Justia Gaming Law Opinion Summaries

Debtor, licensed under North Dakota’s pari-mutuel wagering system, filed for bankruptcy in 2004. Ten years later, the district court ruled that the state was not authorized to collect certain taxes from the Debtor. North Dakota agreed to pay the estate $15 million. Creditors asserted claims. Although the state constitution provides that “the entire net proceeds of such games of chance are to be devoted to educational, charitable, patriotic, fraternal, religious, or other public-spirited uses,” North Dakota did not raise the rights of any charities.In 2018, the bankruptcy court ruled on the claims. North Dakota filed a new proof of claim. The court concluded that the state lacked parens patriae authority to assert claims on behalf of charities. The Eighth Circuit Bankruptcy Appellate Panel (BAP) remanded. On remand, the state attempted to add a breach of contract claim. The bankruptcy court denied that motion and concluded that the contract claim had no merit. The court also rejected a constitutional-statutory claim.The BAP affirmed, rejecting arguments that North Dakota law requires that charities, not Debtor, recover the remaining tax settlement funds and that the court erred when it disallowed the contract claim. The state constitution concerns the legislature and does not govern the actions of private parties such as Debtor. Debtor paid the taxes originally; the reimbursement of those improperly-paid taxes should inure to the benefit of Debtor after distribution under the bankruptcy priority scheme. View "North Dakota v. Bala" on Justia Law

In 2000, the Tribe had agreed to pay Monroe $265 million for Monroe’s 50% ownership interest in the Casino, giving the Tribe a 100% ownership interest. In 2002, the Tribe agreed to another $200 million debt in exchange for a continued gaming license from the Michigan Gaming Control Board (MGCB). In 2005, the Tribe created a new entity (Holdings), which became the Casino’s owner; pre-existing entities owned by the Tribe became Holdings' owners to allow the Tribe to refinance and raise capital to meet its financial obligations. The restructuring was approved by the MGCB, conditioned on the Tribe’s adherence to strict financial covenants. In 2005, Holdings transferred approximately $177 million to various entities. At least $145.5 million went to the original owners of Monroe. At least $6 million went to the Tribe. For three years, the Tribe unsuccessfully attempted to raise additional capital to meet its financial obligations. In 2008, the related corporate entities) filed voluntary petitions for Chapter 11 bankruptcy. The Trustee alleged that the 2005 transfers were fraudulent and sought recovery under 11 U.S.C. 544, 550. The district court and Sixth Circuit affirmed the bankruptcy court’s dismissal of the complaint on the basis of tribal sovereign immunity. The court rejected arguments that Congress intended to abrogate the sovereign immunity of Indian tribes in 11 U.S.C. 106, 101(27). View "Buchwald Capital Advisors LLC v. Sault Ste. Marie Tribe" on Justia Law

In 2006, the Pennsylvania Gaming Control Board awarded a slot machine license to PEDP for a $50 million fee. The Board eventually revoked the license when PEDP failed to meet requirements. PEDP unsuccessfully appealed from the revocation in state courts. PEDP then filed a Chapter 11 bankruptcy petition and brought an adversary action against the Commonwealth alleging that the revocation was a fraudulent transfer under 11 U.S.C. 544 and 548 and under Pennsylvania law. Citing the Rooker-Feldman doctrine, the Bankruptcy Court concluded that it lacked jurisdiction over the fraudulent transfer claims because state courts had upheld the revocation. The district court affirmed. The Third Circuit reversed. State and federal courts can address the similar question of property interests; the Bankruptcy Court would not need to review the Commonwealth Court’s decision to reach a conclusion; the Rooker-Feldman doctrine did not bar the court from finding that there was a fraudulent transfer. The Trustee is not “complaining of an injury caused by the state-court judgment and seeking review and rejection of that judgment.” An award of damages for the revocation is not the functional equivalent of reinstating the license. The court did not express an opinion on the merits of the claim or on the possibility of issue preclusion. View "Philadelphia Entertainment and Development Partners, LP v. Commonwealth of Pennsylvania Department of Revenue" on Justia Law

