Plainridge owner buys competitor casino firm for $2.8 billion

• By Jim Hand

Plainridge Park Casino in Plainville is setting out to make sure people know it’s more than just a casino.

Paul Connors / The Sun Chronicle//
PLAINVILLE — The owner of Plainridge Park Casino has agreed to acquire a gambling industry competitor for $2.8 billion in stock and cash.
Penn National Gaming will buy Pinnacle Entertainment and its 16 casinos, extending its reach across the United States and Canada.

Pinnacle stock holders will receive $20 and 0.42 shares of Penn National stock for each share of Pinnacle stock.

“The combined company will benefit from enhanced scale, additional growth opportunities and best in class operations, creating a more efficient, integrated gaming company,” Penn National Chief Executive Officer President Timothy Wilmot said.

http://www.thesunchronicle.com/news/local_news/plainridge-owner-buys-competitor-casino-firm-for-billion/article_72a5ae51-bb04-5047-a097-7056a0a06937.html

Ohio Defunding Host Communities

The article at the bottom goes far beyond PREDATORY GAMBLING, IMPACTS and the costs to HOST COMMUNITIES.

This defines the Failed Fiscal Policies.....

How Ohio Pulled $4 Billion+ from Communities and Redistributed It Upwards

Ohio: Poster Child for Mindless Global Self-Destruction

Toxin leaves 500,000 in northwest Ohio without drinking water

 

Racino communities looking to governor for payment plan



When the governor vetoed a legislative proposal to provide $500,000 each to Austintown and Dayton for hosting racinos, we thought he would lay out his ideas for the payments in the executive biennium budget he submitted to the Ohio General Assembly earlier this month.

But much to our surprise, Gov. John Kasich’s budget makes no mention of the racino communities.

Thus, we, along with Austintown Township officials, state Rep. Ronald Gerberry of Austintown, D-59th, and Senate Minority Leader Joe Schiavoni of Boardman, D-33rd, wonder if the governor has had a change of heart, or if there’s a hitch.

Last December, Kasich vetoed an amendment that would have required Penn National Gaming to pay $250,000 to each community, with the other $250,000 coming from the $150 million Penn National will be paying into a special fund over the next 10 years.

The governor contended that Penn National should be responsible for the entire amount, and then he went a step further: He said that four other communities that host racinos, North Randall, Northfield, Lebanon and Cincinnati, must also receive annual payments from the owners of the gaming facilities.

Excluded from his plan is Franklin County, which is home to Scioto Downs Racino. Hollywood Casino Columbus already is paying the county government.

In addition to Penn National, other gaming companies operating in Ohio are Rock Ohio Caesars, MTR Gaming, Hard Rock International, Miami Valley Gaming and Pinnacle Entertainment.

We praised the governor for coming up with a fair solution, but Gerberry issued a warning at the time that may be coming to pass.

Here’s what the veteran legislator said in the wake of Kasich’s action:



“I’m just hopeful that the persuasion of the governor’s office is very strong in 2015 on the majority party of the Senate.

The reason that this is not getting done is that there are some folks in the majority that believe that the host racino communities shouldn’t be paid $500,000 a year, and they’ve been able to stop it.

That’s unfortunate.”

We were skeptical about Gerberry’s claim that some senators do not believe racino host communities should be paid, but recent developments have given us pause.

ReluctanceFor instance, Gerberry and Schiavoni have been trying to get leaders from the four communities the governor added to the list to publicly support Kasich’s payment proposal, but their unwillingness to take a stand does raise questions.

After all, it’s their constituents who stand to benefit.“I think there should be at least 10 to 15 state reps crying over here saying, ‘Why haven’t these communities gotten their money?’

I don’t know why there isn’t more of a push from every racino community ... Don’t you think you would have gotten involved? Actively involved?”

We certainly would think so.In the end, however, it’s up to Gov. Kasich to press the GOP leaders in the House and Senate to take up the issue.

After all, he said no to the original proposal that would have resulted in Austintown and Dayton being paid by now.

The two communities have already budgeted for the $500,000, which is not a handout.

While the seven racinos in Ohio — there also are four Vegas-style casinos in Cleveland, Columbus, Cincinnati and Toledo — have spurred economic growth, they also forced governments to spend more on police and fire protection and road maintenance.


 - See more at: http://www.vindy.com/news/2015/feb/21/racino-communities-looking-to-governor-f/#sthash.ewD4jH8J.dpuf

Robert Johnson for Business Insider

The Saddest Tourist Destination In America Just Got Even Worse

• GARY LEFF, VIEW FROM THE WING

• MAY 21, 2014

I genuinely didn't think my opinion of Atlantic City could get worse. But they are apparently trying to take the home of an ill senior citizen, son of a murdered holocaust survivor, in order to help a failing casino.

Now, I grew up on Long Island but didn't spend summer weekends in the Hamptons. My family went to the Jersey Shore. We used to take the North Jersey Coast Line to Point Pleasant. I have wonderful memories growing up of the beach in New Jersey, although I don't remember the train as being especially reliable. I loved it when my train broke down on the way back to New York once, I think I was 7 and I was happy waiting for the next train to come by and pick us up since the cafe car on ours had run out of M&Ms.

Take the beach in New Jersey and add legal gambling and you should have an even better destination in Atlantic City.

On its face Atlantic City should have every conceivable destination. Not only is there beach and gambling, but proximity to Manhattan — as a population center and financial center. Who should need Vegas, when you have Vegas-on-the-Beach accessible by car?

There's this thing in travel, though. We're not supposed to say that destinations are awful, even when they are. We say things like we "didn't connect with" someplace we went, as though it was our fault or the destination wasn't for us even though we all presume that it was – of course – special. We just didn't get it. We failed.

Sometimes a place can be a cesspool, though. Sadly, that's Atlantic City, although it really shouldn't be. In Leaving Las Vegas, Nicolas Cage portrays a suicidal alcoholic and makes Vegas seem depressing. Vegas ain't got nothing on Atlantic City.

Unemployment in Atlantic City nears 14%. Most of the hoped-for casino projects over the past decade have failed to materialize.

