MGC Doubles Down with 2 Suitability Adjudications in 2 Days

Massachusetts Gaming

In two lengthy meetings over the course of two back-to-back days, the Massachusetts Gaming Commission (MGC) held public hearings on the suitability of two slots parlor contenders: Ourway Realty, LLC and Raynham Park, LLC.

Per the process laid out in the MGC’s implementing regulations, each license contender (be it for a Category 1 casino license or a Category 2 slots parlor license) is entitled to a public adjudicatory hearing on its Phase I suitability petition. The MGC commissioners took both suitability petitions under advisement following the respective hearings, with a written decision to follow.

Ourway Hearing’s Focus on Piontowski Scandal

The Ourway adjudicatory hearing on June 25 was one of the MGC’s lengthiest meetings yet. Ourway owns and operates the Plainridge Racecourse in Plainville, MA and plans to develop slot machine gaming on that site if granted the sole Category 2 license under the Commonwealth’s Gaming Act.

Ourway’s majority investors, Stanley Fulton and Al Ross, along with Ourway’s new president, John Grogan, spent much of the six-and-a-half hour hearing fielding questions about the scandal involving Gary Piontkowski, the former president and manager of Plainridge.

Piontkowski resigned several months ago after the Investigations and Enforcement Bureau (IEB) suitability investigation revealed he had been making unauthorized cash withdrawals from the Plainridge money room for years. In order to reconcile the books, accountants later characterized these withdrawals as “disbursements” to the president.

According to the investigative report, Piontkowski told Timothy Peterson, Ourway’s former CFO, that he would obtain authorization for the withdrawals from Fulton and Ross, but never did. Peterson attempted to alert the owners to the “routine” withdrawals but felt uncomfortable because of the amount of power and control Piontkowski exercised at the racecourse. The report also revealed that Piontkowski had a contentious relationship with state police and even told one employee not to speak with an officer stationed at the track.

To add to Ourway’s woes, it was forced to petition the MGC for a withdrawal of a qualifier after Peterson resigned from his post earlier this week. According to Ourway’s lawyer, Peterson resigned after management denied his request, just days before the MGC hearing, for a one-year employment contract.  Despite requests from Ourway that he appear, Peterson was not on hand to testify on June 25. His sudden departure and failure to appear prompted concern, particularly from IEB Director, Karen Wells. Wells said she was very troubled by Peterson’s abrupt withdrawal and emphasized that the MGC needed to ask him questions about the financial practices of the company.

Commissioners were particularly persistent in questioning John Grogan about the “separation agreement” that he, Fulton and Ross made with Piontkowski. Grogan took over as Ourway president in April after Piontkowski’s departure.  He testified about steps he has taken to create a “culture of integrity, accountability, and responsibility” at Ourway and to encourage an environment of openness in which control is not vested entirely in one person. Commissioners challenged Grogan to explain how that vision can be reconciled with the manner in which Ourway leadership dealt with Piontkowski after his money room practices were revealed. Instead of punishing Piontkowski, Grogan, Fulton and Ross gave him a severance package and did not require that he pay back the money he took.

Under the suitability guidelines set forth in M.G.L. c.23K §12, one of the criteria the MGC is looking for in applicants is personal and business integrity. Several commissioners suggested that by failing to hold Piontkowski accountable, Ourway’s leadership was sending a questionable message about the value it places on integrity. Grogan, Fulton, and Ross pushed back and explained that their goal was to make a clean, quick break with Piontkowski and to avoid expensive litigation so that they could move on with the licensing process.

Aside from the many questions about the departures of Piontkowski and Peterson, Ourway has considerable strengths as an applicant.  Fulton and Ross, both majority investors and members of Ourway’s executive team, have had long and distinguished careers in the gaming industry.

Fulton is the former owner of Anchor Gaming (now owned by International Game Technology) and the current owner of Sunland Racetrack and Casino in New Mexico.  He was instrumental in the creation of the Wheel of Fortune machine. Fulton has agreed to fund the necessary costs to establish the slots parlor.

Ross has more than 60 years of experience in the racing industry and has managed racetracks all over the country. Grogan, who has a background in banking and finance, assured the MGC that, while he does not have an extensive background in gaming, he is more than capable of managing a gaming operations team.

Raynham Deals with Investors’ Own Skeletons

A day after the Ourway hearing, the MGC reconvened to adjudicate the Raynham Park, LLC suitability petition. While paling in comparison to the six-and-a-half hour Ourway hearing, the Raynham Park hearing still held its own at over four hours. Raynham Park, LLC was created in 2012 for the sole purpose of obtaining a category 2 slots parlor license for a facility at the Raynham Park Racecourse, a former grey hound track and current simulcast venue. Two ownership groups are involved in the Raynham proposal: the Carney Family Group, LLC (formed in 2012 and owned by members of the Carney family), and Greenwood Racing, the parent company of Parx Casino & Racing, Philadelphia’s largest gaming facility.

It was the Greenwood/Parx side of the proposed venture that monopolized the majority of the June 26 hearing. Greenwood Racing financier Watche “Bob” Manoukian appeared to testify at the hearing and faced vigorous questioning regarding alleged tax improprieties. IEB members opened the discussion by noting that allegations that Manoukian was on the Canadian terrorist watch list had proved false before turning to tax issues. While the IEB members said they found Manoukian in compliance with US tax laws, they noted that a distinction might be drawn between compliance with the law and tax avoidance. The tax allegations focused on claims that Manoukian has used offshore business entities and tax shelters to avoid paying hefty taxes on his US corporate earnings.

Manoukian testified that he has never been charged by any law enforcement agency with tax evasion, nor has he ever paid a penalty to any tax agency. Manoukian also told the MGC that he plans to be closely involved in the construction phase of the Raynham facility, though he intends to leave the day to day management of the facility itself to others.

Greenwood Racing President, Robert Green, also monopolized much of the hearing time. Mr. Green faced intensive questioning regarding his relationship to Robert Brennan, who was convicted of bankruptcy fraud and money laundering in 2001. Green allegedly allowed Brennan to make investments through Green’s British company, UK Food Products, despite Brennan’s ongoing legal troubles.

In contrast to the lengthy questioning of Green and Manoukian, Raynham Park Racetrack owner George Carney faced little questioning from the MGC and IEB.

Also discussed during the June 26 MGC meeting was the proposed August 13 voter referendum on Raynham’s slots parlor proposal.  Raynham intends to use an exception in the MGC regulations that allows for an applicant to move forward with a local referendum vote prior to receiving a suitability petition approval from the MGC. In order to hold a referendum under this exception, Raynham Park needed MGC sign-off. The MGC approved the Raynham Park referendum notice unanimously with little discussion.

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