Penn National offers
to put Illinois
in casino business

Feb 3, 2004 6:51 AM

Forty years ago, New Hampshire became the first state to enter the lottery business and if gaming proposal made last week is accepted Illinois could become the first state to own a casino.

And Illinois Gov. Rod Blagojevich seems to believe that’s not a bad idea.

Penn National Gaming Inc. (PENN) appears to be playing right into Blagojevich’s hand by proposing that it be permitted to merge one of its companies with the bankrupt Emerald Casino Inc., holder of the state’s 10th riverboat gaming license.

Penn National would then build a $255 million casino in Rosemont, a suburb of Chicago, and add a 200-room hotel and other amenities before selling the whole project to the state for $1. The state would then own 80% of the project while selling 20% to minority investors.

For its largesse, Penn National would be granted a 20-year license to operate the casino and would receive 10% of the casino’s gross revenues. The company expects to earn between $40 million and $50 million annually while estimating the state would bank about $3 billion during that period.

Blagojevich said he would go with the idea provided the Illinois Gaming Board selected the Penn National bid as its choice for the license. Other bidders under consideration are Caesars Entertainment Corp. (CZR), Harrah’s Entertainment Inc. (HET), and Steve Wynn’s Midwest Gaming and Entertainment LLC.

THE INSIDER: Boyd Gaming has announced a cash dividend of $0.075 per share to be paid on March 2 to shareholders of record on Feb. 13.

Operators of Evangeline Downs, Louisiana’s newest racino, reportedly are pleased with the initial results they have seen for the recently installed 1,627 slot machines. For the first 13 days of operation, the machines generated an average of $261,000 in revenue per day.

The Penobscot and Passamaquoddy Indian Tribes, whose effort to open a casino in Sanford, Maine, was voted down last November, have asked that lawmakers open up the process of selecting a slot machine operator in Bangor. Currently, Penn National Gaming Inc. (PENN) has the franchise to operate slots at Bangor Raceway.

The Mississippi Gaming Commission has approved plans for a $235 million Hard Rock Hotel and Casino Resort in Biloxi. The property will be adjacent to Beau Rivage Hotel/Casino owned by MGM MIRAGE Inc. (MGG).

Also on the Mississippi front, the state’s chairman of the House Gaming Committee, Rep. Bobby Moak, announced last week that the state likely will not raise gaming taxes during the next four years.

Oklahoma Gov. Brad Henry has endorsed the plan to authorize electronic gaming machines to be placed at the state’s three horse race tracks.

Macao gaming magnate Stanley Ho has opened his 12th casino in that community. The property was opened in time to benefit from the Chinese lunar New Year.

A bill to provide funds that would be used to lower the workmen’s compensation costs for horse owners and trainers in California was vetoed by Gov. Arnold Schwarzenegger.