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Barge move to cut costs

Oct 1, 2002 7:33 AM

Penn National Gaming Inc. (PENN) took another step toward a huge rental charge saving last week when the Mississippi Gaming Commission approved the relocation of the Boomtown Casino Biloxi barge to a new site.

In its current location, the barge, that was acquired by Penn National Gaming from Pinnacle Entertainment Inc. (PNK) a few months ago, requires an annual payment of $5 million to the property owner. The payment is derived from a percentage of the casino’s earnings.

By moving the barge about 300 yards to the west, Penn National Gaming feels it can get out of a 99-year lease and end up paying about $500,000 a year in rent.

Also, by moving the barge, the company feels it will ease a serious parking problem. Additional traffic flow also will develop when the city of Biloxi completes a widening project for a major access road.

The move won’t be made until early 2004 because the company must await approval from the state Department of Marine Resources and the U.S. Army Corps of Engineers Mobile District, the two agencies charged with reviewing the move.

The owner of the current site opposed the move and asked the gaming regulators to turn down the request. He also has taken his petition to federal court asking that the move be ruled as violating the long-term lease.