The legal fight
Coakley sides with pro- and anti-casino forces on petition
May 01, 2014
Links to all the briefs filed with the SJC can be found here.
As the Supreme Judicial Court prepares to hear arguments on whether a question repealing the state’s casino gambling law should appear on the November ballot, Attorney General Martha Coakley finds herself in an odd position, putting forward legal arguments in the case that side with casino companies trying to block the question and with casino opponents working to repeal the law.
Coakley, a Democratic candidate for governor, ruled in September that the question did not belong on the ballot because it represented an illegal taking of property belonging to casino applicants. But with state regulators starting to issue slots and casino licenses, her position, focused solely on the application process, is being overtaken by events. She isn’t backing away from her legal stance, but she’s opposing other arguments by casino proponents to keep the question off the ballot. By implication, Coakley seems to be saying that if the court doesn’t accept her original argument, voters should be given the chance to vote to repeal the casino gaming law.
The central issue before the SJC is whether the ballot question would effectively take private property rights of casino and slots parlor applicants without properly compensating them for the money they’ve already spent pursuing licenses. (Ballot questions by law cannot include appropriations.)
In her briefs, Coakley focuses on what she calls the “implied contracts” that arise between the Massachusetts Gaming Commission and casino and slots parlor applicants during the application process. She basically argues that the state can’t invite companies to participate in what amounts to a bidding process for casino licenses and then cancel the process before it is completed without compensating the bidders.
“Basic fairness to those who accepted the commission’s invitation to apply for licenses, and who invested millions of dollars in the process, requires recognition of such an implied contract to complete that process,” her brief says.
But Tom Bean, the attorney representing anti-casino groups, says no implied contract exists simply because an application process is going on. Even if an implied contract does exist, Bean says, it’s a moot point because most, if not all, of the slots and casino licenses are expected to be awarded before the ballot question, if approved, becomes law.
Coakley herself acknowledged in her original rejection of the ballot question that “applicants for gaming licenses will have no property rights in any licenses they may receive at the end of the application process.” In other words, she believes a license can always be revoked by lawmakers or voters who approve a law taking away the license. But she believes the licensing process itself creates an implied contract that cannot be taken away without compensation.
In a phone interview, Bean said it was hard for him to understand Coakley’s argument that applicants for licenses had stronger property rights than actual license recipients. “From the very beginning, I didn’t think the AG’s position made any sense,” he said.
Carl Valvo, the lawyer for the casinos, goes further than Coakley on the property rights issue in his brief. While he supports her contention that license applicants acquire property rights that cannot be taken without compensation, he also says a company winning a casino or slots parlor license also acquires property rights. His claim raises a question often raised by casino opponents: How did voters shut down the state’s existing dog tracks using a 2008 ballot question without paying compensation to their owners?
Valvo points out that a dog racing license and a casino license are very different. A dog racing license was renewed annually, available to anyone, and not transferable. By contrast, a casino license lasts 15 years, requires an $85 million upfront licensing fee, grants the winner an exclusive franchise in an area of the state, and is transferable. “Based on these factors, a gaming licensee’s property interest in a duly awarded license is clear,” Valvo said in his brief.
Bean responds in his brief that the Legislature never authorized the gaming commission to enter into a binding or implied contract with casino applicants or licensees because to do so would prevent the state from exercising its “core police and regulatory powers” in overseeing gambling. He says strong legal precedents buttress his position and adds that casino applicants knew what they were getting into when they became engaged in the licensing process.
“Having voluntarily entered into a heavily regulated industry subject to pervasive government control, applicants lack a private property interest that requires compensation when the government chooses to modify the program that created the benefit in the first place,” Bean’s brief states.
Valvo layers another argument, one that hasn’t received attention to date, on top of the property rights claim. He argues that the proposed ballot question should be invalidated because it asks voters to not only ban casinos and slots but also simulcast betting on dog races held in other states around the country. He notes that a 2006 decision by the SJC held that ballot questions must be crafted so that they offer a “unified statement of public policy.” He argues dog racing and casino/slots gaming are two distinct issues that can’t legally be addressed in the same ballot question.
