- Associated Press - Tuesday, May 26, 2015

ATLANTIC CITY, N.J. (AP) - A southern New Jersey college’s battle over a failed deal to convert a former casino into a satellite campus is now part of Caesars Entertainment’s bankruptcy case in Illinois.

Stockton University filed a claim in the case as it remains mired in a thus-far failed deal to convert the former Showboat casino into a satellite campus.

Stockton bought the Showboat in December from Caesars for $18 million. But the Trump Taj Mahal is enforcing a 1988 legal covenant prohibiting Showboat from being used as anything other than a casino hotel.

The university’s claim charges Caesars with breach of contract and fraud, and says that it negligently concealed material facts. It wants Caesars to honor an indemnification clause in the sales contract that is meant to leave the college “harmless” from any liabilities that come from Trump’s attempt to enforce the covenant.

Caesars is working on a reorganization plan to get out from under about $18 billion in debt. An attorney representing Caesars in the bankruptcy proceeding did not immediately return a call seeking comment on Stockton’s claims.

Trump’s parent company, Trump Entertainment Resorts, says it enacted the covenant because it fears students under the legal age of 21 will sneak into the Taj Mahal to gamble and drink, exposing the company to costly fines.

Former Stockton President Herman Saatkamp has said the university was aware of the restriction, but had been led to believe it had been resolved.

It had not, and the university has not said who made that assurance or when it was given. It has authorized an outside investigation of the Showboat purchase, even as it tries to get out of the deal, which acting president Harvey Kesselman has termed “a mistake.”

Stockton still does not have clear title to the building, which it has agreed to sell for $26 million to Glenn Straub, the new owner of the former Revel casino next door to the Showboat. That deal can be canceled until July 3.

Kesselman, told a state Senate panel Stockton still wants to have a campus in Atlantic City, but probably at a different location.

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