Maine Lawmakers Mull Extraordinary Casino Move
Members of the legislature in Maine are contemplating an unusual, constitutionally questionable tactic in order to keep what they consider to be the fruit of a poisoned tree from making it to the November ballot—and possibly enriching a controversial and almost universally reviled casino developer to the exclusion of anyone else.
They’re aiming their guns at a casino developer whose modus operandi is to quality casinos for the ballot, pass them, and then flip the them to another developer.
Because a casino initiative that gathered enough signatures to qualify for November was sold by a campaign that hid its financial backers and violated campaign ethics rules, two legislators propose that the legislature take one of the options offered to it by the state constitution: immediately adopt the bill as law. And then just as quickly repeal it, thus obviating the election.
Supporters of a third Maine casino, in the form of an initiative so closely written that only the casino developer Shawn Scott would be able to take advantage of it, began their signature gathering around November of 2015. The wording specified that the casino would be located in Southern Maine and that applications could only be accepted “from an entity that owned in 2003 at least 51 percent of an entity licensed to operate a commercial track in Penobscot County.”
The shadowy and frequently dodgy Scott is the only person who fits that description. Scott brought casino gaming to Maine when, in a similar effort, in 2003 he qualified a casino for the ballot that eventually became the Hollywood Slots in Bangor. Before the casino was built he sold the interests for $51 million to Penn National Gaming, which operates it now.
Scott is based in the Northern Mariana Islands, but has decided to return to Maine to see if he can duplicate his success of 14 years ago. He allowed his sister, Lisa Scott, to be the public person in the spotlight.
The first petition they floated in 2015 failed because the Secretary of State’s office declared more than half of the signatures invalid and signature gatherers were accused of misleading voters to get their signatures. They tried again in 2016, selling the initiative as a job engine to help fund the state’s schools. This time they gathered enough valid signatures, although the committee has been accused of fraud.
The Scotts’ tactics offend many lawmakers, among them Senator Garrett Mason, co-chairman of the Veterans and Legal Affairs Committee, who declared last week: “Given what we know so far, it certainly seems as though they are trying to take advantage of Mainers. We’re going to look at all of our options to prevent that from happening and protect Maine people.”
Scott’s strategy over the years seems to be to qualify measures for casinos in various states, and if they pass, to sell the rights to other developers. This avoids the scrutiny of gaming regulators who invariably dip into Scott’s past of numerous lawsuits (against him,) of shady financial dealings and multiple allegations of fraud.
Most of what Scott has done has been under the radar, and few politicians have ever met him. People associated with him are notoriously closemouthed. That’s also true of the people in charge of the ballot question’s committee: Horseracing Jobs and Fairness.
Rep. Louis Luchini, the other chairman of the Veterans and Legal Services Committee, and the other sponsor, with Mason, of the strategy of passing and then immediately repealing, the casino bill, says of Scott and his activities: “One of the difficulties is these people involved have hundreds of shell corporations. It’s hard to tell who is really behind it and I think that veil of secrecy exists to protect themselves.”
He adds, “This casino case reflects poorly on the citizens’ initiative process. It essentially allows one wealthy person to pay to put a law on the books that helps them.”
Longtime casino opponent Dennis Bailey, who once headed the group CasinosNo! told the Portland Press Herald: “He’s a very mysterious guy but what he’s trying to do now, it’s not like we haven’t seen it before. This is his thing. He comes in with a scorched earth campaign to get a casino question on the ballot and then flips it once it passes.”
Scott grew up in Riverside, California and after obtaining degrees in biology and psychobiology he first became a casino investor in 1994 in Henderson, Nevada. He obtained a restricted license to operate a struggling casino—the first example of a pattern he would employ again and again. He withdrew the application and sold the casino after the Nevada Gaming Control Board began scrutinizing his accounting.
