For Duchossois, hosting BC is dream come true

Oct 22, 2002 6:30 AM

   Each year, since the beginning of the Breeders’ Cup in 1984, European horses have become more prominent participants both in numbers and in success. That’s no surprise to Dick Duchossois, who used his personal wealth to rebuild the fire-destroyed Arlington Park into a world-class facility and this year gets to host the Breeders Cup World Thoroughbred Championships this coming Saturday.

   For years, the Chicago track was home for the Arlington Million, a popular attraction for European-based horses primarily because of the sensational neck victory of Tolomeo over the American hero, John Henry nearly two decades.

   In 1983, Duchossois joined with partners Joe Joyce, Ralph Ross and Sheldon Robbins in acquiring the old Arlington Park from Madison Square Garden Corporation. Within two years, the property went up in smoke completely destroying the grandstand. Not to be denied, Duchossois ordered the construction of a tent city and that year’s renewal of the Arlington Million went off as scheduled.

   After buying out his partners, Duchossois ordered the construction of Arlington International, a racetrack that has no equal anywhere in the world. Everything went well until riverboat competition and the lack of legislative support caused Duchossois to close his creation in 1998.

   A renewed spirit and a change in state law encouraged Duchossois to re-open the track in 2000. It also suggested to both the owner and the operators of Churchill Downs Inc. (CHDN) that a merger would be beneficial. Thus, in September, 2000, Duchossois became the largest single stockholder in corporate Churchill with about 25% of the outstanding shares.

   For years, Duchossois dreamed of welcoming the world’s greatest thoroughbred horses to his beloved Arlington International. Saturday, his dream comes true.

IBM boost

   MGM MIRAGE Inc. (MGG) announced Monday that it had signed an agreement with International Game Technology Inc. (IGT) to upgrade nearly all of its slot machines with the increasingly popular ticket-in ticket-out technology, EZ Pay.

   Involved in the agreement are the properties The Mirage, New York-New York, Treasure Island, MGM Grand, Golden Nugget, Bellagio in Las Vegas; the three Primm Valley Resort in Nevada; the Beau Rivage in Biloxi, Ms., and the MGM Grand in Detroit, Mich.

   The Monday announcement sent IGT shares soaring. After opening at $70.30 a day long climb began that took it to a closing price of $75.55, up $5.25 a share with more than 2.9 million shares traded.

   The closing price easily surpassed the previous 52-week high of $71.95.

   Also impacting the price of the IGT shares was the announcement in New York that the company was one of four companies approved to sell video lottery terminals to the state’s racetracks.

   The MGM MIRAGE announcement was made by Bobby Baldwin, president and CEO of Mirage Resorts and the executive in charge of implementing this initiative for the company.

   “MGM MIRAGE properties have developed a reputation for excellent customer service and extraordinary entertainment experiences,” Baldwin said. “By using ticket technology in combination with our cutting edge Players Club loyalty programs, we will further enhance our leadership position in the gaming industry.”

   Ticket payouts, rather than the cumbersome coins, provided players with the added convenience of not having to handle the coins when they cash out and provide less interruption of play due to coin fills on machines. Recent surveys, Baldwin pointed out, indicate that 80% of players prefer tickets to coins.

   Underscoring MGM MIRAGE’s leadership position in the gaming industry, one observer noted that IGT probably will be receiving many calls from other companies who will be looking to maintain their competitive positions.

   Also showing strong support from Wall Street investors on Monday were Penn National Gaming Inc. (PENN), Alliance Gaming Corp. (ALLY) and Argosy Gaming Corp. (AGY). Penn National, seen as a major beneficiary from any slots legislation that is expected in Pennsylvania, saw its share price increase $1.48 to $21.14. Alliance Gaming, also approved for sales of VLTs in New York State, increased in value to $17.99, an increase of $1.82 for the day and Argosy was up $1 to $19.40.

Ameristar in nosedive

   An earnings warning by Ameristar Casinos Inc. (ASCA) caused the company’s stock to take a major hit on Monday, falling $2.63 to $12.11 a share. This was below the 52-week low of $14.45. During the same period, the share price hit a high of $33.94.

   Company officials said that lower than expected operating margins with its new facility in St. Charles, Mo., caused them to reduce earnings for this quarter. Before one-time charges, the company expects earnings to be about $0.43 a share, substantially below the $0.51 a share estimated by a majority of Wall Street analysts.

   The Monday announcement did not change the company’s plans to officially announce third-quarter earnings results on Oct. 29.

   Also, the company said it was going forward with plans for a $30 million project to renovate its property in Kansas City, Mo. The project includes improvements to the casino and major renovations to the property’s land-based amenities.

