Illinois casinos cut jobs to counter higher taxes

Sep 2, 2003 5:17 AM

A huge jump in gaming taxes voted earlier this year by Illinois lawmakers is now costing casino workers their jobs but the politicians and the riverboat operators disagree over the cause.

The most recent layoffs were announced by the Empress Casino in Joliet, a riverboat that is operated by Argosy Gaming Inc. (AGY). The company said last week it had eliminated 70 jobs while cutting the boat’s operating hours.

In previous announcements, Hollywood Casino in Aurora, owned and operated by Penn National Gaming Inc. (PENN) cut 350 positions resulting in 280 people losing their jobs. And Harrah’s Entertainment Inc. (HET) announced a reduction of 70 jobs.

Casino operators had warned that they would have to take drastic measures to counteract the increase in taxes that will force the higher grossing properties to pay a 70% tax on their revenues. When the Illinois Gaming Board announced that boats could reduce their operating hours, four operators took advantage of the offer.

Still, Gov. Rod Blagojevich, who sponsored the tax increase measures, remained adamant that the state would benefit from the increased revenues. Following the layoff announcements, his spokeswoman remarked, "(the casinos) are trying to use the tax increase as an excuse for cutting jobs. I think casinos will continue to be profitable under the new tax structure."

Big quarter

Increases in both revenue and income were reported by Acres Gaming Inc. (AGAM) for the period that ended on June 30.

Revenues more than doubled to $20 million from last year’s $9.3 million while net income grew to $7.1 million or $0.64 a diluted share, easily topping last year’s net income of $3 million or $0.29 per share.

The company, a leader in bonusing technology for the gaming industry, is in the process of being acquired by International Game Technology (IGT).

Recently, both companies announced that the waiting period under the Hart-Scott-Rodino Antitrust Improvements Ace of 1976 had expired and that they are working to complete the acquisition during the fourth calendar quarter of the current year.

IGT has agreed to pay $11.50 per share for an aggregate purchase price of $130 million.

Hub handle rises

The Oregon Racing Commission reported record handles for the five Hub totalizator companies operating under its jurisdiction.

During the second quarter that ended on June 30, the total dollar volume of wagers made through the five companies totaled $222.21 million, up about 150% over last year.

The highest amount of wagers was handled by Youbet.com (UBET) with $67.97 million recorded. Second was Oneclickbetting.com, a company operated by Philadelphia Park with $61.27 million.

Next in line was TV Games Network that set a quarterly record of $60.98 million. Then it was America TAB, operated by the Ohio racetracks, Beulah Park and River Downs.

Handling $4.48 million was the newest operation, US Offtrack, a company that is a subsidiary of the Greyhound Channel.

Internet prosecution

Another group accused of operating an Internet gambling ring is being prosecuted in California. Charged were four men from Rhode Island.

Officials said the men began running a business in North Providence called Gold Chip Technologies in January 1997. The group then incorporated a company in the Dominican Republic called Tecnologia JPR that purchased software and computer services from Handa Lopez, Inc., of Sunnyvale, Calif., to run the online gambling activity.

According to the charges, which resulted from raids by federal, state and local authorities in September 2001, the business offered games such as slots, black jack, poker baccarat and sports betting.

The Insider

Gaming analysts at Merrill Lynch have cut their rating on shares of Harrah’s Entertainment Inc. (HET) to "neutral" from the previous rating of "buy."

Mandalay Resort Group (MBG), which reports its quarterly financials on Tuesday, Sept. 2, has instituted a new program. In the past, the company has monitored the gambling activity of its guests, but now, it plans to track the guests spending beyond the casino floor.

The Turning Stone Casino Resort in Verona, N.Y., owned and operated by the Oneida Indian Nation, is celebrating its 10th anniversary. It has become one of the most popular tourist attractions in upstate New York.

New Mexico will have another new casino this week when the Laguna Pueblo Indians open their new $60 million Route 66 Casino.

Gerald Bair, a longtime employee of the Iowa Department of Revenue and Finance, is the newest member of the Iowa Racing and Gaming Commission.

In a recent survey, 70% of the Maine Merchants Association members indicated that they oppose the proposed casino in Sanford, Maine. If approved by a Nov. 4 referendum, the casino will be built by Marnell Carrao for the Passamaquoddy and Penobscot Indians.

Station Casino Inc. (STN), operator of the Thunder Valley Casino near Sacramento, Cal., has opened a 500-seat bingo parlor at the property.

Alliance Gaming Corp. (AGI) has launched its first international wide-area progressive system, linking Playboy video slot machines at gaming locations in Moscow, Russia, to a central control center at the company’s Las Vegas office.

Perini Building Co., responsible for the construction of several properties in Las Vegas, has completed the Chumash Indian Casino in Santa Ynez, Calif.