MGC Says No Way to Ourway Plainridge Slots Parlor; Odds Improve for Raynham Park

Massachusetts Gaming

Demonstrating that it is more than just a rubber stamp, the Massachusetts Gaming Commission (MGC) denied one slots parlor suitability petition and granted another on August 5, 2013.

The decisions came less than two weeks after back-to-back marathon adjudicatory hearings on the Ourway Realty LLC (which operates Plainridge Racecourse) and Raynham Park LLC suitability petitions. Having taken both applications under consideration, the MGC ultimately denied Ourway’s Phase 1 slots parlor suitability application but issued a positive determination for Raynham Park.

In its 9-page written decision, the MGC noted that “[w]hile the findings of the investigation support a conclusion that certain of the individual qualifiers are suitable, there are far too many unanswered questions and concerns to find Ourway itself to be suitable.”  In its decision, the MGC focused largely (as it had at the adjudicatory hearing) on the actions of recently resigned Ourway head Gary Piontowski.

During the course of the MGC Investigations and Enforcement Bureau’s (IEB) vetting of Ourway’s suitability petition, investigators discovered that Piontowski had been helping himself to money room funds for years. Estimates place the total of Piontowski’s covert takings somewhere in the vicinity of $1 million.

In denying Ourway’s application, the MGC highlighted the fact that Piontowski only stepped down after the IEB flagged issues about Piontowski’s practices. The MGC was also troubled by the fact that those high up in the Ourway structure had failed to detect the covert withdrawals on their own.

Further, the MGC was unimpressed with the manner in which Piontowski separated from Ourway. Piontowski’s separation agreement did not require him to repay the money room funds and included a $1.8 million share repurchase in addition to $180,000/year for the next two years. The MGC characterized the agreement as “send[ing] the wrong message. . . .”

While the MGC recognized new Ourway president John Grogan’s “impressive background,” it found his credentials in the gaming industry to be lacking. Further, the MGC flagged the fact that Grogan has not worked to further investigate the Piontowski allegations since taking over in April 2013.

Further clouding Ourway’s application is the recent resignation of its Chief Financial Officer Timothy Petersen. The MGC stated in its written denial that, based on Petersen’s resignation and notable absence from the adjudicatory hearing, “it seems clear that the issues uncovered with [Ourway] and his involvement in them are of such a character that he would rather leave his job than answer questions about them in a public setting.”

The MGC also highlighted lingering questions regarding Petersen’s knowledge of Piontowski’s unauthorized withdrawals, interest in a company providing services to Plainridge, a loan he made to himself from Plainridge and political contributions which may have involved Plainridge funds. Ourway had petitioned the MGC to withdraw Petersen as one of its qualifiers. Given that this application came after the MGC scheduled Ourway’s adjudicatory hearing, Ourway needed to receive MGC approval for such a withdrawal. The MGC declined to allow Petersen’s withdrawal as a qualifier and “issued a negative determination of suitability” as to Petersen.

Also noted in the MGC’s negative determination as to Ourway itself was the unclear involvement of Ourway investors Stanley Fulton and Alfred Ross. While the pair had attempted to paint their role as that of passive investors, evidence showed the pair had signed a 2012 audit letter that flagged certain advances paid to Piontowski. Both men claimed no recollection of signing the document.

With the MGC’s negative determination, Ourway becomes the first Phase 1 applicant (with 11 applications total among the slots parlor and resort casino contenders in Regions A and B) not to successfully clear the suitability process. This marks the end of the road for the Ourway bid as suitability determinations are not appealable under MGC regulations.

As to Raynham Park, the adjudicatory hearing focused primarily on Greenwood Racing financier Watche “Bob” Manoukian and Greenwood Racing President, Robert Green. In their positive written opinion, the MGC mentioned what they characterized as Mr. Green’s “extremely troubling” involvement with convicted businessman Robert Brennan.

In its decision, the MGC went on to state that it “struggled with whether it should find Mr. Green suitable[,]” but ultimately credited “seventeen (17) years of good conduct” as mitigation and found Green suitable (provided he have no further business dealings with Brennan).

Manoukian was also found credible and suitable, though the decision did mention certain offshore tax structures Manoukian had used in past enterprises. The MGC credited Manoukian’s testimony that he will not use such structures for the slots parlor endeavor. Any future changes to the slots parlor’s capital structure must be approved by the MGC.

While the MGC found that Raynham Park owner George Carney was delinquent on taxes in New Hampshire, the MGC found him suitable with the condition that he remain current on all property taxes moving forward.

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