Foxwoods partners file complaint for refund of $50M licensing fee

Posted: May 31, 2014

Three years after the Foxwoods Casino group lost its license to open a Philadelphia gaming hall, the former partners in the project are trying to retrieve their $50 million licensing fee in federal bankruptcy court.

The Foxwoods group - also known as Philadelphia Entertainment & Development Partners (PEDP) - filed a complaint Thursday against the commonwealth and the Pennsylvania Department of Revenue.

The investor group alleges that Pennsylvania's refusal to refund its money was "an unconstitutional taking" and "unjust enrichment."

The complaint says the action was "exacerbating the harm suffered" by the group, which filed for bankruptcy relief April 1.

PEDP, which included 13 local investors and the Mashantucket Pequot tribe of Connecticut, said in its bankruptcy proceeding that it has claims of $23.6 million from creditors.

The $50 million tied to the license was the partnership's only asset, PEDP has said.

Elizabeth Brassell, a spokeswoman for the Pennsylvania Department of Revenue, said the department would not comment on ongoing litigation.

However, she added that the revenue office "has no role in the collection or deposit of the gaming-license fee. That's a function of the Gaming Control Board, which is an independent agency."

Doug Harbach, a spokesman for the Pennsylvania Gaming Control Board, said he could not comment. "The complaint was just received late this afternoon and is being reviewed," he said.

The action in bankruptcy court rekindles a dispute that dates to the winter of 2010.

At the time, the Foxwoods group was trying to salvage its project by partnering with Harrah's Entertainment. That followed a failed deal with Wynn Resorts to take over.

Instead of granting the group more time to work out its problems, the gaming board revoked its license Dec. 16, 2010 - and kept the $50 million that PEDP paid for the gaming license.

The board's decision was based primarily on its view that the project was not financially viable and that the group was unable to comply with previous orders.

In 2011, PEDP unsuccessfully appealed the board's order through Commonwealth Court, but did not specifically ask for a refund of the fee.

The partnership is taking up that specific matter by filing a complaint as part of its federal bankruptcy proceeding.

When the state's gaming law was amended in 2010, it established language requiring a licensee to waive any claim for a refund.

PEDP said in its complaint that it never agreed to such a waiver and "therefore expressly preserved its right to a refund of its license fee."

After revoking the license, the gaming board announced that it would reissue it. Currently, five groups are waiting for the gaming board to award that license.

The Foxwoods group won one of two gaming licenses reserved for Philadelphia in 2006. But the financial downturn and stiff political opposition to the South Philadelphia waterfront project resulted in repeated setbacks.

The main local investors in the Foxwoods deal included Comcast-Spectacor chairman Ed Snider, and family charitable trusts for developer Ron Rubin and the daughter of Lewis Katz. Katz is one of the owners of Interstate General Media, which publishes The Inquirer.


jlin@phillynews.com

215-854-5659 @j_linq

www.inquirer.com/

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