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2 groups file Baltimore casino license appeals

With the slots tax at a future Baltimore casino set to be cut and an upcoming voter referendum on legalizing table games in Maryland casinos, two groups want a crack at the already-awarded city casino license.

Two appeals of the license awarded last month to CBAC Gaming LLC, a group led by Caesars Entertainment Corp., were filed this month. HarborWest Partners LLC filed one notice with the Maryland State Board of Contract Appeals on Aug. 10 and Baltimore City Entertainment Group LP filed an appeal on Aug. 13.

BCEG is the casino company, led by Canadian homebuilder Michael Moldenhauer, which unsuccessfully bid to operate a city gambling site in 2009.

Both companies contend there were problems with the license’s Request for Proposals and the ensuing consideration of CBAC’s bid, conducted by the Video Lottery Facility Location Commission.

Maryland Assistant Attorney General Robert T. Fontaine called both appeals “wholly meritless,” because neither group responded to the RFP, released in April 2011. On behalf of the slots commission, Fontaine filed motions Wednesday to dismiss both appeals.

Tax reduction to boost Maryland casino profits

In its filing, HarborWest, formerly Charm City Development and Gaming LLC, said it would have bid for the license in 2011 if it had known the General Assembly was going to allow table games and reduce the state’s 67 percent slots tax to as low as 51 percent.

The legislature passed a bill last week that set the framework for both changes, but the legalization of table games, such as blackjack and roulette, still requires voter approval.

HarborWest’s appeal argues that it was against the “best interests” of the state to award a license to CBAC in July when it was “public knowledge” that the legislature could change Maryland casino laws in August.

“If the applicable tax rate was reduced and/or table games were authorized, HarborWest would submit a proposal far more financially beneficial to the state than the proposal submitted by CBAC,” the appeal said.

Both appeals contend that requirements in the license’s RFP were “unnecessarily restrictive.” Applicants were required to submit a plan to operate 3,750 slot machines, a number both appeals say is unreasonable given the proximity of the Maryland Live Casino at Arundel Mills mall, which will soon operate 4,750 slot machines.

“With the completion schedule for the Arundel Mills facility now well ahead of the Baltimore city location, the maximum allotment of 3,750 is more than can be supported by the market,” BCEG’s appeal said.

Maryland casino investor Dan Gilbert

Two appeals have been filed over the Maryland casino license granted to CBAC. CBAC Chairman Dan Gilbert, above, plans to build a casino in Baltimore.

BCEG also contends that state lottery officials should not have relaxed rules that say who can receive a Maryland casino license. Dan Gilbert, chairman of CBAC member Rock Gaming LLC and owner of the Cleveland Cavaliers, was allowed to be part of the license group despite being charged with running an illegal sports betting operation while a student at Michigan State University in 1981.

Before being changed, state requirements said individuals with “past gambling transgressions” could not be awarded a slots license, even if the persons were not convicted.

BCEG was the sole bidder on the first RFP, but the slots commission rejected the company’s proposal in December 2009. CBAC was the only bidder on the second RFP.

William H. “Billy” Murphy Jr. and Kenneth B. Frank, of Murphy & Falcon P.A., represent HarborWest. Neither was available for comment Thursday.

Dana P. Moore, of Petersen Moore LLC, represents BCEG. She also could not be reached for comment Thursday.

Caesars intends to start construction on a casino near M&T Bank Stadium in the second quarter of 2013. The facility, dubbed Harrah’s Baltimore, should open in the second quarter of 2014.

[Editor’s note: This story has been updated to reflect that a CBAC spokesman said incorrect information was provided at Thursday’s commission meeting.]