Wikipedia gives us a list of cancelled casino projects, most of which currently sit as vacant lots.

_

New Jersey has some of the worst crony capitalism in the United States, and yet (or because of?) Governor Christie sees Atlantic City as a standout for how poorly their regulatory regimes work. United offers new regional jet service to Chicago and Houston… not because there's value in the route, but because Chris Christie promised big taxpayer dollars to support public transportation to and from United's Newark hub if they'd do it, which would be a net transfer to the airline no matter how much they lose on the flights.

So it struck me when I saw Heels First write about the plight of a man she met while visiting the city.

It was at dinner I got the chance to chat with their clients — Charlie Birnbaum and his wife.

…Charlie was a brilliant concert pianist earlier in his career and now worked as a piano tuner using the house as his "studio." I was touched by the painstaking care with which he maintained the house over the years, enjoying it as a living memory of his parents and a respite from Atlantic City's hectic atmosphere.

And it was heartbreaking to know that it might all be taken away and torn down. The Casino Reinvestment Development Authority is attempting to use eminent domain to take his property for a yet-to-be-determined "better" use.

This has to be one of the saddest and most frustrating stories I've heard in recent times. Searching online for more details (it's relatively high profile, subject of aWall Street Journal op-ed last week), it just gets worse.

The property was purchased by the man's parents in 1969. They had met while hiding in a forest during the Holocaust. His mother continued to live in the home until she was murdered.

He works out of the home, its central location key to his ability to work at all because of his autoimmune condition.

Now the government has come for this home.

They're trying to take the property through eminent domain to support the Revel casino — which has been behind in property taxes by an 8 figure amount, filed for bankruptcy last year, and has seen its value drop by three-quarters — in unspecified ways. Seriously — they can't even articulate exactly what they're going to do with the property once they take it. (There's a "conceptual plan" to use the property for "restaurants, specialty stores, boutiques and residential housing for rent and purchase.")

Fortunately this man is being represented by the Institute for Justice, the same organization that successfully stopped Atlantic City from taking the home of a senior citizen in order to give it to Donald Trump for a parking lot.

There are some truly awful places in the world. You're not supposed to say that about tourist destinations; you're supposed to marvel in them or at least find what’s special about them. But Atlantic City's and New Jersey's political classes have done such terrible things to the place that I find it impossible to do that.

As they say, "if you always do what you've always done, you'll always get what you've always got." And here, they seem to be repeating the same sort of cronyism that's just taken from local residents and given to big businesses without doing a thing to improve the community.

SEE ALSO:  Why New Jersey's Beautiful Revel Casino Is Struggling, In 23 Photos

Read more: http://boardingarea.com/viewfromthewing/2014/05/21/saddest-tourist-destination-united-states-just-gotten-even-worse/#ixzz33FaZufMZ

Missouri seeing effects of declining casino visits

JORDAN SHAPIR, Associated Press

By JORDAN SHAPIRO, Associated Press

Published 11:41 am, Saturday, March 8, 2014

 

JEFFERSON CITY, Mo. (AP) — A recent decline in Missouri's casino revenues has created funding shortfalls for public schools and state-run veterans' nursing homes, raising questions among lawmakers about the extent to which the state can continue to rely on gambling to fund some key programs.

 

Underlying the concern is an uncertainty over whether the shortfall is a temporary event caused by a cold winter, the economy and increased casino competition from neighboring states, or whether it is the start of a long-term trend.

 

Missouri relies on two sources of casino revenues. A portion of a per-patron casino fee is used to pay for the operations of the Missouri Veterans Commission, which oversees seven nursing homes for 1,350 retired service members. A state tax on casino revenues helps fund public schools.

 

But fewer people are visiting and spending money at Missouri's 13 casinos, leaving lawmakers to scramble for a solution.

 

"We do have a problem in the veterans funding that has kind of gotten away from us," House Budget Chairman Rep. Rick Stream, R-Kirkwood, said in an interview this past week. "We are going to have to address it for this year's budget."

 

Missouri's veterans' homes are funded through a combination of casino fees, federal dollars and an average $2,000 monthly resident's fee.

 

Concerns about long-term funding for veterans homes led lawmakers in 2012 to dedicate a larger share of the casino fees to the homes. But a decline in casino attendance is causing lawmakers to revisit the issue.

 

A recent report from the Missouri Gaming Commission shows that patronage at casinos decreased about 9 percent through the first seven months of Missouri's 2014 fiscal year compared with the same period the previous year. That means funding for veterans programs is down by a similar amount.

 

"If more people gamble then the odds are the funds will increase," said Daniel Bell, a spokesman with the veterans' commission.

 

The Gaming Commission's report shows that casino tax revenue, which supports schools, has declined by 4.7 percent from the same time last year. That drop-off contributed to the House's decision last week to approve an additional $22 million for public schools in a supplemental budget for the current fiscal year.

 

From the July 1 start of the fiscal year through the end of January, the state had received $26 million from the admissions fee and $180 million for education funding, according to the Gaming Commission.

 

Stream and Missouri Gaming Association Director Mike Winter both said this year's cold and snowy weather kept people from casinos. Winter also attributed the revenue decline to an economic downturn.

 

"We continue to see that the economy bounce-back is not as quick as experts predicted," he said.

State Budget Director Linda Luebbering said falling revenues could also be the product of increased competition from other states or transitions in Missouri casino ownership. A Hollywood Casino opened in 2012 at the Kansas Speedway in Kansas City, Kan. Last year, Pinnacle Entertainment sold a casino in downtown St. Louis to a different owner.

 

Absent an increase in casino gambling fueled by warmer weather, some lawmakers already are looking at long-term solutions for veterans' home funding. The commission estimates it will need an additional $10 million during the next budget year to avoid an interruption in services.

 

The House passed legislation this year that would create a special lottery ticket with the proceeds exclusively going to veterans' homes. That plan has faced opposition in previous years over concerns it would divert money away from education. Currently, lottery proceeds exclusively fund K-12 and higher education.

 

Stream said the House also was considering a boost for veterans' home funding. But Gov. Jay Nixon did not include additional money for the homes in his proposed budget, and Luebbering said the department should have enough money in its trust fund to continue operating the homes at their current funding level.

