Riverboat casino sales cause worry
Associated Press
CHICAGO — When state regulators found gambling mogul Jack Binion unfit to run a riverboat casino in Illinois, he left — after selling the casino for $465 million.
He's not alone. Across the country, riverboat casino owners in trouble with state regulators have found profit in their problems. Faced with heavy fines or the loss of their licenses, they've simply sold their operations to other, less-troubled companies.
"It's a pattern that is disturbing," said the Rev. Tom Grey, executive director of the National Coalition Against Legalized Gambling. "Now we've got regulatory bodies that are acting as Laundromats."
Players International, tainted in a scandal involving former Gov. Edwin Edwards in Louisiana, got out of its jam with a $425 million sale to Harrah's Entertainment.
And Station Casinos, in hot water with Missouri regulators over allegations against a former company lawyer, left the state after selling to Ameristar Casinos for $488 million.
The buyouts are not illegal, and no authorities other than state regulators have investigated the deals. Casino operators say it's only fair that they walk away with a fair price for their investment.
"We still live in a country where government cannot take away people's property without due process," said Frank Fahrenkopf, president and CEO of the American Gaming Association. Fahrenkopf said it's easier for some companies to sell than jump through hoops put up by regulators.
But Grey and other critics say allowing casino operators to sell their problems sends a dangerous message.
"It says you can screw up, sell at a profit and keep in the gambling business," Grey said. "Once they're in, they're protected."
It's unclear how often regulators allow buyouts of troubled casinos.
The North American Gaming Regulators Association doesn't track such sales; Fahrenkopf said the cases involving Players, Stations and Binion's Horseshoe Gaming are exceptions rather than the rule.
In the Horseshoe case, Illinois regulators approved the company's move into the state. They later alleged Binion had pretended to use minority vendors and had once posted a $2 million bond for a jailed high-stakes gambler in Nevada.
The Horseshoe sale to Argosy Gaming was approved last week by the Illinois Gaming Board. Horseshoe spokesman Guy Chipparoni said the sale recognizes the investment Horseshoe made in Illinois.
"Profit's not a bad word," Chipparoni said. "With respect to this industry as with every other industry, they're in it to make a profit."
Exactly how much Horseshoe and other casino companies have profited is unclear because companies often change or expand their properties after winning a state license. Binion paid $609 million for the Joliet boat and another in Hammond, Ind. He received $465 million from Argosy Gaming for the Illinois casino and still operates the Hammond boat.
Riverboat profits help the states and municipalities that play host to the casinos and create jobs, making it hard for regulators to threaten the most drastic penalty: closure.
"It becomes a lot more difficult to wield that hammer when you're talking about an operating casino," said Michael Pollock, publisher of the newsletter Gaming Industry Observer.
Michael Fanning, president of the regulators association, said there were a number of reasons to allow the buyouts, including the cost and time spent on lawsuits.
"There are a lot of sensible and defensible reasons for removing the bad apples from the barrel," he said.
Casino companies aren't escaping allegations entirely — Players was fined $10.2 million after federal prosecutors claimed executives funneled money to Edwards and his son to get a Louisiana gambling license. The former governor was found guilty of extortion.
Players agreed to leave the state and pay the fine. In return, regulators approved the buyout.
Station Casinos paid a $1 million fine and sold its riverboats in Missouri after a former lawyer was accused of trying to influence the regulatory board's former chairman.
Station and Horseshoe still own casinos outside the states where they ran into trouble.
• On the Web:
- American Gaming Association: www.americangaming.org
- National Coalition Against Legalized Gambling: www.ncalg.org
