STATION SQUARE GAMING L.P., Petitioner, v. PENNSYLVANIA GAMING CONTROL BOARD, Respondent. PITG Gaming, L.L.C., Intervenor. IOC Pittsburgh, Inc., Petitioner, v. Pennsylvania Gaming Control Board, Respondent. PITG Gaming, L.L.C., Intervenor.
Nos. 28 & 29 MM 2007
Supreme Court of Pennsylvania
Decided July 18, 2007
927 A.2d 232
Argued May 15, 2007
For the reasons stated herein, the Board‘s decision approving the license of Mount Airy is affirmed.
Justice CASTILLE, SAYLOR, EAKIN and BAER, Justice BALDWIN and Justice FITZGERALD join this opinion.
James J. Eisenhower, III, Esq., Paul H. Titus, Esq., Hans Justin Park, Esq., Mark McKelvie Lee, Esq., Mark PITO, Philadelphia, for PITG Faming, L.L.C.
Patrick Kennedy Cavanaugh, Esq., Victor Paul Stabile, Esq., Seth P. Waxman, Dilworth Paxson, L.L.P., Arthur H. Stroyd, Jr., Esq., Harrisburg, for Station Square Gaming L.P.
Richard Douglas Sherman, Esq., John Walter Dornberger, Esq., James John Kutz, Esq., Brian M. Peters, Esq., Jonathan B. Sprague, Esq., Barbara S. Magen, Esq., Post & Schell, P.C., Frank T. Donaghue, Esq., Linda S. Lloyd, Esq., Harrisburg, for PA Gaming Control Board.
Mark Scott Stewart, Esq., Dino Antonio Ross, Esq., Brian P. Flaherty, Esq., Wolfe, Block, Schorr and Solis-Cohen, L.L.P., Kevin James McKeon, Esq., Anthony Robert Twardowski, Esq., Katherine Elizabeth Lovette, Esq., Hawke McKeon Sniscak & Kennard, L.L.P., Tami Bogutz Steinberg, Esq., Harrisburg, for IOC Pittsburgh, Inc.
BEFORE: CAPPY, C.J., and CASTILLE, SAYLOR, EAKIN, BAER, BALDWIN and FITZGERALD JJ.
OPINION
Chief Justice CAPPY.
Petitioners in these matters challenge the Pennsylvania Gaming Control Board‘s (“Board“) grant of a slot machine license to PITG Gaming, LLC (“PITG“). For the following reasons, we affirm.
The genesis of these matters lies in the Legislature‘s July of 2004 enactment of the Pennsylvania Race Horse Development and Gaming Act (“Act“). The Act established the Board, granting it general jurisdiction over all gaming and related activities including the licensing of gaming facilities.
Under the Act, the Legislature provided for legalized slot machine gaming at a limited number of licensed facilities throughout the Commonwealth. Three categories of slot machine gaming facilities are authorized under the Act.
On December 20, 2006, the Board met in open session and voted upon all pending applications. The Board voted unanimously to award the Pittsburgh slot machine license to PITG.
On February 1, 2007, the Board issued an Order and Adjudication granting the Pittsburgh slot machine license to PITG. In its Adjudication, the Board emphasized that it had “been presented with three very competent proposals, all of which are eligible and suitable for licensure under the terms of the Act.” Adjudication at 7. Yet, as there was only one Pittsburgh slot machine license to award, the Board necessarily had to deny two of the applications. Id. The Board emphasized that IOC‘s and Station Square‘s applications were denied “not because the unsuccessful applicants were found unsuitable, but because the Board had the difficult task of
The Board detailed its reasons for selecting PITG for the Pittsburgh slot machine license. The Board determined, inter alia, that PITG was financially suitable for licensure. It also found that PITG‘s proposed facility was the most aesthetically pleasing; its ability to deal with traffic concerns was superior; and the facility had great potential for stimulating economic rebirth of the North Shore area where the facility was to be located. The Board also found Don Barden (“Barden“), the owner of PITG, himself to be a huge factor: Barden had shown an impressive level of personal commitment to the project and Pittsburgh in general; the Board also emphasized that Barden would bring “integration of diverse representation in the gaming industry in Pittsburgh....” Adjudication at 55.