 

http://www.sfgate.com/news/article/Missouri-seeing-effects-of-declining-casino-visits-5299998.php

Doubling down on casino credit lines

Doubling down on casino credit lines

On April 27, 2012, the Post-Dispatch featured an article on proposed credit lines for Missouri casino gamblers. Fortunately, it failed to pass, but, like problem gamblers trying desperately to recoup their losses, Missouri casinos still yearn for more action. "Casinos want OK to offer credit" (May 6) contains the same specious, illogical arguments made by credit line proponents a year ago.

In 2012, it was "professional athletes" who couldn't be troubled to bring cash to casinos, cash checks there, or take credit card advances. In 2013, it's rappers like Lil Wayne and private aircraft owners who (we're told) are unable to gamble adequately without borrowing money from casinos. Who knew the well-heeled had such cash flow issues?

We're told that big rollers prefer to flee to the older, smaller Casino Queen rather than newer, larger Missouri "boats," solely because they can obtain lines of credit in Illinois. If that were true, wouldn't Casino Queen's handle be expanding, not shrinking?

Lobbyist John Bardgett (dubiously representing both the St Louis Co. Economic Council and Pinnacle Entertainment) assures us that conventioneers' primary concern in St. Louis is the availability of casino credit lines. Rep. Bob Burns (who called River City Casino "a godsend" to his district) makes the remarkable assertion that private jet owners are the intended recipients of credit lines, that "this has nothing to do with people living paycheck to paycheck."

These arguments ring as false today as last year. High-end players have plenty of money to gamble without relying on credit lines. They have bank accounts, ATM cards, checks, and yes, even credit cards.

Joe Public, who just lost his rent money and car payment on slots or blackjack, is far more likely to apply for credit than a private jet owner. There are also thousands more "Joe Public" casino patrons than Lil Wayne and aircraft owners combined, meaning they constitute vastly more profit potential for casinos. This measure is not about wealthy patrons, the 1 percent with unlimited cash to spend; it's about area problem gamblers who risk their mortgage payment, their savings, and their lives by wagering recklessly, about casinos who lust for higher profits regardless of the human cost.
If casino credit supporters were forthright, they'd state the obvious: They're desperate to expand handle; they have no regard for the financial well-being of their players; and that the lives destroyed by gambling losses are just collateral damage.

Two of the questions used to diagnose compulsive gambling are "Did you ever borrow to finance your gambling?" and "Did you often gamble until your last dollar was gone?" Credit lines on Missouri casinos would guarantee far more "yes" answers when area problem gamblers face the reality of their situations. Let's hope the Missouri Senate recognizes a bad hand when it sees one, and folds on Missouri casino credit lines.

Ted Rood • O'Fallon, Mo.

http://www.stltoday.com/news/opinion/mailbag/letters-to-the-editor/doubling-down-on-casino-credit-lines/article_370f3458-c7ca-5c10-9e35-f8e04f9ea0b8.html

Ameristar Casinos 1Q profit falls, revenue drops

Ameristar Casinos 1Q profit falls, revenue drops

5/3/2013
LAS VEGAS — Ameristar Casinos said Friday that its net income slid 57 percent in the first quarter, pressured in part by acquisition-related costs, economic conditions and bad weather.

For the three months ended March 31, the casino operator — which is being acquired by Pinnacle Entertainment Inc. — earned $18 million, or 51 cents per share. That's down from $41.4 million, or $1.21 per share, a year earlier.

Stripping out acquisition-related costs and costs related to the development of a new property, earnings were 56 cents per share.

Analysts polled by FactSet expected earnings of 60 cents per share.

Pinnacle announced in December that it would buy rival Ameristar for about $869 million, plus take on $1.9 billion of its debt. Ameristar shareholders approved the deal late last month. The transaction is expected to close in the second or third quarter.

Ameristar said that its comparison to the year-ago period was tough because last year was a leap year and included a very mild winter. The company said the higher payroll tax, a delay in income tax refunds and escalating fuel and utility costs also weighed on its performance.

Revenue dropped 5 percent to $295.1 million from $312.1 million as it pulled in less money from gambling and lodging. The company was also slightly more promotional during the period.

Wall Street predicted $302.4 million in revenue.

Ameristar Casinos Inc. has eight casino-hotel properties that mostly serve people from Colorado, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Nebraska and Nevada. It is building a new casino resort in Lake Charles, La.

Its stock added 4 cents to $26.40 in morning trading.

http://www.nbcnews.com/id/51762199/ns/business-us_business/

Detroit Faces Takeover

Stop Predatory Gambling

Detroit promised its 3 casinos would stabilize its finances; city now faces takeover for spiraling deficits.

http://buswk.co/WVyjEC via @BW

A file photo shows the entrance to the Horseshoe Casino near Chicago in Hammond, Indiana during September 2003. Photographer: John Zich/Bloomberg

Bloomberg News

Casinos Saturating U.S. Midwest Cannibalize State Revenue

By Mark Niquette and Chris Christoff on February 07, 2013

 

Mike Thomas, a retired salesman for a truck manufacturer, says odds are that he’ll stop driving 45 minutes five days a week from Ohio to play slot machines at Hollywood Casino in Lawrenceburg, Indiana .

Instead, he and his wife, Sandy, expect to do their betting at the Horseshoe Casino in downtown Cincinnati, set to open next month about 15 miles (24 kilometers) from their suburban home. He doesn’t think he’ll be alone, noting that most cars in the Indiana casino’s garage bore Ohio plates.

“They’re going to lose a lot of customers,” said Thomas, a 75-year-old in an Ohio State Buckeyes sweatshirt and cap. “I’m not going to drive 40 miles if I can do as well there.”

 

VIDEO:

Ohio Casinos Siphoning Off Indiana Gaming Revenue

 

The Cincinnati casino will be the fourth to open in Ohio since voters approved them in 2009, and as many as seven horse tracks with slots also are planned. Yet even as revenue at the Ohio casinos has missed projections, they’re siphoning money from Indiana and Michigan (STOMI1). With most major Midwest markets now served, states that rely on gambling taxes for schools and other services are fighting for a piece of the action.

