10/19/2013 11:09AM

Suffolk Downs: Caesars out as casino partner

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Caesars Entertainment has backed out of a partnership with Suffolk Downs in East Boston on a massive casino project less than three weeks before voters will be asked whether to approve a casino at the track, Suffolk officials said in a statement on Saturday.

Caesars pulled out at the request of Suffolk after Massachusetts regulators provided a report to track officials that raised questions about the company’s suitability for a license, the statement said. Caesars entered a partnership with Suffolk to build a casino and hotel at the track in 2011.

Chip Tuttle, the track’s chief operating officer, said that officials from the state racing commission’s investigative bureau briefed the track on Friday about their concerns.

“As a result of the briefing we have asked our management partner, Caesars Entertainment, to withdraw as a qualifier from our license application,” Tuttle said in a prepared statement. “We will immediately begin a public communications initiative to notify our host communities of this change.”

The statement said that Suffolk intended to press forward with the project.

“We are confident that Suffolk Downs will be deemed suitable for licensing,” Tuttle said.

Caesars has properties in 13 U.S. states and six countries, according to its website. Several months ago, the South Korean government denied a casino license to Caesars because of concerns over the company’s debt and credit rating. South Korea also denied a license to another company at the same time.

The Boston Globe, citing unnamed officials, said the report from Massachusetts regulators “raised several concerns about [Caesars], including a business relationship with a person alleged to have family members involved in organized crime outside the U.S.”

The pull-out is certain to raise questions about the project at a critical time. Suffolk is competing for the sole license in the Boston area with two other bidders, Wynn Resorts and Foxwoods, and faces a Nov. 5 referendum for local approval.

Under a law passed authorizing casinos in 2011, Massachusetts horsemen will receive a share of the revenue from the state’s casinos and a lone slots parlor, regardless of which companies are awarded the licenses.

Caesars had a 4.2 percent equity share in the Suffolk project and would have received fees for operating the casino.

Earlier this year, the Massachusetts Gaming Commission disqualified the owners of Plainridge Racecourse, a harness track, from applying for the slots license, citing an apparent scheme by an owner of the track to embezzle funds. The scheme was uncovered during the commission’s background check.

Suffolk Downs was purchased in 2007 by a partnership led by Richard Fields, a former associate of Donald Trump. The track has lost tens of millions of dollars each year since then, Tuttle told regulators earlier this week.