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Bally’s Chicago is battling a lawsuit filed against the company’s decision to limit participation in an investment opportunity to those who self-identify as women or minorities. The purpose of the offer was to help the resort project meet the terms of its host community agreement, in which Bally’s committed to having at least 25% of the project’s equity owned by minority groups.
Conservative activist group American Alliance for Equal Rights‘ (AAER) Richard Fisher and Philip Aronoff filed the lawsuit, claiming the equity stipulation “is illegal.”
The lawsuit could slow down the development of Bally’s permanent Chicago location. The casino is operating out of its temporary home, Medinah Temple in downtown Chicago.
How the AAER’s lawsuit came to be
Late last year, Bally’s Corporation announced it was launching an investment opportunity for those interested in getting equity in the company’s permanent casino and resort through an offering of 25% of the company’s shares. The shares were intended for women and people of color who wanted to invest in the project.
That spurred the legal objection from two AAER members who say they wanted to invest: Fisher and Aronoff.
“Plaintiffs Fisher and Aronoff are interested in and able, ready, and willing to invest in Bally’s Chicago, Plaintiffs are the American Alliance for Equal Rights and two individuals who cannot invest because they are white males,” the lawsuit alleges. “They would like to be dealt in on this offering but are excluded from the table solely based on immutable characteristics. In short, Defendants have stacked the deck against them, a hand Defendants cannot play.”
Court documents provide screenshots of the application process for the shares. One of those screenshots shows the qualifications for investors in the share offering. “Be a minority or woman” is listed among other qualifications such as the applicant not being an official, employee, or family member of a City of Chicago official or employee. Felons also couldn’t apply for a share of the equity release, per court documents:
The lawsuit states that, once Aronoff realized he wasn’t eligible to invest, he felt submitting his application was futile.
“Going through this step would be meaningless—a complete waste of time (like it was for Plaintiff Fisher). Moreover, it would be an affront to his dignity. The final criterion is subject to and premised on racial stereotypes. Through it, a person’s race is made a negative.”
Who is AAER?
The AAER has a history of bringing lawsuits against policies they view as discriminatory toward white people. For example, the group has recently filed lawsuits against Southwest, the Minnesota Board of Social Work, and the Smithsonian Institute’s National Museum of the American Latino.
The group won a recent legal victory against Fearless Fund. The Atlanta-based fund had to shut down a grant program for small businesses owned by Black women because of AAER’s lawsuit.
The AAER frames its lawsuits as civil rights issues, a curious position considering the notable civil rights movements in the United States intended to bring equality to people of color who had long been discriminated against by white Americans.
Its founder, Edward Blum, is a notable leader in the conservative push to end affirmative action, part of the Civil Rights Act of 1964 and multiple presidential executive orders in the 60s.
The American Civil Liberties Union noted that Blum came into the limelight when he successfully fought Harvard’s affirmative-action admissions policies on behalf of Asian Americans. The ACLU stated:
Blum’s cynical attempt to use members of the Asian American community seeks to pit people of color against one another.
“This is the direct antithesis of race-conscious admissions programs, which endeavor to create richly diverse college campuses. A college community that includes diversity across many spectrums, including race, allows students to learn from one another and to work together.
Lawsuit could force Bally’s to find investors another way
The lawsuit has sparked concerns that it could jeopardize the Bally’s Chicago project by preventing it from meeting the terms of the host community agreemeent.
However, even if it were to lose the lawsuit, Bally’s would likely have time to try a different tack. The relevant portion of the agreement reads:
“Developer commits that 25% of the Project equity will be owned by Minority individuals and Minority-Owned and Controlled Businesses no later than twelve months following commencement of the Term or such later date as may be determined by the City, and will continue for no less than five years thereafter.“
In other words, so long as Bally’s is making a good-faith effort to meet the terms of the agreement, the City may extend its timeline for doing so. However, depending on the result of the suit, the company may need to expend greater time and effort directly soliciting private investments.
