Stadium Casino RE, LLC v. PA Gaming Control Bd. ( 2023 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Stadium Casino RE, LLC, :
Petitioner :
:
v. : No. 249 M.D. 2021
: ARGUED: March 7, 2022
Pennsylvania Gaming Control Board, :
SC Gaming OPCO LLC and :
Ira Lubert, :
Respondents :
BEFORE: HONORABLE CHRISTINE FIZZANO CANNON, Judge
HONORABLE STACY WALLACE, Judge
HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY
SENIOR JUDGE LEADBETTER FILED: February 8, 2023
Before the Court are the preliminary objections of SC Gaming OPCO
LLC (LLC) and Ira Lubert (Lubert) (collectively, SC Gaming), and the Pennsylvania
Gaming Control Board to the Petition for Review in the nature of a complaint for
declaratory and injunctive relief and in mandamus (Petition) filed in this Court’s
original jurisdiction by Stadium Casino RE, LLC. For the reasons stated below, the
preliminary objections are overruled.
Background
The Petition alleges the following facts, which we must accept as true
in ruling on preliminary objections. In July 2004, the General Assembly passed, and
Governor Edward G. Rendell signed into law, the Pennsylvania Race Horse
Development and Gaming Act (Gaming Act, or simply Act),1 which authorized
gaming in Pennsylvania. See Petition ¶ 19. The Gaming Act established an
independent agency of the Commonwealth known as the Board. See Petition ¶ 20;
see also 4 Pa.C.S. § 1201. The Board has sole authority over the conduct of gaming
in Pennsylvania, as prescribed by the Gaming Act. See id.; see also 4 Pa.C.S. §
1202. The Board has the authority to, among other things, issue a slot machine
license based upon the requirements of the Gaming Act. See Petition ¶ 21; see also
4 Pa.C.S § 1325(a). The Gaming Act initially established three categories of slot
machine licenses: (a) Category 1 license, which allows a licensee to operate slot
machines at an existing racetrack facility; (b) Category 2 license, which permits a
licensee to operate slot machines at a stand-alone facility in major cities or tourist
areas in Pennsylvania (e.g., Philadelphia, Pittsburgh); and (c) Category 3 license,
which permits a licensee to operate slot machines at an existing resort hotel. See
Petition ¶ 22; see also 4 Pa.C.S §§ 1302, 1304-1305.
In 2017, the General Assembly established a new category of slot
machine license - Category 4 license - which permits a licensee to operate mini-
casinos, i.e., casinos with 300 to 750 slot machines. See Petition ¶ 24; see also 4
Pa.C.S. § 1305.1. Section 1305.1(a) of the Gaming Act, 4 Pa.C.S. § 1305.1(a),
authorized the Board to issue up to 10 Category 4 licenses only to existing Category
1, 2 or 3 licensees in good standing with the Board. See id. Section 1305.1(a) of the
Gaming Act instructed the Board to conduct initial auctions beginning no later than
January 15, 2018, and concluding by July 31, 2018, to determine which eligible
bidders had the right to apply for the 10 available Category 4 licenses. See Petition
¶ 26; see also 4 Pa.C.S. § 1305.1(a). If a winning bid was not awarded at an initial
auction, Section 1305.1(a) of the Gaming Act directed the Board to conduct
1
4 Pa.C.S. §§ 1101-1904.
2
subsequent auctions and complete all of them no later than August 31, 2018. See
id.; see also 4 Pa.C.S. § 1305.2(b).
Between January and June 2018, the Board held five auctions. See
Petition ¶ 27. Of the five winning bidders at these auctions, the Board issued
Category 4 licenses to three of them. See id. The Board denied the application of
one of the winning bidders, Mount Airy Casino Resort, because it was unable to
obtain funding to build a casino. See id. One application remains pending. See id.
Pursuant to Section 1305.2(b.1) of the Gaming Act, 4 Pa.C.S. § 1305.2(b.1), if a
subsequent auction failed to generate any bids, the Board, in its discretion, may
conduct additional auctions at which any Category 1, Category 2 or Category 3 slot
machine licensees, or other qualified entities, may bid. See Petition ¶ 28; see also 4
Pa.C.S. § 1305.1(b.1). Such auctions were required to be completed by August 31,
2018. See id.; see also 4 Pa.C.S. § 1305.2(b)(3). The Board did not conduct further
auctions prior to the August 31, 2018 statutory deadline. See Petition ¶ 30.
