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Illinois governor places
Isle of Capri casino plans
in jeopardy

Aug 31, 2004 7:08 AM

Plans being developed by Isle of Capri Inc. (ISLE) for a casino in Rosemont, Ill., seem to be in greater danger of being scrapped now that the chairman of the Illinois Gaming Board has resigned.

In fact, that resignation and the expired term of another gaming board member places even greater power in the hands of Gov. Rod Blagojevich who had signaled that a radical change in the approach to taking over the bankrupt Emerald Casino license.

Isle of Capri’s bid of $518 million for the Emerald casino license was accepted by the gaming regulators despite strong protest from the state’s attorney general.

In an interview with the Chicago Tribune editorial board last week, Blagojevich said that his office had tried unsuccessfully to halt the board’s efforts to put a riverboat casino in the Chicago suburb of Rosemont With two new appointments due shortly for the gaming board, Blagojevich noted, "I think they realize change is in the air, it’s imminent, relatively speaking."

Blagojevich, who personally fought for and won an increase in Illinois gaming tax making it the highest in the country, indicated he would consider an expansion of gaming provided the legislature would agree to certain budget cuts. He added that any new casinos would have to boost an economically depressed area and not "fundamentally alter the landscape of the state."

Elzie Higginbottom, 62, said he was resigning as chairman of the Illinois Gaming Board so that he could turn his attention to his family and business. He was appointed in 2001 and his appointment expired on June 30.

A ”˜Fair’ change

In recent years, Mike Pegram, an Arizona businessman who owns numerous McDonald’s franchises, gained fame in the thoroughbred racing industry by owning outstanding racehorses.

Now, he’s about to move into a chair on the other side of the desk as the majority owner of the Fair Grounds racetrack and casino in New Orleans, La. His takeover plan, negotiated with former owner Bryan Krantz, has received the conditional blessing of the bankruptcy court.

Left out is Churchill Downs Inc. (CHDN) that had made a "stalking horse" bid for the track.

Under the revised ownership plan, Pegram will own 86% of the stock while Krantz and his family will hold 11% of the stock. The remaining stock will be held by minority interests. Krantz will be given a five-year contract and will hold the title of vice chairman of the board. He will be paid $200,000 per year.

Final approval of the plan is expected as soon as the bankruptcy judge is satisfied that all creditors will be paid.

Casino race book

It’s like déjà vu all over again for Scientific Games Corporation (SGMS) as it prepares to set up a state-of-the-art race book in Freeport, Bahamas.

Scientific Games, whose race betting activities were formerly known as Autotote, has signed on with Isle of Capri Inc. (ISLE) to build the race book at that company’s casino at Our Lacaya, Freeport.

In the late 80’s and early 90’s, Autotote, the country’s largest supplier of pari-mutuel systems at racetracks in America, helped the Las Vegas casinos expand their race betting services before selling its operation to Vic Salerno, operator of the CBS ticket writing machines, and owner of American Wagering Inc. (BETM).

Lorne Weil, chairman and CEO of Scientific Games, noted that "patrons at the Isle of Capri Casino will be able to wager on horse and greyhound simulcast races on self-service devices as well as at betting windows."

In another announcement, Scientific Games said it had been chosen by the New Mexico Gaming Control Board to install its new gaming monitor system.

Investor confusion

No wonder investors are sometimes confused as to the prospects of a Wall Street traded gaming company.

Take the case Harrah’s Entertainment Inc. (HET).

On Friday, analysts at KeyBanc Capital Markets/McDonald upgraded their rating on HET from buy to aggressive buy.

But, three weeks earlier, analysts at Lehman Brothers initiated their coverage of the company’s shares with an "underweight" rating.

This differed markedly from the Morgan Stanley analysts who two weeks earlier had upgraded the shares from equal-weight to overweight.

And a week before that announcement, analysts at Harris Nesbitt and Prudential downgraded HET from outperform to neutral at one firm and from neutral to underweight at the other. Yet, on the same day, Buckingham Research analysts upgraded HET from neutral to strong buy.

Go figure!

Casino opposition

California Gov. Arnold Schwarzenegger ran into a flurry of opposition last week when he proposed permitting a San Pablo card club to be expanded into a casino whose size would rival Las Vegas’ largest gaming properties.

The plan was to grant a casino compact to the Lytton Band of Pomo Indians for their property that sits along a major interstate in the heart of the San Francisco Bay area. Elected officials from the immediate area were joined by political powerhouse Sen. Diane Feinstein in opposing the project.

Schwarzenegger agreed to pull the project from the other compacts that he had proposed to the state legislators. Four projects, whose tribal leaders had agreed to pay a portion of their profits to the state, were approved. This makes nine Indian casino compacts negotiated successfully by Schwarzenegger.

THE INSIDER: Mikohn Gaming Corp. (MIKN) has filed a lawsuit charging that Paltronics Inc. has violated its patents, trademark and copyrights.

Mandalay Resort Group announced Monday that it was exercising an option to redeem convertible debentures for cash. The company will announce its second quarter earnings on Thursday, Sept. 2, at l:30 p.m. PDT.

Magna Entertainment Corp. (MECA) says it is selling Great Lakes Downs racetrack located near Muskegon, Mich. to Richmond Racing Co. LLC. It also has a lease agreement with Richmond for the track.

A Harrah’s casino in Missouri has been fined $40,000 for mailing promotional materials to problem gamblers who had voluntarily banned themselves from Missouri casinos.

In a filing with the Securities & Exchange Commission, American Wagering Inc. (BETM) reported that the Bankruptcy Court has denied approval of a competing disclosure statement leaving the matter with only the company’s disclosure statement under consideration.

The Sunland Park, N.M., City Council has voted 4-0 to oppose the construction of a casino in nearby Anthony, N.M.

The $8 million track renovations at Charles Town Race & Slots, owned by Penn National Gaming Inc. (PENN), have been completed. The track reopened Aug. 26.

Current owners of Rosecroft Raceway in Maryland say they have ended their negotiations to sell the track to the family of Peter Angelos, owner of the Baltimore Orioles. Leaders of the Cloverleaf Enterprises said sale negotiations were terminated because "we couldn’t resolve our differences."

Foxwoods Resort in Connecticut has opened its expanded Rainmaker Casino and Hard Rock Café. The new casino floor has an additional 750 slot machines bringing the total for the property to 7,400 machines.