In the first go-round by Kansas to designate casino operators, the Lottery Commission rejected cash hording Penn National Gaming Inc. (PENN) in favor of cash-starved Harrah’s Entertainment Inc.
The result was no casino since Harrah’s couldn’t come up with the necessary funding. That meant that the licensing officials had to go back to the drawing boards.
Now, in this second round, the lottery people decided to award the Sumner County casino license to Foxwoods Development Co., an offshoot of the Mashantucket Pequot Indians who run the Foxwoods Resort in Connecticut.
Luckily, however, Foxwoods Development doesn’t have to come up with any cash. Their partners will fund the project. A 50 percent interest will come from a private equity firm called Och-Ziff Real Estate Acquisitions LP; another 33 percent is being raised by another private equity firm, Clairvest Group Inc., while Lakes Entertainment Inc. (LACO) will come up with 17 percent.
The arrangement calls for Foxwoods to serve as a co-manager of the facility with Lakes Entertainment.
A few days ago, Michael J. Thomas, chairman of the Mashantucket Pequot Tribal Nation, warned that casino revenues have fallen and there are no signs of improvement. He said, "These are dire financial times for our tribe. The situation is serious and threatens our tribe."
Reportedly, the tribe is on the brink of defaulting on its bond payments and is trying to restructure its $2.3 billion debt. An official indicated that the debt is $1 billion more than the tribe can sustain.
Foxwoods Resort has terminated 800 casino workers since last summer.
Question? Comment? E-mail me at: Ray Poirier