Goldman prepares to sue over casino

Jeremy M. Lazarus | 8/3/2023, 6 p.m.
In mid-June, Richmond City Council voted 8-1 to select RVA Entertainment Holdings LLC as its preferred choice to operate a ...
Mr. Goldman

In mid-June, Richmond City Council voted 8-1 to select RVA Entertainment Holdings LLC as its preferred choice to operate a resort casino in the city — setting the stage for a second attempt to win city voter support for a gambling operation that was defeated two years ago.

However, political strategist Paul Goldman believes the no-bid award to the company could violate a provision of the state constitution as well as the Virginia Public Procurement Act. He said he is preparing a lawsuit to test whether the city was required to go through a bidding process before making what amounts to a perpetual right for that company to operate the casino.

“This is the most lucrative franchise the city has ever awarded,” Mr. Goldman said, “and it was done without the kind bidding process that was initially used in 2021. Both the constitution and the procurement act were written to prevent just this kind of ‘sweetheart’ deal.”

Mayor Levar M. Stoney’s administration, though, has said that it did not believe it needed to go through a bidding process and had authority to recommend RVA Entertainment Holdings — apparently a 50-50 joint venture involving Maryland-based Black-owned media company Urban One and Kentucky-based racing and gambling group Churchill Downs.

The city, which does not comment on pending litigation, is pushing ahead without concern. It recently obtained the approval of the casino-regulating Virginia Lottery to move ahead and also gained a court order to put it on the Nov. 7 general election ballot in a new effort to gain approval.

Mr. Goldman, who managed L. Douglas Wilder’s historic run for lieutenant governor and also was a close adviser in Mr. Wilder’s successful bid for governor, publicly supported holding a second vote, but he believes that those going to the ballot should cast “an informed vote.”

He said that city officials have hidden the fact that the deal has changed. Back in 2021, RVA Entertainment Holdings was listed by Urban One as a wholly owned subsidiary.

At the time, the company’s president and CEO, Alfred C. Liggins III, proudly said that the proposed casino would be the only one that in the country that was Black-owned.

But that will no longer be the case, Mr. Goldman noted, in pointing to filings by both companies with the U.S. Securities and Exchange Commission stating that the project is a 50-50 venture. Mayor Stoney’s team never mentioned that change to the council or the public, a review of their statements show.

Mr. Goldman said preliminary information he has obtained indicates that description may also be inaccurate. He said the Virginia Lottery was notified that 6% of the equity in the casino is to come from other private investors. “Either both companies will have less than majority stakes, or one company will have less, but they cannot be 50-50 owners if others are taking 6%” he said.

In support of his analysis, he points to Article 7, Section 9 of the state constitution which states that a city or town, before granting a franchise or privilege, “shall, after due advertisement, publicly receive bids therefor.”

He also noted that the Virginia Public Procurement Act (VPPA) lays out a policy requiring “fair and impartial” conduct in the award of contracts to avoid “any impropriety or appearance of impropriety” and ensuring that “qualified vendors have access to public business and that no offeror be arbitrarily or capriciously excluded.”

Mr. Goldman, who has a law degree and a master’s in public administration, believes the city has violated those strictures, noting the state law that allows the city to select the preferred casino operator contains no wording waiving the constitutional mandate or the VPPA’s requirements.

He said he could not say yet when he would file. He said he is still in the process of gathering data, including seeking information from the Lottery on RVA Entertainment Holdings.

He said the Lottery has declined to release all the documents they have received and he first might have to file suit challenging the agency’s action under the Freedom of Information Act.