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Baltimore judge upholds state’s decision on city casino site bid

A would-be casino developer spurned by the state said he is planning to file an appeal of a Baltimore judge’s ruling upholding the state’s rejection of his proposal to build a slots parlor in the city.

Donald C. Fry, chairman of the Video Lottery Facility Location Commission, which awards gaming licenses, hailed the ruling Friday as “great news” for Maryland’s much-maligned casino program.

Baltimore City Entertainment Group was the only bidder for the Baltimore license in the first go-round, but Fry’s commission tossed out the bid late in 2009, sparking what has stretched into 19 months of sparring over legal and administrative appeals.

BCEG contended the commission made its decision behind closed doors, without demanding a best and final offer from the group. The state yearned to move on, and reap the tax revenues expected from the city casino, which will be the state’s second-largest.

State fiscal analysts estimated in 2007 that Baltimore’s casino would generate $265 million in its first year of operation and $426.7 million the year after.

“We always felt we were fair and reasonable in our decision with Baltimore City Entertainment Group,” Fry said. “The decision of the judge reaffirms that the commission acted prudently.”

He said the decision issued by Baltimore City Circuit Court Judge Sylvester B. Cox will bolster the state’s second attempt to find a casino developer for the city. The state reopened bidding on the license in April under the cloud of BCEG’s pending appeal.

“I certainly think that the decision of the court adds more certainty” to the process, Fry said.

At least four developers have expressed interest in the Baltimore license, including a group headed by local attorney William H. “Hassan” Murphy III, an Oklahoma Native American tribe and two companies with diverse gaming interests. Proposals are due July 28, and Fry said he expects to choose the winner by the end of the year.

BCEG has sought to halt that process and force Fry’s commission to reexamine only its bid.

“BCEG is confident in its legal position and right now is planning to file an appeal, but we are reviewing Judge Cox’s decision carefully before making a final decision,” BCEG head Michael Moldenhauer said Friday through his attorney, John Dougherty of Kramon & Graham P.A.

Fry said he hopes “that this would end this litigation, but there are additional steps the parties are able to take.”

The next challenge would take the case to the Maryland Court of Special Appeals for a review of the State Board of Contract Appeals decision in December 2010, which upheld the slots commission’s rejection of the bid a year earlier.

That action came after 10 months of delays and missed self- and state-imposed deadlines for BCEG. The group submitted a proposal and $3 million license fee for a 500-terminal slots casino in February 2009, well short of the 3,750 machines and $22.5 million in license fees the state expected.

Moldenhauer said he would expand his proposal, but never delivered an updated version to the commission. He repeatedly requested delays to shore up his financing. He blamed much of the delay on negotiations with Baltimore — the casino must be built on city-owned property — that did not yield a deal until October 2009, just two months before the state rejected the bid.

In a court hearing May 25, Dougherty said the commission “made it up as they went along” and the contract appeals board gave too much deference to that flawed process and ultimate decision.

But Daniel A. Friedman, counsel to the slots commission, said during the hearing the state has the right to hit the reset button and restart the bidding process.

He also delivered the most direct and public rebuke of BCEG by a state official.

BCEG “was a terrible, terrible applicant,” he said. “It filed a confused application. It never got its financing deal together. It made and broke dozens of promises to the location commission and its staff.”