IOC and Station Square filed petitions for review with this court. PITG filed a notice of intervention in both matters per
Our appellate review of these matters is carefully defined by the Act. The Legislature provided that this court “shall be vested with exclusive appellate jurisdiction to consider appeals of any final order, determination or decision of the board involving the approval, issuance, denial or conditioning of a slot machine license....”
With regard to the directive that we are to uphold orders of the Board unless such orders are arbitrary or the result of a capricious disregard of the evidence, our case law provides guidance as to the parameters of our appellate review. We have defined a capricious disregard of the evidence to exist “when there is a willful and deliberate disregard of competent testimony and relevant evidence which one of ordinary intelligence could not possibly have avoided in reaching a result.” Arena v. Packaging Systems Corp., 510 Pa. 34, 507 A.2d 18, 20 (1986); see also Leon E. Wintermyer, Inc. v. Workers’ Compensation Appeal Board (Marlowe), 571 Pa. 189, 812 A.2d 478 (2002). Furthermore, under the capricious disregard standard, an agency‘s determination is given great deference, and relief will rarely be warranted. Wintermyer, 812 A.2d at 484.4 Under this standard, an appellate tribunal is not to substitute its judgment for that of the lower tribunal and the standard “is not to be applied in such a manner as would intrude upon the agency‘s fact-finding role and discretionary decision-making authority.” Id. at 487-88.
The primary argument of both Station Square and IOC is that the Board incorrectly concluded that PITG had demonstrated by clear and convincing evidence that it was financially suitable for licensure under the Act.5
efficient operation. Applicants shall produce the names of all proposed key employees and a description of their respective or proposed responsibilities as they become known. (e) Applicant‘s operational viability. In assessing the financial viability of the proposed licensed facility, the board shall make a finding, after review of the application, that the applicant is likely to maintain a financially successful, viable and efficient business operation and will likely be able to maintain a steady level of growth of revenue to the Commonwealth pursuant to section 1403 (relating to establishment of State Gaming Fund and net slot machine revenue distribution). Notwithstanding any provision of this part to the contrary, an applicant that includes a commitment or promise to pay a slot machine license fee in excess of the amount provided in section 1209 or a distribution of terminal revenue in excess of the amounts provided in sections 1403, 1405 (relating to Pennsylvania Race Horse Development Fund) and 1407 (relating to Pennsylvania Gaming Economic Development and Tourism Fund) shall not be deemed a financially successful, viable or efficient business operation and shall not be approved for a slot machine license. (f) Additional information. In addition to other information required by this part, a person applying for a slot machine license shall provide the following information: (1) The organization, financial structure and nature of all businesses operated by the person, including any affiliate, intermediary, subsidiary or holding companies, the names and personal employment and criminal histories of all officers, directors and key employees of the corporation; the names of all holding, intermediary, affiliate and subsidiary companies of the corporation; and the organization, financial structure and nature of all businesses operated by such holding, intermediary and subsidiary companies as the board may require, including names and personal employment and criminal histories of such officers, directors and principal employees of such corporations and companies as the board may require. (2) The extent of securities held in the corporation by all officers, directors and underwriters and their remuneration in the form of salary, wages, fees or otherwise. (3) Copies of all management and service contracts.
First, we address Station Square‘s argument that the Board erroneously examined PITG‘s ability to generate revenue after it receives its license. The Board predicted that the PITG facility would earn $482.8 million annually in a stabilized year in 2005 dollars. Board‘s Brief at 25, citing R. 6746a. The Board concluded that PITG “is likely to maintain a financially successful, viable and efficient business operation, which would maintain a steady level and growth of revenue.” Adjudication at 21. Station Square objects to this analysis, asserting that the Board should not have looked at projected revenue in determining whether PITG was financially suitable for licensure. Contrary to Station Square‘s argument, the Board in no fashion acted improperly when it calculated PITG‘s projected revenues in determining PITG‘s financial suitability. In fact, the Act requires the Board to consider projections of future revenue.
