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06/16/94 ARCH-VIEW CASINO CRUISES v. ILLINOIS

June 16, 1994

ARCH-VIEW CASINO CRUISES, INC., AN ILLINOIS CORPORATION, PETITIONER,
v.
THE ILLINOIS GAMING BOARD, RESPONDENT.



Administrative Review of the Illinois Gaming Board. No. GL 002

As Corrected July 15, 1994. Released for Publication July 25, 1994.

Honorable Frederick S. Green, J., Honorable James A. Knecht, J., Honorable Robert W. Cook, J.

The opinion of the court was delivered by: Green

JUSTICE GREEN delivered the opinion of the court:

This case is before us for judicial review pursuant to section 17.1(a) of the Riverboat Gambling Act (Act) (230 ILCS 10/17.1(a) (West 1992)) and Supreme Court Rule 335 (134 Ill. 2d R. 335) from a final order of the Illinois Gaming Board (Board) (230 ILCS 10/5(a)(1) (West 1992)) denying petitioner Arch-View Casino Cruises, Inc. (Arch-View), an owner's license to conduct a riverboat gambling operation (230 ILCS 10/6, 7 (West 1992)). The order was entered orally by the Board on May 3, 1993, by adoption of a recommended decision of an administrative law Judge. Notice of that decision was mailed by the Board to Arch-View's counsel on May 5, 1993.

Arch-View contends that the Board's decision should be set aside because (1) the decision was contrary to the manifest weight of the evidence; (2) Arch-View was improperly denied its rights under the contested hearing provisions of the Illinois Administrative Procedure Act (Procedure Act) (5 ILCS 100/10-5 et seq. (West 1992)); and (3) Arch-View was denied due process rights. We disagree and affirm.

Section 7(e) of the Act (230 ILCS 10/7(e) (West 1992)) permitted the Board to issue up to five owner's licenses to become effective not earlier than January 1, 1991, and another five licenses to become effective not earlier than March 1, 1992, with one of that five to authorize gambling on the Des Plaines River in Will County. Arch-View sought one of the latter four licenses for a boat to be docked on a pier at the Village of Sauget, Illinois, a community of 197 people situated on the east bank of the Mississippi River in St. Clair County.

Section 7(b) of the Act (230 ILCS 10/7(b) (West 1992)) sets forththe factors for the Board to consider in passing upon an application for an owner's license. They are (1) the character, reputation, experience, and financial integrity of the applicant or persons having direct or indirect ability to control the applicant; (2) the facilities available for the gambling; (3) the revenue the State is likely to receive from the gambling; (4) the good faith of the applicant in providing an affirmative action plan to recruit, train, and upgrade minorities in all employment classifications; (5) the ability of the applicant to provide liability and casualty insurance; (6) the adequacy of the applicant's capitalization; and (7) the extent to which the applicant meets other requirements the Board may adopt by rule. The Board adopted rules which also require an applicant to have (1) a background, reputation, and associations which will not result in adverse publicity for the State and its gaming industry; (2) adequate business competence and experience; and (3) adequate funding for the entire operation from a suitable source. 86 Ill. Adm. Code § 3000.230(c)(2) (1992).

The recommended order adopted by the Board emphasized that section 2 of the Act described a legislative intent to benefit the people of the State by assisting economic development and promoting tourism, which can be done only if public confidence and trust in the credibility and integrity of the gambling operation and regulating process are maintained. (230 ILCS 10/2(a),(b) (West 1992).) The order then (1) found a lack of showing that the operation would be adequately financed; (2) deemed the existing type of entertainment at the establishments near the docks as being too low-grade to attract tourists; (3) noted the lack of hotels in the area; (4) questioned the accuracy of calculations of the number of likely customers for the gambling boat; (5) questioned the reputation of at least one of the prospective employees; (6) noted that a person who would profit greatly if the boat was a success was a relative of the mayor of Sauget and a local official; and (7) pointed out that two Super Fund hazardous waste sites were close to the dock area.

The evidence presented before the Board was that Arch-View had only a minimum of cash and substantial debts, but almost all of its shares were owned by George E. Middleton. He did not testify, and he had not signed a purported financial statement of his which had been furnished with the application. Middleton's chief financial advisor, Gary Gill, testified that Middleton had accumulated a fortune of approximately $44 million through his ownership of Pizza Hut restaurants and could put $21 million into the instant project. Gill described Middleton as a very able person who had worked on the "Gemini" project for the Federal government at one time. According to Gill, Middleton had put approximately $453,000 into the project toget the riverboat but had never been involved before in gaming operations. As Arch-View's financing was almost entirely dependent upon Middleton, and he had neither testified nor signed the financial statement which accompanied the application, the Board was justified in finding that Arch-View's ability to finance the project was not proved.

The evidence was undisputed that several of the few places of entertainment in Sauget were places where women entertainers remove their clothes. Reasonable minds may differ as to whether that atmosphere is likely to attract or turn away prospective gamblers. Some evidence was presented of plans to erect hotels in the area but no assurance existed that this would take place. The Board's decision that this environment would deter gamblers from coming to Sauget was not contrary to the manifest weight of the evidence.

Evidence was presented that originally, a well-established gaming company had been sought to manage the boat's gaming operation, but that plan had been abandoned because that company's fee request was too high. Instead, Jack Speelman was hired as gaming manager. He had been involved in the gambling industry since 1954 mostly in Las Vegas, Nevada, but he had never operated a gaming boat or an operation under Illinois law. He had been fired by the Tropicana Casino in that city. There, a dispute had arisen concerning an "irregularity" affecting a game that Speelman's daughter was supervising. He had hired her but did not fire her or other employees involved in that situation. Speelman testified that his firing was for other reasons. Speelman testified he had hired his daughter to be an assistant pit boss supervising certain game tables on the proposed boat.

Originally Middleton had a 60% interest in Arch-View and Vincent and Richard Sauget had most of the rest of the interest in equal shares. Vincent died and Richard succeeded to his interest. Others dropped out. Richard then entered into an agreement with Arch-View whereby Arch-View purchased and redeemed Richard's shares for a purchase price which was dependent upon the issuance of an owner's license and the successful operation of the gaming boat but which could result in a payment to Richard of between $600,000 and $1 million. Richard is a trustee of the Village of Sauget and a member of the St. Clair County Building Commission. His uncle is mayor of Sauget, and his cousin is on the township board. Richard is also the owner of or a substantial creditor of many of the businesses in the area. Richard clearly had an interest in the success of Arch-View and also obligations to the governmental units with which Arch-Viewwould be dealing. While all concerned would benefit by the success of Arch-View, the interrelationships involved were matters of concern for the Board as they could affect the reputation of the operation or its integrity.

The proposed dock site was approximately 1,000 feet north of a proposed Super Fund hazardous waste site and approximately 12,000 feet west of another such site. Testimony of an Illinois Environmental Protection Agency (Agency) project manager indicated that the sites "released or threatened releases of contamination * * * impacting human health or the environment" with high levels of hazardous chemicals, including a carcinogen. He described the north site as one of the worst in the State. He noted that the Village had placed a playground near it despite his warning. While the existence of these nearby sites is not directly listed as ...


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