Penn National Suit Dismissed

A Nevada court on Jan. 25 dismissed a lawsuit that attempted to label Charles Town Races as a casino and force track owner Penn National Gaming to pay a management fee to a previous owner. The suit, which was filed by Showboat Development, was dismissed on the grounds that case should be heard in West Virginia, where the track is located.

The case may be appealed.

Showboat Development sued Penn National Aug. 20, 2001, because it believes the operation of 2,000 coin-out, video lottery terminals at Charles Town Races constitutes the operation of a casino. When Penn National bought the racetrack in 1997, Showboat retained the casino operating rights to the property. Penn National agreed to pay Showboat a management fee if the casino rights were ever exercised, and the fee was to be determined at the time the rights were exercised. Showboat believes that right has been exercised.

The lawsuit also claims Penn National's acquisition of an 11% minority interest in Charles Town from the BDC Group, a former partner, violated a first right of refusal agreement that Showboat has with BDC Group regarding the sale of any interest in a casino at the track.

Showboat filed its suit in Nevada and Penn National attorneys argued for dismal because of a lack of jurisdiction. The U.S. District Court for the District of Nevada agreed with Penn National.

"Because the subject of the agreements between plaintiff and defendant was located in West Virginia and the option could not be exercised without changes in West Virginia law, the court finds that jurisdiction over defendants is not appropriate in the state of Nevada," the court ruling stated.