The Chicago Tribune recently reported that two of the groups hoping for a casino in Waukegan—one of six new casinos permitted under Illinois’ new gambling law—include people who previously were denied gaming licenses.
One bid team is led by former Democratic state Senator Michael Bond, who until recently ran a video gambling company. Another bid came from real estate mogul Neil Bluhm, part owner of Rivers Casino in Des Plaines.
Besides these two bids, Waukegan sent a third proposal, from Nevada-based Full House Resorts, to the Illinois Gaming Board; other host cities sent just one.
Waukegan Mayor Sam Cunningham said, “Waukegan has a little history of being burned. Our position this time is we’re not going to leave anything to chance in the event that the Illinois Gaming Board doesn’t like the one that we select. I was not going to let that happen again.”
One of Bond’s partners is Warner Gaming, founded by William Warner. Warner was a finance executive at Station Casinos when Station wanted to open casinos in Missouri, and hired local lawyer Michael Lazaroff, who later pleaded guilty to mail fraud. Lazaroff told the Missouri Gaming Commission that Station paid him to help it win licenses.
Several Station executives were subpoenaed by the Missouri gaming board to testify about Lazaroff’s involvement, including Warner, who as Station’s chief finance officer paid Lazaroff. At the hearing, Warner repeatedly said he can’t remember much about the payments to Lazaroff.
“Out of eight hours of questioning, I think mine was about 20 or 15 minutes,” he said. “I think, based on the full testimony that everybody gave, there was no deemed wrongdoing by Station.” Station ultimately paid a $1 million fine and surrendered its Missouri licenses in a deal, but admitted no wrongdoing.
Warner said he has no concerns about his past in Missouri. “I’ve been licensed 20-some odd times in multiple jurisdictions, currently licensed in several. I don’t anticipate it being an issue” in Waukegan, he said.
He has operated casinos in Nevada, Iowa and other states, but he did remove himself from a 2013 casino bid in Massachusetts after learning regulators had received “certain derogatory information” regarding his time in Missouri.
Last month, the Illinois Gaming Board approved Warner’s application to operate video gambling terminals.
Clairvest, the private equity firm for Bond’s bid, tried to get a video slot machine contract at a New York racetrack. Its partnership included an Australian investor who was declared ineligible for a New York license due to legal issues back home, and another person who “refused to cooperate with authorities” regarding a double homicide investigation.
The partnership also included two others who had ties to a man convicted of securities fraud.
Jeff Parr, Clairvest’s vice chairman and managing director, said the firm joined the bid after the investor group was formed and attempted to distance itself and save the deal when it learned about the other partners.
The gambling license ultimately went to another group. “We played by the rules. Some things came to light in the process. The government did a full investigation and condemned the process and the people who ran the process. It was not good and we were cleared. We did nothing untoward,” Parr said.
In 2019, Bond’s company and its affiliated political action committees spent $266,000 on the campaigns of four of the city’s nine aldermen, candidates who supported video gambling, he said. Bond denied he sought special treatment for his casino bid and said he’d “respected the rules of the request for proposals on a casino and the city’s desire to run a fair, open and transparent RFP process.”
Bluhm’s group includes developers Alan Ludwig and Richard Stein, who have ties to William Cellini, a Springfield power broker who went to prison in connection with the scandal surrounding former Governor Rod Blagojevich. In 2008, Waukegan was one of three finalists for a casino license, and Ludwig and Stein had the exclusive right to build and operate it. However, the gaming board rejected Waukegan’s proposal, citing Ludwig and Stein’s “long-standing association” with Cellini.
The license was awarded to Bluhm, who built Rivers Casino in Des Plaines. He’s now proposing to add a second casino in Waukegan. Ludwig and Stein hold a 6 percent stake in the venture.
Ludwig has accused Waukegan of favoring Bond. Bond said Bluhm got behind-the-scenes help from state Senator Terry Link, who helped negotiate the new gaming bill in Springfield and has been identified as a cooperating witness in a government corruption probe. Link denies it, but has agreed to cooperate with the FBI in return for a reduced sentence on expected tax fraud charges, according to a court filing.
Bond’s group said Link sent an email of “draft remarks” to Park City Mayor Steve Pannell last September, which Pannell delivered at a public hearing on the casino bids. Park City would share in Waukegan casino revenue. Parr of Clairvest said Link and Pannell received information not known by the public from Bond’s group. He said, “Our view is there’s no way Link and Pannell could have gotten that information from a heavily redacted proposal from Rivers unless it was fed to them by someone. It’s very disturbing when it was supposed to be a fair, clean and transparent process.”
Meanwhile, suburban Chicago developer Rick Heidner and his company, Gold Rush Amusements, have filed a $4 million lawsuit against the Illinois Gaming Board alleging negligence and breach of fiduciary duty. Heidner claims a gaming board employee leaked volumes of sensitive information to three federal agencies in a data breach revealed last month, leading to negative media coverage of his failed bid to open a racino in Tinley Park.
Heidner said the unnamed employee revealed personal and financial information “intentionally and illegally,” and said the board engaged in “unfair and improper actions” that ruined his reputation and finances in the fallout from the racino deal.