In June 2019, the General Assembly passed (and Governor Tom Wolf
signed into law) an amendment to The Fiscal Code,2 which provided specific
instructions to the Board regarding additional Category 4 auctions. See Petition ¶
31; see also 72 P.S. § 1724.1-E(c). Section 1724.1-E(c) of The Fiscal Code, 72 P.S.
§ 1724.1-E(c)(1), instructed the Board to conduct up to five auctions for the
remaining available Category 4 slot machine licenses, beginning no later than
September 4, 2019, and concluding by December 31, 2019. See id.; see also 72 P.S.
§ 1724.1-E(c)(1). The legislation further provided that if an auction failed to
generate a bid, no further auctions shall be conducted. See id.; see also 72 P.S. §
1724.1-E(c)(2)(iv). Section 1724.1-E(c)(2)(v) of The Fiscal Code limited eligible
2
Act of April 9, 1929, P.L. 343, as amended, 72 P.S. §§ 1-1805.
3
bidders to slot machine licensees as defined under Section 1103 of the Gaming Act,3
4 Pa.C.S. § 1103, that met the criteria in the legislation. See id.; see also 72 P.S. §
1724.1-E(c)(2)(v). On September 4, 2019, the Board held an auction for the right to
apply for a Category 4 license, but received no bids. See Petition ¶ 32. Because
there were no bids, the Board was not authorized to conduct further auctions. See
id.
In May 2020, the General Assembly again amended The Fiscal Code.
See Petition ¶ 33; see also 72 P.S. § 1724.1-E(e). Section 1724.1-E(e) of The Fiscal
Code, 72 P.S. § 1724.1-E(e), directed the Board to conduct another auction by
September 29, 2020 (i.e., within 90 days of the legislation’s effective date), of any
Category 4 slot machine license for which the Board has denied the application filed
by the winning bidder of an initial auction, namely, the application the Board denied
to Mount Airy Casino Resort. See id.; see also 72 P.S. § 1724.1-E(e)(1). Section
1724.1-E(e)(2)(iv) of The Fiscal Code, 72 P.S. § 1724.1-E(e)(2)(iv), narrowly
expanded eligible bidders to include persons with an ownership interest in a slot
machine licensee. See Petition ¶ 34; see also 72 P.S. § 1724.1-E(e)(2)(iv). In other
words, there were only two categories of eligible bidders: (a) existing licensees; and
(b) persons with an ownership interest in an existing licensee. See id. Section
1724.1-E(e)(2)(i) of the Fiscal Code, 72 P.S. § 1724.1-E(e)(2)(i), further required
the Board to “conduct the auction according to the procedures under [Section
1305.2(c) of the Gaming Act,] 4 Pa.C.S. § 1305.2(c).” Petition ¶ 36; 72 P.S. §
1724.1-E(e)(2)(i).
Section 1305.2(c) of the Gaming Act, 4 Pa.C.S. § 1305.2(c), requires,
among other things: (a) the winning bidder shall pay to the Board the bid amount
within two business days following the auction; (b) if the winning bidder does not
3
Section 1103 of the Gaming Act defines slot machine licensees as “[a] person that [sic]
holds a slot machine license.” 4 Pa.C.S. § 1103.
4
pay the bid amount within the time period required under paragraph 7, the second
highest bidder shall be awarded the right to select a Category 4 location and apply
for the Category 4 slot machine license; (c) the winning bidder shall submit an
application for the Category 4 slot machine license within six months of the payment
of the winning bid amount;4 and (d) failure of the winning bidder to submit an
application within the time under subparagraph (i) shall result in forfeiture of the
bidder’s right to apply for the license and forfeiture of the winning bid amount. See
Petition ¶ 37; see also 4 Pa.C.S. § 1305.2(c)(7), (8), (10)(i), (10)(ii).