In Louisiana, he purchased a down on its luck racetrack, the Delta Downs, and persuaded the state’s voters to allow him to add slots. When state regulators began questioning his finances, Scott sold the racetrack for a large profit. He used the profits to buy another nearly defunct racetrack in upper New York state—just in time to take advantage of a new law that allowed racetracks to add slot machines.
Once again, a background check on Scott’s finances by the New York State Racing and Wagering Board, especially about where he got his money and who his partners were, led the board to refer to Scott’s accounting practices as “smoke and mirrors.” Scott ended up selling his interest in 2004.
That was about the time Scott was qualifying a casino initiative for Bangor, Maine, through his company Capital Seven. He spent $1.5 million on advertising the initiative as a way to bring jobs and tax revenue to the state: much the same message he is employing today.
Scott’s initiative passed, but in large part because it shared the ballot with another that would have allowed the state’s Indian tribes to operate a casino. The anti-casino forces focused their attention on the Indians, and Scott’s initiative slipped through at 52 percent.
Scott helped fund the effort to defeat the Indian casino, and his activities included making false statements about Penn National Gaming (the Indians’ backers) that prompted them to sue Scott for defamation. Scarborough Downs, which tried to get slot machines—an effort Scott fought—also ended up suing him.
When the voters passed the Bangor casino, state regulators began looking very closely at Scott’s past, something he vigorously did everything to obfuscate. Nevertheless, the Maine Harness Racing Commission produced a 36-page report based on 40,000 pages of documents gleaned from four states.
That report said, in part: “Mr. Scott and his associated companies have not provided many of the documents requested during the course of this investigation. It is reported that he demonstrated a similar lack of cooperation during investigations conducted by the New York Racing and Wagering Board and the Louisiana State Police.” It added that Scott’s companies,
“have demonstrated sloppy, if not irresponsible, financial management and accounting practices over several years.”
Scott’s associates were also singled out for comment, and it became obvious the regulators were not inclined to issue him a gaming license. So, he sold to Penn National, which built Hollywood Slots, which remains a very successful operation.
That fight, which dragged so much of Scott’s past through the light, appears to have hurt him with other efforts to qualify gaming initiatives, such an attempt in 2004 to qualify a slots parlor initiative in Washington D.C. Scott’s past caused one potential business partner to tell the Washington Post years later: “We did not like what we saw on Shawn and thought he would not be a good partner.”
Although Scott tried to bring slots to Idaho, his focus shifted offshore and he started a company, Bridge Capital, that operated in Asian markets such as the Philippines and Cambodia, and targeted risky investments. The government of Laos seized one of his casinos in the country, alleging corruption.
Last year Scott was one of the backers of an unsuccessful campaign to allow a slots parlor near the Suffolk Downs racetrack in Massachusetts. The effort apparently tried to hide Scott’s involvement, but was forced to file documents that clarified his major involvement. That group was later fined $125,000 for violating campaign disclosure laws—accusations that have also been leveled at Scott’s Maine campaign this year.
That campaign is being run by Lisa Scott, who has defended the campaign from accusations that it is trying to commit fraud. Last month she wrote, “The committee did not understand the statute at issue to require Lisa Scott to identify the original sources for contributions made to her … as such all the monies were identified as coming from Lisa Scott.”
She defends the effort to “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’s efforts to be more transparent in her dealings than her brother, ran onto shoals two months ago when a lobbyist hired to represent the campaign confused and infuriated lawmakers when he testified that he was working for Bridge Capital, Scott’s offshore company, and then later clarified that he worked for Universal Capital—and that he didn’t know who its principals are.
Luchini and Mason are now exploring their limited options. They could put a competing measure on the ballot and hope voters choose that over Scott’s initiative.
The one they appear to be leaning on would be to pass an identical bill to what is proposed by Scott. Then later repeal it. They admit that what they are considering is drastic.
“This ballot question committee has been so fraudulent from beginning to end,” Luchini told the Herald. “They have shown a blatant disregard for Maine laws and, frankly, should know better.”