By Matt Murphy

STATE HOUSE NEWS SERVICE

STATE HOUSE -- Opponents accused Attorney General Martha Coakley's office of "splitting hairs" on Monday as the state's lead attorney trying to block a ballot petition outlawing casino gambling in Massachusetts drew a distinction before the Supreme Judicial Court between the casino application process and issuance of licenses.

Peter Sacks, the state solicitor, argued before the full Supreme Judicial Court that prospective casino developers invited by the state to bid on casino licenses have an implied contractual right to seeing the Gaming Commission rule on their applications, even if licenses are never awarded.

The state's argument in the case runs through the center of positions taken by ballot petitioners and the casino industry who disagree over whether developers who paid applications fees as part of the licensing process set up by the Legislature have a contractual right to see that process play out and if they would be entitled to compensation if the law were to be repealed.

With one license for a slot parlor in Plainville already awarded and three additional applications for casino licenses in eastern and western Massachusetts under review, the Supreme Judicial Court on Monday heard a challenge to Coakley's determination that a proposed ballot question to undo the state's expanded gaming law and make casino gambling illegal in Massachusetts is ineligible under the constitution.

"They weren't merely paying their millions of dollars for a commission seal of approval on their applications. What they wanted was a 15-year casino license or 5-year slots parlor license but the Legislature and commission have no power to grant that in a way that's binding on subsequent Legislatures or on the people," Sacks said. "What they can get and what would still have value is a decision on their application."

Sacks said a favorable opinion from the Gaming Commission on an application, even without a license, could have value to a casino developer as they pursue licenses in other states and having that decision would negate the state's obligation to provide compensation to applicants if the licensing authority of the commission were rescinded by the voters.

Attorney Thomas Bean, arguing the case for the ballot petitioners, said if the ballot question were to be allowed and if it were approved by voters, it would have the same effect as the Gaming Commission deciding at the end of the application review process not to issue a license, which is their right.

"There is no contract unless you draw the distinction that they're drawing . . . ," Bean said, referring to the attorney general's argument. "We believe that's hairsplitting."

Bean said that prospective casino developers, who operate in a heavily regulated industry, entered the licensing process knowing that the law legalizing expanded gambling in Massachusetts could be changed at any time and that the Legislature, and by extension the public, cannot forfeit its police and regulatory powers.

Bean also said he disagreed with the Attorney General's interpretation that the ballot question would prohibit the Gaming Commission from making decisions on the applications without issuing a license. Sacks said he had advised petitioners prior to their submitting the proposed question that this was a concern and recommended changes that would have made the question valid, but his suggestions were not taken.

Though Sacks said there was no reason to believe the application review process would be complete before November, and certainly not before the July deadline to certify ballot questions, officials from the Attorney General's office acknowledged that if licenses had already been awarded the petition would likely have been deemed eligible for the ballot.

The Supreme Judicial Court is expected to rule in the case by the summer, and Secretary of State William Galvin must know by July 9 what questions are moving forward to the November ballot.

In response to repeated questions from Justice Robert Cordy about whether compensation would be required for applications should the licensing process for casinos be repealed, Bean said developers have no contractual rights and therefore compensation would not be necessary. 

"So a five-year exclusive license that has already been awarded after a thorough process outlined by the Legislature, at great cost to the applicant, can simply be taken away with a big never mind?" Cordy asked.

"Yes," Bean replied.

While both Bean and Sacks agreed that the Legislature or the people have a right at any time to repeal or change the gaming law if it's determined to be in the best interest of the state, Carl Valvo, representing casino interests, took the position that a contractual right does exist.

Valvo said further regulations impacting casino profitability could be added, but he argued the licensing of casinos could not be repealed without compensating applicants for what amounts to a "taking" by the government. Because ballot petitions are not allowed to authorize public spending, Valvo said the petition should be invalidated.

Justice Margot Botsford appeared to struggle with the distinction that Sacks attempted to draw between the actual licensing of a casino and having an opinion on an application rendered by the Gaming Commission.

"I'm still confused," Botsford said. "You make the distinction. I would think there would have to be something in the legislation itself that draws a bright line there."

Sacks likened the process to a public procurement, arguing that the commission retains the discretion to reject all bids, but cannot simply cancel the procurement process. He said decisions on applications "can have value to applicants apart from the licenses."

John Ribeiro, a Winthrop resident and chairman of Repeal the Casino Deal, said he remains confident that voters will have a chance to decide the issue in November.

"By the way I read it, we're going to be on the ballot in November. If common sense prevails, we'll be on the ballot," Ribeiro said after the court hearing.

Former Attorney General Scott Harshbarger, who has been advising the ballot campaign, said he was pleased to see how engaged the justices appeared to be with the case before them.

"If we get a fair hearing here, it will determine that people have a right to vote. That's all this is about. It's not about the policy arguments. It's about whether the people have a right to vote in this very important issue," Harshbarger said. He continued, "I feel very comfortable that in this case the attorney general was wrong."

Should the court allow the petition to proceed to the ballot and it be approved by voters, Sacks said he believed stakeholders from the casino industry may sue the state for damages, leading to future legal entanglements.