On September 2, 2020, the Board conducted an auction at which there
were two bidders: Lubert and Stadium Casino. See Petition ¶ 38. Lubert was an
eligible bidder because he has an ownership interest, held in his individual capacity,
in Holdings Acquisition Co., LP, an existing Category 2 licensee that operates Rivers
Casino Pittsburgh. See Petition ¶ 39. Stadium Casino was an eligible bidder because
it holds a Category 2 license. See Petition ¶ 40. At the September 2, 2020 auction,
Lubert submitted the winning bid at just over $10,000,000.00, and selected a location
in Centre County, Pennsylvania, near Pennsylvania State University, for placement
of the proposed Category 4 casino. See Petition ¶ 41. Lubert did not pay the entire
winning bid to the Board himself, as required by Section 1305.2(c)(7) of the Gaming
Act, 4 Pa.C.S § 1305.2(c)(7). See Petition ¶ 42. Instead, Robert Poole, Richard
Sokolov, and possibly other persons or entities, invested in the payment for Lubert’s
winning bid. See Petition ¶ 42. Their contributions were not mere loans made in
the ordinary course of business; rather, the contributions bought the investors an
interest in the Category 4 license for which Lubert would have the right to apply as
the winning bidder. See Petition ¶ 43.
4
Section 1305.2(c)(10)(i) of the Gaming Act provides that “[t]he [B]oard may, in its
discretion, extend this deadline for a period not to exceed two additional months.” 4 Pa.C.S. §
1305.2(c)(10)(i).
5
After Lubert paid the winning bid on behalf of himself and his
investors, he began preparing to apply to the Board for a Category 4 license. See
Petition ¶ 44. On February 5, 2020, Lubert formed another entity, 2901 ECA
Associates, LLC (LandCo), and according to LLC’s application, LandCo’s sole
member and manager is now HoldCo. See Petition ¶ 46. On November 5, 2020,
Lubert formed several limited liability companies, including LLC, SC Gaming
HoldCo, LLC (HoldCo), and SC Gaming, LLC (SC NewCo). See Petition ¶ 45.
LLC’s sole member is also HoldCo; and HoldCo’s two members are SC NewCo
(98%) and Lubert (2%). See Petition ¶ 46; see also Petition Ex. 1 (ownership
information provided to the Board). Neither the Board nor Lubert have identified
who is a member of SC NewCo, the ultimate parent entity of the entities formed on
November 5, 2020. See id.
On January 4, 2021, Bally’s Corporation (Bally’s) announced that it
had signed an agreement with Lubert to jointly design, develop, construct and
manage a Category 4 licensed casino in Centre County, the total costs of which are
expected to be approximately $120,000,000.00. See id.; see also Petition Ex. 2
(Bally’s Form 8-K (Mar. 4, 2021)). Bally’s represented that it would “maintain a
majority interest in the partnership, including 100% of the economic interests of all
retail sports betting, online sports betting and iGaming activities associated with the
project.” Id.; Petition Ex. 2. On or around March 4, 2021, LLC, not Lubert,
submitted an application to the Board for a Category 4 license. See id. The Board
waited more than a month, until April 12, 2021, to make LLC’s application public.
See Petition ¶ 46. The vast majority of the public version is redacted. See id.; see
also Petition Ex. 3 (LLC’s Application). The public version entirely redacts the
details about who owns and controls LLC, including details about the entity’s stock,
members, debt, and other security devices and options. See id. The public version
also omits Bally’s purported partnership with Lubert, which Bally’s has already
6
announced publicly. See id. It appears from LLC’s application that the ultimate
parent entity, SC NewCo, is owned or controlled by persons other than Lubert,
including the individuals who helped fund the winning bid. See Petition ¶ 47. The
ownership information on the Board’s website purports to break down who owns
and controls LLC itself. See Petition ¶ 48; see also Petition Ex. 1. The breakdown
identifies 14 different LLC principals, including Bally’s entire Board of Directors,
several of Bally’s officers, Robert Poole, and Richard Sokolov. See id. Any of these
principals may, by definition under the Gaming Act, have an interest in or ownership
or control of LLC. See id. Although the Board’s website states that Lubert owns
100% of LLC’s common stock, the website expressly carves out other ownership
interests such as preferred stock and options. See id.
In a March 23, 2021 letter to the Board’s Executive Director (March
23, 2021 Letter), a copy of which was sent to Lubert’s counsel, Stadium Casino
detailed its concerns about SC Gaming’s compliance with the Gaming Act and the
Board’s authority to consider LLC’s application for a Category 4 license. See
Petition ¶ 49; see also Petition Ex. 4. In the March 23, 2021 Letter, Stadium Casino
requested that the Board address several issues, including: (a) whether Lubert
forfeited his right to apply for a Category 4 license; (b) whether LLC is permitted to
apply for a license; and (c) assuming other persons funded Lubert’s winning bid,
why his bid was not disqualified as inconsistent with the Gaming Act. See id.
