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Union goes to court to delay Ameristar real estate sale

The union Unite Here is asking a judge to place a stay on a deal between Ameristar Casino East Chicago owner Pinnacle Entertainment and the real estate investment trust Gaming and Leisure Inc. that would transfer ownership of the Ameristar real estate to Gaming and Leisure.

CROWN POINT — A Lake County judge on Wednesday cleared a potential road block in Pinnacle Entertainment's deal to sell its real estate assets, including Ameristar Casino East Chicago, to a real estate investment trust.

That trust, Gaming and Leisure Properties Inc., will then lease the property back to a Pinnacle subsidiary.

Wednesday's hearing, before Superior Court Judge Tempore Leon Sarkisian, was held at the behest of the labor union Unite Here, which represents about 200 Ameristar employees.

Unite Here is arguing that the transaction constitutes a transfer of ownership that would violate Indiana law, which limits any individual from having an ownership interest in more than two casino licenses.

As part of the Pinnacle deal, GLPI would acquire the property of Pinnacle's other Indiana casino, Belterra. GLPI already owns the real estate of Hollywood Casino, which is operated by Penn National Gaming. Both those casinos are on the Ohio River.

Unite Here attorney John Macey argued GLPI's ownership of the three casinos' real estate assets effectively constituted ownership of three casinos. Giving GLPI a supplier's license, as the Indiana Gaming Commission has done, is "a fiction," Macey argued.

"The licenses are flipped," he said. "They've given the operator an owner's license and the owner a supplier's license."

But the companies argue that it's appropriate for a casino operator license to be held by a tenant of property owned by another entity, with the latter as a "supplier" of real estate services.

The Indiana Gaming Commission agrees with that interpretation. Attorney Scott Chinn, representing Pinnacle at Wednesday's hearing, argued that the IGC's distinction is appropriate.

"It is our contention that Pinnacle is the owner and operator (of the casino)," he said. "GLPI is owner just of the (real estate) assets."

Sarkisian agreed, and made his ruling based on the opinion that Unite Here's fundamental argument regarding licensing was flawed.

Unite Here says it is concerned that the lease-back model envisioned by the transaction would not leave the casino operators with sufficient cash for reinvestment because of what it deems too-high rent payments.

And, if the transaction were to be permitted to commence Thursday, Unite Here argued, it would limit the union's ability to gain legal remedy regarding its licensing argument.

With a closing of the transaction, "the boat is sailing for us," Macey said.

Chinn argued that the union's legal remedy still exists, even after the deal closes. "Nothing stops Unite Here from pressing its claim on the two boat rule."

Macey indicated the union would continue to press its claims.

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Transportation Reporter

Andrew covers transportation, real estate, casinos and other topics for The Times business section. A Crown Point native, he joined The Times in 2014, and has more than 15 years experience as a reporter and editor at Region newspapers.