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MGM MIRAGE or Trump to get NYRA slots contract

Apr 1, 2003 5:55 AM

Barry Schwartz, chairman of the New York Racing Association (NYRA), has been taking his time in selecting the company he wants to operate the video lottery machines that will be installed at Aqueduct. But, last week, he indicated he has weaned the likely choice to two candidates: MGM MIRAGE Inc. (MGG) and Trump Hotels & Casino Resorts (DJT).

The reason Schwartz has been reluctant to go forward in establishing Aqueduct as a racino is strictly financial. The bill, passed at the end of 2001 authorizing VLTs, was so stringently written that Schwartz and the other track operators realized that they would bear the expense but would receive only a small amount of the revenue from the project. Initially, the VLTs’ law granted the track operator something on the order of about 15% of total revenues. Too small, said Schwartz. And, Gov. George Pataki agreed, offering instead, to reduce the state’s share to 60%.

Still, the tracks continued to literally drag their feet in hopes of having the law amended. The legislature has responded with a variety of suggestions that would boost the tracks’ percentage.

Schwartz sees a fiscal crisis at the end of the current legislative session as motivation for the lawmakers to resolve the impasse by boosting the tracks’ share, as well as increasing the number of machines from the current 2,500 to a more lucrative 4,500 machines.

Aqueduct would be expected to attract between 12,000 and 20,000 new players to the facility with each slot machine generating in excess of $300 per day.

Visiting solons

Sheldon Adelson, whose Las Vegas Sands Inc. operates the Venetian Resort Hotel and Casino, has been lobbying the Nebraska legislature to permit him to build and operate a casino in that state where none currently exists.

So, eyebrows were raised over the weekend, when it was announced that more than a quarter of these lawmakers were staying at The Venetian while attending a conference sponsored and paid for by the American Legislative Exchange Council (ALEC).

Officials of the sponsoring group denied any skullduggery, explaining that the meeting was scheduled more than a year ago and that holding it at The Venetian was a coincidence.

Earnings restated

Station Casinos Inc. (STN) lost its $4.9 million investment in the Kerzner Interactive online wagering activity and planned to take the charge in the current quarter. However, accepting the advice of its auditors, Deloitte & Touche, the company will take charge in its fourth quarter 2002 period by restating its earnings for that period.

Previously, the company reported earnings of $7.7 million or $0.13 a share for the fourth quarter of 2002. After applying the $4.9 million investment loss, the earnings were reduced to $4.5 million or $0.07 a share.

Kerzner International Ltd. (KZL), formerly Sun International Inc. (SIH), was granted one of three Internet gaming licenses by the Isle of Man, a self-governing island off the coast of England. MGM MIRAGE Inc. (MGG) also was a successful bidder for an Internet license and is currently operating from that location.

Kerzner sold Station Casinos Inc. an option to acquire 50% of Kerzner Interactive but because of substantial losses the Internet site was closed thus causing Station Casinos to lose its investment.

Compromise offered

Iowa’s principal horse track, Prairie Meadows Racetrack and Casino, has made a last minute offer to settle the tax dispute with the state. It offered to settle its lawsuit with a tax rate of 28%. This was lower than the state’s offer of 30%.

The dispute became a major problem when the Iowa Supreme Court struck down the state’s two-tiered tax that charged the racetracks 32% while charging the state’s riverboats 20%.

The court ordered the state to rebate the racetracks $112 million. However, the state appealed that decision to the U.S. Supreme Court and is scheduled to present its arguments on April 29.

A spokesman for Prairie Meadows said the 30% offer was made to show the state that "we want to work with legislators and the governor to make something that’s right for Iowa."

The track’s proposal would settle at a 28% tax retroactive to July 1, 2002, and allow the court case to proceed. The track would also immediately pay the state $15 million. If the tracks lose the federal lawsuit the state would agree to keep the cap at 28%.

The Insider

President Casinos Inc. (PREZ) has presented to the bankruptcy court a two-track reorganization program that has the approval of current creditors.

A recent Wisconsin poll indicated that the state’s residents favor the state’s Native American casinos by a two-thirds majority and would support the state making money from gambling by the majority fear there would be more problems from expanded gambling.

Massachusetts lawmakers have set aside April 15 for a full day of debate regarding allowing slot machines and casinos in the state. Harrah’s Entertainment Inc. (HET) President and CEO Gary Loveman believes the Âí­casino proposal has a 50-50 chance of passing.

Argosy Casino Inc. (AGY) says it will convert all of its slot machines at its Lawrenceburg, Ind., riverboat to cashless slots.

Venetian Casino Resort, LLC, and its associates have announced receipt of a $50 million loan facility to apply toward developing a casino in Macau.

As expected, the West Virginia Lottery Commission has approved the addition of 500 slot machines at Mountaneer Race Track & Gaming Resort, bring the total number of authorized machines to 3,500. The property is owned and operated by MTR Gaming Group Inc. (MNTG).

Scientific Gaming Corporation (SGMS) has been awarded a contract to supply an on-line lottery system to the Peruvian Lottery.