Feud brewing between Harrah’s, JCC Holding Co.

April 23, 2002 1:58 AM
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Charges and counter-charges filled the business press last week as JCC Holding Co. and its 49% owner, Harrah’s Entertainment Inc. (HET) took their battle public.

JCC Holding Co. filed a lawsuit alleging that HET had failed to properly promote the Harrah’s New Orleans Casino in favor of diverting potential customers to some of their other facilities.

HET countered in a press release that its management company had exceeded the minimum financial performance standard set during the JCC bankruptcy reorganization by 18.25% and had improved the property’s market share by 2.7%. Also HET charged that the lawsuit was filed just a few days before the implementation of additional compensation benefits for two outside directors "who live in California" and whose duties are to monitor a holding company with fewer than 20 employees.

Still awaiting judicial response is an effort by HET to require JCC Holding to allow its shareholders to vote for an independent outside director at the upcoming JCC annual meeting.

The meeting, originally scheduled for April 25, has been postponed until a Delaware court resolves the director voting dispute.

More quarterly reports

Three more gaming companies have announced conference calls during which they will release their financial experience for the most recent fiscal quarter.

Scientific Games Corp. (SGMS), the company that was formed with the merger of Autotote Corp. (TTE) and Scientific Games (SG), has set its report for 7 a.m. on Monday, April 22.

Hollywood Casino Corporation (HWD), which has advertised to the industry that it would like to be acquired by a larger company, will report on Tuesday, April 23, beginning at 8 a.m. (PDT).

Las Vegas Sands Inc., the privately-held company that operates The Venetian Casino Resort, will release its earnings at 4 a.m. (PDT) on Wednesday, April 24.

Viability doubted

Even as management continued a major executive shakeup last week, the continued viability of Youbet.com (UBET) was placed in doubt by a report of its auditor, BDO Seidman LLP.

The auditors focused on the company’s recurring operating losses and its need to raise additional cash if it were to continue as an operating concern. The company responded by pointing to the receipt of an operating license in California and the opening of a betting hub in Oregon as factors that would assist it in staying in business.

Last week, Youbet.com announced that its chief financial officer, Phillip Hermann, had resigned. Hermann also served as co-CEO and president. Named to the board of directors was Guy J. Chipparoni, president of KemperLesnik Public Affairs Co.

Attempting to keep the company going is co-founder David Marshall who rejoined the company last month and brought with him a $750,000 infusion. Despite this, the company said it will need additional monies to meet its financial responsibilities.

Resolving Emerald

Negotiations continue between the state of Illinois and the principals in Emerald Casino Inc. over the future of a riverboat gaming license that would have located a facility in Rosemont, Ill., a suburb of Chicago.

An original plan to have gaming giant MGM MIRAGE Inc. (MGG) pay $615 million to Donald and Kevin Flynn and their Emerald partners was shut down by the Illinois Gaming Board.

But, things are changing, just as the makeup of the Board is changing. Only chairman Gregory Jones remains and his term expires in June. A reconstituted board could have a completely different view on how the license stalemate should be resolved.

Ongoing are discussions between the existing regulatory agency and legal representatives of the casino license holders. A revised financial arrangement that would better compensate the state could be beneficial to MGM MIRAGE.

The Insider

Business continues to boom for the three casinos operating in Detroit, Mich. During the month of March, the casinos reported record revenues of $102.4 million. And, leading the pack was MotorCity with $37.3 million. Mandalay Casino Resort is the majority owner of MotorCity. Second was MGM Grand with $35.8 million, followed by Greektown at $29.3 million.

Park Place Entertainment Corp. (PPE) reports it has sold its 20% stake in an Australian Internet company for $120 million Australian funds. This was $10 million more than it had anticipated.

The annual Trade Show of the National Indian Gaming Association will be held this week in San Diego. The group plans to release its first National Impact Study to better educate the general public about the "fundamental issues relating to Indian gaming policy."

Colorado casinos generated $63.5 million revenues during March, an 8.2% increase over March, 2001.

The Belle of Sioux City riverboat in Iowa, owned by Argosy Gaming Co. (AGY) has been fined $60,000 for liquor law violations. The boat also will lose its liquor license for three weeks.

Paul-Son Gaming Corp. of Las Vegas has agreed to merge with a French company that already owns the Bud Jones company of Las Vegas.

GTECH Holdings Corp. (GTK) has agreed to a two-year extension of its contract with the state of Washington.

Mikohn Gaming Corp. (MIKN) says it has received contracts from the British Columbia Lotteries Corp. and the Sky City Casino in New Mexico for the company’s MoneyTime Slot Bonusing system.