Next, Station Square and IOC assert that the evidence as presented to the Board revealed that PITG was not financially suitable for licensure. In support of their argument, Station Square and IOC rely heavily on the PITG Financial Suitability Report (“PITG FSR“)7 that the Financial Suitability Task Force prepared. The Board and PITG respond that Station Square and IOC waived any challenge to the Board‘s
In analyzing this waiver issue, we turn to the seminal decision of Dilliplaine v. Lehigh Valley Trust Co., 457 Pa. 255, 322 A.2d 114 (1974). In Dilliplaine, this court made clear that the general policy was that no question would be heard by an appellate court that was not objected to and raised before the lower court. The purpose of requiring such an objection was to ensure that the lower tribunal had the first opportunity to correct any such alleged error as well as providing an efficient use of judicial resources. Id. at 116-17. Such reasoning was extended to administrative agencies, like unemployment compensation proceedings, in Wing v. Unemployment Comp. Bd. of Review, 496 Pa. 113, 436 A.2d 179, 181 (1981) (“[T]he administrative law tribunal must be given the opportunity to correct its errors as early as possible; diligent preparation and effective advocacy before the tribunal must be encouraged by requiring the parties to develop complete records and advance all legal theories; and the finality of the lower tribunals’ determinations must not be eroded by treating each determination as part of a sequence of piecemeal adjudications.“).
The Board has not pointed this court to anything reassuring us that Station Square or IOC had a way in which to lodge such objections to the financial suitability inquiry conducted by the Board vis-à-vis PITG. Indeed, neither the Board nor PITG adequately explain how Station Square or IOC could have identified or raised these issues before the Board at any time materially sooner than they did. Accordingly, we hold that Dilliplaine and its progeny do not apply to Board proceedings as they currently are structured and reject the Board‘s waiver argument.
The PITG FSR is the principal focus of Station Square‘s and IOC‘s financial suitability arguments. The Financial Suitability Task Force focused on the financial condition of Majestic Star Casinos, LLC (“Majestic Star“), an entity which is wholly owned by Barden Development, Inc. (“Barden Development“). The Financial Suitability Task Force did so because PITG, which is also wholly owned by Barden Development, is a newly formed entity and has no financial history of its own. Thus, the Financial Suitability Task Force examined the sister-entity to PITG-i.e., Majestic Star-to render its conclusions regarding PITG‘s financial health. Station Square and IOC forcefully argue that the PITG FSR revealed that Majestic Star is financially unsound. For example, the PITG FSR revealed that Majestic Star operates with a high leverage
Secondarily, Station Square Gaming and IOC contend that the Financial Suitability Task Force, and hence the Board, failed to consider documents pertaining to Majestic Star‘s performance in and around 2006 that were publicly available prior to the Board‘s decision to award the license to PITG. Station Square and IOC contend these omitted documents allegedly would establish or reinforce PITG‘s poor financial performance in gaming. On these bases, Station Square and IOC urge this court to find that the Board erred as a matter of law, acted arbitrarily and in capricious disregard of the evidence and thus violated its fiduciary duty to act as a “prudent man” when it determined that PITG was financially suitable for licensure.
In arguing that we should employ the “prudent man” standard in performing our appellate review, IOC and Station Square are not referencing the appellate review provision contained in § 1204. Rather, they are harking back to a separate section, namely
(h.1) Fiduciary relationship.--A member or employee of the board shall serve as a fiduciary of the Commonwealth.
(h.2) Standard of care.--Members shall exercise the standard of care required by
20 Pa.C.S. Ch. 73 (relating to municipalities investments) in the performance of their duties under this part.(h.3) Liability.--Members shall not be personally liable for any of the following:
- Obligations of the board.
- Actions which were within the scope of their office and made in good faith.
