The Maryland State Lottery Commission unanimously decided Thursday that a Caesars Entertainment Corp.-led group is qualified for a Baltimore slot machine license, despite one investor’s questionable loan to an indicted former Detroit mayor who faces federal corruption charges.
Dan Gilbert, chairman of Rock Gaming LLC – a member of CBAC Gaming LLC, the group bidding for a Baltimore slots license – gave a $60,000 loan to former Detroit Mayor Kwame M. Kilpatrick in 2009, according to a background investigation conducted by Linwood, N.J.-based Spectrum Gaming Group.
Gilbert is better known as founder of Quicken Loans Inc. and majority owner of the NBA’s Cleveland Cavaliers.
Kilpatrick, who stepped down as mayor in 2008 after pleading guilty to obstruction of justice, accepted the loan — plus additional money from several other businessmen — in exchange for his resignation, said Phil Metz, the state lottery’s manager for licensing and background investigations.
Gilbert was part of a group that banded together to offer the loan while Kilpatrick was still in office but facing perjury and misconduct charges stemming from an extramarital affair with an aide, according to reports in the Detroit Free Press. The money was not loaned to Kilpatrick until after he stepped down. Gilbert’s loan has not been repaid, Metz said.
The background investigation also indicated that Gilbert was charged — but not convicted — with running an illegal sports betting operation while a student at Michigan State University in 1981.
Jennifer Kulczycki, a spokeswoman for Rock Gaming, said the issues had already reviewed by the Casino Control Commission in Ohio, where Rock and Caesars teamed to build casinos in Cleveland and Cincinnati. Spectrum also conducted the background investigation for the Ohio commission.
“What’s important to realize is that the findings that Spectrum showed [Thursday] were not material to Mr. Gilbert [being an investor],” Kulczycki said. Gilbert was not made available for comment.
Despite Gilbert’s loan to the former mayor, Metz said the background report’s findings “did not materially impact Gilbert’s suitability for licensing” under statute. Spectrum and lottery commission staff determined that Gilbert’s loan to Kilpatrick was just “poor judgment” and “not an illegal extortion or bribery scheme.”
J. Kirby Fowler Jr., chairman of the lottery commission, said that the issue was significant enough for Spectrum to bring to the commission’s attention, but not significant enough to disqualify Gilbert and Rock Gaming as a member of CBAC Gaming, which, led by Caesars, wants to build a Harrah’s Casino on Russell Street.
“Our staff is incredibly professional and diligent and I trust their review,” said Fowler, who is also president of the Downtown Partnership of Baltimore Inc. “I was less concerned [when I learned] that the loan was issued after the former mayor [left office]. Clearly, it doesn’t appear the loan was issued for any effort to receive any official special treatment.”
The lottery commission will send its approval to the Video Lottery Terminal Location Commission within a week, Fowler said. That panel will use the background investigation to make a final decision on the licensee.
Donald C. Fry, chairman of the terminal location commission, said this week that analysts from PricewaterhouseCoopers and the state Department of Legislative Services were tied up with the ill-fated product of a work group considering expanded gambling. With that group’s work complete, analysts should be freed up to continue the financial analysis of CBAC Gaming.
The analysis, combined with the background investigation, is the final step toward the award of a license, which Fry said could come in late July.
A Caesars executive could not be reached for comment.
Kilpatrick, the indicted former Detroit mayor, served 14 months in prison in 2009 for violating his parole after being released early from a four-month sentence stemming from his guilty plea.
The former mayor now faces federal public corruption charges and a trial is scheduled for September. Kilpatrick, his father Bernard Kilpatrick and two others face corruption charges related to a pay to play scheme involving city contracts.