Seven of the 18 identified shareholders in Spectacle Entertainment Group LLC, the parent company of the Hard Rock Casino Northern Indiana, recently asked a Marion County judge to immediately stop implementation of the Indiana Gaming Commission’s new rules requiring more detailed disclosure of their financial records and business interests. The emergency rules, unanimously adopted by the IGC on March 23, apply to privately owned casino companies.
The plaintiffs include Laelaps LLC and MD Twenty-Twenty LLC, both registered to Daniel Dumezich, a retired attorney, former state representative, former town court judge for Schererville and past treasurer of the Indiana Republican Party, according to the Indiana secretary of state’s office. Other notable plaintiffs include insurance company executive Stephen Hilbert, onetime business partner of Donald Trump, and lobbyist and former Republican state representative Matthew Whetstone. Windy City H&C Investors LLC joined the lawsuit after it was filed; it’s represented by South Bend attorney Jesse Barrett, husband of U.S. Supreme Court Justice Amy Coney Barrett.
According to court records, the plaintiffs claim the IGC, its chairman Michael McMains and executive director Sara Tait exceeded their statutory authority by adopting rules that “will cause immediate and irreparable harm” to the plaintiffs. Specifically, they argue the IGC cannot subject the plaintiffs to the detailed financial and background investigation necessary to acquire Level 1 occupational licenses, along with requiring the same of any person with an interest in any entity that holds a stake in Spectacle.
The lawsuit stated, “In other words, the IGC attempts to extend its jurisdiction to shareholders of gaming companies. What is more, the IGC attempts to extend its jurisdiction to the shareholders of shareholders of gaming companies. The IGC’s attempt to extend its jurisdiction to holders of an equity interest is beyond the scope of authority granted by the Indiana General Assembly.”
The plaintiffs also assert the IGC setting a repurchase price for their Spectacle shares is an unconstitutional taking of their property. They also repeat a claim previously made by former Spectacle Chief Executive Officer Rod Ratcliff that the IGC is barred from taking any action, despite having a quorum, because the commissioner post that must be held by an individual living in Lake, Porter or LaPorte County currently is vacant.
In March, Ratcliff agreed to permanently exit the Indiana gaming industry and sell his ownership interests in the intermingled parent companies of the new land-based Hard Rock Casino and the former Majestic Star Casino in Gary; it closed April 18 so employees and gaming equipment could be transferred to the Hard Rock for its May 14 grand opening. In return, the IGC pledged it would not pursue any further administrative or legal action against Ratcliff, whose occupational gaming license was suspended last year for his alleged role in a straw donor campaign finance scheme resulting in pending federal criminal charges against former Republican state Senator Brent Waltz and John Keeler, Spectacle’s former general counsel and a former Republican state representative from Indianapolis.
Ratcliff has not been charged with any crimes. However, upon further investigation, the IGC found he also allegedly made unauthorized executive employment offers to various individuals; exercised control of Spectacle finances after he resigned from the company; failed to provide the IGC with required disclosures or cooperate with its investigation; and failed to report about $900,000 in deposits to his horse wagering account between 2015 and 2019, as well as the resulting wins and losses.
All of which led Tait to declare the new IGC rules—adopted immediately after Ratcliff left the company and the industry—are “designed to enhance the public’s trust in the industry” and “ensure the integrity of gaming in Indiana.”
Tait said increased public disclosure of information regarding casino ownership, updated licensing thresholds and clearer guidelines for reporting information to the IGC will aid “those who perhaps need assistance in being more mindful of the high standards of disclosure upon which their suitability for licensure is dependent.”
Those “clearer guidelines” include limits on lobbying, a ban on gambling at the Hard Rock Casino, a ban on doing independent business with casino vendors and a requirement to notify the IGC when a casino stakeholder has more than $50,000 cash on hand. Tait said, “We consulted with other gaming jurisdictions and this set of rules includes provisions that are already industry standards. As is our practice, I offered the industry the ability to review these rules and offer feedback. Several operators and applicants offered support for this initiative, as well as very helpful feedback and clarifying language, which were incorporated into the document.”
The IGC has not formally responded to the lawsuit. A hearing has not yet been scheduled.