In an April 2, 2021 letter to the Board (April 2, 2021 Letter), Lubert’s
counsel responded, focusing on an unrelated bid and application for a prior gaming
license submitted by Stadium Casino’s parent company, Stadium Casino, LLC
(Stadium Parent), and an amended license application subsequently submitted by
another of Stadium Parent’s wholly-owned subsidiaries, Stadium Casino
Westmoreland RE, LLC (Stadium Casino Westmoreland), in 2019. See Petition ¶
50; see also Petition Ex. 5. Stadium Parent’s bid and application timely complied
7
with all requirements in the Gaming Act. See id. Stadium Casino and Stadium
Casino Westmoreland are sister entities, wholly owned by Stadium Parent, and they
are all mirror images of each other, i.e., they are owned and controlled by the exact
same people in the exact same way. See id. In contrast, Lubert and LLC are
different, not only because Lubert is an individual person and LLC is an entity, but
also because LLC is owned or controlled by persons other than Lubert. Lubert’s
counsel’s April 2, 2021 Letter did not address this critical distinction, nor did it
address whose funds paid for his winning bid or who has an interest in LLC. See id.
By April 13, 2021 letter (April 13, 2021 Letter), the Board’s Executive
Director responded to Stadium Casino’s March 23, 2021 Letter, stating that the
Board received funds representing the winning bid amount of the auction bid on
behalf of Lubert. See Petition ¶ 51; see also Petition Ex. 6. The April 13, 2021
Letter did not address any of Stadium Casino’s other questions and concerns,
including whether the Board has the statutory authority to consider LLC’s
application; instead, it stated that the Board will address any purported issues
relating to compliance with the Gaming Act in determining LLC’s suitability and
financial fitness for a license. See id.
On April 20, 2021, after the Board made public the highly-redacted
version of LLC’s application discussed above, Stadium Casino again asked the
Board to address the issues raised in its March 23, 2021 Letter. See Petition ¶ 52.
Stadium Casino explained that these are not suitability or financial fitness issues that
can be addressed after the Board completes its review; rather, they go to the core of
whether the Board even has the authority to consider LLC’s application. See id.
Stadium Casino also asked the Board to make public the non-confidential
information that is redacted from the public version of LLC’s application, including
(a) the identities of persons with an interest in LLC and its affiliates; and (b) the
details about Lubert’s and LLC’s relationship with Bally’s. See id. By April 28,
8
2021 letter (April 28, 2021 Letter) the Board responded to Stadium Casino, stating
only that the Board has a different interpretation of the Gaming Act, and that any
response that it provides will not serve to reconcile the differing positions. See
Petition ¶ 53; see also Petition Ex. 7.
Because the Board did not respond to Stadium Casino’s request that it
make public the information that should not be redacted in LLC’s application,
Stadium Casino sent another letter dated May 19, 2021 (May 19, 2021 Letter), again
requesting that non-confidential information in the application be made public,
including (a) what interest the persons who funded Lubert’s winning bid at the
September 2, 2020 auction have in that bid or in LLC; (b) whether persons other
than Lubert are members or otherwise have an interest in LLC or its affiliates; and
(c) details about Bally’s partnership with Lubert. See Petition ¶ 54; see also Petition
Ex. 9.
In a June 2, 2021 letter (June 2, 2021 Letter), SC Gaming’s counsel
responded to Stadium Casino’s May 19, 2021 Letter, refusing to respond to Stadium
Casino’s core questions - namely, who paid for Lubert’s winning bid at the
September 2, 2020 auction, and who has an interest in or control of LLC. See
Petition ¶ 55; see also Petition Ex. 10. On June 15, 2021, Stadium Casino again
followed up with the Board to: (a) underscore the importance of full disclosure,
particularly because Lubert and LLC had repeatedly evaded answering Stadium
Casino’s main questions; and (b) reiterate its request that the Board make public the
information it requested in its May 19, 2021 Letter. See id.; see also Petition Ex. 11.
The Board has not responded to Stadium Casino’s May 19, 2021 or June 15, 2021
Letters. See Petition ¶ 56.