Section 1201(h.2), in turn, references the standard of care contained in Chapter 73 of 20 Pa.C.S., namely,
Any investment shall be an authorized investment if purchased or retained in the exercise of that degree of judgment and care, under the circumstances then prevailing, which men of prudence, discretion and intelligence exercise in the management of their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income to be derived therefrom as well as the probable safety of their capital. The authorization to make and retain investments pursuant to this subsection shall be in addition to, and independent of, authorizations to make investments pursuant to other provisions of this chapter and requirements applicable under other provisions of this chapter shall not affect investments also authorized by this subsection.
While the recently added provisions of
The next stage of our analysis brings us back to § 1204‘s definition of our appellate review. To wit, we must determine whether Station Square and IOC‘s claim that the Board improperly determined that PITG was financially suitable for licensure truly raises both an error of law issue as well as a claim that the Board acted arbitrarily and capriciously in making this determination. IOC and Station Square both argue that PITG‘s financial suitability is an “error of law“-type of claim. We are unpersuaded. IOC‘s and Station Square‘s arguments focus on the Board‘s alleged failure to place proper weight on evidence that they believed ostensibly showed Majestic Star to be financially unstable. The essence of such an argument, however denoted by IOC and Station Square, is that the Board acted arbitrarily and with capricious disregard of the evidence. Accordingly, we will examine whether there was “a willful and deliberate disregard of competent testimony and relevant evidence [by the Board] which one of ordinary intelligence could not possibly have avoided in reaching a result.” See Arena, 507 A.2d at 20.
In commencing our analysis of whether the Board arbitrarily or capriciously disregarded information contained in the PITG FSR, we acknowledge that that report reveals some less than optimum facets of Majestic Star‘s finances. Yet, as noted by the Board, the Director of the Bureau herself testified under oath that “the Financial Suitability Task Force is not aware of any financial material issues that would preclude licensure” of PITG. Board Brief at 24, citing R. 4679a (testimony of Denyse Miskin); see also Adjudication at 20. Furthermore, with regard to one of the more significant negative aspects of Majestic Star‘s financial health, namely that it has a high leverage ratio, the Board countered that the Financial Suitability Task Force “recognized that ‘Majestic Star has shown that it can operate with an elevated ratio.’ ” Board‘s Brief at 27 (quoting PITG FSR, R. 6744a). Further
Station Square and IOC contend that the Board should have considered, in addition to the financial information encompassed in the PITG FSR, information pertaining to Majestic Star‘s allegedly poor performance in and around 2006. Although the information in question has been submitted to this court under the rubric of a Judicial Notice Reproduced Record, we need not determine whether such notice is appropriate in this context. Rather, two related matters compel our rejection of this claim.
First, although Station Square and IOC appear to be correct that this public information was accessible to the Board before it awarded PITG the gaming license, that does not change the fact that it was necessary for the Board to limit the timeframe for the gathering of information. An entity like Majestic Star collects reams of financial information pertaining to its operations on a daily basis, and not infrequently aggregates and submits such information to various state and federal administrative bodies. Were the Board to demand the up-to-the-day financial information Station Square and IOC argue that it must, the Board would never have a closed record based upon which it might gauge financial suitability and award a license.
Second, even if we agreed with Station Square and IOC that the Board should have considered the information in question, nothing in Station Square‘s or IOC‘s proffers regarding these records suggests any revelation that would have changed the picture the Board had of Majestic Star‘s financial health. The information in question does not create a picture of Majestic Star divergent from that reflected in the PITG FSR, which plainly recognized, inter alia, Majestic Star‘s mixed financial record but nevertheless deemed it financially suitable for licensure.
Next, IOC argues that the Board erred as a matter of law when it considered PITG‘s amendments to its application. IOC‘s original application to the Board included a proposal to provide financing for a new arena for the Pittsburgh Penguins, a professional hockey team, as well as a commitment to revitalize the Hill District. Subsequently, PITG amended its application, adding its own funding scheme for the Pittsburgh Penguins’ arena as well as redevelopment plans for the Hill District area of Pittsburgh. IOC expresses indignation over PITG being allowed to propose such an amendment. IOC asserts that PITG could have made similar proposals in its initial application but did not do so. Instead, IOC argues, PITG acted unfairly: after the application deadline passed, PITG “pirated” IOC‘s proposals to fund the arena and donate money to the Hill District community by submitting a revamped application which included community-enhancements proposals similar to those IOC had previously advanced.
