Massachusetts Taxpayers Fund Palmer Casino Food Fight

Mohegan Sun sues landowner in Palmer

Seeks recovery of $22m investment

By Mark Arsenault

| Globe staff April 29, 2014
Connecticut gambling giant Mohegan Sun is suing a Palmer landowner to recover at least $22 million the company says it spent on its failed, five-year pursuit of a casino in the Western Massachusetts town, according to documents filed Monday in Hampden Superior Court.

The gambling company accuses Northeast Realty Associates, which controls the land where Mohegan had proposed a gambling resort, and Northeast’s manager, Leon Dragone, of breaking exclusivity deals with the casino developer, and also of undermining Mohegan’s casino referendum campaign, leading to its narrow defeat last November.

“More than just working separately from the Mohegan campaign, Dragone was a hindrance,” the company alleged.

The assertions are strikingly similar to accusations the landowner has levied against Mohegan Sun, in a lawsuit filed in February. Northeast Realty has accused Mohegan Sun of investigating a possible Boston-area casino while contractually committed to Palmer and then failing to try its best to win the Palmer referendum. The 94-vote failure of Mohegan Sun’s Palmer proposal was one of the bigger surprises in the state’s more than two-year effort to bring casinos to Massachusetts.

Shortly after the Palmer referendum failed, Mohegan Sun announced it had struck a deal with the Suffolk Downs racetrack to lease about 40 acres of racetrack land in Revere for a casino resort. The Revere casino proposal is now one of two finalists, along with a Wynn Resorts casino plan in Everett, for the sole Greater Boston resort casino license. The state gambling commission expects to choose a winner later this year.

Northeast, in February, asked the court for a judgment to forbid Mohegan Sun from pursuing a casino license for any property other than the Northeast site in Palmer.

In a counterclaim filed Monday, Mohegan Sun alleged “it is Northeast Realty and its affiliates, particularly Dragone,” who breached the agreements between the parties and caused the referendum to fail.

 

The agreements date back to 2008, three years before Massachusetts legalized Las Vegas-style casino gambling, according to the lawsuit. Mohegan Sun and Northeast signed several agreements, including an exclusivity deal that prohibited either side from “engaging in discussions or negotiations concerning the opening of any gaming facility in Massachusetts” other than on the Palmer site, according to court documents. Another agreement committed the parties to work together to get a law passed to legalize casino gambling and to develop a casino in Palmer.

Mohegan Sun alleges in its counterclaim that Northeast violated the exclusivity agreement by holding options to buy land in New Bedford that had been marketed for a casino and that Dragone or his representatives promoted the New Bedford site in discussions with casino companies other than Mohegan Sun.

The counterclaim also defends Mohegan Sun’s referendum campaign in Palmer and asserts Dragone undercut the campaign by running his own effort, in violation of the agreement to work together.

“Dragone and his supporters refused to act in coordination with the Mohegan-led campaign,” the company alleged. Dragone, the company said, “ignored the advice of the professionals hired by
Mohegan and expected the campaign to conform to his expectations of proper timing, believing, as he did throughout the campaign, that he knew best.”

The company said it is entitled to recover $22 million it invested in the Palmer venture.

Northeast Realty fired back at the company Monday: “Blaming others for their failures is a typical Mohegan Sun . . . response.” Mohegan Sun, through a spokesman, declined to comment beyond its legal filing.


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