BLB Investors, Harrah’s
in R.I. battle royal

Feb 15, 2005 5:39 AM

The battle for Rhode Island’s gambling dollars heated up last week with both BLB Investors LLC and Harrah’s Entertainment Inc. (HET) looking for political blessing on their gaming plans.

BLB Investors is a partnership involving Kerzner Holdings Inc. (KZL), a division of Starwood Hotels (HOT), and the British firm, Waterford Investments.

Embattled Wembley Plc, the British firm that owns Lincoln Greyhound Park, as well as tracks in Colorado, has agreed to sell its U.S. division to BLB Investors for $339 million in cash.

The deal to buy all or part of the gambling company has been ongoing for more than a year. Involved in the bidding at one time was MGM MIRAGE Inc. (MGG) but it backed off when BLB Investors offered $559 million for the entire company.

However, BLB Investors also withdrew its bid when troubles became known that involved Wembley, its former CEO and the operating head of the Lincoln track. It was said at the time that Lincoln was easily the largest profit contributor the company had.

BLB owned 22.6% of Wembley’s shares thus making the entire price tag for the tracks $455 million.

After locking up the purchase, BLB sent to the governor a draft of legislation that would insure an 18-future without competition. Among the demands in the draft was a requirement that should Harrah’s build a casino, in partnership with the Narragansett Indian Nation, that the tax rate would be no less than what Lincoln pays. This was seen as a way of knocking out the Harrah’s casino plan.

Lincoln now pays 60% of its revenues to the state, equal to $255 million annually, while Harrah’s has proposed that its casino be taxed on a sliding scale of between 25% and 35%. The argument for a lower tax, said a Harrah’s spokesman, was because the company planned to spend at least $600 million on its casino.

Although Gov. Don Carcieri wanted Wembley to be sold to another operator, he has not as yet given his blessing to either side.

Big win

Nevada’s casinos won a record $10.6 billion during 2004, according to figures released by the Nevada Gaming Control Board.

This was a 9.7% increase over the previous year. The increase was the first major jump in more than four years, officials said.

The board said the final boost to 2004 gaming revenues came in December when the 260 casinos reached $852 million in December, a jump of more than 11% over the previous year.

Showing new life was the win from table games, up 10%, while slots gained 9.6% over the previous year.

Breaking down the table games, regulators said baccarat had a strong showing with an increase of 35%.

THE INSIDER: Fair Grounds racetrack in New Orleans, now owned by Churchill Downs Inc. (CHDN), could have slot machines operating by early 2006, according to track general manager Randall Soth. If so, it will be the first land based competition to Harrah’s New Orleans Casino.

Also, Churchill Downs has appointed Tim Scott as senior vice president of sales and marketing. Scott previously was with AMF Bowling Worldwide Inc.

Argosy Gaming Inc. (AGY) plans to double the size of its riverboat casino in Lawrenceburg, Indiana, just across the river from Cincinnati, Ohio. The company planned the expansion even before it agreed to be acquired by Penn National Gaming Inc. (PENN).

Las Vegas Sands Corp. (LVS) has scheduled an earnings conference call for Tuesday, March 8, at 10 a.m. PDT.

Riviera Holdings Corporation’s fourth quarter financial results will be announced on Tuesday, Feb. 15, at 11 a.m. PDT.

Youbet.com Inc. (UBET) says it is in the process of acquiring International Racing Group, a privately held account wagering company based in Curacao.

Ameristar Casinos Inc. (ASCA) has declared a quarterly cash dividend of $0.15625 per share to be paid on March 15 to stockholders of record on March 1.

Irwin A. Siegel, a retired certified public accountant, has been appointed to the board of Las Vegas Sands Corp. (LVS).

The California Lottery Board has agreed to join the multi state Mega Millions game that is played in 11 other states.