Binion returns to Vegas in wake of casino boat sale

Sep 16, 2003 6:11 AM

It probably was a case of visiting the sins of the father on the son or maybe it was a form of resentment because of his rapid success, but some gaming regulators in the Midwest placed Jack Binion’s license in their sights. Sell out or else, they said.

They may have done the son of legendary gambler Benny Binion a financial favor. Jack Binion sold his Illinois riverboat to Argosy Gaming Inc. (AGY) on July 31, 2001 for $453 million. The property, one of the state’s most successful casinos at that time, has since been handicapped by a new law that raised the gaming revenue tax rate to as high as 70%.

During the same period, Binion faced licensing problems in Louisiana where his riverboat in Bossier City consistently led not only the market area but also all other boats in the state. Jack Binion weathered the assault on his license but it probably motivated him, considered one of the industry’s giants, to consider packing it in while he was still on top of his game.

Rumors have persisted for several months that he was negotiating the sale of Horseshoe Gaming Holding Co., In addition to his riverboat in Bossier City, Binion’s company owned high-grossing riverboats in northern Indiana and in Tunica, Miss.

Last week, the announcement was made that the company was being sold to Harrah’s Entertainment Inc. (HET) for $1.45 billion that included $912 million in cash and $533 million in debt.

Harrah’s said that following the closing on the sale it planned to peddle its nearby riverboat, Harrah’s Casino in Shreveport. Reports indicated that the likely buyer for the casino would be Colony Capital LLC, a Los Angeles private equity firm that operates the Resorts Atlantic City Casino and formerly owned the Harveys’ properties that it sold to Harrah’s.

Also competing for the gaming dollar in the western Louisiana area is Louisiana Downs racino that was acquired earlier this year by Harrah’s from the siblings of the late real estate tycoon Ed DeBartolo.

In recent months, Jack Binion moved his executive offices to Las Vegas where he retains a very small interest in Binion’s Horseshoe Casino, the Downtown casino founded by his father, Benny, and which he operated with his late brother, Ted. The casino is now owned and operated by his sister, Becky Binion Behnen.

The Harrah’s purchase of Horseshoe Holdings is expected to be completed in early 2004.

Judge sues

A former Mississippi judge, who is facing bribery charges, is suing Grand Casino Biloxi, owned by Park Place Entertainment Corp. (PPE), on allegations that the company slandered and libeled him.

The $600 million suit claims the casino falsely accused him last week of pressuring former company executive Tom Brosig for money in exchange for a ruling in favor of the company in a lawsuit that was before him.

Ex-Judge John Whitfield was hearing an appeal of a slot machine player who had been denied a slot machine jackpot because the machine allegedly malfunctioned. He ruled in favor of the player and his ruling was upheld on appeal.

On Friday, Brosig submitted a sworn statement saying that the Grand Casino’s lawyers had misrepresented a conversation he had had with Whitfield. Brosig said Whitfield told him the company should cite a similar case in Las Vegas and then asked for a $40,000 campaign donation.

"However, Brosig emphasized, "(Whitfield) made no express statement linking the request for payment to the (case he was hearing)."

Lottery superstar

Looking to launch its new state lottery with the best hope of success, the state of Tennessee has hired away from the State of Georgia Rebecca Paul, considered by the industry to be a "superstar."

The price tag to be paid by the Tennessee Education Lottery Corp. to Paul is $350,000 but with incentive bonuses that could rise to $752,000 per year. The first standard that the new lottery director must reach is to begin selling lottery tickets by Feb. 17. The second is to have the lottery show a profit of $122 million by next July 1.

Can she do it?

Paul, 52, says that reaching maximum compensation would require a "Herculean effort" but she welcomes the challenge. In Georgia, her base salary and bonus amounted to $500,000.

Paul’s hiring was supported by the author of the lottery bill, Sen. Steve Cohen, who described Paul as "absolutely the best."

