Another lawsuit has ensnared the parent company of Indiana’s newest casino.

The show at Hard Rock Casino Northern Indiana is being run by Spectacle Entertainment.

Approximately 50% of Spectacle’s shareholders are currently filing a lawsuit against the Indiana Gaming Commission (IGC).

The friction arises from some financial disclosure rules that the IGC implemented a few weeks ago.

This shouldn’t impact the grand opening of Hard Rock on May 14, but it’s yet another twist in the ongoing Spectacle saga.

Owners of Spectacle Entertainment battle against new IGC regulations

The IGC’s new rules compel shareholders in gaming companies to disclose detailed financial information.

Workers in the state’s gambling industry have always faced this reality, but not the companies’ shareholders.

To operate gambling machines in Indiana, you must obtain a Level 1 occupational license.

That’s a component of the IGC’s safety and background stipulations for the industry.

Maintaining such checks assists the commission in ensuring that operations proceed smoothly. The minimal surprises help to avoid any integrity problems with the state’s gambling businesses.

It’s one thing for Indiana to require such detailed background information from workers, but it’s a new measure to demand the same from investors.

The lawsuit from Spectacle is contending that the IGC is overstepping its bounds with this action.

“The attempt by the IGC to expand its jurisdiction to those who hold an equity interest exceeds the authority given by the Indiana General Assembly.”

The basis of the shareholders’ argument is the belief that they are merely investors in the gaming company.

They don’t believe they should have to disclose additional financial information as they are not involved in the daily gambling operations.

Repercussions of Rod Ratcliff’s lawsuit

What was the initial reason for the IGC creating these new rules?

The requirements were created by the commission in response to the investigation of Spectacle Entertainment.

Essentially, the shareholders of Spectacle are distressed about the repercussions of misconduct within their own corporation.

Rod Ratcliff is the one to be thanked by the shareholders for that.

Allegedly, the ex-CEO of Spectacle was involved in a political money-funneling scheme that was exposed early the previous year.

The IGC attempted to compel Ratcliff to sell his Spectacle shares.

The commission contended that an individual under scrutiny should not wield significant influence over a major gambling corporation.

The IGC hoped to expel him from the state’s gambling industry.

Ratcliff initiated a lawsuit against the commission in an attempt to retain his position, eventually culminating in a settlement between the two parties.

Ratcliff traded his Spectacle shares and, in exchange, the IGC agreed not to bring any new legal cases against him.

The situation resulted in a mess that required months to rectify.

IGC aims to establish public trust

During its investigation into Spectacle, the IGC discovered some red flags.

Ratcliff’s financial decisions for the company set off warning signals along the way.

Theoretically, the new financial disclosure rules of the commission will stop this kind of situation from recurring.

The IGC should anticipate potentially dubious decisions by maintaining comprehensive background information about investors.

On March 24, the commission adopted a new set of rules, hoping to bolster public trust in the industry.

IGC Executive Director Sara Tait stated that before finalizing the rules, the commission sought input from state operators.

In keeping with our usual approach, I extended the opportunity to the industry to review these regulations and provide feedback. Numerous operators and applicants not only expressed their support for this initiative but also gave valuable feedback and clear language suggestions, all of which were included in this document.

Nonetheless, Spectacle’s shareholders are displeased with the changes.

Currently, a hearing for the shareholder lawsuit has not been scheduled.

Gaming commission responds

The IGC is requesting the court to dismiss the shareholder lawsuit.

The commission contends that the Riverboat Gaming Act unequivocally grants it the authority to request detailed financial information.

The IGC was established as the regulatory body for Indiana casinos by a law in 1993.

In its official response to the lawsuit, the IGC referred to the act which indicates that “the Commission has the authority to request a range of information types, including any data it deems vital for the efficient management of the Article.”

The Riverboat Gaming Act explicitly states that the IGC has the authority to gather records, which includes “financial statements.”

The commission is of the opinion that its new financial disclosure regulations are significant for the state’s gaming industry.

It views Spectacle’s objection as a perilous move for the entire Indiana gambling industry.

These events have tarnished the industry’s reputation and integrity, casting a shadow over it.

The IGC is keen to move past this as Spectacle has faced trouble for more than a year now. However, as long as the lawsuit continues, this won’t be feasible.

The inaugural hearing for the case is scheduled for the morning of May 14. That same day will also mark the grand opening of Spectacle’s new Hard Rock Casino.