“It’s close to the saturation point,” Alex Bumazhny, director in Fitch Rating’s Gaming, Lodging & Leisure group, said in a telephone interview from New York. “It’s almost a zero-sum game whenever a new casino opens.”

Ben’s Bets

Atlantic City, the New Jersey resort that ruled the East Coast market for three decades after the first casino opened in 1978, is floundering after six years of declining revenue as a result of losing business to casinos in neighboring states. Pennsylvania, which opened its first gambling house in 2006 and now has 11, passed New Jersey in 2012 to become the second- largest U.S. betting market after Nevada.

VIDEO:

Hasselhoff: 'The Hoff' Brand Dominates My Life

Gambling has a long history as a pillar of U.S. public finance. A half-dozen lotteries sponsored by the likes of Benjamin Franklin and George Washington operated in the 13 colonies to pay for building projects, according to the American Gaming Association. Nevada in 1931 became the first state to legalize casinos, and now people can bet in every state except Utah and Hawaii. Commercial casinos operate in 23 states and tribal ones in 29, according to the association.

The market is especially crowded around the new $400 million Cincinnati casino developed by Rock Ohio Caesars LLC, a venture of Caesars Entertainment Corp. and Rock Gaming LLC.

Falling Revenue

Within about 50 miles, there are three places to gamble in Indiana -- the Hollywood Casino Lawrenceburg run by Penn National Gaming Inc, Pinnacle Entertainment Inc. (PNK)’s Belterra Casino Resort & Spa in Florence and the Rising Star Casino Resort owned by Full House Resorts Inc. in Rising Sun. Pinnacle also plans a new track with slots -- a “racino” -- at Cincinnati’s River Downs horse track.

Tax revenue from Indiana’s 13 betting sites has declined every year since 2009, according to the state Gaming Commission. Projections for the next two fiscal years assume about $120 million less because of Ohio competition, Chris Atkins, director of the Indiana Office of Management and Budget, said in a telephone interview from Indianapolis. A forecast by the state’s Revenue Forecast Technical Committee in December pointed to “continuing casino market saturation.”
Meanwhile, the Hollywood Casino Toledo near the Michigan- Ohio border, which Penn National opened on May 29, may be siphoning business from Detroit’s three casinos.

Border Jumpers

In the first seven months that the Hollywood was open, Detroit casinos’ combined gross receipts fell 2.5 percent to $796.5 million compared with the same 2011 period, according to the Michigan Gaming Control Board.

“We see large amounts of people coming from Michigan,” said John McNamara, spokesman for the Hollywood.

Michigan also has 22 casinos run by autonomous Indian tribes, and a casino operates in Windsor, Ontario, across the Detroit River in Canada. It all adds up to bad news for Detroit (984FMF), which faces a possible state takeover because of spiraling deficits. The city anticipates a $10.4 million drop in casino- tax revenue for the fiscal year that ends June 30. The 5.7 percent decrease would be the largest since the casinos opened in 1999 and 2000.

The gambling parlors had been “a godsend,” providing steady revenue while other sources dried up, said Bettie Buss, senior research associate for the nonprofit Citizens Research Council of Michigan, which analyzes state and local government.
Yet the casinos making Detroit suffer are no panacea for their states.

Slow Going

Revenue at the casinos that opened last year in Cleveland, Toledo and Columbus  has been short of projections by the Ohio Department of Taxation in 2009, according to Mike Sobul, a former employee who helped calculate them and now is a Columbus financial consultant to local governments and schools.

Timothy J. Wilmott, president of Penn National, said in a Jan. 31 conference call that while the company is “seeing a slower ramp-up” in slots revenue than expected in Toledo and Columbus, he thinks the market needs time to develop.

Indiana lawmakers are considering ways bolster the industry. A bill by state Senator Phil Boots, a Crawfordsville Republican, would allow casinos to keep more revenue and gambling riverboats to move inland. It may be just a holding action.

“You lose your ability to out-entice somebody because everybody is pretty much the same, and everybody is on the same playing field,” Mark Nichols, a professor of economics at the University of Nevada, Reno, and its Institute for the Study of Gambling & Commercial Gaming, said in a telephone interview. “Then it just comes down to location.”

http://www.businessweek.com/news/2013-02-07/casinos-saturating-u-dot-s-dot-midwest-cannibalize-state-revenue#p2

Ameristar Investigation

Ameristar formerly sought a Springfield, MA site.

Law Office of Brodsky & Smith, LLC Announces Investigation of Ameristar Casinos, Inc.

By: Brodsky & Smith, LLC via PR Newswire

BALA CYNWYD, Pa., Jan. 4, 2013 /PRNewswire/ -- Law office of Brodsky & Smith, LLC announces that it is investigating potential claims against the Board of Directors of Ameristar Casinos, Inc. ("Ameristar" or the "Company") (Nasdaq: ASCA) relating to the proposed acquisition by Pinnacle Entertainment, Inc. ("Pinnacle").

Under the terms of the transaction, Ameristar shareholders will receive only $26.50 in cash for each share of Ameristar stock they own. The investigation concerns possible breaches of fiduciary duty and other violations of state law by the Board of Directors of Ameristar for not acting in the Company's shareholders' best interests in connection with the sale process to Pinnacle. The transaction may undervalue the Company as Ameristar expects to open its 500 million Lake Charles, La project in 2014. In addition, an analyst has set a price target for Ameristar stock at $29.00 per share.

If you own shares of Ameristar stock and wish to discuss the legal ramifications of the proposed transaction, or have any questions, you may e-mail or call the law office of Brodsky & Smith, LLC who will, without obligation or cost to you, attempt to answer your questions.  You may contact Jason L. Brodsky, Esquire or Evan J. Smith, Esquire at Brodsky & Smith, LLC, Two Bala Plaza, Suite 602, Bala Cynwyd, PA 19004, by e-mail at investorrelations@brodsky-smith.com visiting http://brodsky-smith.com/524-asca-ameristar-casinos-inc.html, by calling toll free 877-LEGAL-90.
SOURCE Brodsky & Smith, LLC
http://finance.boston.com/boston/news/read?GUID=23131590

Massive Casino Debt Passed Along

Pinnacle to buy Ameristar Casinos
Price tag set around $869M
Dec 21, 2012

In a deal that would more than double its size, Pinnacle Entertainment said Friday that it will buy rival Ameristar Casinos for about $869 million, plus take on $1.9 billion of its debt.