IOC states that the Board erred as a matter of law when it allowed PITG to submit this “me too“, revamped proposal. IOC‘s brief at 32. It provides two supports for this argument.
We find Bedford Downs to be very flimsy support for IOC‘S argument. First, the situation presented in Bedford Downs is quite distinct from the one at issue sub judice. In Bedford Downs, the rejected applicant was requesting leave to amend after the Commission issued an adjudication in the matter. In contrast, PITG‘s amendment occurred while the Board was still conducting its review of this matter. Furthermore, Bedford Downs is a decision from an inferior court regarding statutory material distinct from the Act; it is clearly not a controlling decision. Furthermore, the comment made by the Commonwealth Court was dicta, lacking any type of discussion or analysis. Accordingly, we do not perceive how Bedford Downs militates in favor of finding that the Board erred in allowing PITG to amend its application.
We find that there is no provision or common law authority that barred PITG from amending its application in this fashion. Furthermore, a flat ban on such amendments would not be consonant with the application process. This process was a fluid, ongoing dialogue between the Board and the applicants. In keeping with that dialogue, the Board properly welcomed the submission of additional material, including material which was responsive to information contained in competitors’ applications. As noted by PITG, “the very purpose of having a competitive application process is to encourage such ‘one-upsmanship’ as it results in stronger applications from all parties, thus benefiting both the public at large and the residents of Pittsburgh in particular.” PITG brief at 9. IOC‘s view that the first applicant to propose a community-enhancement funding scheme essentially stakes out territory with regard to that idea is unsupportable. There is nothing in the Act that would grant a “quasi-patent” in an idea regarding development and charitable giving to the first applicant who proposes it.
Next, in a cursory argument, IOC claims that the Board committed an error of law when it stated that “[t]he Board finds that IOC did not fulfill its burden to the Board‘s satisfaction of establishing by clear and convincing evidence that it had the best quality gaming facility in this competitive slot machine licensing environment.” Adjudication at 61 n. 8. IOC states that while the Board may consider the quality of the proposed facility, the Act does not require that the applicant establish via clear and convincing evidence that it had the
IOC is correct in stating that while the Board is certainly permitted to consider the quality of the proposed facility in making its licensure decision,
We do not believe, however, that this constituted reversible error. As noted supra, the Board did not find IOC unacceptable for licensure. In fact, the Board specifically stated that IOC and Station Square were both also suitable for licensure. Adjudication at 7. Yet, as there was only one Pittsburgh slot machine license to award, the Board was forced to deny two of the applications. Id. The Board selected PITG for licensure (and thus concomitantly denied IOC and Station Square a license) because PITG‘s application was, overall, the strongest one. Thus, the Board‘s denial of IOC‘s application was not a result of any inappropriate application of the clear and convincing evidence standard to IOC‘s application. Thus, a remand on this point would serve no purpose as the Board‘s improper recitation of the clear and convincing evidence standard in footnote 8 of its Adjudication did not drive the Board‘s denial of IOC‘s application.
Next, IOC and Station Square raise a series of arguments relating to the Board‘s calculations of anticipated revenue for each of the three proposed casinos. Station Square asserts that the Board blindly concluded that Station Square and PITG‘s proposed facilities would generate the same revenue. We disagree. The Board did not ham-fistedly and nonsensically assume that Station Square and PITG would
Furthermore, while the Board did conclude that the three different proposed casinos would generate “similar” amounts of revenue, Adjudication at 62, it carefully considered a variety of different factors in arriving at its calculations. See, e.g., Adjudication at 11-12 and 62-64. There was no thoughtless, one-size-fits-all calculation for projected revenue.
