Majestic Star's bankruptcy clouds renewal

Another Too Big to Fail?

It was clearly explained to the Beacon Hill crowd that once the Predators are invited into the Commonwealth, the state becomes stakeholder, invested in the success of the venture. In the case of Majestic Star's bankruptcy, Gary's addiction to gambling revenues has enslaved them.

Gambling Vultures are no longer a 'business' that contributes to the vitality of a city along with many others, but becomes the 'owner.' What other business would become so entwined?


Majestic Star's bankruptcy could confuse license renewal

September 16, 2010

BY JON SEIDEL
Majestic Star Casino's bankruptcy could complicate things today when the Indiana Gaming Commission decides whether to renew the company's twin riverboat gambling licenses in Gary.

The Gary City Council is ready to send the casino and its owner, Don Barden, packing. Even Gov. Mitch Daniels, who appoints the members of the Gaming Commission, had reservations about Majestic Star when he visited the region in April.


Learn more

WHAT: Indiana Gaming Commission meeting

WHEN: Noon, Lake Co. time

WHERE: History Reference Room, Indiana State Library, 315 W. Ohio St., Indianapolis

"Clearly, there are big, big problems with the current ownership," Daniels told the Post-Tribune.

But Ed Feigenbaum, editor of Indiana Gaming Insight, said it could be counterproductive for Gary if Majestic Star loses its licenses while in bankruptcy court. That's because the loss could complicate Majestic's ability to emerge successfully.



Gary, meanwhile, was listed as the casino's 10th largest creditor when it filed for bankruptcy in November.

That's why Feigenbaum said the chances of the Gaming Commission denying Majestic Star's renewal bid today are between "slim and none."

"And slim can't get out of town on the Borman because of all the construction," Feigenbaum said. "It just isn't going to happen."

That doesn't mean there won't be conditions attached to today's decision. When the Gaming Commission granted a renewal in 2007, it asked Barden to submit quarterly financial reports.

Since that renewal, Barden filed a lawsuit against Gary and stopped making payments due to City Hall under the terms of a disputed local development agreement. That exacerbated what, at the time, was an emerging financial crisis still threatening to sink City Hall.

But Majestic Star argues the city failed to keep a promise to build an access road from Cline Avenue to the casino property despite receiving more than $200 million in casino revenue since 1996.

Larry Buck, Majestic Star's general manager, said he doesn't think the gaming commission would hesitate to pull a casino's license just because of a looming bankruptcy case.

However, as of Wednesday afternoon, he said Majestic Star had no warning that the loss of its licenses was imminent.

"If there was something of that magnitude looming, they would already be communicating to us, I would think," Buck said.

Still, Gary's City Council passed a resolution in May asking the Gaming Commission to pull them.

Mayor Rudy Clay has also become increasingly critical of Barden. Gary Corporation Counsel Susan Severtson said the city and the casino were trying to resolve their legal issues Wednesday, just as they have been for years.

But Severtson said Clay won't endorse Majestic's license renewal without a resolution. That means a breakthrough is needed by noon, local time, today. And Severtson said she expects the Gaming Commission to consider Clay's comments in its decision.

"We trust that it matters," Severtson said.

Indiana law is vague when it comes to outlining the conditions for renewal or revocation of a casino license. It says the commission can revoke a license if it "determines that the revocation of the license is in the best interests of Indiana."

Feigenbaum said Majestic Star appears to be paying its bills to the state and to its vendors. County records show it owes more than $20 million in overdue taxes, but Buck says that's because those taxes are under appeal.

"Indiana law permits taxpayers to pay tax while their appeals are pending based on the pre-appeal assessment of their property," Buck said in a statement. "This law applies equally to all taxpayers, including business and commercial enterprises."

Buck also pointed out Majestic Star has made several contributions to the community since it came to town.

"In addition, we will have invested millions of dollars in 2009 and additional millions of dollars in 2010 to improve our casinos so that we can remain competitive in the Chicagoland market," Buck wrote.