Pinnacle owns seven U.S. casinos and a racetrack and is developing another property. Ameristar has eight casinos in the United States — including one in Vicksburg — and has a $500 million casino under construction in Lake Charles, La. The company said buying Ameristar could help it become a bigger player in the gaming industry, while trimming costs.

U.S. casinos have struggled to recover from the recession as consumers watch spending. Larger U.S. casino companies have increasingly relied on their properties in Asia for profits.

If the deal is approved by shareholders and regulators, Pinnacle will pay $26.50 for each share of Ameristar Casinos Inc. That’s a 20 percent premium over the company’s Thursday closing stock price of $22.07. It’s also gaining $116 million of the company’s cash.

Ameristar shares jumped 17 percent to $25.75 on the news, while Pinnacle shares rose 3 percent to $13.80.

The deal, expected to close by the end of the third quarter, has been approved by the boards of both Las Vegas operators. Pinnacle said it has received a financing commitment.

Pinnacle said the acquisition would save it at least $40 million a year and boost earnings.

Pinnacle has casinos in Louisiana, Missouri and Indiana. It’s developing another property in Ohio and also has a racetrack in the state. Ameristar’s holdings include casinos in Missouri, Iowa, Colorado, Mississippi, Indiana and Nevada. Had the two companies already been combined, it would have generated $2.4 billion in revenue in the 12 months through September, Pinnacle said.

Pinnacle was the parent company of Biloxi Casino Corp., which did business as Casino Magic Biloxi.

That casino closed in fall 2006, and the Biloxi property was sold to Harrah’s Entertainment for $25 million.

http://www.clarionledger.com/viewart/20121222/BIZ/312220017/Pinnacle-buy-Ameristar-Casinos

Acquisition of Ameristar Casinos, Inc. by Pinnacle Entertainment, Inc. May Not Be in Ameristar Casinos Shareholders' Best Interests

SAN DIEGO and LAS VEGAS, Dec. 21, 2012 /PRNewswire/ -- Shareholder rights attorneys at Robbins Umeda LLP are investigating possible breaches of fiduciary duty and other violations of the law by members of the board of directors of Ameristar Casinos, Inc. (NASDAQ: ASCA) in connection with their efforts to sell the company to Pinnacle Entertainment, Inc. (NYSE: PNK).

(Logo: http://photos.prnewswire.com/prnh/20111014/ROBBINSUMEDALOGO)

On December 21, 2012, Ameristar Casinos and Pinnacle Entertainment announced they had entered into a definitive merger agreement under which Pinnacle Entertainment will acquire Ameristar Casinos through an all cash offer. Ameristar Casinos shareholders will receive $26.50 per share. The transaction is expected to close in the third quarter of 2013.

The Board of Directors' Actions May Prevent Ameristar Casinos Shareholders from Receiving the Maximum Value for Their Stock

Robbins Umeda LLP's investigation focuses on whether the board of directors at Ameristar Casinos is undertaking a fair process to obtain maximum value and adequately compensate its shareholders. The $26.50 per share offer price is substantially below the $31 target price maintained by an analyst at Knight Equity Research, and the $29 price set by an analyst at Imperial Capital. Further, on October 31, 2012, Ameristar Casinos announced that the company's third quarter of 2012 "was one of Ameristar's most profitable ever." Given, these facts, the firm is examining whether the board of directors' decision to sell Ameristar Casinos for $26.50 per share is fair to shareholders and maximizes the value for their shares.

Ameristar Casinos shareholders have the option to file a class action lawsuit against the company to secure the best possible price for shareholders and the disclosure of material information so shareholders can vote on the transaction in an informed manner. If you own Ameristar Casinos stock and are interested in information about your rights and potential remedies, contact Darnell R. Donahue at (800) 350-6003, ddonahue@robbinsumeda.com, or via the shareholder information form on the firm's website.

Robbins Umeda LLP is a nationally recognized leader in securities litigation and shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested. For more information, please go to http://www.robbinsumeda.com.

Press release link:
http://www.robbinsumeda.com/shareholders-rights-blog/ameristar-casinos-inc/

PR Newswire (http://s.tt/1xyyp)
http://www.prnewswire.com/news-releases/acquisition-of-ameristar-casinos-inc-by-pinnacle-entertainment-inc-may-not-be-in-ameristar-casinos-shareholders-best-interests-184509441.html

Shift to smaller casino firms continues

Shift to smaller casino firms continues
By Rob Sabo
Northern Nevada Business Weekly
Sunday, September 23, 2012

The return of Ferenc Szony to the Reno gaming market marks yet another shift away from large corporate ownership of Northern Nevada gaming properties.

It's a trend that's likely to continue.

Szony, a longtime Reno gaming executive, heads newly formed Truckee River Gaming, which bid $19.2 million to purchase the Sands Regency in Reno, Gold Ranch Casino in Verdi and Terrible's Casino in Dayton from Las Vegas-based Affinity Gaming. Affinity will entertain other, higher bids until Oct. 1, but if the offer goes through Szony expects to be back in northern Nevada by the end of the first quarter of 2013.

“Reno is home, and it always has been,” he says. “I am looking forward to getting back to northern Nevada.”

Affinity, the publicly held company that arose from the bankruptcy ashes of Herbst Gaming, is the latest large corporate entity to shed Reno-area assets. Truckee River Gaming joins M1 Gaming, which purchased Boomtown from publicly held Pinnacle Entertainment last year, and the Mereulo Group, which owns Grand Sierra Resort, as the newest players in the regional casino market. Mereulo bought Grand Sierra from JPMorgan, which ended up with the property through foreclosure.

Szony is no stranger to Northern Nevada. He's been a casino executive in Reno since the mid 1980s, including a 10-year stint as general manager of the Sands Regency.