Next, Station Square and IOC assert that the Board erroneously determined that neither IOC nor Station Square had fully committed to operating 5,000 slot machines in their respective facilities. This argument fails. In testimony offered by Station Square‘s witnesses, Station Square firmly committed to operating only 4,000 slot machines. See Board Public Hearing, 11/20/2006, at 88, 91, and 138. Station Square was equivocal, at best, as to whether it would ever operate 5,000 slot machines. In a similar vein, the record also does not support IOC‘s contention that it was firmly committed to operating 5,000 slot machines. Instead, the record establishes that IOC would not commit to Phase II (i.e., the phase at which it would expand to 5,000 machines) prior to licensure. See Board Public Hearing, 11/20/2006, at 123-124. See also Adjudication at 35. Rather, IOC wanted to delay that determination until a future date dependent upon the market and economy. In contrast, PITG firmly committed to expanding to 5,000 machines. Thus, the Board did not capriciously disregard the evidence when it failed to find that IOC and Station Square would operate with 5,000 slot machines.
Finally, Station Square contends that the Board erred when it projected PITG‘s revenue based on PITG operating 5,000 slot machines. Station Square asserts that the Board
Station Square and IOC‘s final set of arguments address the discretionary factors that the Act states that the Board “may” consider in awarding a license.
IOC argues that with regard to traffic issues, PITG‘s facility was not advantageously located. IOC contends that the Board capriciously disregarded evidence establishing the IOC‘s facility would be able to address any traffic and transportation issues far better than the PITG facility.
This argument fails. While the Board found that “traffic is a concern at all three properties[,]” Adjudication at 56, the problems sparked by the Station Square and IOC sites were far more significant. With regard to the Station Square site, the Board noted that there is already “severe congestion” in that area and that Station Square had not provided adequate assurances that traffic problems could be mitigated. Adjudication at 56-57. With regard to the IOC site, the Board found it particularly significant that casino traffic would have to wend its way through residential neighborhoods. Adjudi-
Continuing with the
As to the aesthetic component of the
Station Square and IOC both challenge the Board‘s findings with regard to their potential to generate tourism in the area, see
IOC also argues that the Board placed too much weight on the fact that the largest negative public comment concerned IOC‘s proposal. This argument is without substance. The Board did not place undue emphasis on the fact that the largest negative public comment was with regard to IOC, but rather logically and properly weighed the negative comments from the public in rendering its decision.
Next, IOC asserts that the Board incorrectly credited PITG‘s commitments to donate money to Hill District revitalization projects. IOC stridently calls PITG‘s commitments nothing more than “empty promises“. IOC Brief at 54. This argument fails. Barden detailed under oath what his commitment would be in that regard. The Board did not act improperly in crediting this testimony.
IOC also objects to the Board‘s finding that PITG‘s pledge to fund the building of a new arena for the Pittsburgh Penguins “provided some degree of neutralization to IOC‘s arena building commitment.” Adjudication at 66. IOC rails against this conclusion and contends that its arena funding scheme was far superior to anything offered by PITG. In making this argument, IOC ignores the key component of the Board‘s discussion of this point. Namely, the Board cogently stated that “[w]hile the issue of the arena and the Penguins remaining in Pittsburgh reflect on economic development and tourism and are an issue considered by the Board, the Board is not swayed that the Penguins are or should be an overriding factor in the Board‘s decision.” Adjudication at 66; see also Adjudication at 61 n. 8 (the applicants’ primary focus before
Station Square and IOC challenge the Board‘s emphasis on Barden personal level of commitment to the project, a level of commitment that the Board found significant. Station Square and IOC are referencing the Board‘s comment that
the personal commitment of Mr. Barden to the PITG-Majestic Star project was evident at every step of the licensing proceedings. The Board notes Mr. Barden‘s personal presence at all proceedings and his unwavering commitment to PITG Gaming‘s project as his “flagship” property. The calm intensity which Mr. Barden brought to this project and his undeniable dedication to make this project a success for all of Pennsylvania speaks volumes of his character and suitability for this license.
