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Endeka, Penn in legal battle over Lawrence County project
By Kalea Hall
NEW CASTLE, PA.
Endeka Entertainment claims in a lawsuit that Penn National Gaming Inc.’s misrepresentation on a Lawrence County casino and racing project will hinder approval of a gaming license.
In its own lawsuit, Penn National — after withdrawing its interest in the project — says if the application is denied, Penn’s own reputation will be “irreparably harmed.”
Both are seeking damages from each other in these lawsuits, which came just a few weeks before the April 29 hearing before the Pennsylvania Gaming Control Board for an update on the project.
In a lawsuit filed in the Court of Common Pleas in Berks County, Pa., on March 30, Penn National wants the court to require Endeka to pay the company damages and determine whether Penn can cause Endeka to file a petition to withdraw its gaming license application.
Likewise, in a lawsuit filed in the Court of Common Pleas of Lawrence County on March 30, Endeka asks the court for compensatory damages, plus punitive damages for the “fraudulent scheme and fraudulent misrepresentations” made by Penn National to prevent the completion of the Lawrence Downs project.
“Upon information and belief, Penn National sought to control the application for a gaming license and the development of a casino in Lawrence County, derailed the project from the outset through fraud, and ultimately destroyed the project, all to protect Penn National’s own financial interest in its Austintown, Ohio, casino,” Endeka’s lawsuit says.
Penn National on March 30 announced its withdrawal in the $225 million casino and racing resort project off of U.S. Route 422 that was expected to include more than 1,000 slot machines, 10 poker games and a harness race track.
The company cited the oversaturated market and the softness of the economy for why it could not justify the investment.
Lawrence County Commissioner Dan Vogler said he was caught off guard by Penn National’s decision to withdraw from the project, but he is optimistic for the future of the development that would provide hundreds of jobs to the area because Endeka still holds the harness-racing license and is the applicant for the gaming license.
“I was optimistic that the partnership was a strong one and going to be a successful one,” he said. “With this withdrawal it does create an opportunity to look for another partner.”
Penn National had been involved in the project since 2013, when Endeka enlisted Western PA Gaming Ventures, a Penn National company, to join its efforts in obtaining a gaming license for the property. Endeka applied for the license in May 2013. Penn provided a $50 million bond to the Pennsylvania Gaming Control Board in order to ensure the gaming license application would remain in place for consideration by the board. The bond expires June 1.
In its lawsuit, Penn National claims project agreements between the two companies gave both of them responsibilities on the project.
“Since May 2013, WPA Gaming has taken significant actions and expended significant amounts of its own money to advance this project and attempt to secure financing and the category 1 license,” Penn’s lawsuit states.
Penn argues that Endeka and other partners on the project violated their contractual duties and failed to spend the time, effort and resources needed to obtain the license, which violated the company’s contractual agreement.
Penn claims a withdrawal agreement allows the company to cause Endeka to withdraw its application for the license.
In its lawsuit, Endeka contends a series of statements made by Penn National representatives were a misrepresentation of reality. Some of those statements include: Penn’s Austintown project would have no effect on the company’s actions in the Lawrence Downs project; Penn would take all actions needed to receive a gaming license for Endeka; Penn would obtain financing for the project and would use its reputation to secure a gaming license.
“Penn National continued to publicly and privately represent commitment to the Lawrence Downs project until it was too late for Endeka and Tuxepo (an Endeka partner in the project) to do anything material to save the project,” the Endeka lawsuit says. “At no point in time did Penn National represent hesitancy or questions regarding the ability to obtain financing for the Lawrence Downs project or concerns over the revenue projections and/or market assessments for the Lawrence Downs project.”
Penn National, however, says it had “ongoing, well-founded doubts” about the project and consistently communicated its concerns for more than a year to Endeka and others.
Penn National notes in its lawsuit that Endeka has to meet an April 9 deadline of application materials to the gaming control board. The company is concerned that if the deadlines aren’t met then the license will be denied, which would cause Penn to have to report the denial on other gaming projects and cause harm to its reputation.