Mitch Daniels Once 'Fired' Trump Over Indiana Casino Project

05/09/2011 07:30 pm ET | Updated Jul 09, 2011

Though it may be hard to believe given his mild-mannered demeanor, Indiana Gov. Mitch Daniels is the only potential Republican presidential candidate who can claim to have fired Donald Trump. Back in 2005, Daniels effectively blocked Trump’s attempt to build a casino in the town of French Lick, Ind.

In one of his first acts as governor, Daniels asked for the resignation of the state gaming commission that approved Trump’s plans for a $108 million casino. The move raised tough questions about Trump’s financial viability. Around the same time, the Indiana tax court also ordered Trump to pay an estimated $20.9 million in back taxes. When state gambling regulators delivered a list of demands to Trump including details on the project’s funding, the mogul couldn’t meet a state-imposed deadline and backed out of the project.

Eventually, an Indiana-based group won approval and now runs the casino in town.

Daniels and Trump are currently neck-and-neck atop the polls of GOP presidential contenders. But when asked recently about Trump’s potential as a candidate during a local TV interview, Daniels laughed.

"When I was first elected, he was going to be the operator of one of our casinos and there were problems with it. So we transferred the license to somebody else," Daniels replied. "Somebody said to me: ‘You’re the first person to say, ‘Donald –- you’re fired.’’”

Watch the last 40 seconds of the interview:

Before Daniels' election, a casino in the fabled resort town was the subject of heated competition with the odds favoring a group led by hometown basketball hero Larry Bird, according to local officials.

But Trump won the uphill battle by wielding all his charm. He swept into town for a personal visit, went on a marketing blitz and promised a glitzy casino with marble floors and sparkling chandeliers. Trump’s group had the most ambitious proposal, featuring a bigger facility and more gambling revenue.

“They didn’t look too closely at Larry’s offer,” remembers Jerry Denbo, a former state representative who was the prime supporter of gaming in the county. “We had some local leaders who thought they could see Larry anytime they wanted but Donald Trump -- he was a big deal. His TV show was a big hit and people got swept up in the excitement.”

The state gaming commission awarded Indiana’s 11th casino to Trump Hotels & Casino Resorts in July 2004. But a few months later, the company filed for bankruptcy protection -- with Trump relinquishing his CEO title (although remaining chairman) -- and reemerging under the name Trump Entertainment Resorts.

When new governor Daniels took office in January 2005, he called for the resignation of the commission’s seven members. Daniels wanted his own appointees to review the choice of Trump’s proposal.

“There are too many unanswered questions,” the governor said to the Courier-Journal at the time.

Powerful state lawmakers were also demanding a second look. Bob Alderman, the chairman of a key state House committee, grilled commission members on their choice at a hearing. He expressed his concern about Trump’s accounting statements and the selection process. The state also hired a bankruptcy lawyer and casino expert to review the deal.

“When we were able to look at Trump’s financials, we saw that every cent he was getting from the bankruptcy reorganization was committed -- not to Indiana,” remembers Alderman.

"The most troubling was Trump’s intention to use its casino properties, including the Orange County project, as collateral for a multimillion dollar loan,” the state-hired experts told the Courier-Journal.

When the gaming commission gave Trump a list of conditions, including covering the tax liability, the company’s representatives said they couldn’t meet the demands.

And the project’s fate was already up in the air: Just a month after being awarded the project, Trump’s company said it was “uncertain” whether it could follow through, according to filings with the Securities and Exchange Commission.

Asked about the decision to cut off negotiations with Trump, Daniels said in a news conference: “It’s the right outcome for all concerned.”

A lawyer for Trump and the company’s former counsel on the project did not return requests for comment.

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