Colony Capital joins gaming
companies in European merger

Jan 20, 2004 6:24 AM

Colony Capital, the California-based investment company that has an agreement with Caesars Entertainment Corp. (CZR) to purchase the Las Vegas Hilton, announced on Monday that it is joining two other gaming companies to form one of the largest gaming enterprises in Europe.

The French Group Accor and the Barriere Desseigne family will merge their casino and hotel businesses to form the new company.

Under terms of the agreement, the merger will create a company to be called Groupe Lucien Barriere that will operate 37 casinos. Included in the merger will be some of the biggest gaming operations in Europe including the casinos at Deauville, Biarritz and Nice in France, and about 5,000 slot machines as well as 13 luxury hotels and major restaurant facilities.

According to a pro forma, the combined sales of the properties in 2003 was approximately $1.113 billion.

Colony Capital sold its interest in Harveys Casinos in July of 2001 to Harrah’s Entertainment Inc. (HET) for $625 million. Earlier that year, the investment company bought the Resorts International Hotel in Atlantic City from Sol Kerzner for $140 million.

Late last year, the holding company said it had an agreement with Caesars Entertainment to acquire the venerable Las Vegas Hilton for $280 million.

Involved in the European merger are the Societe Hoteliere de la Chaine Lucien Barriere (SHLB), the Societe des Hotels et Casino de Deauville (SHCD), Accor Casinos and their respective subsidiaries.

The announcement explained that the Barriere Desseigne family owns 100% of SHLB and 54% of SHCD while Accor Casinos is held 50-50 by the French family and Colony Capital.

Following the completion of the merger, Accor will hold a 34% equity in the new company, Barriere will hold a 51% interest and Colony Capital a 15% position.

Also, Colony Capital said it will invest 100 million euros in the new entity through its European Fund Colyzeo.

Kansas potential

Kansas Gov. Kathleen Sebelius has admitted that she is working on a plan that would expand gaming in her state but she won’t confirm rumors that she plans to support a proposal for a large state-owned casino in western Wyandotte County.

The state constitution does not permit the private ownership of a casino, leaving the door open for either a state-owned casino or one owned by an Indian tribe.

Last year, Sebelius appointed a study committee that reported back to her that she should permit slot machines at dog and horse tracks. Such a move would benefit New Frontier Hotel & Casino owner Phil Ruffin who operates a dog track in Kansas.

Help for horsemen

A bill sitting on California Gov. Arnold Schwarzenegger’s desk would have major significance to both Churchill Downs Inc. (CHDN) and Magna Entertainment Corp. (MECA), operators of horse tracks in the Golden State.

The proposal, that swept through the state Senate 31-4 and more recently through the Assembly by 78-0 vote, would raise the takeout on exotic wagers by a half percentage point to help offset rising workers’ compensation insurance premiums.

One of the reasons many of the state’s top horsemen have moved to other jurisdictions was to avoid workers’ compensation insurance premiums that ranged from $35 to $65 per $100 of payroll.

Hoping to beef up the thoroughbred daily programs, legislators expedited the bill with hopes that Schwarzenegger, who has made workers’ compensation reform a priority, would sign the bill into law that is expected to raise an estimated $10 million.

Early deadline

Maine Gov. John Baldacci believes the state referendum that approved the operation of slot machines at the state’s racetracks was poorly written and leaves the state at risk. He has asked the state legislature to expedite its consideration of his bill to change gaming laws.

But, legislative leaders are reluctant to move forward too quickly. As one senator remarked, "There’s been so much rush-rush with this issue”¦that we really need to slow this down a little bit."

Baldacci’s bill would limit the total number of slot machines statewide to 3,000 with no more than 1,500 at any given site.

The governor also warned that new gaming legislation must be passed prior to Feb.23 when the "much weaker, voter approved" law will take effect.

Working to open a racino at Bangor Raceway is Penn National Gaming Inc. (PENN) that bought the facility from Las Vegas entrepreneur Shawn Scott.

Dismissal asked

The British company and two of its executives that have been indicted in Rhode Island on charges related to attempted bribery of a public official have asked the U.S. District Court to dismiss the indictments.

Lawyers for Wembley PLC, its former CEO, Nigel Potter, and the general manager of Lincoln Greyhound Park Daniel Bucci charged that the case was "ill-conceived and fatally-flawed" and that the charges should be dropped.

Last September, a federal grand jury indicted both the company and the executives for scheming to pay up to $4.5 million to the then House Speaker John Harwood’s law firm for helping the dog track to get additional slot machines. Neither Harwood not his law partner were indicted.

The U.S. attorney’s office has 45 days to respond to the dismissal request.

THE INSIDER: John Brackenbury of England has joined the board of directors of Isle of Casinos Inc. (ISLE) A veteran of the United Kingdom hospitality and leisure industry, joins the American gaming company as it expands its operations in England.

The state of Connecticut received $30.2 million as its share of the revenue generated by the slot machines at Foxwoods and Mohegan Sun casinos. This brought the total amount turned over to the state by the two Indian casinos to more than $200 million.

WMS Gaming Inc. (WMS) has filed suit against Sigma Game Inc. claiming patent infringing.

The Nevada Bankruptcy Court denied the summary judgment petition of American Wagering Inc. (BETM) that sought to subordinate the judgment claim of Michael Racusin. The company said it planned to appeal the decision.

According to a national travel association survey, Las Vegas is the most popular destination for Asian-American travelers. The City of Reno ranked eighth behind several cities in California.

Troubled Fair Grounds racetrack in New Orleans, now in bankruptcy protection because of a $90 million court judgment against it, has attracted the interest of Churchill Downs Inc. (CHDN).

A coalition of gaming supporters in Nebraska has launched a drive aimed at allowing casinos and video gambling in that state.

N.Y. Gov. George Pataki is expected to include expansion of slot machines in that state in his budget address this week.

International Game Technology (IGT) has arranged conversion for its zero-coupon debentures during the period beginning on Jan. 20 and ending on April 19.

Nevada casino gambling revenues rose 4.3% during the month of November compared to a year earlier. According to figures released by the Nevada Gaming Control Board, total gambling revenue was $387.8 million compare to last year’s $372.3 million.

Lobbyists and their clients donated more than $400,000 to New Mexico politicos last year. Among the companies that donated was Sunland Park Racetrack and Casino, owned by former Las Vegan Stan Fulton, which contributed $59,245 to two political and campaign committees of legislators.

Alliance Gaming Corp. (AGI) has agreed to supply Rocket Gaming Network with up to 3,000 base gaming machines and licenses over the next three years.

ShuffleMaster Inc. (SHFL) has agreed to sell some of its slot operations and related inventory to International Game Technology (IGT).

Bernie Hettel, one of the most respected officials in the thoroughbred industry, was fired last week as the state of Kentucky reorganizes its approach to horse racing regulation.

Max Baer Jr.’s plans to build a casino in Carson City based on the theme of the Beverly Hillbillies is being challenged by J.C. Penney Co., a neighbor in the mall that has been chosen as the casino site.

New Mexico is reviewing the manner in which the state handles slot machine funds that have been earmarked for the treatment and prevention of compulsive gambling.

A House committee in Indiana has approved a bill that would permit that state’s horse tracks to operate 5,000 electronic slot-like gambling machines.

The Millionaire’s Casino gambling boat will begin operating gambling cruises out of Savannah, Ga., on March 1.

The Nez Perce Tribe, operator of a casino in Lewiston, Idaho, has turned over more than $200,000 to the school departments of three area districts.