No compromise in Florida slots dispute

May 10, 2005 4:27 AM

Market reaction was quick on Monday with shares of Isle of Capri Inc. (ISLE) losing ground because of the failure of the Florida legislature to pass a bill that would have taxed and regulated slot machines at South Florida racetracks.

Lawmakers went home on Friday following a two-month session during which racino proponents attempted to find a compromise with opponents of expanded gambling following the vote in Broward County that approved the slot machine installation at three racetracks and one jai-alai fronton.

ISLE shares fell to $22.92, down $1.38 a share, in early trading on Monday.

An attempt at a compromise was made Friday when the Senate passed a bill, 28-10, that increased the tax rate to a 40% to 50% sliding scale, closer to the 55% tax rate that was in the bill previously approved by the House. However, the House leadership elected not to bring the Senate bill before its members because it provided for the use of Class III machines while the House insisted that only bingo-based Class II machines be installed.

The major concern on the type of machine involved the Indian tribes that currently operate casinos. These casinos by law are limited to Class II machines but were the legislature to approve Las Vegas-styled machines for the pari-mutuel operations the Indians would be able to use them also.

Without a law regulating the machines, it was unknown when the tracks would be able to install slots, as approved by the county voters.

MORE COMPS

Harrah’s Entertainment Inc. (HET) has introduced an experimental program for its Kansas City, Mo., casino that will attempt to beef up business on Mondays and Tuesdays with additional cash rebates.

Missouri has a law that limits a gambler’s losses to $500 every two hours. The casino operator uses player’s club cards to track the customer’s level of play.

Under the new program, the players who gamble at least $50 on either a Monday or a Tuesday will be mailed a voucher with a cash value of 10% of the total amount wagered that day, up to $20 or 10% of $200.

The promotion is expected to run through the month of May but could be expanded.

Also, Harrah’s has indicated it wants to restart negotiations with the town of West Warwick, R.I., where it hopes to build a casino in partnership with the Narragansett Indians.

The discussions have been on hold since it appeared that the legislature would not permit a general vote on the matter. However, new legislation authorizing a statewide referendum on the casino has been filed and has been submitted to the State Supreme Court to see if it is constitutional.

THE INSIDER: Shareholders of MGM MIRAGE Inc. (MGM) have approved doubling the number of company shares from 300 million to 600 million.

The Louisiana legislature is working a bill that will permit two Delta Queen Steamboat Co. vessels to have slot machines, table games and a race book. The move is being made to revitalize the steamship company that has filed for bankruptcy and has closed its paddle-wheel business.

A big shakeup in an Indian tribe that operates a casino in southern California is underway. The Cabazon Band of Mission Indians has fired three top executives in light of an IRS investigation of a tax-exempt bond deal.

Louisiana has chosen GTECH Holdings Corp. (GTK) to provide a video gaming monitoring system to oversee its video gaming program.

Goldman Sachs gaming analysts have downgraded the shares of Wynn Resort Ltd. (WYNN) from outperform to in-line.