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For two casino groups, a dispute over investor

Peter Picknelly, CEO of Peter Pan Bus Lines, in his company’s Springfield headquarters in December. He is working with Penn National Gaming in proposing a casino for Springfield’s north end.

NANCY PALMIERI for The Boston Globe

Peter Picknelly, CEO of Peter Pan Bus Lines, in his company’s Springfield headquarters in December. He is working with Penn National Gaming in proposing a casino for Springfield’s north end.

Casino developers in Palmer and the North End of Springfield are in a sharp dispute over which project may claim businessman Peter Picknelly, head of Peter Pan Bus Lines, who initially invested in the Palmer venture before joining Penn National Gaming in an $807 million casino proposal in his hometown of Springfield.

While Picknelly insists he has separated from the Palmer deal, his former partners say he remains legally bound to the original project, and they threaten to sue to stop Picknelly from moving forward with Penn ­National in Springfield. The partners argue that losing such “a prominent, highly visible local and regional businessman” to a competing project will undermine the Palmer casino bid.

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Penn’s Springfield casino proposal, meanwhile, has become intimately tied to Picknelly, and it is hard to imagine that project moving ahead without him. The casino is proposed for land occupied by the Peter Pan bus terminal, and Picknelly has said he will be a 50-percent partner in the ­development.

Picknelly and Penn National say he has no obligation to any other casino effort, and they have threatened litigation of their own if the Palmer group interferes with Picknelly’s pursuit of a casino license in Springfield.

The dispute is laid out in a series of letters, obtained by the Globe, ­between lawyers for Picknelly and Penn National and representatives of Northeast Gaming Group, which owns land in Palmer where Mohegan Sun has proposed a gambling resort.

The Penn National and ­Mohegan projects would be in direct competition for the sole Western Massachusetts casino resort license. MGM Resorts is also seeking the license with a project planned for the South End of Springfield.

The state gambling commission is taking applications for development rights for up to three resort-style casinos, one each in three regions of the state. The commission hopes to issue licenses by early 2014.

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Picknelly’s public connection to the Palmer project dates to 2008, when it was announced that he had invested in the effort to bring a gambling resort to the town, if casinos were legalized in the state. The Palmer group struck a deal with Mohegan Sun to develop a resort at the site, and the project was among the first ­serious contenders for a casino license when Massachusetts ­legalized Las Vegas-style gambling in 2011.

But last August, Picknelly informed Northeast Gaming that he intended to “disassociate” from the Palmer effort.

“Peter will be pursuing a ­casino license for an undetermined site in Springfield, and, by operation of law, he cannot have an interest in more than one casino license,” Picknelly’s lawyer wrote on Aug. 7 to Northeast.

The letter asked the group to return Picknelly’s $500,000 investment.

Over the summer, Picknelly emerged as the local development partner for the Penn ­National Springfield project.

Northeast refused to let him walk away, maintaining that their agreement remained in force, despite Picknelly’s intention to leave. The group wrote that Picknelly’s obligations ­under the 2008 agreement “do not permit him to simply abandon his venture with Northeast so that he can become a competitor.” Northeast also said Picknelly had access to proprietary business information about the Palmer effort, “which he apparently feels free to use in his competitor status.”

“His decision to abandon Northeast and his legal obligations is regrettable and will surely result in Superior Court litigation for injunctive relief” and damages, the group wrote.

Penn National responded through lawyers, calling the statements “frivolous” and “completely unfounded” and arguing that Picknelly’s 2008 agreement with Northeast only obligated Picknelly to provide investment capital, which he did.

“All of the remaining obligations under the agreement are those of Northeast Gaming, not Mr. Picknelly,” Penn wrote to Northeast, in a letter dated last Friday.

Picknelly has taken another step to try to separate from Palmer, signing an agreement assigning “all right, title, and interest” in the Palmer venture to a business associate, according to a copy of the agreement.

Northeast was unmoved and complained directly to Penn National chief executive officer Peter Carlino, insisting that “Penn National Gaming not aid and abet any effort by Mr. Picknelly to breach his ­fiduciary and contractual ­duties to Northeast.”

Picknelly said Monday by ­e-mail that he was traveling and would be available to comment later in the week. He told the Globe in a mid-December interview that he had ­“divorced . . . completely” from Palmer.

“I was never really that ­involved,” he said. “I was simply an investor in the land. I never had any intimate knowledge, never had a conversation with Mohegan Sun, never even saw the plans until the day I said I’m out, I’m pursuing something in Springfield.”

Mark Arsenault can be reached at marsenault@globe.com. ­Follow him on Twitter ­@bostonglobemark.

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