“Although these two policy questions may be said to be related at some high level of generality, the activities they address are quite different – each has its own regulatory history, each raises significant different issues relating to local effects (both positive and negative), and each offers economic development and revenue opportunities of markedly different kinds and magnitude,” his brief says.
In gathering signatures for the ballot petition, Valvo says, the sponsors themselves acted as if the dog-betting and casino issues were separate. Grey2K USA, which led efforts to ban dog racing in Massachusetts, asked people to sign the petition to help fight greyhound cruelty. He said the group’s pitch to would-be signatories ignored the casino issue, on which its leader said the organization had no official position. By contrast, anti-casino groups appealed for signatures without even mentioning the proposed ban on simulcasting of dog races.
Attorney General Coakley’s brief, written by her aide Peter Sacks, says the question should not be disqualified because it includes a ban on simulcast dog wagering. She argues that casinos, slot machines, and simulcast wagering on out-of-state dog races are all closely related. She notes all three forms of gambling were authorized by the 2011 gaming law, are regulated by the state gaming commission, and likely will be made available at the state’s casinos and slots parlor. The proposed slots parlor in Plainville, for example, has already been given the simulcast rights of the harness track at which it will be located.
Coakley said the fact that backers of the ballot question have different motives for advancing it doesn’t mean the issues are unrelated. She said the question offers a “unified statement of policy” by giving voters the chance to repeal key elements of the 2011 gaming law in one fell swoop. Bean, the attorney representing casino opponents before the court, sides with Coakley on this issue.
The last point of contention before the SJC is whether Coakley’s summary of the petition is accurately written. Valvo asserts the summary contains several inaccuracies that invalidate the question; Coakley disagrees.
The SJC hears oral arguments on the question Monday and then has until July to render its decision.
As the Supreme Judicial Court prepares to hear arguments on whether a question repealing the state’s casino gambling law should appear on the November ballot, Attorney General Martha Coakley finds herself in an odd position, putting forward legal arguments in the case that side with casino companies trying to block the question and with casino opponents working to repeal the law.
Coakley, a Democratic candidate for governor, ruled in September that the question did not belong on the ballot because it represented an illegal taking of property belonging to casino applicants. But with state regulators starting to issue slots and casino licenses, her position, focused solely on the application process, is being overtaken by events. She isn’t backing away from her legal stance, but she’s opposing other arguments by casino proponents to keep the question off the ballot. By implication, Coakley seems to be saying that if the court doesn’t accept her original argument, voters should be given the chance to vote to repeal the casino gaming law.
The central issue before the SJC is whether the ballot question would effectively take private property rights of casino and slots parlor applicants without properly compensating them for the money they’ve already spent pursuing licenses. (Ballot questions by law cannot include appropriations.)
In her briefs, Coakley focuses on what she calls the “implied contracts” that arise between the Massachusetts Gaming Commission and casino and slots parlor applicants during the application process. She basically argues that the state can’t invite companies to participate in what amounts to a bidding process for casino licenses and then cancel the process before it is completed without compensating the bidders.
“Basic fairness to those who accepted the commission’s invitation to apply for licenses, and who invested millions of dollars in the process, requires recognition of such an implied contract to complete that process,” her brief says.
But Tom Bean, the attorney representing anti-casino groups, says no implied contract exists simply because an application process is going on. Even if an implied contract does exist, Bean says, it’s a moot point because most, if not all, of the slots and casino licenses are expected to be awarded before the ballot question, if approved, becomes law.
Coakley herself acknowledged in her original rejection of the ballot question that “applicants for gaming licenses will have no property rights in any licenses they may receive at the end of the application process.” In other words, she believes a license can always be revoked by lawmakers or voters who approve a law taking away the license. But she believes the licensing process itself creates an implied contract that cannot be taken away without compensation.
