By Daniel Lovering
BOSTON (Reuters) - Caesars Entertainment Corp is suing Massachusetts' gaming commission chairman, claiming the review of its $1 billion casino development plan was biased because he had undisclosed ties to a landowner who favored another applicant.
In a lawsuit filed in federal court in Boston, the Las Vegas-based company challenged "the constitutionality, objectivity and fairness" of its treatment by Stephen Crosby, chairman of the Massachusetts Gaming Commission.
The landowner, Paul Lohnes, is Crosby's former business partner who stood to benefit from the awarding of a gambling license to another applicant, Caesars claimed, without directly naming the company.
Wynn Resorts Ltd is seeking a license in Everett where Lohnes was part owner of land for a proposed casino.
Caesars had been in the running for one of three casino licenses in the New England state until October, when it pulled out of a plan to develop a casino with the operator of Boston's Suffolk Downs horse racing track. It cited the gaming commission review, which has not been made public, but denied any wrongdoing.
Caesars contended, without elaborating, that the commission was harsher on it than other applicants. MGM Resorts International casino had proposed a site in Springfield.
In papers filed in U.S. District Court, Caesars noted that Crosby and Lohnes served together in the National Guard in the 1970s, and were business partners from 1983 to 1990.
Its lawsuit seeks unspecified monetary damages.
The company cited local media reports that said the land in which Lohnes had a stake was bought for $8 million in 2009 and had a potential purchase price of $70 million, contingent on the awarding of a casino license to a rival, the documents said.
Crosby was aware of Lohnes' interest in the property by the fall of 2012, Caesars charged, "but he did not publicly or otherwise disclose his past business or personal relationship with Lohnes at that time." He disclosed it privately to the governor's office, but said he could perform his official duties "objectively and fairly."
In September, Crosby stepped in to resolve a conflict between Boston and the Everett applicant over whether the proposed casino site extended into the city, which would have required an agreement, "and in doing so cleared a potential obstacle," Caesars said in the complaint.
The company, whose chief executive has described Boston as the future "second city" of North American gambling, said at the time that investigators from the Massachusetts Gaming Commission had raised concerns about its suitability for a state gaming license.
A spokeswoman for the gaming commission did not respond to calls seeking comment.
Massachusetts legalized casino gambling in 2011, and lawmakers carved the state into three districts, allotting one casino license to each. The state has yet to approve a casino plan, and voters in several cities and towns have rejected proposed developments.
Voters in East Boston last month rejected the proposal backed by Caesars, and a referendum in Palmer, Massachusetts, defeated a proposed casino that would have been in contention with MGM for the western Massachusetts license.
Another project backed by Wynn Resorts Ltd is seeking approval for a casino in Everett, just outside Boston.
The Massachusetts Gaming Commission plans to award the licenses for resort casinos in April.
(Editing by Scott Malone and Richard Chang)