"...the gaming commission is under fierce scrutiny, and the entire process of licensing casinos appears to be unraveling."
Opinion | JOAN VENNOCHI
The case against Stephen Crosby
By Joan Vennochi / Globe Columnist / December 14, 2013
Caesars Entertainment has taken its measure of Stephen Crosby and found him unsuitable to be chairman of the Massachusetts Gaming Commission.
The Las Vegas gambling giant has a point.
Last week, Caesars filed suit in federal court in Boston, charging that Crosby’s link to a landowner who stands to benefit from an Everett casino project represents a conflict of interest that harms Caesars.
The harm is easy to assess. For two years, Caesars partnered with Suffolk Downs to develop a $1 billion casino proposal in East Boston and Revere; it invested at least $100 million in the venture.
Then, state investigators concluded that a licensing arrangement with a New York hotel chain that had, through an investor, an alleged link to the Russian mob, made Caesars “unsuitable.” The full commission never voted on the investigators’ recommendation, because Suffolk Downs asked Caesars to drop out as its partner.
After Caesars dropped out, investigators gave green lights to other gambling enterprises, such as Foxwoods and MGM Resorts, despite business connections that could be viewed as sketchy as Caesars’ — if not sketchier.
The conflict of interest plot thickened after the Globe reported that Crosby had a longstanding, if long ago, relationship with Paul Lohnes, the co-owner of a potential casino site in Everett. Crosby waited 10 months to disclose an eight-year business association with Lohnes, which occurred two decades ago. Meanwhile, over the past year, Steve Wynn was negotiating a deal to purchase the Everett land for a proposed casino development.
The legal issues are up to the court. But the optics are bad for Crosby. He has a reputation for honesty, but he should have thought more about appearances.
He has long experience in state government and a resume that includes stints working for Democratic and Republican governors. Those were cited as strong points when he took on the job of overseeing the expansion of casino gambling into Massachusetts. But all that history also creates a network of relationships that represent potential entanglements.
And in Everett, he’s entangled.
He recused himself from a gaming commission meeting on the matter of the land transaction between Lohnes and Wynn. But he should have taken himself out of all deliberations having to do with awarding a casino license for the Eastern Massachusetts district.
Instead, he voted to give Suffolk Downs a chance to move forward with a Revere-only casino plan.
The commission is allowing a Revere-only referendum, after East Boston voted against the initial proposal that applied to both communities. A second, Revere-only vote amounts to a lifeline for Suffolk Downs.
Here’s the problem for Crosby. If he voted against a Revere-only referendum, it would be seen as a boost for Everett. But a “yes” vote can also be viewed through the Everett prism: Once his Everett connection made headlines, he wouldn’t want to look like he favored Everett, so he had to find a way to keep the Suffolk Downs proposal alive.
The disclosures about Crosby’s ties to Lohnes weakened him. In the aftermath, he looked compromised, no matter how he voted. That’s the definition of a conflict. And given the gaming commission’s self-proclaimed commitment to the highest standards for all casino license applicants, holding its chairman to a lower standard is awkward.
When Caesars dropped out of the Suffolk Downs deal, CEO Gary Loveman lashed out bitterly at Crosby and the gaming commission. They were naive amateurs, he complained, using “a very distant relationship” to call Caesars’ suitability into question.
It can be argued that Caesars is now using “a very distant relationship” to launch a suit against Crosby. Revenge is clearly on Loveman’s mind, and he isn’t waiting to serve it up cold; he’s hitting Crosby in the heat of the moment, when the gaming commission is under fierce scrutiny, and the entire process of licensing casinos appears to be unraveling.
After voting against a Suffolk Downs proposal, East Boston is looking for ways to stop a Revere-only casino. Mayor-elect Martin J. Walsh has already indicated a willingness to file a lawsuit to stop that from happening.
Caesars is the first to act on the weapon Crosby handed them. There’s no other way to put it. He was not above reproach.