NYRA touts non-profit status
to offset growing competition

Aug 22, 2006 4:33 AM

There are 16 groups looking to take over the franchise that operates New York’s three largest racetracks but because of consolidation of efforts the decision may fall between two of the petitioners.

Last week, Churchill Downs Inc. (CHDN) and Magna Entertainment Corp. (MECA) announced that they were joining Empire Racing Associates in their bid for the franchise. Previously, Empire Racing had added Canada’s Woodbine Entertainment Group and Buffalo, N.Y.’s Delaware North to their combine.

Empire Racing, backed by the New York horsemen’s association, is expected to offer the strongest opposition to the bid being made by the current franchise holder, New York Racing Association (NYRA).

In what has become a controversial gathering, this year’s Jockey Club Round Table, held annually at Saratoga during its famed summer racing meeting, gave a big boost to NYRA by permitting its CEO, Charles Hayward, to make his pitch for the franchise.

His argument was simple: NYRA is a non-profit organization while all the other bidders involve for-profit companies.

"You pay a lot of money to purses when you don’t have to pay money to shareholders," Hayward was reported as stating.

The reason the franchise, which expires in December, 2007, is up for grabs is because of multiple problems that developed under the former management. Hayward addressed those problems but insisted the new management had overridden them under the guidance of a federal monitor.

The representative of the state ad hoc committee charged with determining the future of the franchise described the established bidding process. The committee is expected to make its decision late next month.

Some bidding representatives expressed dissatisfaction with the Jockey Club’s use of the Round Table to permit NYRA to gain a forum for its proposal while not permitting others to participate in the discussion.

Also adding to the controversy was the revelation that Tim Smith, former head of the National Thoroughbred Racing Association and organizer of a group called Friends of New York Racing — a group that was influential in getting the state to seek franchise bids — has a "small stake" in Empire Racing. The revelation resulted in claims that Smith misled the racing industry as to the true nature of the "Friends" organization.

Nebraska victory

After a great deal of political haggling in Nebraska, Judge Karen Flowers has ruled that the voters can decide in November whether they want to have casinos in their state.

The casino battle in Nebraska has been going on for several years, primarily fostered by Coast Casinos, now an operating division of Boyd Gaming Corp. (BYD).

Earlier, the Nebraska Attorney General, Jon Bruning, ruled that the petition seeking the November vote was too close in language to the one defeated by the voters in 2004, thus precluding it from being attached to this year’s referendum.

Judge Flower disagreed, saying that "one must consider the content of the initiatives themselves, not their fundamental essence."

Bruning, a major opponent to casino gambling, said he will appeal to a higher court.

THE INSIDER: Net income for Atlantic City’s 12 casinos fell nearly 75% in the second quarter when compared to a year ago. New Jersey officials said the decline was due primarily to one-time charges such as the major expense incurred by the Trump casinos in emerging from bankruptcy.

Voters in Calcasieu Parish, La., will decide in November whether Pinnacle Entertainment Inc (PNK) can build a second floating casino on Lake Charles.

Philadelphia Park Casino has chosen Bally Technologies Inc. (BYI) to provide it with a complete casino management system solution. The racetrack hopes to open a slots parlor this winter.

Hollywood Casino in Hancock County, Miss., will reopen on Aug. 31, according to owner Penn National Gaming Inc. (PENN). Originally, the property was to reopen in the fourth quarter.

Isle of Capri Casinos Inc. (ISLE) will release its first quarter results after the markets close on Thursday, Aug. 24.

Hyatt Hotels has announced that it plans to sell its Grand Victoria Casino and Hotel in Rising Sun, Ind. The property, manned by 1,100 workers, has a 40,000 square-foot riverboat casino with five restaurants and a 201-room hotel.

GTECH Holdings Corporation (GTK) has received a contract to supply a new video central system for the Manitoba Lotteries Corporation of Canada.

Ameristar Casinos Inc. (ASCA) has announced a quarterly cash dividend of $0.09375 per share to be paid on Sept. 15 to stockholders of record on April 30.

Churchill Downs Inc. (CHDN) has reopened its off-track betting facility at Fair Grounds Race Course in New Orleans, La. The facility was closed because of damage from Hurricane Katrina.

Harry Curtis, chief gaming analyst for JP Morgan, has upgraded the shares of Las Vegas Sands Corp. (LVS) from neutral to overweight. He believes the company will benefit from the opening of the Wynn Resort casino in Macau next month.