In his role as president of Sands Regent Corp., the publicly held company that owned the downtown hotel and casino, Szony acquired Gold Ranch and the Dayton property. Sands Regent was purchased by Herbst Gaming in 2007.

Large publicly held companies with ownership of large gaming properties in Reno-Sparks today include Caesars Entertainment (Harrah's) and MGM (Circus-Circus and one-half of the Silver Legacy). Publicly held Monarch Casino & Resort Inc. of Reno owns the Atlantis.

Smaller publicly held ownership in the region includes Affinity Gaming (Rail City) and Jacobs Entertainment (Gold Dust West casinos in Reno, Carson City and Elko).

The size and scope of the gaming market in Reno-Sparks simply makes more sense for small ownership groups with a local focus, says Bill Eadington, professor of economics and director of the Institute for the Study of Gambling and Commercial Gaming at University of Nevada, Reno.

Large public-company ownership is limited by the deteriorating state of the northern Nevada gaming market, which has shed half its annual revenue since 2000, Eadington says.

“Large publicly traded gaming companies like Caesars or MGM, it is really hard for them to justify putting a lot of effort in their Northern Nevada properties,” he says. “It is not worth management's time and money. A lot of companies are putting their low-performing properties up for sale, and the Reno market is a good example.”

Eadington points to Caesars lack of investment at its Harrah's Reno property, and MGM's silence on the Chapter 11 bankruptcy filing by Silver Legacy earlier this year as evidence of where those properties rank in the corporate hierarchy. The two publicly traded companies own roughly 70 percent of the mega casinos on the Las Vegas Strip.

Private ownership also makes more sense here than in southern Nevada because the owners and operators of larger casino properties — the Ascuagas, Farahis, Paganettis and Caranos — have long-established careers in Northern Nevada and know the local market far better than any Las Vegas-based corporate entity. They have deep ties to the community, and with most, northern Nevada is their sole focus.

“In spite of the fact that it's a down market, they are here for long-term,” Eadington says. “Private ownership pretty much fits within those trends.”

Szony, who worked for years for Hilton Hotels Corporation and Sands Regent, says local management groups have a much better handle on the needs of the Reno-Sparks market and can affect change much more quickly than large corporations with multi-jurisdictional concerns.

“If you look at family operators, the Ascuagas, the Caranos, they all have done a spectacular job at being hands-on in management, and that makes a big difference in the product we have in Northern Nevada,” says Szony, who spent the past three years in Las Vegas running Affinity Gaming.

“We are seeing a wave of new interests in ownership coming into the market. They all are very hands-on, and they need to be in order to be successful in the Reno market. Taking a national playbook that may work in different jurisdictions isn't as successful as getting to know the patrons in the market.”

David D. Ross, chief executive officer of Affinity Gaming, says that as the company emerged from bankruptcy on Dec. 31, 2011 it shed its extensive slot route and culled certain “non-core” properties from its portfolio because of the relatively small revenue they generate.

Affinity Gaming still holds Rail City Casino, however, mainly because the small casino on Victorian Avenue fits the company's property profile. Rail City has about 1,000 slots on its casino floor, Ross says, and together the other three properties it plans to shed barely reach that mark.

Affinity Gaming also divested three small casinos in Las Vegas in 2011. Handing the reins back to Szony is the best solution for all parties, Ross adds.

“This is his family. These are his kids, and he's going home. This is the best outcome for the employees and for Reno. He knows that market, he lives there, and we are very happy with where we sit today on that transaction.”

Ross says Affinity Gaming remains bullish on both northern and southern Nevada despite the state's prolonged economic woes. (The company also has casino interests in Missouri, Iowa and Colorado).

High unemployment in Nevada, along with neighboring California, means the downturn in the Silver State is far from over, Ross says, but businesses in Nevada have already navigated through the worst of it.

“Certainly no one has ever seen the downturn that we are seeing — the magnitude of it is unprecedented,” he says. “But we are counting on the economy to continue to slowly improve.”

Despite the prolonged — and apparently irreversible — decline in gaming revenues from the California drive-up market, revenues from local players has increased significantly, Eadington notes. Northern Nevadans account for 40 to 50 percent of regional gaming revenues versus about 10 percent in 2000, he says.

Gaming revenue in Northern Nevada will stabilize and recover when the local economy rebounds, Eadington adds.

http://www.nevadaappeal.com/article/20120923/BUSINESS/120929939/1070&ParentProfile=1058

Caesars, Atlantic City settle tax appeal

Caesars, Atlantic City settle tax appeal, but other casinos have also filed
Posted: Sun Mar 25, 2012.
By EMILY PREVITI Staff Writer pressofAtlanticCity.com

ATLANTIC CITY — Recent tax-appeal settlements with Caesars Entertainment Corp. have cut property values for three casinos by 35 percent — a development that could affect public finances if a similar degree of reduction results from pending appeals filed by seven other gambling halls.

“It’s a major concern to the city’s administration and to everybody. It’s 11 (casino) properties, and they make up 38 (percent) or 39 percent of the (city’s) ratable base, and 25 percent of the county’s (ratable base). So having these drops doesn’t just affect the city, it affects the county as well,” city finance director Michael Stinson said Friday.

The city has agreed to give back $26.96 million to Caesars for taxes paid from 2009 to 2011 on Bally’s Atlantic City — one of four local casinos the company operates — because those tax bills were based on the property’s value being $1.5 billion, which tax court negotiations have since reduced to $700 million, he said.

Stinson spoke two days after City Council approved more than $27 million in refunds for Bally’s and nine other, smaller commercial properties in the resort. The rebates are intended to make up for owners paying taxes on properties whose values have been determined to be lower than calculated in 2008, when the resort underwent its first citywide revaluation in three decades.

Caesars contested assessed values for all four of its local casinos, although Showboat Casino Hotel’s appeal was resolved previously. Settlements for Harrah’s Resort and Caesars Atlantic City were also approved Wednesday but do not provide for any refunds, according to city documents summarizing the settlements.

Casinos previously were assessed solely on their land and buildings, but opted to have their assessments take financial performance into account when the economic downturn started — and while legal, it’s unfair, Mayor Lorenzo Langford said Friday.

