The Indiana Gaming Commission opted Thursday not to renew the Lucy Luck gaming license to operate a casino in Terre Haute.
The casino, to be operated by Hard Rock International, was projected to earn $120 million in its first year of operation.
Commissioners faulted the company for falling short on two requirements: hiring an executive team to run the casino and securing fully vetted financing.
“We’re now a year and a half into this process and still talking about things that are prospective in nature,” Sarah Tait, executive director of the commission, said just before the vote.
Lucy Luck Gaming, chaired by Terre Haute businessman Greg Gibson, needed approval for both an annual license renewal and finance plan at Thursday’s meeting.
With the license renewal denied, commissioners didn’t vote on the finance plan.
Murray Clark, an Indianapolis attorney with Faegre Drinker Biddle & Reath representing Lucy Luck, said that it was a “unique situation.” The company, formerly Spectacle Jack, was granted the initial license in May 2020.
“Hard Rock will manage the design and construction — much like it did in Gary,” Clark said, referencing the new Hard Rock casino in Gary, which operates under Spectacle Entertainment. Gibson is also vice president of Spectacle Entertainment.
“We haven’t closed on the financing because we don’t have financing approval. Other than that, I’m not clear on why this statement of ‘We’re not fully funded,’” Clark said.
Tait noted that potential executive team members, submitted by Lucy Luck but not yet hired, had credibility issues, including one “not qualified” and another not interested in working for Lucy Luck.
“General practice … is that a company is fully established and vetted prior to licensure,” Tait said. “With this company before us, 13 months into licensure, that is not the case.”
Tait said Lucy Luck knew of the state’s concerns since April 26, when staff reiterated the requirements for licensure renewal along with shortcomings and deficiencies. Typically, she said, staff and key executives were in place prior to licensure but financing came after.
Commission member Susan Williams said that, based on her experience in construction, those teams should be in place prior to breaking ground.
Gibson told commissioners that there were no gaming operations at this time in response to questions about the lack of executive staff and emphasized Lucy Luck’s management agreement with Hard Rock.
“We have worked our tails off to get in a position to make this happen for Vigo County,” Gibson said. “We feel like we’re in a position to move forward on constructing this facility.”
Gibson didn’t respond to a request for comment following the commission meeting, but he did later issue a written statement:
“The news we received today, although it wasn’t what we had anticipated or hoped for, isn’t the end of the journey. Lucy Luck Gaming has been prepared to begin construction on this project for months. We have worked tirelessly alongside many to bring this project to the Terre Haute community. We have developed our team, our finances, and detailed our operations to secure our license.
“However, more importantly, Terre Haute has worked hard for this project. The citizens have worked hard for this project. I am deeply disappointed in what came from today’s meeting, and disappointed that a community who has fought and stood ready received such news. I believe in my community, and I believe in this project. As for Lucy Luck, we may reapply, but I’m not sure if we will.
“We certainly have accomplished our original goal of bringing a gaming license to Vigo County. The community can take solace in the fact that there will eventually be a gaming facility here. It truly saddens me to know that the Terre Haute license will be open for a bidding process amongst companies who will be interested in the project solely for monetary gain, and with companies who don’t know our community like Lucy Luck does.
“For me, this project has always been about Terre Haute; it’s been about my home community. Terre Haute deserves this casino, and I wish it could be alongside Lucy Luck Gaming.”
Murray said the finance plan, tabled at the commission’s May meeting, included a commitment letter from five Indiana banks, led by Old National Bank. He noted that the current commitment letter expired on June 30 during the May meeting.
However, Tait said the commission had concerns with payment-in-kind (PIK) securities, which finances 33% of the proposed casino.
“It is critical that the commission have information about who is funding, precisely the (PIK) financing and the company declined to provide it to us,” Tait said.
Clark noted that PIK financing, considered a riskier financing option with a relatively high rate of interest according to Investopedia.com, was also used for the Gary casino.
Tait said there were opportunities to remedy the shortcomings and the commission wanted to expedite the process, given the local and state support for the project, for new applications in the next 90 days.
“We’re disappointed that we’re here today, starting the process over,” Tait said. “Issuing a license and getting construction underway will continue to remain the top priority of the commission … the community needs to have confidence that the commission will only approve of a plan that has the greatest prospects of success.”
In May, Lucy Luck and Hard Rock reached a management agreement, a prerequisite for renewing their gaming license for Vigo County. The $125 million casino was projected to generate more than $7 million for local governments and business development and employ nearly 700 Hoosiers.
Gibson told the Tribune-Star he had hoped for a late June groundbreaking, one month after Hard Rock Casino Northern Indiana, a facility owned by Spectacle Entertainment, opened in Gary.
The casino projects previously encountered difficulties with the Gaming Commission because of former Spectacle executives Rod Ratcliff and John Keeler, both under investigation for financial wrongdoing.
That led Gibson to spin off the Lucy Luck company as a separate entity.
The commission ordered Spectacle to remove Ratcliff as a trustee in December. Because Spectacle didn’t “immediately comply” and removed Ratcliff 53 days later, the company paid $53,000 to the commission.
Allegations against Ratcliff and Keeler include illegally funneling improper donations to a former lawmaker running in 2016 and making improper job offers to government lobbyists.
Ratcliff challenged the commission’s allegations in December before settling and giving up his state casino license in March.