With new casino opening, a look back at Cordish's gambling record
Baltimore developer has dropped or been forced out of all prior casino ventures
Gambling machines inside the entrance of Arundel Mills's Live! Casino. (Karl Merton Ferron, Baltimore Sun / May 28, 2012)
The $455 million Florida casinos were completed in 2004. David S. Cordish, the company's chairman, called their openings "the proudest accomplishment in the 90-year history" of Cordish Cos., according to articles at the time in The Baltimore Sun.
The casinos quickly became among the most profitable in the United States, but they also drew the attention of the Internal Revenue Service. The agency questioned how the tribe structured its payments to Cordish and said the use of tax-exempt bonds to finance construction was suspect.
When the Seminoles were forced to refinance the projects with taxable bonds in 2005, the tribe moved to end its 10-year contract with Cordish.
The next year, the Seminoles sued the company, calling the casino deal "illegal and unconscionable." Cordish was receiving 30 percent of the net gambling proceeds, which the tribe said could be as much as $2.2 billion.
The company violated federal law by acquiring a "proprietary interest" in tribal gambling operations, the tribe contended. In court documents, the Cordish Cos. argued that the tribe wanted to back out of the deal after realizing how profitable the casinos were.
In 2007, the Seminoles agreed to pay the company $756 million to end the casino partnership.
"The project did exponentially better than we had projected … and I think the tribe felt like they wanted to look at a renegotiation of our contract, and we ended up with an amicable settlement with them," Weinberg said.
In spite of the litigation, the casino was extremely profitable for Cordish, which took in about $1.3 billion on the Seminole projects.
"We saw that our formula for integrating gaming and retail and entertainment and dining had a lot of merit," Weinberg said.
The gambling bug
Bitten by the gambling bug, Cordish sent representatives to pursue deals with other tribes. According to news reports, the company came close to agreements with at least three groups, but Cordish was not selected for another Indian project after the dispute with the Seminoles.
The developer began to look elsewhere. Within months of its settlement with the Seminoles, Cordish was pursuing multiple gambling projects: talking with Donald Trump to buy one or more of the debt-ridden entrepreneur's properties; bidding to build a casino resort at Kansas Speedway in Kansas City; and contracting to develop and operate a casino at a horse track outside Indianapolis.
In late 2007, Cordish launched a venture with Dennis Gomes, a prominent gambling industry executive. Within weeks, Gomes and Cordish considered buying the Tropicana Casino and Resort in Atlantic City, N.J., where Gomes had previous casino management experience and Cordish owns The Walk, a retail center now being expanded to include entertainment venues.
But Gomes and Cordish lost the hotel to the bondholders. The company's only project was to operate the $200 million "racino" in Indianapolis.`
Gomes, who died this year, was not involved when Cordish won the contract for the Kansas Speedway casino in September 2008. The partnership dissolved amicably the next summer.
By that time, Cordish was focused on Maryland. In 2008, voters approved amending the state's constitution to allow slots gambling, and Cordish wanted a piece of the action. The company quickly pulled together a proposal for the Arundel Mills site.
"We have a real strategic advantage over the public company players," Weinberg said. "We're able to act much quicker. … We were able to analyze the Anne Arundel County market when no one else was."
In September 2009, in order to focus on Arundel Mills, Cordish sold its interest in the Kansas casino to Penn National Gaming Inc., which had competed with Cordish for the speedway's gambling license.
In mid-2010, the parent of the Indianapolis casino, the financially struggling Indianapolis Downs LLC, moved to terminate its 10-year management contract with Cordish, about three years into the deal. By year's end, Cordish no longer managed the casino, Weinberg said.