The Debtors own the Atlantic City Trump Taj Mahal casino. The union represents 1,136 employees. The 2011 collective bargaining agreement was to remain in effect through September 14, 2014 and continue in full force and effect from year to year thereafter, unless either party served 60 days written notice of its intention to terminate, modify, or amend. In March 2014, the Debtors gave notice of their “intention to terminate, modify or amend” and sought to begin negotiations. The Union initially declined. On August 20 the parties met. The Debtors emphasized their critical financial situation. No agreement was reached. The Debtors filed for Chapter 11 bankruptcy. On September 11, the Debtors asked the Union to extend the term of the CBA. The Union refused. The CBA expired. On September 17, the Debtors sent the Union a proposal with supporting documentation. After meetings, the Debtors successfully moved, under section 1113, to reject the CBA and implement the terms of the Debtors’ last proposal, asserting that rejection of the CBA was necessary to the reorganization.While 11 U.S.C. 1103 allows a debtor to terminate a CBA under certain circumstances, the National Labor Relations Act prohibits an employer from unilaterally changing CBA terms even after its expiration; key terms of an expired CBA continue to govern until the parties reach a new agreement or bargain to impasse. The Third Circuit affirmed, finding section 1113 does not distinguish between the terms of an unexpired CBA and terms that continue to govern after the CBA expires. View "In re: Trump Entm't Resorts" on Justia Law

CEOC, the Chapter 11 debtor, owns and operates casinos. Caesars (CEC) is CEOC's principal owner. CEOC borrowed billions of dollars, issuing notes guaranteed by CEC. As CEOC’s financial position worsened, CEC tried to eliminate its guaranty obligations by selling assets of CEOC to other parties and terminating the guaranties. CEOC's creditors, who had received the guaranties, challenged CEC’s repudiation, seeking approximately $12 billion. CEOC, in its bankruptcy proceeding, asserted claims alleging that CEC caused CEOC to transfer valuable assets to CEC at less than fair value, leaving CEOC saddled with debt (fraudulent transfers) and that the guaranty suits will thwart CEOC’s multi‐billion‐dollar restructuring effort, which depends on a substantial contribution from CEC in settlement of CEOC’s claims, and will let the guaranty plaintiffs take precedence over other creditors. The bankruptcy judge, and a district judge refused CEOC's request to enjoin the guaranty suits until 60 days after a bankruptcy examiner completes his report. The bankruptcy judge’s exercise of jurisdiction over the other suits would have been constitutional, but he thought he lacked statutory authority to enter an injunction under 11 U.S.C. 105(a). The Seventh Circuit vacated, finding that the judges misinterpreted the statute and that issuance of a temporary injunction could facilitate a prompt wind‐up of the bankruptcy. View "Caesars Entm't Operating Co., Inc. v. BOKF, N.A." on Justia Law

In 1997, Player and his wife established EAR, purportedly to refurbish high-tech machinery . In 2005-2009, EAR defrauded creditors and the couple obtained $17 million in fraudulent transfers from EAR. Before the fraud was detected, they used funds for their personal benefit and spent large amounts at the Horseshoe Casino, Player was known to “walk with chips,” rather than cashing them in, and giving chips to a third party to cash in. Neither is illegal, but are potentially indicative of “structuring” transactions to avoid triggering the $10,000 reporting requirement, a federal crime, 31 U.S.C. 5324. When the fraud was discovered, EAR filed for Chapter 11 bankruptcy. The plan administrator sought to avoid transfers to Horseshoe, alleging that Horseshoe had reasons to believe that Player’s money came from EAR. Horseshoe objected to a motion to compel under 31 C.F.R. 1021.320(e), which governs Suspicious Activity Reports filed by financial institutions, including casinos, to detect money laundering and other violations of the Bank Secrecy Act. The district court ordered an ex parte filing by Horseshoe, which was inaccessible to EAR. The Seventh Circuit affirmed denial of the motion, finding that Horseshoe accepted the transfers without knowledge of the fraud at EAR and could not have uncovered the fraud if it had investigated. View "Brandt v. Horseshoe Hammond, LLC" on Justia Law

