SugarHouse HSP Gaming, LP v. Pennsylvania Gaming Control Board
136 A.3d 457
Pa.2016Background
- Pennsylvania Gaming Control Board re-opened a Category 2 Philadelphia license competition (last available Category 2 in Philly) after revocation of an earlier award; Stadium Casino, Market East, SugarHouse (existing Category 2 licensee), and others applied.
- Stadium proposed converting a Holiday Inn near the Stadium District into a hotel/casino; ownership was 50% Stadium Casino Investors (linked to Sterling Investors Trust and Sterling Fiduciary) and 50% Cordish Group.
- Watche Manoukian had ownership interests through Greenwood (Parx Casino, a Category 1 licensee) and minority interests in Sterling Fiduciary; Board-approved revised post-application ownership shifted Manoukian to minority positions.
- Board investigated eligibility and Section 1330 (33.3% cross-ownership limit) concerns, considered a revised ownership structure submitted by Stadium, and awarded the license to Stadium.
- SugarHouse sought broader intervention (denied as to 1304/1330 issues); Market East and SugarHouse appealed the Board’s award to the Pennsylvania Supreme Court challenging intervention limits, concentration analysis, Section 1304(a) eligibility, and Section 1330 compliance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was SugarHouse wrongly denied full intervention on 1304/1330 issues? | SugarHouse: denial prevented it from protecting its competitive and statutory-enforcement interests; OEC did not adequately represent those issues. | Board: intervention discretionary; OEC and other applicants adequately represented statutory issues; SugarHouse had interest limited to market saturation. | Denial of broader intervention was not arbitrary or legal error; Board permissibly limited SugarHouse to market-saturation issues. |
| Did Board fail to consider undue concentration/monopolization under §1102(5) and 58 Pa.Code §421a.5? | Market East: Board didn’t analyze the regulation’s factors or consider anti-competitive effects (e.g., Manoukian linkage to Parx). | Board: regulation requires consideration, not checklist recitation; record and Adjudication show consideration; Cordish is majority control of Stadium. | No error; Board’s decision was supported by record and adequate consideration of concentration factors. |
| Was Stadium ineligible under §1304(a) because an affiliate was "eligible to apply" for a Category 1 license? | Market East: Manoukian (via Greenwood/Parx or Sterling) made Stadium ineligible because an affiliate was eligible to apply for Category 1. | Board: "eligible to apply" meant applicants for initial Category 1 licensing process, not active license-holders; Greenwood as existing licensee was not "eligible to apply." | Court remanded: question unresolved on facts. Court agreed statutory interpretation generally supports Board but found factual findings lacking about whether Manoukian was "eligible to apply" for a Category 1 at application time; remand for factfinding. |
| Did Stadium/Manoukian violate §1330 (33.3% ownership/financial-interest cap)? | Market East: post-application restructurings were a sham; Manoukian retained effective control/financial exposure exceeding 33.3%; Board’s analysis was cursory and ignored sealed financial transactions. | Board: §1330 applies to post-licensure interests; Board properly considered Stadium’s proposed post-license ownership; legal ownership calculations keep Manoukian under 33.3% and trustee assets are not his. | Partial affirmance and remand: Court agreed Board may evaluate post-licensure ownership but remanded to determine whether Manoukian’s financial interest (beyond ownership percentage) post-licensure — including pledged commitments and other transactions in the sealed record — exceeded 33.3%. |
Key Cases Cited
- Greenwood Gaming & Entertainment, Inc. v. Pennsylvania Gaming Control Bd., 15 A.3d 884 (Pa. 2011) (explains standard of review for Board decisions and capricious-disregard test)
- Riverwalk Casino, LP v. Pennsylvania Gaming Control Bd., 926 A.2d 926 (Pa. 2007) (describes deference and limits on appellate reweighing of administrative factfinding)
- Mason-Dixon Resorts, LP v. Pennsylvania Gaming Control Bd., 62 A.3d 1087 (Pa. 2013) (addresses scope of appellate review of Board licensing decisions)
- Station Square Gaming L.P. v. Pennsylvania Gaming Control Bd., 927 A.2d 232 (Pa. 2007) (explains waiver and the sui generis nature of Board proceedings)
- Society Hill Civic Ass’n v. Pennsylvania Gaming Control Bd., 928 A.2d 175 (Pa. 2007) (holds plaintiffs who were not parties below lack standing to appeal Board decisions)
- Appeal of Municipality of Penn Hills, 546 A.2d 50 (Pa. 1988) (recognizes tribunal authority to limit intervention and that scope of intervention affects appellate rights)