On July 28, 2021, Stadium Casino filed the Petition seeking, in Count
I: (1) a declaration that Lubert’s bid is invalid because he failed to pay the full
amount of the winning bid himself as required by the Gaming Act; (2) a mandamus
9
order requiring the Board to award Stadium Casino the right to select a Category 4
location and apply for a Category 4 slot machine license; and (3) such other legal
and equitable relief as the Court may deem just and proper. See Petition at 23-24.
Stadium Casino requests, in Count II: (1) a declaration that the Board lacks the
authority to consider LLC’s pending application for a Category 4 slot machine
license; (2) an injunction enjoining the Board from further considering LLC’s
pending application for a Category 4 slot machine license; (3) as an alternative to
the relief sought in Count I, a mandamus order requiring the Board to conduct
another auction pursuant to Section 1305.2(c)(10)(ii) of the Gaming Act; and (4)
such other legal and equitable relief as the Court may deem just and proper. See
Petition at 25-26.
On September 17, 2021, SC Gaming filed preliminary objections to the
Petition asserting: (1) this Court lacks subject matter jurisdiction; (2) Stadium
Casino failed to exercise or exhaust a statutory remedy; and (3) Stadium Casino
failed to state a viable claim as a matter of law. Also on September 17, 2021, the
Board filed preliminary objections to the Petition alleging: (1) the conduct alluded
to in Count I of the Petition is not prohibited by the Gaming Act; and (2) nothing in
the Gaming Act precludes LLC from being an applicant for Category 4 licensure so
long as Lubert is the sole owner at the time the license is awarded. By November 9,
2021 Order, this Court directed that the preliminary objections be listed for oral
argument. The above-stated preliminary objections are now ripe for review.
Discussion
In ruling on preliminary objections, we must accept as true
all well-pleaded material allegations in the petition for
review [in the nature of a Complaint], as well as all
inferences reasonably deduced therefrom. The Court need
not accept as true conclusions of law, unwarranted
inferences from facts, argumentative allegations, or
expressions of opinion. In order to sustain preliminary
10
objections, it must appear with certainty that the law will
not permit recovery, and any doubt should be resolved by
a refusal to sustain them.
A preliminary objection in the nature of a demurrer admits
every well-pleaded fact in the [petition for review in the
nature of a] complaint and all inferences reasonably
deducible therefrom. It tests the legal sufficiency of the
challenged pleadings and will be sustained only in cases
where the pleader has clearly failed to state a claim for
which relief can be granted. When ruling on a demurrer,
a court must confine its analysis to the [petition for review
in the nature of a] complaint.
Torres v. Beard, 997 A.2d 1242, 1245 (Pa. Cmwlth. 2010) (emphasis added;
citations omitted). “‘[C]ourts reviewing preliminary objections may not only
consider the facts pled in the [petition for review in the nature of a] complaint, but
also any documents or exhibits attached to it.’ Allen v. Dep’t of Corr., 103 A.3d
365, 369 (Pa. Cmwlth. 2014).” Foxe v. Pa. Dep’t of Corr., 214 A.3d 308, 311 n.1
(Pa. Cmwlth. 2019).
Demurrers
Both the Board and SC Gaming have asserted demurrers to the Petition,
to a large extent based upon mischaracterizations of Stadium Casino’s claims. They
seize upon the allegation that, “Lubert did not pay the entire winning bid to the Board
himself, as required by [the Gaming Act]” and argue that the Act does not so require.
Both Stadium Casino and the Respondents make plausible arguments concerning
whether the provision cited5 should be read to imply such a requirement, but even if
we agree, arguendo, with Respondents on that issue, it is of no moment. The primary
claim asserted in the Petition is that LLC is not eligible to apply for the license at
issue. On that point, the Board’s demurrer asserts that the Act does not prohibit the
winning bidder “from forming a solely owned entity (e.g., corporation, limited
5
See 4 Pa.C.S. § 1305.2(c)(7).
11
liability company) to be the applicant for said license. . . . [R]ather the winning
bidder can form a separate entity to be the applicant, so long as owned solely by the
bidder.” (Board’s Prelim. Objs. at p.6) (emphasis added). However, this principle
is not in issue. Rather, Stadium Casino alleges, upon information and belief, that
LLC is not solely owned by Lubert, but is owned and controlled in large part by
others. This allegation is more than a bare unsupported assertion, but is based on
various circumstantial evidence outlined in the Petition. While the ownership
information provided to the Board identifies LLC as 100% owned by Lubert, and
SC Gaming so asserts, Stadium Casino has been denied information on this issue
and it has been redacted from the public version of LLC’s application. Accordingly,
a material factual dispute exists precluding the grant of the demurrers.
