Concerns over online gambling and the Russian mob may have killed Caesars involvement in Suffolk Downs project

In a filing with the Securities and Exchange Commission today, Caesars Entertainment said Massachusetts gaming investigators raised red flags over three issues related to its proposed involvement in the Suffolk Downs project: One executive's past "employment by public companies in the internet gaming industry," the company's overall financial health, but most important, a "business relationship related to a license agreement for branding of a hotel that was entered into in 2013 (and recently terminated)."

The Las Vegas Review-Journal translates that last statement:

Massachusetts gaming investigators, during routine background checks of Caesars’ business partners, took issue with an investor in New York-based Gansevoort [which had a deal with Caesars to market a rebuilt Nevada casino].

The investor, a German businessman, is reputed to have ties to organized crime in Russia.

The Review-Journal says the report by Massachusetts gaming investigators - due for public release on Wednesday - took issue with the Gansevoort investor even though that company has nothing to do with the Suffolk Downs project.

As it has done publicly, Caesars criticized the Massachusetts investigation, which led Suffolk Downs to drop it from its proposal on Friday:

The Registrant notes that neither it nor its affiliates have been found unsuitable by any licensing authority. This matter related to the finding of an investigation that was delivered to a licensing authority, which has not made any findings. In addition, all but one of the issues raised by the Bureau, the license agreement for branding of a hotel, relate to circumstances that are at least several years old, and, to date, have not been the subject of a finding of unsuitability.

In the same filing, Caesars notes that the US Treasury is currently investigating possible money laundering at one of its Nevada casinos.

On Nov. 5, East Boston and Revere voters decide whether to let Suffolk Downs proceed with a $1-billion plan to add a casino and two hotels to the existing racetrack. Even if they approve, the state Gaming Commission will have final say on where to site a casino in eastern Massachusetts - there are competing proposals in Everett and Milford.

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OK, let me make sure I'm following this:

Being involved with a PUBLIC company involved with internet gambling is a disqualification but
being involved with your brother in law in a PRIVATE internet gambling company qualifies you to be a US Congressman representing the North Shore.

Yeah, this is no bag job. Everything in this state is legit.

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Casino scuttled due to German investor in Nevada? C'mon.

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Is anyone believing this? At the last minute, the "independent" Gaming Commission, appointed by Governor Patrick, AG Coakley and Treasurer Grossman, all liberal Democrats in the Menino mold, essentially scuttle the billion dollar East Boston casino plan championed by Menino and his longtime pal and donor Joe O'Donnell? His legacy on the line and his buddy and "his" city potentially losing tens of millions, an unusually passive Menino makes a half-hearted suggestion to delay the casino election but seems less than upset when another fellow Dem Bill Galvin refuses. Menino even praises the Gaming Commission's diligence and is shown smiling and joking with his media pals over the weekend and again today on TV. I can't wait for the real story on this and I doubt it has much to do with a German businessman who was not even remotely involved in the project or his ties to the Russian mob.

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Aliens

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IMAGE(<a href="http://www.sodthe.net/wp-content/uploads/2013/08/ancient-aliens-guy-im-not-saying-its-aliens-but-its-aliens.jpg)">http://www.sodthe.net/wp-content/uploads/2013/08/ancient-aliens-guy-im-n...

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Chicago Gambling Group for Suffolk Downs?

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@jdrinboston: Just my opinion, but if Suffolk Downs still wants a casino and hasn't decided to develop the land another way, I would keep your eye on the Chicago group that already has approval from the "independent" Gaming Commission, all appointed by Democrats Deval Patrick also of Chicago, Coakley and Grossman, the three of which love Obama (D-Chicago) and his followers. Menino's ties to Obama and vice versa are also well documented. The CEO of the Chicago company already cleared to operate here is reportedly best friends with the son of a billionaire Chicago casino and horse racing magnate who is a heavy donor to Obama, Rahm Emmanuel, Hillary Clinton and other Democrat operatives. http://www.dailyherald.com/article/20110725/news/707259959/

Now add in Menino's behavior since Friday. Does he look like Tommy scorned? After 20 years of using bullying to get his way, he's out joking with reporters and students when "his city" and one of his closest friends at Suffolk stand to lose a fortune. For a guy who just made an international spectacle of himself to pay back gays (Chik-fil-A) for their support, shouldn't he be dragged kicking and screaming out of the Gaming Commission offices in support of his closest friends and the Commission's laughable reasons for scuttling Caesars?

A wise man once said of Boston politics (and it goes for Chicago too) "Nothing is on the level. Everything is a deal. No deal is too small."

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Interesting theory. I'm

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Interesting theory. I'm assuming you are referring to the Rush Street group, which operates casinos in Illinois, Pittsburgh, and Philadelphia. They would certainly appear to be one of the potential suitors for Suffolk. However, they don't seem to really be in the hotel business, which is supposed to be a key part of the "resort" concept.

Out of curiosity....my understanding is the governor was born in Chicago, was awarded a scholarship to attend Milton Academy and has worked and or resided in Massachusetts for most of his adult, professional life. Can you really say he is "of Chicago?"

