A ballot measure headed for November that would authorize a third casino in Maine, a measure so tightly worded that only one person could meet its qualifications, was funded by a shady offshore consortium—according to election filings that came to light last week.
That connection was apparently hidden from the state’s ethics commission—possibly illegally. The revelation caused two top-ranking lawmakers to say that the whole process “stinks” and consists of “fraud after fraud after fraud.”
The consortium of companies all are controlled or connected to Shawn Scott, who first brought casinos to the state. Their most prominent member is Bridge Capital. They are operating under the umbrella of “Horseracing Jobs Fairness,” which has one officer, Shawn Scott’s sister, Lisa Scott.
Horseracing Jobs Fairness proposes to build a casino with 1,500 slots in York County, and limits the actual location to land near an existing racetrack. Only one property owner, Shawn Scott, meets the qualifications.
The way it is worded, the only party that could apply for the license would be “an entity that owned in 2003 at least 51 percent of an entity licensed to operate a commercial track in Penobscot County that conducted harness racing with pari-mutuel wagering on more than 25 days during calendar year 2002.” Note that the actual location for the casino proposed would be York County.
The measure purports to benefit the state’s horseracing industry, which is on life support. It claims the purpose of “bringing tens of millions of dollars in new revenues for education, health care and the horse-racing industry, as well as nearly a thousand new jobs to Maine.”
Lisa Scott, a resident of Miami, paid for a $4.2 million signature gathering campaign that harvested enough names to qualify the measure for the ballot. But, according to campaign documents filed with the Maine Ethics Committee, the money came from several corporations, all with links to Shawn Scott. The names of the businesses didn’t come to light until this filing—and only after the measure qualified for the ballot.
This same group of businesses last November failed to pass an initiative in neighboring Massachusetts that would have allowed a slots parlor near Boston. The same group, once again including Bridge Capital, was fined $125,000 in the Bay State for not disclosing all its participants.
Bridge Capital is a Saipan-based firm that specializes in high-risk investments. Its name isn’t mentioned in the filing, however the firm that is mentioned, Capital Seven, and Bridge Capital, have the same chief executive officer: Shawn Scott.
When Maine lawmakers were holding hearings on the casino measure in March, Bridge Capital’s dodgy offshores history came up several times. They focused on the casino that the government of Laos seized in 2015.
Shawn Scott’s previous casino venture in Maine was the 2003 campaign to authorize the state’s first slots parlor, which—after Scott sold the rights to it—became Hollywood Slots. The slots parlor converted an existing racetrack, Bangor Raceway, which Scott purchased in 2002 for about $1 million.
Under fire from the Maine Harness Racing Commission for “sloppy” “irresponsible” financial management, and defending himself against lawsuits in multiple states, Scott quickly sold the property for $50 million once the voters approved the measure.
Veterans and Legal Affairs Committee co-chairman Garrett Mason, who railed against the measure during the committee’s hearings, but who could do nothing since the measure had to be put on the ballot, told Maine Public Radio last week that this was what he had feared.
“We knew something was wrong with them. The committee knew that in its questioning … and I think the organizers are starting to figure out that we’re on to them,” Mason said.
Scott’s sister last week said she didn’t intend to mislead the ethics commission or violate the financial disclosure laws. She issued a statement that said, “There was never any intent by either Lisa Scott or HRJF to mislead the Ethics Commission in any of the original filings made in this matter.” The statement added, “HRJF did not understand the statute at issue to require Lisa Scott to identify the original sources for contributions made to her for HRJF; as such all the monies were identified as coming from Lisa Scott.”
It adds that once the Ethics Commission notified Scott of the error that she amended the disclosure documents. This indicated the “ongoing commitment of the supporters of this initiative to provide additional information regarding the source of funding for HRJF,” said the statement.
State law requires that all donors to an election effort be publically disclosed. The law could result in a hefty fine for Scott. The fine could be as high as the entire $4.3 that was donated. The law would not prevent the measure from being on the November ballot.
Mason and his co-chairman Louis Luchini last week called for an investigation by the commission, noting the legal problems that Bridge Capital and Scott have generated in several states and around the world.
Bridge Capital’s involvement in the campaign came to light in March when Mason and Luchini held their hearings, and subjected the one representative of Bridge Capital who testified, to a withering grilling. The attorney admitted that he knew very little about the company, having only that day been retained to represent it before the committee.
Last week Luchini accused the campaign of “fraud after fraud after fraud.” Mason declared, “This referendum stinks and there is certainly something wrong.”
The campaign has had a rocky road. The initial efforts to qualify the ballot measure failed to garner enough signatures after Secretary of State Matt Dunlap ruled that thousands of them were ineligible. A second effort filed in the gap and in January the Dunlap certified that enough signatures had been collected.
‘Brink of Viability’
The harness-racing industry that Horseracing Jobs Fairness says to want to save is in dire straits. The Maine Horseracing Commission says that the industry is on the “brink of viability.”
Critics point to Scarborough Downs, and say that it shows that adding slot machines alone can’t save racetracks that don’t take other actions to shore up their sagging fortunes.