Adjudication at 71-72. IOC and Station Square find the Board‘s appreciation of Barden‘s personal commitment to the PITG project to be distasteful and employ quite strident language in protesting it. IOC goes so far as to call the Board “silly” and accuse it of “engaging in a cult of personality” in its display of regard for Barden. IOC‘s brief at 38 and 62.
The Board‘s cognizance of Barden‘s personal commitment to the PITG project, and what that personal commitment revealed about Barden‘s “character and suitability for this license,” was in no fashion bizarre or peculiar. It was a sensible factor to consider when determining which entity should be awarded the license to build such a substantial gaming facility. Furthermore, the Board noted that it in part
At bottom, IOC and Station Square‘s argument regarding the
For the foregoing reasons, the order of the Board is affirmed.
Justice EAKIN and FITZGERALD join the opinion.
Justice SAYLOR files a concurring opinion.
Justice BAER files a concurring opinion.
Justice BALDWIN files a joining concurring opinion.
Justice CASTILLE files a dissenting opinion.
Petitioners’ arguments are, in my view, somewhat weightier than the majority portrays. For example, Petitioners contend that the Board‘s alleged failure to act as a “prudent man” in awarding the Pittsburgh license constituted an error of law. See, e.g., Brief for Petitioner (Station Square Gaming, LP) at 57 n. 33. The majority rejects this claim by stating that the Gaming Act‘s requirement that the Board use the prudent man standard has no effect upon the review that this Court must undertake in determining whether the Board erred in the award of a gaming license. See Majority Opinion, op. at 679, 927 A.2d at 242 (asserting that the Gaming Act‘s directive to apply the prudent man rule “do[es] not channel this Court‘s appellate review“). It would appear, however, that if it were evident that the Board failed to apply such a standard as required by statute, this would constitute an error of law, thus providing possible grounds for reversal. See
Station Square also contends that the Board should have used a baseline of 3,000 slot machines for its revenue-generation comparison of all applicants. The majority dismisses this argument by pointing out that, after six months, “the licensee may request to be permitted to operate up to 5,000 slot machines. Considering that the Board was calculating future revenues beyond the first six months of the casino‘s operation,
While I ultimately do not agree with Station Square for reasons discussed below, I find its argument more plausible than the majority. In particular, Station Square points out that the Board has taken the position that market conditions favorable to slots expansion are always a necessary precondition to expanding beyond 3,000 machines, and hence, there is no assurance that the Board will approve such a request. In its decision regarding slot licenses for Philadelphia, the Board stated:
At first glance ... it appears that Riverwalk will be more profitable than the other casinos. Based upon an examination of evidentiary records, the Board finds there is no significant difference in the revenue estimates. Riverwalk‘s revenue generation estimates were based upon an assumption that 5,000 machines would be operational by the stabilized year. The number of machines is based upon that number for which financing was in place at the time of the hearing. The other casino applicants’ projections were based upon 3,000 machines because that is the number of machines in the committed-to phases of the building projects. Each of those applicants provided credible testimony that they would proceed to their subsequent expansion phase and increase up to 5,000 machines with Board approval if the market supports that expansion. Even Riverwalk could not unilaterally expand from 3,000 to 5,000 machines without Board approval. The Board must approve that expansion.... Although they have the financing in place, if Riverwalk did not show usage and economic activity sufficient to support 2,000 additional machines, the Board would not be obligated to permit the expansion. Likewise, if another casino demonstrated that 3,000 machines were utilized to such an extent that expansion was warranted,
then market conditions would warrant an expansion for their facility as well. In sum, market conditions will dictate the number of machines over the 3,000 threshold number at any of the properties. This was illustrated by testimony that more machines do not necessarily translate into more revenues if the market demand is not present for the additional machines.
Adjudication of the Pennsylvania Gaming Control Board in the Matters of the Applications for Category 2 Slot Machine Licenses in the City of the First Class, Philadelphia, at 94-95 (emphasis added), quoted in Brief for Petitioner (Station Square Gaming, LP) at 63.
