A group of plaintiffs including the Oneida Nation and individual residents of Tyre in New York have filed litigation assailing the integrity of the decision by New York’s Gaming Commission to award a casino license to Lago Resort and Casino. The Oneidas operate a near-by casino, and the individual plaintiffs are long-time residents of the primarily rural community with a permanent population of 950. Lago estimates that its casino will attract 9,000 vehicles per day.
The essence of the litigation is that the Facility Location Board appointed by the Gaming Commission violated the law authorizing casinos in multiple respects, and the Commission simply rubber-stamped the Board’s recommendations without discussion or explanations. The 66-page complaint presents a compelling case that the decision to award a license was arbitrary and capricious, and reeks of incompetence or worse.
The Oneida Nation claims that locating a casino only 75 miles from their existing casino will “cannibalize” their business, contrary to the purpose of the legislation and the standard the Board used in disqualifying other bidders. Finger Lakes Racetrack is only 35 miles away and, while not a plaintiff, is seriously concerned that the competition will put them out of business. That would be a devastating development for the New York breeding industry that has been on the rise in recent years.
Indeed, the Board declined to award a second casino in any of the three regions because a “second competing new gaming facility in any of the regions would make it significantly more difficult for any gaming facility to succeed in that region.”
From my perspective, one of the most troubling aspects of this shoddy and sloppy decision is the refusal of the Gaming Commission to accept any responsibility for the recommendations of its own appointees. In the transcript of its December 21, 2015 meeting awarding three casino licenses, the Commission’s General Counsel advised the commissioners of their responsibilities:
“It is important to note that your role is not to reevaluate all of the applications, compare applicants, or to consider or reconsider the selection criteria the Gaming Facility Location Board considered and applied. Your role is no [sic] to substitute your judgment for that of the Gaming Facility Licensing Board….
You are not appellate body exercising review of the Gaming Facility Location Board’s processes or decision-making.”
There are several curious aspects of this reticence to exercise authority. First, it runs counter to the traditional bureaucratic tendency to absorb as much power and authority as possible. Second, the purpose of establishing the Gaming Commission four years ago was to consolidate all oversight for gambling activities in a single agency with authority to regulate. Third, it is contrary to elemental common sense. One does not set up a permanent agency with the power to appoint temporary bodies, and then deprive the permanent agency of the ability to review the decisions of a temporary one.
Then there is the matter of the language of the law. The statute creating the casino selection process specifically states the Commission has the “power … to deny an application … for any cause that the commission deems reasonable.”
The Commission began the bidding process in a pristine, if not antiseptic, manner. They did not even allow the Facility Location Board members to attend a Q&A with bidders. But subsequent events have tainted the integrity of the process:
- The Facility Location Board used a secret evaluation criterion with no notice to the bidders, let alone the public. This is in despite of detailed criteria required by the law.
- Although the law required a quantitative weighing of evaluation criteria, the Board decided to apply a qualitative analysis, giving primacy to its secret criterion.
- Even with these major defects, the Board still applied its standards differently to competing proposals.
- After deciding that the Southern Tier of the state could not support more than one casino, an unsuccessful bidder complained that he had donated $800,000 to the effort to pass the casino law – according to him, at Andrew Cuomo’s request. The Board – and then the Commission – promptly caved when the Governor said he thought there should be a second bidding process for a second casino in the region. To the surprise of no one, the Board last week decided to make that second award in a meeting lasting less than two minutes. The Board gave no explanation for its flip-flop.
At the risk of belaboring the obvious, New York’s state government has been under a cloud of rampant corruption. When the leaders of both the Senate and the Assembly are convicted of major corruption in just the past year, one would think those remaining might be a little more careful in the conduct of their business.
One of the more obvious sources of possible corruption is in the award of contracts. Indeed, the same United States Attorney who brought the corruption cases against Sheldon Silver and Dean Skelos is looking at contract awards in the Buffalo area that were made to implement a high-profile priority of the Governor.
Because of the possibility of corruption and undue influence, government contracting has developed widely-recognized standards to ensure that the awarding of contracts is beyond reproach:
- The process must be open, transparent and fair to all bidders;
- There is a documented record explaining why decisions were made, so that anyone can go back and determine the process was fair and free of improper influence;
- Those making decisions are publicly known and accountable;
- Applicable laws are followed.
The casino process met none of those standards. Not when a secret evaluation criterion is used, not when criteria are not applied uniformly, and certainly not when the law is being ignored. And we do not know who really made what decisions and why.
The Gaming Commission owes it to the citizens of New York to take a position on the casino decisions and not hide behind a ludicrous legal claim that they lack authority. The Commission, which also has oversight authority for New York’s horse racing, also owes it to that industry to explain why a decision that could devastate both a race track and the breeding industry is one that is justifiable. Anything short of that will further erode any remaining confidence in the ability of New York’s state government to act with integrity.