Failure to Exhaust Administrative Remedies
In addition to the demurrers, SC Gaming objects to the Petition
asserting that: (1) this Court lacks subject matter jurisdiction; and (2) Stadium
Casino failed to exercise or exhaust a statutory remedy.
A party may not seek judicial resolution of a dispute until
he or she has exhausted available statutory or
administrative remedies. The doctrine “reflects a
recognition of the general assembly’s directive of strict
compliance with statutorily prescribed remedies” and it
also acknowledges that “an unjustified failure to follow
the administrative scheme undercuts the foundation upon
which the administrative process was founded.” Jordan v.
Fayette Cty. Bd. of Assessment Appeals, 782 A.2d 642,
646 (Pa. Cmwlth. 2001) (quoting Shenango Valley
Osteopathic Hosp. v. Dep’t of Health, . . . 451 A.2d 434([Pa.] 1982)). If a party fails to pursue a statutory remedy,
the court is without power to act until the statutory
remedies have been exhausted[.]
Martel v. Allegheny Cnty., 216 A.3d 1165, 1172 (Pa. Cmwlth. 2019) (citations
omitted).
12
Further,
[w]hile the failure to exhaust a statutory or administrative
remedy normally bars this Court from hearing claims of
declaratory or injunctive relief with respect to agency
action, “the exhaustion doctrine is neither inflexible nor
absolute.” Keystone ReLeaf [LLC v. Pa. Dep’t of Health],
186 A.3d [505,] 513 [(Pa. Cmwlth. 2018) (en banc)]. Our
Supreme Court has recognized three exceptions to the
doctrine of exhaustion of statutory remedies where (i) the
jurisdiction of an agency is challenged, (ii) the
constitutionality of the statute is challenged or (iii) the
remedy at law is inadequate.
Cnty. of Berks v. Pa. Off. of Open Recs., 204 A.3d 534, 540 (Pa. Cmwlth. 2019).
SC Gaming first argues that Stadium Casino never complained to the
Board in an administrative proceeding that the Board erred in accepting Lubert’s
payment of the winning bid. Section 35.20 of the General Rules of Administrative
Practice and Procedure (GRAPP) provides: “Actions taken by a subordinate officer
under authority delegated by the agency head may be appealed to the agency head
by filing a petition within 10 days after service of notice of the action.” 1 Pa. Code
§ 35.20. Further, Section 493a.1(a)(6) of the Board’s Regulations expressly permit
the filing of “[a]ppeals of staff decisions under [Section 35.20 of GRAPP] (relating
to appeals from actions of the staff).” 58 Pa. Code § 493a.1(a)(6). SC Gaming
argues that because the acceptance of Lubert’s payment for the winning bid was a
Board staff decision, Stadium Casino had the right to appeal that action to the Board
within ten days but did not do so. This argument fails to take into account that there
was no basis to object to the acceptance of Lubert’s bid; it is undisputed that Lubert
was an eligible bidder and that he won the auction. This administrative remedy is
simply inapplicable to the claim asserted in this action, i.e., that another entity, LLC,
was ineligible to apply for the license pursuant to Lubert’s successful bid.
13
In addition, SC Gaming contends that Stadium Casino has not
intervened or sought to intervene in the ongoing administrative proceeding in which
the Board is considering LLC’s application. Stadium Casino argues that this remedy
is inadequate. Even if a person is granted the right to intervene, its participation is
limited. “Except when the Board determines that it is necessary to develop a
comprehensive evidentiary record, the participation of [an intervener] will be limited
to the presentation of evidence through the submission of written statements attested
to under oath.” 55 Pa. Code § 441a.7(z)(6) (licensing hearings for slot machines).
