, Baltimore City Entertainment Group, would suffer "irreparable injury" if the state is permitted to seek new bidders for the city casino.

They argued that the state's casino Location Commission is holding a $3 million bidding fee submitted with its initial bid, and that the new round of bidding would force the company to submit another $3 million, putting the company at a competitive disadvantage.

Gansler argued that was "simply wrong." The money is held by the state Lottery Commission, not the Location Commission, Gansler said in the state's response.

"The Lottery Commission does not intend to keep BCEG's initial license fee," the state said. Instead, it will be paid into a court account until the court can sort out "which of BCEG's numerous creditors are entitled to what amounts of money."

John F. Dougherty, one of Moldenhauer's attorneys, said, "Apparently, whoever in state government authorized this action does not know that the Circuit Court already ruled that these people have no legal right to the $3 million.

"The state seems blind to the possibility that its treatment of BCEG will scare away anyone thinking of responding to its new slots [request for proposals]," Dougherty said.

A hearing on Moldenhauer's request for an injunction is scheduled for 10 a.m. Thursday.

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