Osceola casino agrees to $3.1 million lawsuit settlement with community group
A community non-profit group that jointly holds Osceola’s gambling license said Friday it has reached a $3.1 million settlement to drop state and federal lawsuits against the owners of Lakeside Casino.
Clarke County Development Corp. of Osceola, had claimed in litigation that local residents were being shortchanged millions of dollars of their share of gambling profits.
The litigation was filed against HGI-Lakeside LLC, the operator of Lakeside Casino, and its parent company, Affinity Gaming LLC of Las Vegas. The Iowa Racing and Gaming Commission, which regulates the state’s casino industry, was also a defendant.
“We are pleased to have this settlement in place, and it is a major step forward for the citizens of Clarke County, our communities and our continued economic development and community-betterment initiatives,” said Bill Trickey, the non-profit group’s executive director.
The suits have been pending in U.S. District Court in Des Moines and Clarke County District Court in Osceola.
Under the settlement, the Lakeside Casino will pay the non-profit organization $600,000 which can be used for community betterment projects at the group’s discretion. In addition, the casino will pay $2.5 million to Clarke County Development Corp., which will distribute the money to the Clarke County Reservoir Commission to be used exclusively for water purposes. These payments must be made on or before July 1.
Nick Mauro of Des Moines, a lawyer for HGI-Lakeside and Affinity Gaming, said in a statement Friday that all parties involved in the lawsuit are in the process of finalizing details of the settlement for consideration by the Iowa Racing and Gaming Commission.
“Affinity Gaming and HGI-Lakeside have worked hard over the past several years to develop a positive and mutually beneficial relationship with our local partners in Clarke County. This agreement, when finalized, represents a product of those efforts,” Mauro said.
Brian Ohorilko, administrator of the Iowa Racing and Gaming Commission, said the settlement will not cost Iowa taxpayers any money. The agreement is expected to be approved by state regulators next month.
Clarke County Development Corp. had said in court documents it had been receiving 1.5 percent of the casino’s adjusted gross receipts under a management agreement negotiated in 1997. But the non-profit group contended it should be receiving at least a 3 percent payment from Lakeside Casino, citing a state law requiring a 3 percent minimum for casino operating agreements entered into since May 6, 2004.
Clarke County Development claimed the ownership of the Osceola casino changed hands when Affinity Gaming took over from the previous operator, Herbst Gaming, which filed for bankruptcy in 2009.
Under extraordinary rights given to debtors in federal bankruptcy court, Herbst was allowed to transfer its management agreement to Affinity Gaming without Clarke County Development’s consent, but the development corporation contends the transfer was subject to approval by state regulators.
The casino’s payments to the non-profit group, which totaled $746,000 in 2011, are distributed for community projects, such as buying computers for schools and acquiring gear for volunteer fire departments.
Under the settlement terms, if Lakeside Casino is sold over the next five years the casino’s payment to Clarke County Development Corp. will increase to at least 3 percent, or whatever is the state’s minimum payment, Trickey said.
http://blogs.desmoinesregister.com/dmr/index.php/2013/06/07/osceola-casino-agrees-to-3-1-million-lawsuit-settlement-with-community-group/article
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