Las Vegas-based developers Paragon Gaming, whose ability to “meet the conditions of its registration” has been called into question, could put the future of the $535-million Edgewater casino project in downtown Vancouver into doubt.
At the center of the probe by the Gaming Policy and Enforcement Branch is, it seems, Paragon’s relationship with Michael Graydon, the former boss of the British Columbia Lotteries Corporation (BCLC), now head of PV Hospitality, an affiliate of Paragon.
A separate British Columbia government investigation of Graydon has already concluded that the executive had been in conflict of interest when he negotiated employment with Paragon in December 2013, while still head of the BCLC.
The aim of the Paragon project is to relocate and expand the existing Edgewater Casino, which Paragon purchased in 2006, to create a new resort with a 72,000- square-foot gambling floor and two boutique hotels with 550 guest rooms between them, as well as space for restaurants and retail.
The development, which is scheduled to open in 2016, is expected to create 2,000 jobs and generate $180 million per year for the local economy. The project is being built on a piece of land owned by the BC Pavilion Corporation, opposite the BC Place Stadium.
Conflict of Interest
Graydon was hired by Paragon ten days after resigning from the BC Lottery Corporation. According to a press release at the time, his first priority would be “oversight and operations of Vancouver’s new world-class urban resort adjacent to BC Place.”
Member of the Legislative Assembly of British Columbia David Eby, who requested the initial investigation into Graydon, says he believes that the new of the Paragon examination throws a whole new light on the project.
“This is clearly an expansion of what we had asked for,” he said. “Our original letter was to ask the regulator to review Mr Graydon’s conduct in violation of provincial conflict of interest policy,” he said. “And now in this letter, the regulator says they are not just investigating Mr Graydon, but they are also investigating the gaming service provider, who we understand to be Paragon. Certainly, if Paragon is under investigation, that is a major issue for this entire development.”
Questions About Solvency
Eby has also asked whether the investigation is looking into Paragon’s involvement with Eagle River Casino, which the company operated with the Alexis First Nation. The casino went into bankruptcy proceedings in January.
“The casino was losing over a million dollars a day at the conclusion,” he said. “So when you have a casino operator that is bankrupt, then that raises questions about their solvency generally, and their ability to manage very sensitive business in the province. So it would be perfectly reasonable and appropriate to me that GBEP would be investigating Paragon in light of this bankruptcy.”
The Ministry of Finance said this week that GPEB review is “part of its ongoing business with the service provider.”
“This is an independent process, governed by GPEB’s legislated authority under the Gaming Control Act,” it said. “Typically, this type of activity could take several months. As the examination is ongoing it would be inappropriate to comment.”
A spokeswoman for Paragon told The Province that the company is “co-operating fully” but declined to comment further.