Harrah’s sues Penn National over Charles Town ‘casino’

Aug 28, 2001 4:44 AM

When is a casino a casino?

That question probably will end up in the courts following the filing of a lawsuit Monday by Harrah’s Entertainment Inc. (HET) against Penn National Gaming Inc. (PENN).

The dispute involves Charles Town Race Track that was bought by Penn National from the former Showboat Inc., now owned by Harrah’s.

When Penn National bought the track in 1997, the agreement gave Showboat the continued right to operate “a casino” at the Charles Town property. Actually, the agreement said Showboat would operate video lottery terminals, linked to the West Virginia Lottery, at the racetrack in return for a management fee.

Penn’s reply says the terms of the agreement it had with Showboat “do not specify what activities at Charles Town Race Track would constitute operation of a casino.”

Penn National also said it believed that the installation and operation of video lottery terminals at the track “does not constitute the operation of a casino under the Showboat option or under West Virginia law.”

Slots revenue at the Charles Town Race Track has been a bonanza for the former horse racing company that has branched out into casino gaming with the acquisition of two properties on the Mississippi Gulf Coast.

The company’s stock has risen from a low of  $8 to a high in the mid-20s.

Since news of the lawsuit was made public, the price of PENN dropped to $17.06 but investors moved in and pushed the price up to $18.45 Monday.

Progressive purchase

Looking to enhance its position in the development of progressive systems, WMS Gaming Inc., a subsidiary of WMS Industries Inc. (WMS), has acquired Carson City, Nev.-based Big Foot Software Research and Development Inc.

The strategic acquisition, initially announced in the company’s recent year-end conference call, supplements WMS’ internal efforts to launch its own wide-area progressive system. The company expects the first wide-area progressive system to be submitted for regulatory approval in the fall of 2002, making products available to its customers in the fall of 2003.

Big Foot Software was founded in 1997. No sale price was announced.

“Big Foot’s principals have a proven record of designing and developing unique proprietary client server systems, including wide-area progressive systems currently operating in many casinos in major gaming jurisdictions,” said Brian R. Gamache, president and CEO of WMS Industries Inc.

“The experienced team of developers at Big Foot adds further depth and bench strength to our product development team, positioning us well for our future growth,” he added.

Italian lottery

Scientific Games (SGM) said Monday it has shipped 40 million tickets to Italy for the country’s Gratta e Vinci instant ticket game. The tickets will go on sale throughout Italy in time for the Columbus Day holiday on Oct. 8.

The announcement came on the heels of SGM and its Italian partner, Lottomatica, winning the bid to provide Italy’s lotto system with instant tickets. In the past, as many as two billion Gratta e Vinci tickets have been sold annually and Scientific Games expects the market to return to those levels with the installation of a new instant ticket system.

Lorne Weil, SGM chairman and CEO, said he views Italy as representing a “very large potential market for lottery games and we are confident that the market will grow rapidly once the customers realize the benefits our system brings to them.”

Sonoma casino

Nevada Gold & Casinos Inc. (UWIN) has formed a limited liability company to develop a casino in California’s wine country for the Dry Creek Band of Pomo Indians.

The tribe already has negotiated a gaming compact with Gov. Gray Davis and will build the Class III casino on trust land known as the Dry Creek Rancheria. It will be located on a hill overlooking Alexander Valley vineyards and the Russian River, near Geyserville, Cal., in Sonoma County.

UWIN is a 51% owner of the LLC. Its development and loan agreement was ratified by the Tribal Council on Sunday.

When operational in May 2002, the casino will feature slots and table games, as well as dining and entertainment facilities.

Other members of the limited liability company are Jenkins Entertainment Group LLC, Wintun Lodge LLC, and Pathways Consulting LLC.

UWIN President H. Thomas Winn said this would be the first of three gaming projects the company hopes to develop during the next five years.

Oregon connection

VLC, a subsidiary of Anchor Gaming (SLOT), has received a contract from the Oregon Lottery for slot machines and their support.

The agreement calls for VLC to deliver 2,000 video lottery terminals to the Oregon Lottery between Oct. 15, 2001, and April 15, 2002. Following the deliveries, VLC will establish support and service through March 2010.

“VLC’s management and employees are extremely pleased to expand our relationship with Oregon Lottery,” said Mike Tessmer, VLC general manager. “We look forward to the opportunity to serve the Oregon Lottery in the years ahead.”

Connecticut revisited

In the late 1980s, following the passage by Congress of the Indian Gaming Regulatory Act, a small Connecticut tribe challenged the state’s contention that all-out gaming was prohibited in the Nutmeg State.

Lawyers for the Mashantucket Pequot Indians said that under the law they had the right to conduct the same type of gaming permitted within the state’s borders. And, since the state permitted gambling for charitable purposes, the Indians had the right to conduct the same types of games.

Then-Gov. Lowell Schweiker was adamant so the matter was taken to federal court. The Pequots won and shortly afterward Foxwoods Resort Casino was born.

Now, a similar situation has erupted in Texas where former Gov. George W. Bush and his successors have been attempting to shut down the Speaking Rock Casino in El Paso. The casino, operated by the Tigua Indians, opened in 1993 and now makes between $50 million and $60 million annually for the tribe.

“We believe,” said an assistant to the state attorney general, “the Speaking Rock Casino is without question a bona fide, big-time, high-stakes gambling casino, illegal under Texas law.”

Not so, says the tribe. A Tigua attorney has presented to the court a chart listing the types of gambling that have been going on within the state, including a lottery online and scratch games, bingo, raffles, carnivals, and horse and dog racing. He said some of the lottery games are structured the same as the casino-style games offered by the Tiguas.

In 2000, the lawyer said, the state recorded gambling revenues of nearly $1 billion.

“Gambling is big-time business in Texas,” he told the court.

THE INSIDER: Alliance Gaming Corp. (ALLY) has been selected by Harrah’s Entertainment Inc. (HET) to install its slot management system from Bally Gaming and Systems at three casinos that Harrah’s recently acquired from Harveys Casino Resorts.

Atronic Americas LLC has received approval from Mississippi regulators for its Crazy Fruits slot machines.

Approved in Nevada is the new Evolution Series (EVO) operating platform developed by Bally Gaming and Systems, a subsidiary of Alliance Gaming Corp.