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Opinions differ on revenue increases from tax boosts

Aug 12, 2003 6:16 AM

School is still out in Illinois on the issue of whether increased state taxes on casinos will generate more money to help Gov. Rod Blagojevich rid the state of a $5 billion budget shortfall.

Faced with severe reduction in revenues, Gov. Blagojevich fashioned a series of gaming taxes that boosted all levels of businesses but strongly hit the higher grossing properties. Casino operators reacted by increasing charges for admission, food etc. to offset loss revenue but also to reduce gaming revenues.

Gov. Blagojevich advised everyone not to worry because "in the end there will be more money for the state, not less." And, July revenues show a modest increase when compared to last year’s numbers. Figures for July showed that the state received an additional $6.6 million when compared to the monthly revenues of July 2002. But industry spokesmen said they believed the comparison was premature.

"If the numbers keep going like they are," said Tom Swoik of the Illinois Casino Gaming Association, "I think we’re going to see less than $100 million, probably $75 to $80 million."

Also, gaming industry supporters noted that the booming tax schedule has become a disincentive for properties to improve their facilities.

But, it hasn’t stopped a number of well known companies from expressing their interests in any riverboat license that becomes available. As it stands, all 10 authorized licenses are in use, almost. The 10th license is held by Emerald Casino Inc., which planned a casino in the Chicago-suburb of Rosemont. For the past three years, Illinois regulators have been trying to strip the company from the license. A hearing is scheduled this week to see if the state can revoke the license and auction it off to bidders.

Among these companies are: Park Place Entertainment Corp. (PPE), Isle of Capri Casinos Inc. (ISLE), Hyatt Corp., that plans to joint venture with Mandalay Resort Group (MBG), and Steve Wynn, founder of Wynn Resorts (WYNN).

The Insider

Steve Wynn has appointed Australian gaming executive Grant Bowie as president and general manager of Wynn Macau.

Alliance Gaming corp. (AGI) says its wholly-owned subsidiary Bally Gaming and Systems has entered into an agreement with The Majestic Star Casino LLC to supply the company’s four gaming properties with slot accounting, cashless and professional services.

Louisiana Downs, the racino owned by Harrah’s Entertainment Inc. (HET) has petitioned for a longer racing season in 2004. Money for racing purses is being provided by the slot machines set in operation last May.

Standard & Poor’s Ratings Services has lowered its corporate credit and debt ratings for Riviera Holdings Corporation (RIV).

Plans by Pinnacle Entertainment Inc. (PNK) for a $325 million resort in Lake Charles, La., have been approved by the Army Corps of Engineers.

Rebuffed in its efforts to get lower rent payments for its casino, Bally’s Casino, the New Orleans riverboat owned by Park Place Entertainment Inc. (PPE), has asked that they be given a shorter lease to replace the 10-year renewal currently on the table.

"Let the people decide!" That’s the call of Ben Chandler, a gubernatorial candidate in Kentucky, when asked about his opinion on expanding gambling to include slots at racetracks.

In Kansas, where the expansion of gambling has been debated for several years, Gov. Kathleen Sebelius has created a 15-member committee to study the possibilities of legalized gambling. Currently, the state has pari-mutuel wagering at racetracks; bingo games offered by non-profit groups, and casino gambling on four Indian reservations.

Gaming companies continue to announce dates for the release of current fiscal experience. Sands Regent (SNDS) will conduct a conference call on Wednesday, Aug. 13, at 10 a.m. PDT; Island of Capri Casinos Inc. (ISLE) will release its quarterly report on Thursday, Aug. 14, with a conference call to follow on Friday, Aug.15 at 7.30 a.m. PDT; Shuffle Master Inc. (SHFL) has a call set for Thursday, Aug. 21 at 2 p.m. PDT, and Mandalay Resort Group (MBG) will conduct its conference fall at 1:30 p.m. PDT on Tuesday, Sept. 2.

GTECH Holdings Corporation (GTK) says that its Latin American subsidiary has signed a contract with the National Lotteries Control Board to provide video lottery services in Trinidad and Tobago.

David Anders, chief gaming analyst at Merrill Lynch, has upgraded his rating on Argosy Gaming Inc. (AGY) to "buy" from "neutral."