Casino opens

Nevada Gold & Casinos Inc. (UWN) has expanded its gaming involvement with the opening of the Route 66 Casino, located 11 miles west of Albuquerque, N.M. The casino is a partnership between the company and the Pueblo of Laguna.

An estimated crowd of some 10,000 people waited outside the new building for the opening of the doors to New Mexico’s newest gaming establishment. The property is 165,000 square feet and contains 1,250 slot machines, 20 table games and a bingo hall that accommodates 750 players. There also is a 2,800-seat special events venue, a cabaret lounge and food, beverage and retail outlets.

Nevada Gold & Casinos Inc. partners with the Isle of Capri Inc. in the operation of three casinos in Colorado and has a 69% ownership interest in Dry Creek Casino, LLC, in Sonoma County, Cal. The company also has been selected to develop and operate a casino for the Muscogee Nation on their property in Tulsa, Okla.

Cashing in

Gaming and lodging executives continue to cash in during a period when most company shares have been selling at or near 52-week highs.

The most recent announcement came from Hilton Hotels Corporation (HLT), the former parent of Park Place Entertainment Corp. (PPE), that said Steve Bollenbach, Hilton’s president and CEO, would exercise options to purchase six million shares.

The options were made available to Bollenbach through the company’s 1996 Chief Executive Stock Incentive Plan.

As part of the transaction, the compensation committee of Hilton’s Board of Directors exercised its right under the plan to deliver to Bollenbach a combination of shares of stock and cash, representing the spread between the original option grant price of $11.88 and $15.29, the mean price of the stock from the grant date to Sept. 10, 2003.

Thus, the aggregate value of the stock and cash to Bollenbach is about $20 million.

In another recent announcement, Station Casinos Inc. (STN) said Glenn Christenson, the company’s CFO, would exercise certain options and will sell up to 314,384 shares. The company added that Christenson would have no control over the timing of the sales although they should be completed by Oct. 31.

Other recent filings regarding the sale of company shares by executives include:

Glenn Schaeffer, president of Mandalay Resort Group (MGB) exercised 350,000 options at $15.43 and sold them at $39.69.

Leslie Martin, treasurer of MGB, exercised 60,667 options at $16.57 and sold them at $39.

The Insider

Spurred on by the recently opened Borgata Resort Casino, Atlantic City casinos reported an 11.2% increase in August revenues. Total revenue for the month rose to $475 million, up from $427 million.

Ted Arneault, CEO of MTR Gaming Group (MNTG), is exploring the political scene in West Virginia but has been tight-lipped about identifying the position he is interested in. He has filed papers to form an exploratory committee that will be able to raise money for whatever campaign he decides to pursue.

After months of delays, the New Mexico Racing Commission says it will announce its choice on November 19 for the group that will be licensed to build and operate a racino in Hobbs, N.M. The four applicants will make their final pitch at hearings scheduled for mid-November.

Acres Gaming Inc. (AGAM) adjourned its special meeting of shareholders without a vote on its planned merger with International Game Technology (IGT). The meeting won’t be reconvened until after a court rules on a stockholders’ lawsuit.

WMS Gaming Inc. (WMS) says it has received approval from Gaming Laboratories Inc. for eight additional video game titles for its new operating system.

California Gov. Gray Davis has signed gaming compacts with two new Indian Tribes that plan to open casinos in the San Diego County area.

Developers of the proposed Hard Rock Casino Hotel in Biloxi, Miss., have submitted plans that ease traffic congestion on U.S. 90 that could permit construction to begin as early as November.

Shareholders of Park Place Entertainment Corp. (PPE) have approved changing the company name to Caesars Entertainment Inc. The new name will become effective in January and the company’s stock will begin trading under the symbol "CZR."

Analysts at Deutsche Securities have begun coverage of Penn National Gaming Inc. (PENN) with a "hold" rating. Smith Barney analysts have cut their rating on MGM MIRAGE Inc. (MGG) to "in-line" from "out-perform." And the analysts at Jefferies & Co. have begun coverage of Shuffle Master Inc. (SHFL) with a "hold" rating.