Illinois Gaming Board Grants Initial OK to $310m Hard Rock Bid in Rockford Amid Investigation

  • Board gave “preliminary suitability” despite ongoing investigation into lead developer
  • Dan Fischer’s company owns a chain of Illinois video gambling cafés
  • The bulk of Fischer’s 2018 purchase of another chain was funded by a gaming machine supplier
  • The involvement of the supplier may constitute an illegal inducement
  • Fischer is also in a legal battle with a former machine supplier whose equipment he is replacing
Pin showing location of Rockford, IL on a map
Despite an ongoing investigation into past dealing of the project’s lead developer, the Illinois Gaming Board has granted “preliminary suitability” to a Hard Rock casino bid in Rockford. [Image: Shutterstock.com]

Ongoing investigation makes approval shaky

In a unanimous vote, the Illinois Gaming Board conferred “preliminary suitability” status to a proposed $310m Hard Rock casino project in Rockford. The decision during Thursday’s hearing comes despite an investigation by the Board into the business dealings of Dan Fischer, the lead developer for the project.

these are questions and not evidence”

According to the Chicago Tribune, Illinois Gaming Board Chairman Charles Schmadeke did say that there were concerns about Fischer’s “current and former relationships,” though it does not sound like he referenced Fischer by name. Schmadeke added, however, that “these are questions and not evidence,” and thus don’t rise to the level that would preclude the Board from giving its initial approval.

Gaming Board Administrator Marcus Fruchter did say that investigations are ongoing, so someone’s suitability could eventually be denied and they could be required to leave the project if it is to continue. Hard Rock International has said that it would fill in the gaps should any partners be forced out.

Rockford is about 90 miles north-northwest of Chicago, just south of the Wisconsin border. The proposed site for the Hard Rock resort is off of Interstate 90, a busy highway for commuters back and forth across the state border and thus an attractive location.

Fischer’s past dealings in question

The investigation into Dan Fischer has to do with a deal he made in 2018 when his company, Illinois Café and Service Co., acquired Laredo Hospitality Ventures. Illinois Café and Service operated the Dotty’s video poker café chain; the purchase grew the company’s Illinois video poker empire, as Laredo owned 57 Stella’s and Shelby’s gambling cafés.

Illinois Café and Service only paid $2m for all of Laredo’s locations, which was eyebrow-raising in and of itself, while Midwest SRO, a slot machine supplier, put up $44m. Midwest SRO’s portion was said to be for an equity stake in the company, plus a buyout of Laredo’s CEO’s non-compete agreement.

In Illinois, it is illegal for someone to own a gambling café and the gambling machines contained within. Gaming Board investigators questioned the deal, feeling like the purchase was structured so that Midwest SRO could take ownership of Laredo.

There is also a question as to whether or not the sum that Midwest SRO paid was an “inducement” for Fischer to use the company’s equipment in his properties.

Supplier refused to remove his machines

There was another controversy and subsequent investigation to the Laredo purchase, as well. Rick Heidner is the owner of Gold Rush Gaming, which leased gambling machines to Stella’s and Shelby’s. Fischer planned on replacing Heidner’s machines at 44 of the 57 locations with equipment from Midwest SRO.

Worried about the loss of 25 percent of his company’s revenue, Heidner met with Fischer and Midwest SRO owner Allyson Estey, pleading with them to reconsider. He told them that he lost a multi-million dollar loan because of the Lardeo sale, as well as a deal to sell 30% of Gold Rush.

not to destroy me, my family and my company”

Begging them “not to destroy me, my family and my company,” Heidner offered to pull investors together to buy Laredo from Fischer and Estey for $5m more than they paid for it. He recounted all of this to Laredo CEO Gary Leff in a series of text messages.

The Gaming Board considers that offer to pay a $5m premium an illegal inducement because it was an offer to pay to keep his machines in the Stella’s and Shelby’s properties. Heidner refused to remove his machines, so Fischer sued him in January 2019. Because of the lawsuit, the evidence of the deals was made public, leading to the Gaming Board’s investigations of both Fischer and Heidner.