In a piece entitled “Twelve years and $112 million in state funds have failed to save harness racing in Maine” for the Pine Tree Watch writer Dave Sherwood describes how in March Scarborough Downs opened for racing but that the facility, “which features horses pulling two-wheeled carts and drivers—was downtrodden and cold, with peeling paint, water-stained ceiling panels, broken windowpanes and bathroom doors that didn’t close.”
The track, although the recipient of $13 million in state subsidies over a dozen years, is under no obligation to continue operating as a racetrack. And with the 500 acres of prime real estate as an inducement, the owner has put it up for sale.
Most see Scarborough Downs as the linchpin holding the industry in place in Maine. If it closes, the industry must follow, they say.
Sherwood writes, “The fate of Scarborough Downs serves as a cautionary tale of what happens when the state subsidizes an industry but fails to set firm goals and ensure accountability.”
The state’s two casinos, in Bangor and Oxford, are required by law to pay a percentage of their profits to help prop up the horseracing industry, where the number of licensed horse owners has declined by 40 percent since 2003. The number of mares bred is down by 44 percent.
Betting on horse racing has fallen by 57 percent—all despite subsidized prizes.
The Pine Tree Watch article blames the legislation passed in 2004 for not attaching conditions to the subsidies. The racetracks are not required to track how they spend the subsidies or account for them.
The article also notes that the industry is “increasingly dependent on a handful of wealthy owners,” and adds that allegations of horse drugging reached record levels in 2015. This damaged the industry with the public since it implied that at least some percentage of the races are fixed.
The industry’s reaction? To ask for higher subsidies and allowing slot machines at racetracks, i.e. to transform them into “racinos.”
Supporters of the industry say that its warts are overemphasized and that the subsidies are actually saving the industry.
The story quotes Henry Jennings, director of the Harness Racing Commission: “It’s a tradeoff. We’re spending money, but we’re helping to maintain an agricultural way of life and a little more open space in parts of the state where it’s disappearing the fastest.”
The Pine Tree Watch story travels back to the 2003 referendum where Shawn Scott first brought his unique style of casino politics to the state. He promised that authorizing casinos would “save the ailing harness industry.”
Rep. Don Marean, considered the legislature’s biggest racetrack booster, recalled, “Scott had the dough. But we had the energy. We were everywhere with horses and people and trailers.” Their hard work paid off.
Scott had promised 11 percent of net slots revenue to harness racing and agricultural fairs, but industry lobbyists were able to negotiate a 22 percent deal earmarked for purses, prize money and supports for racetracks and breeding programs.
Wendy Ireland, a stable owner who lobbied for the industry, insists that the money belongs to the industry.
“We were the key moving force in getting that referendum passed,” she told the Pine Tree Watch. “If it wasn’t for the harness racing industry, there would be no slots in the first place.”
Marean added, “It’s not the state’s money. It’s ours. We got that money because we worked for it.”
However, other lawmakers didn’t agree, and soon they began to demand proof for the good the money was doing. In 2010 a bipartisan study sparked by the Veterans and Legal Affairs Committee, wrote that the law gave little direction on how the money should be spent, or to require any accountability.
The study concluded “There needs to be transparency and accountability among those who receive slot machine revenues so that the impact of these funds can be thoughtfully measured.”
In 2017 those questions have only intensified. Last month Jennings was forced to defend how Scarborough Downs and others had spent the subsidies. He pointed out that the law didn’t put any restrictions on how the money is spent.
Jennings also reported the industry’s declining statistics.
Marean blames the decline on competition from the state lottery, online gaming and neighboring casinos.
But the lawmakers last month were not buying those arguments, and one accused horseracing of being a “welfare industry on state funds.”
Rep. Kathleen Dillingham called on the industry to present a marketing plan to increase participation, instead of trying to get more subsidies from a third casino.
Marean thinks this is just an excuse to siphon off more of the money.
“VLA (Veterans and Legal Affairs) is asking questions about things they don’t understand because they don’t know how the industry works,” he told the Pine Tree Watch.
The paper obtained an email sent in answer to an inquiry to Scarborough Downs by commission director Henry Jackson asking for an accounting of why the racetrack was continuing to decline.
Scarborough Downs replied that it was losing $1,387,018 annually. The subsidies were used to offset that, it said.
Industry analyst Wendy Ireland said the money should have been spent on an oversized, aging facility such as Scarborough, which she called “a dinosaur and a tough place to maintain.”
The only other racetrack in the state is Bangor’s Hollywood Casino Hotel and Raceway, which also doesn’t provide any breakdowns on how its subsidies are spent.
There is one aspect of the industry that is growing, however, the number of trainers and stable owners.
This is not surprising, says Marean: “There are more trainers now because the purses have come up. There’s more chance of a return on investment.”
Off track betting
The state’s off-track betting facilities also get subsidies from the two racetracks. Since 2005 they have gotten $6.52 million, according to the Pine Tree Watch report. Like Scarborough Downs, they aren’t required to make an accounting of what they do with the funds.
There are four such facilities in Maine. One of them, Winners Circle, said it used part of the $1.5 million it has gotten over the years to finance a larger, newer facility. Ten years later it is unclear as yet whether that investment paid off due to the competition from—ironically enough—Oxford Casino, which voters approved in 2010 and which now operates half an hour away.
Today, the subsidies at least keep the business from dying, the owner says.