While it may be difficult to reconcile the above reasoning with the Board‘s comparative approach in the present case, it does not follow that the Board may not make comparisons based upon later stages of the submitted proposals which subsume more than 3,000 slot machines. The applicants each included phased augmentations moving beyond the 3,000 number, with the general expectation that the Board would take into account the circumstances of all phases of the proposals when making its decision as to which proposed casino would best serve the Commonwealth‘s interests. Thus, regardless of the Board‘s disposition in the Philadelphia matter, Station Square has little firm ground to maintain that, here, the Board was legally required to make its revenue comparisons using only a 3,000 slot machine basis for each applicant. Moreover, I do not read the adjudication as placing sufficient weight upon the revenue generation factor to support a conclusion that the Board might have reached a different result if it had assumed only 3,000 slot machines relative to all of the proposals.
For these reasons, I am able to join the majority‘s decision to affirm the Board‘s order.
Justice BAER, concurring.
I agree with Mr. Justice Saylor‘s thoughtful observations regarding the effect that the applicable “prudent man” stan-
Justice BALDWIN, concurring.
I join the majority opinion. I write separately to address the prudent man standard of care. Having given careful consideration to Petitioner‘s arguments, I read the majority opinion to confirm that the “prudent man” standard of care, imposed upon the Board, is subsumed within the standard of review for this Court articulated in
Justice CASTILLE, dissenting.
I join the concerns articulated by Mr. Justice Saylor in his Concurring Opinion, and particularly his concern regarding the “prudent man standard” and economic issues affecting Majestic Star. However, unlike Justice Saylor, I believe those concerns warrant a remand to the Board for reconsideration. For the reasons I have set forth in my Dissenting Opinion in Riverwalk Casino, LP v. Pennsylvania Gaming Control Board, J-42-2007, 592 Pa. 505, 926 A.2d 926 (2007), the failure of the Board to conduct any of its deliberations in public, or to allow for the equivalent of a post-verdict procedure once the Board finally articulated the grounds for its decision, necessitates a fuller consideration and explanation. Hence, I respectfully dissent.
Notes
In addition to the eligibility requirements otherwise provided in this part, the board may also take into account the following factors when considering an application for a slot machine license:
(1) The location and quality of the proposed facility, including, but not limited to, road and transit access, parking and centrality to market service area.
(c) Additional requirements.—In addition to the eligibility requirements otherwise provided in this part, the board may also take into account the following factors when considering an application for a slot machine license:
(1) The location and quality of the proposed facility, including, but not limited to, road and transit access, parking and centrality to market service area.
(2) The potential for new job creation and economic development which will result from granting a license to an applicant.
(3) The applicant‘s good faith plan to recruit, train and upgrade diversity in all employment classifications in the facility.
(4) The applicant‘s good faith plan for enhancing the representation of diverse groups in the operation of its facility through the ownership and operation of business enterprises associated with or utilized by its facility or through the provision of goods or services utilized by its facility and through the participation in the ownership of the applicant.
(5) The applicant‘s good faith effort to assure that all persons are accorded equality of opportunity in employment and contracting by it and any contractors, subcontractors, assignees, lessees, agents, vendors and suppliers it may employ directly or indirectly.
(6) The history and success of the applicant in developing tourism facilities ancillary to gaming development if applicable to the applicant.
(7) The degree to which the applicant presents a plan for the project which will likely lead to the creation of quality, living-wage jobs and full-time permanent jobs for residents of this Commonwealth generally and for residents of the host political subdivision in particular.
(8) The record of the applicant and its developer in meeting commitments to local agencies, community-based organizations and employees in other locations.
(9) The degree to which potential adverse effects which might result from the project, including costs of meeting the increased demand for public health care, child care, public transportation, affordable housing and social services, will be mitigated.
(10) The record of the applicant and its developer regarding compliance with:
(i) Federal, State and local discrimination, wage and hour, disability and occupational and environmental health and safety laws; and
(ii) State and local labor relations and employment laws.
(11) The applicant‘s record in dealing with its employees and their representatives at other locations.