Gulfstream joins Florida slots battle

February 26, 2008 11:37 PM
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Industry Insider by Ray Poirier | Magna Entertainment Corp. (MECA) has joined the fight to stop the Seminole Tribe in Florida from upgrading their casinos, a move made possible by a compact negotiated with Gov. Charlie Crist.

The initial objection to the gaming compact was filed by the Florida House of Representatives which argued that the Supreme Court should nullify the compact since under Florida law only the legislature could establish gambling regulations.

After signing the compact with the governor, the tribe installed 1,000 Class III slot machines at the Seminole Hard Rock Casino in Hollywood. Plans call for the tribe to upgrade their other six casinos, as well.

Upon installing the machines, the tribe paid the state $50 million and guaranteed $100 million to $150 million in payments for the first three years of operation.

"The compact is invalid under Florida law in that the governor cannot abrogate the statutory law of this state and cannot bind the state to this compact in which the governor purports to act in a legislative capacity," said the lawyer representing Gulfstream Park, a track owned by Magna Entertainment.

Oral arguments on the petition filed by the House of Representatives were heard on Jan. 30 but no decision has been forthcoming from the jurists.

Answering his critics, Crist denied all allegations by Gulfstream Park in its Supreme Court action. He claimed legal precedent gave him authority and said if he had failed to successfully negotiate the compact, the Seminole tribe might have expanded gaming just on the basis of a ruling from the Bureau of Indian Affairs in Washington, D.C.

Such action, he said, would have left the state without gaming revenue from the tribal casinos.

Illinois deal

Penn National Gaming Inc. (PENN) has arranged to keep its riverboat operation in Joliet, Ill., about 40 miles from southwest Chicago.

When the company acquired the facility with a buyout of Argosy Gaming in October, 2005, it agreed to dispose of the property by June 30, 2008, while retaining two other riverboats in Aurora and Alton, Ill.

However, the deal provided that if circumstances changed during the period the company could ask the gaming regulators to reconsider the terms of the sale. Penn National officials requested the review and the state agreed the sale would not be necessary.

Penn National immediately announced their plans for a $50 million upgrade of the Joliet riverboat.

THE INSIDER: The four southern Nevada casinos owned by a company controlled by billionaire investor Carl Icahn have been sold for $1.2 billion to Whitehall Street Real Estate Fund, a company affiliated with Goldman Sachs investment firm.

Casinos in Mississippi won $225.6 million in January, about two million less than they won in December.

Penn National Gaming Inc. (PENN) has named Mark Loewe as general manager of the Sanford-Orlando Kennel Club in Florida. Loewe formerly held executive positions with Pompano Park Racing in Florida and Prairie Meadows Racetrack and Casino in Iowa.

Magna Entertainment Corp. (MECA) will announce its fiscal fourth quarter results on Thursday, Feb. 28. Also, Trump Entertainment Resorts Inc. (TRMP) will report its fourth results on Wednesday, March 5.