Revel opened an Atlantic City resort-casino, costing $2.4 billion. Revel entered into a 10-year lease with IDEA to run two nightclubs and a beach club. IDEA contributed $16 million of the projected cost of construction in addition to monthly rental payments. The Casino did not turn a profit. Revel filed a “Chapter 22” bankruptcy, seeking permission to sell its assets free of all liens and interests (including leases). The Bankruptcy Court approved and set an auction date. IDEA, concerned that the proposed sale would eliminate the value of its lease notwithstanding its $16 million investment, filed objections. No qualified buyer appeared. The court postponed the auction. A month later, Revel closed the Casino’s doors and barred tenants, IDEA gave notice that it intended to continue operating its beach club and nightclub and expected Revel to honor its obligations to provide uninterrupted utility service. In the meantime Polo agreed to buy the Casino for $90 million. Days before the sale hearing, Revel replied to IDEA’s objections. IDEA appealed an unfavorable order and sought a stay pending appeal, noting that, if the decision were not stayed, its appeal would be moot under 11 U.S.C. 363(m) once the sale closed. The district court denied the motion. The Third Circuit reversed, staying that part of the order that allowed Revel to sell the Casino free of IDEA’s lease. View "In re: Revel AC Inc" on Justia Law

These four adversary proceedings involved suits by Chapter 7 bankruptcy trustees against the Lower Sioux Indian Community (the Tribe) and its subsidiary, Dakota Finance Corporation (together, Defendants). In three of the adversaries, the trustees pursued the Tribe and the debtors for turnover of ongoing tribal revenue payments owed to the debtors under the Tribe's ordinances and the Indian Gaming Regulatory Act. In one of the adversaries, the trustee was seeking to avoid a lien asserted by Dakota Finance Corporation on the ongoing revenue payments owed to one debtor as being unperfected. Absent the filing of a bankruptcy case, the creditors of these debtors would be prohibited by the Tribe's sovereign immunity from, for example, garnishing those revenues. The issue here was whether the filing of bankruptcy by Tribe members serves to make the debtors' ongoing revenues from the tribe available to the respective trustees for the benefit of their creditors. The bankruptcy court held that Defendants were protected by sovereign immunity and dismissed the adversaries as to those parties. The Eighth Circuit Court of Appeals affirmed, holding that the bankruptcy court did not err in concluding that Defendants were protected by sovereign immunity and were, therefore, immune from these suits against them. View "Bucher v. Dakota Fin. Corp." on Justia Law

These four adversary proceedings involved suits by Chapter 7 bankruptcy trustees against the Lower Sioux Indian Community (the Tribe) and its subsidiary, Dakota Finance Corporation (together, Defendants). In three of the adversaries, the trustees pursued the Tribe and the debtors for turnover of ongoing tribal revenue payments owed to the debtors under the Tribe's ordinances and the Indian Gaming Regulatory Act. In one of the adversaries, the trustee was seeking to avoid a lien asserted by Dakota Finance Corporation on the ongoing revenue payments owed to one debtor as being unperfected. Absent the filing of a bankruptcy case, the creditors of these debtors would be prohibited by the Tribe's sovereign immunity from, for example, garnishing those revenues. At issue here was whether the filing of bankruptcy by Tribe members serves to make the debtors' ongoing revenues from the tribe available to the respective trustees for the benefit of their creditors. The bankruptcy court held that Defendants were protected by sovereign immunity and dismissed the adversaries as to those parties. The Eighth Circuit Court of Appeals affirmed, holding that the bankruptcy court did not err in concluding that Defendants were protected by sovereign immunity and were, therefore, immune from these suits against them. View "Bucher v. Dakota Fin. Corp." on Justia Law

These four adversary proceedings involved suits by Chapter 7 bankruptcy trustees against the Lower Sioux Indian Community (the Tribe) and its subsidiary, Dakota Finance Corporation (together, Defendants). In three of the adversaries, the trustees pursued the Tribe and the debtors for turnover of ongoing tribal revenue payments owed to the debtors under the Tribe's ordinances and the Indian Gaming Regulatory Act. In one of the adversaries, the trustee was seeking to avoid a lien asserted by Dakota Finance Corporation on the ongoing revenue payments owed to one debtor as being unperfected. Absent the filing of a bankruptcy case, the creditors of these debtors would be prohibited by the Tribe's sovereign immunity from, for example, garnishing those revenues. The issue here was whether the filing of bankruptcy by Tribe members serves to make the debtors' ongoing revenues from the tribe available to the respective trustees for the benefit of their creditors. The bankruptcy court held that Defendants were protected by sovereign immunity and dismissed the adversaries as to those parties. The Eighth Circuit Court of Appeals affirmed, holding that the bankruptcy court did not err in concluding that Defendants were protected by sovereign immunity and were, therefore, immune from these suits against them. View "Dietz v. Lower Sioux Indian Cmty." on Justia Law