Legislation worries Pinnacle; Re-thinking $325M investment

May 27, 2003 4:02 AM

There was an implied warning to Louisiana legislators last week when Dan Lee, president and CEO of Pinnacle Entertainment Inc. (PNK) complained about legislation that would permit Delta Downs racino to widen its aisle space between slot machines.

From Lee’s point of view, the legislation that already has passed the Senate and will be coming up for a vote in the House soon, is just another way of permitting the Vinton, La., racetrack to expand its gaming floor. That would be a direct threat to Pinnacle’s plans to build a $325 million casino resort in the nearby Lake Charles area.

Delta Downs racino has been a major success story for Boyd Gaming Corp. (BYD) ever since it opened last year following the $131 million purchase of the property. The aisles in the casino are now 36 inches wide. The bill would permit the aisles space to be expanded to 42 inches.

Since the aisles are designated as emergency evacuation routes, they are not included in the property’s 15,000 square feet of gaming that is authorized for the property. Opponents are concerned the additional space will give the operators an opportunity to use the extra space to add video lottery machines to its current inventory of 1,500 devices.

Potential additional competition for Pinnacle’s casino resort has caused Lee to question whether his company can operate successfully in an unstable atmosphere. The Lake Charles development will be the company’s most ambitious project. Its most recent development was a riverboat complex ”” the Belterra ”” in Indiana.

Throughout the Louisiana legislative process, spokesmen for Boyd Gaming has insisted that the bill was a safety measure and that the company has no plans to increase the number of installed slot machines.

$1,000 slots

Casinos with $500 slot machines are pretty standard in the industry but the Borgata Hotel Casino and Spa, which will open this summer in Atlantic City, will double the limit.

The billion-dollar property, the first major hotel to be built in Atlantic City in more than a dozen years, will have two slot machines that will accept $1,000 tokens. They are companion pieces to a pair of $500 slot machines that will be installed on the casino floor.

In total, the property will have 3,640 gaming devices including 10 that will be designated as $100 machines and 16 that will accept $25 tokens.

Those playing with the $1,000 tokens will be hoping to win the maximum payout: $1 million.

Unexpected support

Like many other states, Texas lawmakers have been debating a bill to extend the life of the state lottery that now faces a sunset provision. Not unexpectedly, supporters of placing video lottery machines at the state’s racetracks are attempting to use the bill for their purposes.

That effort sits well with the state’s three Indian tribes who have been fighting state and federal officials to operate their casinos. And, that’s exactly what anti-gamers fear.

Particularly involved are the Tiguas whose casino, the Speaking Rock Casino, was closed by federal officials after several years of litigation. Approval of so-called racinos would open the door to Native Americans and the reopening of their casinos. But even supporters would prefer that the Indians negotiate gaming compacts with state officials.

The Insider

Tourism tanked in Colorado during the month of April and with it fell the state’s gaming revenue. Officials reported that the state’s 43 casinos won $57 million for the month, down from $59.9 million in April 2002.

Also reporting declines in comparative revenues were Detroit and Louisiana. In Detroit, the city’s three casinos reported revenues of $92.5 million, down 4.7% from last year while Louisiana’s casinos reported revenues of $154.6 million, a drop of 2.9% from last year.

Things were better in Indiana last month. Riverboats reported revenues of nearly $182.6 million, up from last year’s $165.3 million.

Barden Companies Inc., operated by Detroit entrepreneur Don Barden, has been named "Company of the Year" by Black Enterprise magazine. The company operates the Fitzgeralds casino in Downtown Las Vegas.

President Casinos Inc. (PREZ) has begun seeking bids for the sale of its St. Louis, Mo., casino known as the Admiral.

Isle of Capri Casinos Inc. (ISLE) says it will lease and operate a casino in Freeport, Grand Bahamas.

The Tulalip Tribe in the State of Washington will soon be opening a new $78 million casino to replace their smaller existing casino. Since opening their gaming establishment, the tribe said it has reduced its 65% unemployment rate to a situation where a job is available to any tribal member who wants one.

Inner strife among the Meskwaki Tribe of Iowa has resulted in federal officials moving in and closing their casino in the town of Tama.

Aztar Corporation (AZR) has launched an "odd lot" buyback program for shareholders who own fewer than 100 shares.

Youbet.com Inc. (UBET) reported that its handle for the Preakness Day of racing was $2,048,486, an 82% increase over last year’s handle.

Shareholders of Station Casinos Inc. (STN) approved the company’s plan for a 10-year extension of its stock options compensation program. The vote, excluding insider votes, was favored by about 55%.

The Seidler Companies have initiated coverage on Mikohn Gaming Corporation (MIKN) with a ”˜buy" rating. They set a target price of $7.13.

Zacks.com has placed a "buy" recommendation on the shares of International Game Technology Inc. (IGT).

Standard & Poor’s Ratings Services has revised its outlook on Penn National Gaming Inc. (PENN) to positive from stable.

Mandalay Resort Group Inc. (MBG) will announce its quarterly financial report on Thursday, May 29, at 1:30 p.m. PDT.

Scientific Games Corp. (SGMS) has named Deloitte Touche as its independent auditor.