Casino owners sweeten offer to state

April 10, 2002

BY CHRIS FUSCO STAFF REPORTER

The embattled owners of a partially built casino in Rosemont are offering the state $300 million--nearly double their initial proposal--to end the legal logjam that threatens to stall the project for several more years.

Emerald Casino Inc. detailed its latest offer in letters hand-delivered late Tuesday afternoon to members of the Illinois Gaming Board, which last year declared the company unfit to operate a casino in Illinois. The board seriously has been considering a buy-out plan pitched by Emerald amid lawmakers' concerns about the state's budget deficit, which is tabbed at upwards of $1 billion.

The board in January 2001 cited misleading statements by two of Emerald's top owners, Kevin and Donald Flynn, plus alleged mob ties by two other shareholders, in rejecting its Rosemont casino plans. Emerald has been appealing that decision while, at the same time, seeking the board's approval of a $615 million proposed buyout by MGM Mirage Inc. of Las Vegas.

"Acceptance of the settlement offer would allow an approved, licensed casino operator to open in Rosemont within six months, creating up to 1,500 jobs, providing a $300 million lump-sum payment, and beginning the flow of tax revenue," Emerald attorney C. Barry Montgomery wrote to the Gaming Board's five members. "Rejection of the proposal leaves the company no choice but to litigate."

Emerald officials declined to comment about the letter, a copy of which was obtained by the Chicago Sun-Times. Under proposed terms of the settlement, Emerald as a corporate entity would pay $250 million of the MGM sale proceeds to the state. The Flynns would pay $50 million on top of that.

Based on the proposed sale price and after legal bills, escrows and other expenditures, the deal would leave the seven members of the Flynn family--who own more than half of the company--with proceeds of about $115 million. The Flynns have invested $39.5 million so far. Fifty-plus other shareholders in the company would split $150 million.

Shareholders identified as having alleged mob links would not profit, but would be reimbursed what they invested.

Leading gambling critics decried the proposal as too generous to Emerald.

"If [Gaming Board Administrator Philip] Parenti and the board's major concern is how to take care of the taxpayers of Illinois, they've overstepped their bounds,'' said the Rev. Tom Grey, who heads the National Coalition Against Legalized Gambling.

Gene O'Shea, a spokesman for the Gaming Board, declined to comment on Tuesday's proposal.

The board on March 22 issued a statement saying it had rejected the proposed MGM buyout and was "considering its own counterproposal" regarding Emerald. But the board in another statement the following week appeared to back away from that stance, with MGM attorney Larry Suffredin saying the company still has a shot at taking over the Rosemont project.

Rosemont Mayor Donald E. Stephens said he hopes the Gaming Board approves the MGM buyout despite his concerns about the Rosemont casino providing more money to the horse-racing industry than to the state. Stephens had said he would block the casino from coming to Rosemont if lawmakers didn't change that formula.

While that change looks unlikely for now, "We've got to solve one problem at a time," said Stephens, explaining why he would support the MGM takeover.