Brutal week for gaming interests

Mar 17, 2009 4:05 PM
Burnt Offerings by Stan Bergstein |

Magna, et al take some bad beats

Casinos and their racing twins, racinos, took a brutal pounding last week.

Aside from the gloomy news on the Vegas Strip, things were grim in other jurisdictions.

In New Hampshire, the hopes of Rockingham Park and two dog tracks were jolted when the House shot down two bills that would have permitted slots at the venerable 115-year-old Rock, now operating harness racing after a century of runners, and two greyhound operations. The Senate followed suit, tabling the idea.

Rockingham’s president and general manager, Ed Callahan, had said earlier that the track could not survive without alternative gaming, but a large majority of the legislators seemed deaf to his appeals. Whether Millennium Gaming pursues its option to buy Rockingham seems a remote possibility now, unless they decide to do so and sweat it out waiting for slots. That is what Isle of Capri did in Florida 14 years ago, when they bought Pompano Park on the if-come and won their gamble 12 years later when they opened their Isle racino in April of 2007. Rockingham, like Pompano, has sizeable real estate surrounding it, but not the weather or water of Pompano Beach, and perhaps not the patience or wherewithal for much delay.

In Maryland, things were no better. Magna Entertainment, which outsmarted itself when it decided not to pay the required $28.5 million up-front fee with its application for a racino at Laurel Park, went to court…and lost. A Circuit court judge threw out their case, saying the 7-man selection committee was correct in disqualifying Laurel’s application. Laurel is appealing the decision.

In New York, little children may be adults by the time Aqueduct Racetrack gets its racino with 5,000 slots. Delaware North, the concessions giant, told the New York Racing Association it could not raise the $370 million needed by March 31 to build and operate the racino. Delaware North’s gaming and entertainment president, Bill Bissett, said the deterioration of credit and equity financial markets in the recession economy" made restructuring a necessity. New York’s governor David Paterson had other ideas. He announced the state would reopen the bidding and start from square one. Delaware North can bid again, but Mohegan Sun in Connecticut announced it was getting back into the race, and other gaming interests are certain to join the new chase. Delaware North won the award when it bid $120 million more than its closest competitor, but obviously it will have to scale back on its bid this time around.

In Indiana, Indiana Downs’ Indiana Live, a new and swanky $200 million racino opened, with thousands pouring in on opening day and cars backed up bumper-to-bumper at the exit from Interstate 74, the main highway between Indianapolis and Shelbyville, where the track is located. There also was a minor brouhaha that didn’t hurt publicity. Indiana Live was running a clever ad in the Indianapolis Star showing a darkened silhouette that obviously was President Obama, with the message "Change You Can Believe." The Washington Times pounced on it, saying the White House had objected. An administration spokesman deflated the story, saying its policy was to protect the presidential image, while being careful not to squelch the public’s overwhelming enthusiasm for him. A day later the White House denied that it had ordered the ad pulled, but the racino did pull it, not without major coverage of the event.

In Pennsyslvania, the hugely successful racino at The Meadows near Pittsburgh, which was to have been bought by Australian James Packer’s Crown operation, had those plans altered. The withdrawal of Gretel Packer from the deal forced interruption of licensing, and Crown agreed to pay $370 million to delay purchase of the Meadows’ racino and two other casinos for up to two years. Or until the recession ends. Or perhaps never.

It was not the only blow to fall at the Meadows during the week. A former employee, Thomas Reddy, who had been director of purchasing, was hired in the same expanded capacity for the racino. A state license was needed for that, and the Gaming Control Board, in its investigations, discovered that $246,000 had been funneled, during Mr. Reddy’s purchasing stint for the track, to two companies that allegedly existed only in Mr. Reddy’s fertile mind. The Meadows is operated by – you guessed it – Magna Entertainment.

Sometimes you can’t win for losing.