New study urges New York
dump MGM slots contract

Feb 28, 2006 3:37 AM

MGM MIRAGE Inc. (MGM) was chosen several years ago by the New York Racing Association to build a slot machine facility at Aqueduct Racetrack but lacking sufficient legislative guarantees, the giant gaming company was slow in implementing its franchise.

Now, in light of a new study relative to the value of the New York tracks, the separately-operated OTBs and the potentials of slots at both Aqueduct and its sister track, Belmont on Long Island, MGM MIRAGE’S reluctance seems to make good business sense.

The study, prepared by the Maryland Tax Education Foundation, a conservative research group, would have the state terminate MGM MIRAGE’s slots contract in favor of establishing a new franchise for 9,500 slot machines with a 20-year guarantee. The franchise would then be put out to bid.

Also suggested by the study is a bidding process for the racing franchise now held by NYRA and the privatization of the state’s OTBs, also to be auctioned off.

These three bids, the study suggests, could bring the state about $2.1 billion.

The report differs sharply from one recently prepared by the non-profit group Friends of New York Racing that suggested the tracks and the OTBs should be operated together similar to the Canadian operation of Woodbine Entertainment Group. A spokesman for the group called the Maryland study impractical.

SEC filing

After delaying a fiscal year filing with the Securities and Exchange Commission to review the accuracy of its annual audit, Shuffle Master Inc. (SHFL) announced last week that the review was completed and the 10-K filed.

Management said two adjustments to the original data were "immaterial."

As adjusted, fiscal year revenue for the period that ended on Oct. 31, 2005, is $112.9 million with income from continuing operations of $29.1 million or $0.80 per diluted share. These represent respective increases of 33%, 29% and 33% over fiscal year 2004 results, the company said.

The questions of the original filing dealt with the company’s CARD subsidiary and a transaction that occurred in either late 2005 or in the first quarter of 2006. After an adjustment was made regarding the transaction, the company decided that the prudent procedure would be to undertake an extensive review of other transactions that caused a delay in the SEC filing.

Boat sale

Pinnacle Entertainment Inc. (PNK) says it has an agreement with bankrupt President Casinos Inc. (PREZ) to acquire the President Casino riverboat located in St. Louis, Mo.

The purchase for $31.5 million must be submitted to the bankruptcy court for the District of Missouri and is subject to a potential overbid by a third party. The deal must also be approved by the Missouri Gaming Commission.

It is expected that a bankruptcy auction for the boat will be set for some time in May.

Pinnacle has two other development projects scheduled for the St. Louis area.

THE INSIDER: The return of live racing to hurricane-battered Fair Grounds Racetrack in New Orleans will depend on the success the track’s owner, Churchill Downs Inc. (CHDN) has with resolving its insurance claims.

Progressive Gaming International Corporation (PGIC) has received regulator approval to begin a 30-day field trial for its Rapid Bet Live product at the Palms Hotel and Casino in Las Vegas.

Japanese officials said Sunday they will encourage a plan to lift the country’s ban on gambling and like Singapore prepare a program that will lead to increased tourism.