The parent company of Indiana’s newest casino has found itself in the midst of another lawsuit.
Spectacle Entertainment is running the show at Hard Rock Casino Northern Indiana.
Around half of Spectacle’s shareholders are now suing the Indiana Gaming Commission (IGC).
The friction is due to some financial disclosure rules that the IGC put into place a few weeks ago.
This shouldn’t effect the Hard Rock’s grand opening on May 14, but it’s just another development in the never-ending Spectacle situation.
Spectacle Entertainment owners fight new IGC rules
The new rules from the IGC force shareholders in gaming companies to release detailed financial information.
That’s always been a reality for workers in the state’s gambling industry, but not for shareholders of the companies themselves.
You have to receive a Level 1 occupational license to operate gambling machines in Indiana.
That’s part of the IGC’s safety and background requirements for the industry.
Keeping checks like that in place helps the commission make sure that things are going off without a hitch. There are few surprises, which helps prevent any kind of integrity issues with the state’s gambling companies.
Requiring that kind of detailed background info from workers is one thing, but making investors disclose it is a new step for Indiana.
The Spectacle lawsuit is arguing that the IGC is going too far with the move.
“The IGC’s attempt to extend it’s jurisdiction to holders of an equity interest is beyond the scope of authority granted by the Indiana General Assembly.”
The shareholders’ argument rests on the idea that they are only investors in the gaming company.
Since they’re not a part of the day to day gambling operations, they don’t believe that they should have to release the extra financial info.
Fallout from Rod Ratcliff lawsuit
So why did the IGC create these new rules in the first place?
The commission created the requirements in response to the Spectacle Entertainment investigation.
In a nutshell, the Spectacle shareholders are upset about the fallout from wrongdoing in their own company.
The shareholders can thank Rod Ratcliff for that.
The former Spectacle CEO was allegedly wrapped up in a political money-funneling scheme that came to light early last year.
The IGC tried to force Ratcliff to sell his shares of Spectacle.
The commission argued that someone under investigation shouldn’t hold a large sway over an important gambling company.
The IGC hoped to force him out of the state’s gambling industry.
Ratcliff sued the commission to try and hold onto his position, and the two sides eventually reached a settlement.
Ratcliff sold his Spectacle shares, and in return, the IGC pledged not to pursue any new legal charges against him.
The entire situation created a mess that took months to clean up.
IGC hoping to build public trust
The IGC discovered some red flags during its investigation into Spectacle.
Some of the financial decisions that Ratcliff made on behalf of the company triggered alarms along the way.
In theory, the commission’s new financial disclosure rules will prevent this type of situation from happening again.
The IGC should be a step ahead of potentially shady decisions by having detailed background information about investors on hand.
The commission adopted the new set of rules on March 24, and hopes that the new rules will increase the public’s trust in the industry.
According to IGC Executive Director Sara Tait, the commission took the time to get some input from state operators before making the rules official.
“As is our practice, I offered the industry the ability to review these rules and offer feedback. Several operators and applicants offered support for this initiative, as well as very helpful feedback and clarifying language, which were incorporated into this document.”
Despite that, Spectacle’s shareholders are not happy with the changes.
At least for now, a hearing has not been scheduled for the shareholder lawsuit.
Gaming commission responds
The IGC is asking the court to throw out the shareholder lawsuit.
The commission is arguing that the Riverboat Gaming Act clearly gives it the ability to ask for detailed financial information.
That 1993 law established the IGC as the regulatory body for Indiana casinos.
The IGC cited the act in its official response to the lawsuit, which states that “the Commission may require the submission of an array of types of information, including any information the commission considers necessary for the effective administration of the Article.”
The Riverboat Gaming Act specifically mentions that the IGC can collect records, “including financial statements.”
The commission believes that its new financial disclosure rules are important for the state’s gaming industry.
It sees Spectacle’s objection as a dangerous step for Indiana gambling as a whole.
“These events have cast a shadow over the industry and served to undermine its reputation and integrity.”
The IGC is eager to put this in the past since Spectacle has been in hot water for over a year now. That won’t be possible as long as the lawsuit is ongoing.
The first hearing for the case will take place on the morning of May 14. Spectacle’s new Hard Rock Casino will have its grand opening on that same day.