“If the state of New Jersey really wants to assist the city, they should mandate that the casinos be assessed in the same way and manner as residential properties,” Langford said. “Property taxes are not reduced on the residential side if a property owner suffers a reduction in income or mismanages their financial affairs. Why should casinos be treated differently?”

Caesars Atlantic City now has an assessed value of $1.05 billion, down 38 percent from $1.7 billion. Harrah’s now has an assessed value of $1.55 billion, down 18 percent from $1.9 billion, the documents show.

Atlantic City officials have not yet introduced the 2012 budget. But for 2011, Caesars would have paid $49.3 million in municipal taxes on the Bally’s, Harrah’s and Caesars properties, a figure that would drop by 35 percent to $31.9 million with the new, lower assessed values.

That would leave the city with $17.4 million — 7 percent of 2011’s $234 million budget — to make up. That likely would result in increased taxes for other local property owners.

The 2011 municipal tax rate is $0.967 per $100 assessed value. If everything else stayed the same, the tax rate would increase to $1.06 per $100 assessed value to make up for the ratable base reduction resulting from adjustments to the three Caesars properties’ values.

That means the owner of a $100,000 house would have paid $1,060 in municipal taxes versus $967, which is an increase of $93, or nearly 10 percent.

Still more losses could result from the resolution of pending appeals by other casinos.

Revel, Borgata Hotel Casino & Spa, Tropicana Casino and Resort, Trump Entertainment Resorts Inc., Golden Nugget Atlantic City and Atlantic Club Casino Hotel each has appealed.

Stinson, who was not at Wednesday night’s meeting, later clarified details of the settlements with Caesars, which were discussed in closed session. The terms include the company’s pledge to refrain from filing tax appeals this year or next year on any of its local properties.

Last fall, Resorts Casino Hotel and Pinnacle Entertainment Inc. also agreed they would not contest property values through 2013.

That’s significant, because casinos and other large companies automatically file tax appeals every year, figuring the cost of the process is worth potential savings on taxes based on property values of millions or billions of dollars.

City Council agreed Nov. 2, 2011, to borrow $38.5 million to settle tax appeals — including those filed by Resorts and Pinnacle — involving overpayments made as long as 15 years ago.

Officials could have issued a tax credit but instead felt it would be easier from a budgeting perspective to settle up, start collecting taxes and allow that revenue to cover the related interest payments, which would be figured into the city budget, Stinson said.

That convenience will cost the city about $3.5 million in interest over five years, Stinson estimated at the time.

If interest rates remain as competitive as then, the city likely will do the same for the $27.1 million approved Wednesday for settlements with the three Caesars properties and nine others, Stinson said.

Improved borrowing rates also prompted City Council to agree Wednesday to refinance two debts: $16.2 million borrowed at 4 percent interest in 2003 for capital improvements and $6.1 million in deferred pension payments, for which the state is charging 7 percent interest, Stinson said.

Stinson expects to get a 2 percent rate on the $16.2 million bond and a 4.75 percent rate on the pension debt. The changes should save the city about $670,000 over five years, he said.

Highest debt ratios in Gambling Industry

TOP 5 COMPANIES IN THE CASINOS & GAMING INDUSTRY WITH THE HIGHEST DEBT TO EBITDA RATIO (MGM, BYD, PNK, ISLE, SGMS)

Below are the top five companies in the Casinos & Gaming industry as measured by their Debt to EBITDA ratio.

The measure of a debt's pay-back period is Debt/EBITDA. The longer the payback period, the greater the risk. This metric ignores all tax expenses even though a good portion are cash payments and gets paid first.

MGM Mirage (NYSE:MGM) has a Debt/EBITDA ratio of 12.81x based on total debt of $12.6 billion.

Boyd Gaming (NYSE:BYD) has a Debt/EBITDA ratio of 8.66x based on total debt of $3.2 billion.

Pinnacle Entertainment (NYSE:PNK) has a Debt/EBITDA ratio of 7.42x based on total debt of $1.2 billion.

Isle of Capri Casinos (NASDAQ:ISLE) has a Debt/EBITDA ratio of 7.34x based on total debt of $1.3 billion.

Scientific Games (NASDAQ:SGMS) has a Debt/EBITDA ratio of 7.28x based on total debt of $1.5 billion.

SmarTrend is monitoring the recent change of momentum in Pinnacle Entertainment. Please refer to our Company Overview for the results of our proprietary technical indicators that have been scanning shares of Pinnacle Entertainment in search of a potential trend change.

Louisiana Food Fight!

Ex-CEO sues Pinnacle in legal battle over Louisiana casino resort
By Steve Green
Sun coverage

Dan Lee, former CEO of casino operator Pinnacle Entertainment Inc. of Las Vegas, hit Pinnacle with a counterclaim this week in their legal battle over Lee's proposed casino resort in Louisiana.

The legal dispute erupted last month when Pinnacle sued Lee claiming Lee violated his 2009 separation agreement by using confidential information and trying to recruit Pinnacle employees for Lee's proposed Mojito Pointe gaming resort in Lake Charles, La.

Mojito Pointe would be adjacent to what Lee calls Pinnacle's existing flagship casino property, L'Auberge. Mojito Pointe is proposed for the Sugarcane Bay casino site that Lee championed at Pinnacle -- a project Pinnacle canceled after Lee left the company.

Clark County District Court Judge Kathleen Delaney in November denied Pinnacle's motion for an injunction barring Lee from competing against Pinnacle. And last week, a state judge in Louisiana denied Pinnacle's motion that the Port of Lake Charles — which controls the casino sites — be blocked from working with Lee on Mojito Pointe.

Pinnacle is continuing its litigation with Lee and plans to take depositions from several witnesses.

Attorneys for Lee, in the meantime, this week filed an amended answer to the Nevada lawsuit and also filed a counterclaim against Pinnacle, charging the Las Vegas company has engaged in a "no-holds-barred attempt to obstruct Lee'' and his company Creative Casinos LLC from obtaining a gaming license in Louisiana.