I'll pose an alternate theory on Menino's behavior. He is weeks away from retirement and realizing that he has thrown his political muscle and capital behind a group - friends if you will - who thought nothing of hooking up with a gaming partner who was billions of dollars in debt and apparently had money laundering issues going on at their flagship property in Las Vegas. The opponents of the casino in both Eastie and Revere had been using Ceasar's financial issues as a cudgel against the proposal, and even before Friday, they may have been making inroads.

Now Friday comes along and Suffolk realizes that their association with Ceasars is about to sink their bid, so they dump them late Friday night in what is notoriously the best time to break bad news because presumably, few media outlets are prepared to cover the news in-depth. The move looks desparate and shady causing all but the most vocal casino supporters to question the fitness of Suffok Downs to manage such a facility.

Bottom line, Suffolk Downs "screwed the pooch," and squandered what should have been a sure thing into a political and legal mess. Hell, even if the referendum passes in a couple weeks (I think very unlikely at this point), it sure seems like casino opponents have a heck of a legal case given the nature of the mitigation agreement with Suffolk/Ceasars and the wording on the ballot. Those legal challenges - even if unsuccessful - would likely push their application past the Dec. 31 deadline. At this point, Menino probably realizes even he can't bail Suffolk out of the mess they've created by their incompetence and frankly, what good is all the casino money coming in anyway since he isn't going to be the one to pass it around? Why allow a doomed, mis-managed casino campaign effort to become the coda on a long, otherwise successful political career?

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Was Loveman a "friend" too?

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Does anyone know how Gary Loveman, the Caesars CEO, fits in to this circle of friends. It looks like he and Joe O'Donnell have a Harvard connection. Is it possible they just blindly trusted Loveman? O'Donnell spoke very highly of Caesars at the HCA announcement. Here's an article from last year showing how arrogant and wrong Caesars was.

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Re: Suffolk Downs / Interesting Theory

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Chicago based Rush Street group had a hotel / casino proposal for Worcester earlier this year that was dropped. Direct links don't seem to be working but you can find that story here. http://www.bizjournals.com/boston/blog/mass_roundup/2013/04/worcester-ca....

Deval Patrick left Chicago at 14. They consider him a "native" (Elizabeth Warren would be proud) and the city just named a street after him. http://www.boston.com/politicalintelligence/2013/06/06/illinois-governor...

Menino's has ties to Patrick, Coakley and Grossman who appointed the Gaming Commission. Menino and Patrick have ties to Obama and crew. Obama has ties to people close to Rush Street The CEO's pal threw Obama a birthday party! It makes for either a potent brew or just a lot of coincidences.

Suffolk Downs did "screw the pooch" and it wouldn't be the first time Menino dumped a friend who helped get him where he is (see Sen. Joe Timilty). Still, I think Menino's thirst for power, his sense of entitlement and his close friendship with Suffolk Downs principal owner and philanthropist to all Menino pet causes, Joe O'Donnell, make your theory possible but not probable. This is what Boston Magazine has written about the Menino /O'Donnell connection, "Even after selling Boston Culinary Group, the longtime concessions king is still packing plenty of punch. A close friendship with Menino has helped O’Donnell, who owns 31 percent of Suffolk Downs, scare off competitors who might want to challenge the track for the rights to a casino license." I'm not inclined to believe that Menino suddenly found God and is walking away from O'Donnell after all that Joe has done for him. More likely a deal to replace Caesar's has been in the works for a while, it just took some time to find the German businessman with Russian mob ties. My only question is did anyone with ties to Rush donate to disgraced now-convicted former Gov. Rod Blagojevich and how the Gaming Commission might react given their strict rules?

Stay tuned!

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Google Neil Bluhm

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Was that a leading question? Yes, Rush Street owner Neil Bluhm participated in "philanthropy" to Rod as noted in his Wikipedia article.

(also you need to change Text format to html to get links to work, for some reason it defaults to BBCode)

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Your theory has one one major

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Your theory has one one major hole. Why pull the trigger on this less than 3 weeks from the referendum. As it is, you need voters in two communities to vote in favor and now you've shaken the electorate in both towns. Do you honestly feel this proposal has a chance of passing in both towns? Do you honestly think there are going to be any "fence sitters" voting in favor of this in any significant numbers? Even if by some miracle they do pass, does it not seem like a protracted legal battle will follow?

If this is some plan by Menino to do a solid for a buddy, I'd hate to meet Joe O'Donnell's enemies.

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Re: Your theory has one one major hole

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Don't forget the deal with Caesars, Suffolk and the City was only finalized on August 29th, less than two months ago. Just a week later, Rush Street, already approved by the Gaming Commission, suddenly dropped plans for a slots parlor in Millbury. Who knows what went on behind the scenes in that week. As others have noted, the "concerns" expressed by the Gaming Commission about Caesars seemed specious at best but probably took time to uncover. No doubt, if Rush emerges as the new partner for Suffolk, the media and PR barrage of this "much better" collaboration with a "stronger casino partner" "who are great to their workers and neighbors" will be relentless. This isn't a Menino plan, it's much bigger than that.

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Odd indeed

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None of this makes sense. An investor in a third-party company, unrelated to the Boston project, that Caesar's isn't doing business with any more, may have 'ties to ties to organized crime in Russia' ? An executive may have worked for an online gaming company in Europe? Are these really red flags?

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