In a phone interview, Bean said it was hard for him to understand Coakley’s argument that applicants for licenses had stronger property rights than actual license recipients. “From the very beginning, I didn’t think the AG’s position made any sense,” he said.
Carl Valvo, the lawyer for the casinos, goes further than Coakley on the property rights issue in his brief. While he supports her contention that license applicants acquire property rights that cannot be taken without compensation, he also says a company winning a casino or slots parlor license also acquires property rights. His claim raises a question often raised by casino opponents: How did voters shut down the state’s existing dog tracks using a 2008 ballot question without paying compensation to their owners?
Valvo points out that a dog racing license and a casino license are very different. A dog racing license was renewed annually, available to anyone, and not transferable. By contrast, a casino license lasts 15 years, requires an $85 million upfront licensing fee, grants the winner an exclusive franchise in an area of the state, and is transferable. “Based on these factors, a gaming licensee’s property interest in a duly awarded license is clear,” Valvo said in his brief.
Bean responds in his brief that the Legislature never authorized the gaming commission to enter into a binding or implied contract with casino applicants or licensees because to do so would prevent the state from exercising its “core police and regulatory powers” in overseeing gambling. He says strong legal precedents buttress his position and adds that casino applicants knew what they were getting into when they became engaged in the licensing process.
“Having voluntarily entered into a heavily regulated industry subject to pervasive government control, applicants lack a private property interest that requires compensation when the government chooses to modify the program that created the benefit in the first place,” Bean’s brief states.
Valvo layers another argument, one that hasn’t received attention to date, on top of the property rights claim. He argues that the proposed ballot question should be invalidated because it asks voters to not only ban casinos and slots but also simulcast betting on dog races held in other states around the country. He notes that a 2006 decision by the SJC held that ballot questions must be crafted so that they offer a “unified statement of public policy.” He argues dog racing and casino/slots gaming are two distinct issues that can’t legally be addressed in the same ballot question.
“Although these two policy questions may be said to be related at some high level of generality, the activities they address are quite different – each has its own regulatory history, each raises significant different issues relating to local effects (both positive and negative), and each offers economic development and revenue opportunities of markedly different kinds and magnitude,” his brief says.
In gathering signatures for the ballot petition, Valvo says, the sponsors themselves acted as if the dog-betting and casino issues were separate. Grey2K USA, which led efforts to ban dog racing in Massachusetts, asked people to sign the petition to help fight greyhound cruelty. He said the group’s pitch to would-be signatories ignored the casino issue, on which its leader said the organization had no official position. By contrast, anti-casino groups appealed for signatures without even mentioning the proposed ban on simulcasting of dog races.
Attorney General Coakley’s brief, written by her aide Peter Sacks, says the question should not be disqualified because it includes a ban on simulcast dog wagering. She argues that casinos, slot machines, and simulcast wagering on out-of-state dog races are all closely related. She notes all three forms of gambling were authorized by the 2011 gaming law, are regulated by the state gaming commission, and likely will be made available at the state’s casinos and slots parlor. The proposed slots parlor in Plainville, for example, has already been given the simulcast rights of the harness track at which it will be located.
Coakley said the fact that backers of the ballot question have different motives for advancing it doesn’t mean the issues are unrelated. She said the question offers a “unified statement of policy” by giving voters the chance to repeal key elements of the 2011 gaming law in one fell swoop. Bean, the attorney representing casino opponents before the court, sides with Coakley on this issue.
The last point of contention before the SJC is whether Coakley’s summary of the petition is accurately written. Valvo asserts the summary contains several inaccuracies that invalidate the question; Coakley disagrees.
The SJC hears oral arguments on the question Monday and then has until July to render its decision.
If the question makes it on to the ballot, it could become one of the dominant political issues in the fall. Groups supporting casinos are expected to spend heavily to defeat the question, while opponents will probably rely on a more grassroots campaign funded by wealthy donors who personally oppose gambling.
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