Here, Stadium Casino would not be in a position to present evidence of its claim
unless it were able to obtain discovery of the information that has, so far, been
withheld. “The ability to obtain discovery in an administrative proceeding before
the Board or presiding officer is committed to the discretion of the Board or
presiding officer and will generally be limited to the information, documents and list
of witnesses that any party will present during a hearing.” 58 Pa. Code § 493a.11(a)
(emphasis added) (discovery).6 In addition, “[c]onfidential information furnished to
or obtained by the Board or the Bureau from any source will not be discoverable
under this subsection. If a request for discovery involves confidential information,
a party may file a motion for protective order and the presiding officer will make a
determination as to what is deemed confidential.” 58 Pa. Code § 493a.11(f)
(discovery). Given the Board’s refusal to even consider Stadium Casino’s informal
claims that LLC is ineligible nor to give Stadium Casino any information on LLC’s
ownership, we do not have any reason for optimism, let alone confidence, that the
Board will exercise its discretion to allow such discovery to Stadium Casino, even
6
An “intervener” is defined as “[a] person who petitioned to intervene in a proceeding and
who was admitted by the Board as a participant to the proceeding.” 58 Pa. Code § 491a.2
(definitions). A “participant” is defined as “[a] person admitted by the Board to limited
participation in a proceeding.” Id. A “party” is defined as “[a] person who is named in or admitted
to a proceeding before the Board and who has a direct interest in the subject matter of the
proceeding.” Id.
14
if intervention were allowed. The mere possibility that an administrative remedy
may be adequate, however unlikely, is insufficient to bar equitable relief. See
Feingold v. Bell of Pa., 383 A.2d 791, 794 (Pa. 1977) (holding that “[t]he mere
existence of a remedy does not dispose of the question of its adequacy; the
administrative remedy must be ‘adequate and complete.’”) Moreover, if Stadium
Casino were limited to the usual role of intervener and denied discovery, the Board’s
broad discretion over the matter would likely preclude any prospect of appellate
relief from a decision awarding the license to LLC. For the same reason, SC
Gaming’s objection that Stadium Casino’s ability to appeal to our Supreme Court is
an adequate administrative remedy is unavailing.
Finally, SC Gaming asserts that the issue raised in Stadium Casino’s
Petition is not ripe for adjudication. SC Gaming maintains that there is no licensure
decision by the Board, and no certainty the Board will approve SC Gaming’s license
application when, at some future date, the Board makes its decision. Thus, Stadium
Casino declares that whatever theoretical harm Stadium Casino seeks to address in
this Court does not exist today, and may never come to pass. Accordingly, Stadium
Casino asks this Court to dismiss the Petition for lack of a controversy that is ripe
for review, pursuant to Pennsylvania Rule of Civil Procedure (Rule) 1028(a)(1)
(“lack of jurisdiction over the subject matter of the action”). However, Stadium
Casino is not challenging the Board’s potential future issuance of a Category 4
license to LLC. Rather, it is seeking a declaration that LLC is ineligible to seek the
license and, therefore, the Board lacks the authority to consider LLC’s application.
Such consideration, far from a theoretical future prospect, is already ongoing.
Accordingly, this dispute is ripe. 7
7
Stadium Casino also asserts that its claims fall into an exception to the exhaustion doctrine
because it is bringing a purely legal challenge to the Board’s authority over SC Gaming’s
application. Stadium Casino cites to Southeastern Pennsylvania Transportation Authority v. City
of Philadelphia, 101 A.3d 79 (Pa. 2014) (SEPTA), to support its position. The Court held that
SEPTA was not required to exhaust its administrative remedies because SEPTA raised a purely
15
Conclusion
For the above stated reasons, the preliminary objections are overruled.
_________________________________
BONNIE BRIGANCE LEADBETTER
President Judge Emerita
Judge Covey did not participate in the decision for this case.
legal challenge to an agency’s jurisdiction, not a factual one. Here, however, resolution of Stadium
Casino’s claim that LLC is ineligible hinges on the factual question of LLC’s ownership, so this
doctrine is inapplicable.
16
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Stadium Casino RE, LLC, :
Petitioner :
:
v. : No. 249 M.D. 2021
:
Pennsylvania Gaming Control Board, :
SC Gaming OPCO LLC and :
Ira Lubert, :
Respondents :
ORDER
AND NOW, this 8th day of February, 2023, the Preliminary Objections
to the Petition for Review of Petitioner, Stadium Casino RE, LLC, are
OVERRULED. Respondents, Pennsylvania Gaming Control Board, SC Gaming
OPCO LLC and Ira Lubert, are directed to file answers to the Petition for Review
within thirty (30) days of the date of this order.
_________________________________
BONNIE BRIGANCE LEADBETTER
President Judge Emerita