   Coinciding with the financial shortfall announcement was a research report issued by Bear Stearns in which analysts downgraded ASCA to a “peer perform” rating.

   “We believe St. Charles has been impacted by higher staffing levels, excess promotional costs, and a potential slot machine integration glitch,” wrote the Bear Stearns analysts.

   “This, coupled with reports of a heightened promotional environment in Kansas City, could lead Ameristar to fall short of our previous $0.50 3Q 02 EPS estimate,” the report continued. The analysts then lowered the 3Q expectation to $0.46 a share and $0.38 a share for the fourth quarter.

Harrah’s expanding

   Harrah’s Entertainment Inc. (HET) announced Monday that it is going forward with a $75 million expansion and renovation project for its property in the St. Louis””Maryland Heights area “in a move designed to solidify out position in the St. Louis, Mo., marketplace.”

   Expected to be the cornerstone of the project will be a 16-story, 309-room hotel tower that will feature two “super suites” for high-rollers and 19 two-bay suites. When the tower is completed, the property will have 600 hotel rooms.

   Harrah’s St. Louis recorded more than 10.4 million admissions in the first year ended on June 30, making it the most visited riverboat property in the state of Maryland.

Aristocrat-Mikohn link

   Aristocrat Technologies, Inc. and Mikohn Gaming Corporation (MIKN) announced Monday that they developed a joint agreement establishing Aristocrat as the exclusive supplier of hardware for Mikohn’s licensed recurring revenue products in North America.

   Under the agreement, Mikohn will continue to develop games and license theme properties. Aristocrat will integrate those games onto its latest game platforms. Initially, Mikohn will supply its Yahtzee, Battleship and Ripley’s Believe It or Not game titles to Aristocrat.

   Aristocrat, the Australian-based gaming machine manufacturer, absorbed Casino Data Systems into its operations shortly after setting up shop in Nevada. The joint agreement with Mikohn gives Aristocrat an entry into the licensed branding arena.

Tip controversy

   Unionized casino dealers””identified as Montreal Casino croupiers””are threatening to take a walk if stalled negotiations fail to resolve the controversy regarding their tips.

   The 850 unionized employees receive a top base rate of $20.80 an hour and receive a “substantial benefits package” that includes state of the art child care facilities that are opened round-the-clock.

   Under the current contract provisions, the dealers’ pooled tip money, at least the first $6.50 per hour is retained by the casino operator, Loto-Quebec. Originally no tips were allowed but that rule was eliminated some four years ago. Even now, officials say, pooled tips do not exceed $6.50 an hour.

   Still, whatever the amount, the dealers want their tips, even though they acknowledge they are among the highest paid “croupiers” in North America with an average salary in excess of $43,000 a year for working a 40-hour week.

Opinions vary

   Steve Wynn continues his road show this week attempting to interest the country’s money managers in participating in his announced initial public offering (IPO) for stock in his Wynn Resorts Ltd.

   This, despite one of the worst period on Wall Street for IPOs. Each week, for the past several months, company planning to offer stock to investors have cancelled their IPOs because the per share offer was substantially lower than their original plan.

   Just last week, two planned IPOs involving Insurance broker U.S.I. Holdings Corp. and energy company Plains Explorations & Production Co. were withdrawn when early interest indicated the offerings would fail to attract the offering price. Michael Gaughan and his partners in Coast Casinos Inc.withdrew their planned IPO for the same reason.

   As for Wynn, his hopes to raise $470 million by selling 20.5 million shares has drawn mixed reviews. However, no one has walked away from a presentation being less than impressed by Wynn’s presentation. However, the prospect of investing in a project that won’t be completed until 2005 has turned off some investors who say that current market conditions have caused the market value of many companies to crash.

Talent war erupts

   The Borgata, the $1.2 billion casino, the first destination resort to be built in Atlantic City, opens next summer but that it already is making an impact on the city’s existing talent.

   It was announced last week that Larry Mullin, chief operating officer at Trump Marina Casino, had quit to become a member of the management team at The Borgata. Now, his chief assistant, Steve Ritondo, vice president of Trump Marina’s casino operations, has decided to move over to The Borgata with his former boss, Larry Mullin.

   But adding to the value of the decision was the announcement by one of Trump Marina’s biggest players, Dan Borislow, one of Ritondo’s favorite people. According to Joe Weinert of the Atlantic City Press, Borislow is on record as indicating he will follow Ritondo and take his business to The Borgata, although he did say he also would play at times at Trump Marina.

The Insider

   The Venetian executive William Weidner made a casino pitch in Omaha, Neb., last