In response to concerns raised by a high-profile applicant for a downtown Baltimore slots casino, Maryland officials have relaxed a rule designed to keep people with past gambling transgressions from winning licenses to operate such facilities.
The action, taken the day before bids were due this fall, appears to have removed a significant hurdle for Dan Gilbert, the majority owner of the Cleveland Cavaliers basketball team and chairman of Rock Gaming, to participate in the project.
Gilbert — part of a group vying to win state approval to build and operate a Harrah's-brand casino — was arrested in 1981, while a student at Michigan State University, in connection with an alleged sports bookmaking operation that reportedly threatened violence against some who had gambling debts. Gilbert was not convicted and his record was expunged, but according to published reports, he was fined, put on probation and given community service.
Even though Gilbert does not have a conviction, the incident could have disqualified his group from obtaining a license under regulations that took effect in 2009, when Maryland launched its slots program.
In late September, the State Lottery Commission voted to change those rules. Now, a gambling-related offense that took place out of state and did not result in a conviction is only disqualifying if it occurred in the past 10 years.
Gilbert's group, which includes Caesars Entertainment, was the only qualified applicant for the project after bids closed. The license could be awarded early next year if a separate state panel determines the bid is in Maryland's best interest.
State lottery officials, who are responsible for crafting rules governing Maryland's slots program, acknowledged that the change was made after Gilbert's group sought clarification of state rules before its bid.
But they said the previous regulation was open to interpretation and argued that the rules are now clearer, more fair and still among the strictest in the nation.
"Clearly, in certain respects, we relaxed the provisions," said J. Kirby Fowler Jr., chairman of the lottery panel, who was appointed in 2009 by Gov. Martin O'Malley. "But still, Maryland is one of the most stringent states."
Fowler said the change made sense on its merits and that most commission members were not aware that Rock Gaming had raised the issue or of Gilbert's circumstances.
Most discussion of the matter appears to have taken place between lawyers for the commission and for Rock Gaming, according to representatives of both parties.
Robert T. Fontaine, a lawyer for the commission, said he was asked at one point for assurances that any expunged records would not be held against an applicant. That was something he was unwilling to do as a matter of law, he said.
"My job isn't to provide anything a company wants," said Fontaine, who is assigned to the lottery commission by the state attorney general's office.
For some, the episode raises questions about how accommodating state agencies should be to the businesses they regulate.
Amid the economic downturn, Maryland has struggled to lure qualified applicants for the Baltimore site, one of five authorized by state voters. It is envisioned as the second-largest casino in the state's fledgling slots program.
A previous round of bidding, in 2009, attracted only one bidder for the Baltimore site. And that application was later rejected by a state panel because of concerns about financing.
In Maryland, a panel of legislators serves as a check against state agencies when they make rule changes and has the power to slow the process if lawmakers have questions. Last month, that panel agreed to grant "emergency status" to the lottery commission's change, making it effective immediately.
The panel's co-chairman, Sen. Paul G. Pinsky, a Prince George's County Democrat, said no one told him Rock Gaming's concerns had prompted the change.
"I would have liked to have known that," Pinsky said. "They apparently sat on the information for the purpose of getting this bidder in."
Lottery officials said they complied with standard procedures in submitting the regulation to Pinsky's panel.