Claiming "wholesale abuse of the legal process,'' attorneys for Lee said Pinnacle has launched a "conspiracy with others, including undertaking illegal and prohibited trade practices by attempting to secure agreements from others that they do not do business with Creative.''

Lee's attorneys said in the complaint that L'Auberge generates nearly 40 percent of Pinnacle's gross revenue and that "Pinnacle is desperate to block competition.''

Lee's attorneys said in the complaint that after Pinnacle canceled Sugarcane Bay, the port approached Lee about developing a casino on the Sugarcane Bay site.

The attorneys said that after Lee agreed to do so, and prior to presentations this week by Lee and competing casino developers before the Louisiana Gaming Control Board, Pinnacle tried to ``put a cloud over Creative and Lee on the eve of these presentations.''

The counterclaim alleges Pinnacle:

• Falsely claimed the port did not have legal authority to lease the property to Creative Casinos despite Pinnacle having admitted it defaulted on a lease for that site when it canceled Sugarcane Bay and surrendered the related gaming license for the site.

• Sued the port with a "false and frivolous claim that there had been no default with the ulterior purpose of seeking to delay and thwart Creative's ability to develop its desired project.''

• Sued Lee, falsely asserting Lee was subject to a covenant not to compete.

• Disseminated false information "for the purpose of attempting to disparage Creative's development proposals and discourage the state of Louisiana from issuing a license to Creative.''

• Had contact with suppliers and prospective business associates and made threats "for the purpose of securing agreements that they not provide support or services to Creative.''

Lee, represented by attorneys with the Las Vegas law firm Pisanelli Bice PLLC, asserts charges in the counterclaim of abuse of process, civil conspiracy and unfair and unlawful trade practices.

Pinnacle, represented by the Las Vegas law firm Littler Mendelson, has not yet responded to the counterclaim.

Pinnacle has said Lee, in his separation agreement, was allowed to compete — but that he had to compete fairly.

By providing inside information to the port about Pinnacle's Lake Charles operation and in the past contacting — or arranging for others to contact — Pinnacle employees, Lee violated the separation agreement, Pinnacle asserts.

The prohibition on contacting former employees, however, expired Nov. 7.

Illinois: Cooking the goose

Illinois: No end in sight; Boyd gets some love

“So much for a [gross gaming revenue] stabilization,” sighed analyst Joseph Greff in a J.P. Morgan investor note, after Illinois‘ casino revenues dropped 7% in November. Whenever you think the Land of Lincoln’s casinos have hit bottom, they sink lower still. The statewide gross of $105 million was the worst of the 2009-10 period, although at the present pace December will be worse still. A report from the state’s Commission on Government Forecasting & Accountability, prepared before the November numbers were released, already had Illinois’ casino economy at its lowest level in a decade. (Casinos were legalized in the state in 1990.)

Casinos in the St. Louis area (led by Pinnacle Entertainment’s River City) continue to sap their Illinois competitors, with East St. Louis-berthed Casino Queen down 12% and Penn’s Alton Belle off by 8%.

Impervious to reality, lawmakers like Waukegan state Sen. Terry Link (D) pushed through a lame-duck bill that would create an insane level of gaming expansion: four more riverboats and racinos with 6,300 slots. The lower house must also consider the bill, which Gov. Pat Quinn has opposed … albeit not without some Obama-style wishy-washy-ness. (Is it something in the Illinois water?) Although the proposed law would ease the state’s usurious gaming tax rate (50% of revenues exceeding $200 million) it would also potentially triple the number of gambling positions in the state. The deleterious effects on existing casinos hardly need belaboring. Even Wall Street analysts oppose the measure, using phrases that rarely pass their lips, like “too much gaming.” Not content to have cooked the state’s golden goose, Illinois politicians seem hellbent on eating it for lunch, too.

Borgata is expected to touch bottom next year ....

Atlantic City has been very painful for Pinnacle

Pinnacle says it won’t sell A.C. land dirt-cheap
By Wayne Parry
ATLANTIC CITY - Pinnacle Entertainment, whose plans for a mega-casino resort on the Atlantic City Boardwalk shriveled and died when the economy crashed, says it won't sell its land here dirt-cheap.

The Las Vegas company bought most of the nearly 20-acre site for $270 million from entities affiliated with billionaire investor Carl Icahn four years ago and later added nearby land worth another $70 million.

The company said the land's current book value is $38 million. But Pinnacle said it's content to hold out until a better deal turns up. [$340 million for a property now worth $38 million?]

"Atlantic City has been very painful for Pinnacle," the company's president and CEO Anthony Sanfilippo said on a conference call this morning.

But, he added, "We are not going to exit Atlantic City in a giveaway fashion. A lot of land was acquired. That's a pretty prime piece of real estate. We want to make sure we get the appropriate value for it."

Pinnacle imploded the Sands Casino Hotel in 2007 to make way for a beach house-themed resort in a wave of new investment that several developers proposed for the nation's second-largest gambling market - before the bottom fell out of the economy.

Of four Atlantic City projects then on the drawing board that were worth a combined $10 billion, only one proceeded, the Revel casino. It ran out of money halfway through construction; about $1 billion worth of work remains on the interior of the development, which officials consider too far along to abandon.

Since then, some New Jersey lawmakers have proposed changing state law to enable developers to build smaller casinos with as few as 200 rooms, down from the current 500-room minimum.

On the conference call, a stock analyst asked Sanfilippo whether Pinnacle might consider using its Atlantic City land for such a scaled-down casino if it could not get an acceptable price for its land here.

"Sure, it's a possibility," Sanfilippo said.

But Kerry Andersen, a Pinnacle spokeswoman, said after the call that there are no plans for Pinnacle to do anything with the land other than sell it for a decent price.

Missouri: Underage Gambling

2 Missouri casinos fined for underage gamblers


...Gaming Commission director Gene McNary said the fines show the commission has no tolerance for casinos that fail to keep out those under 21.

"That should get the message across that the law is clear," McNary said. "They (casino companies) are going to have to make the effort to make sure underage gamblers don't get on."

McNary said the problem has gotten worse since November when Missouri voters approved a ballot measure eliminating the state's $500 loss limit. Commissioners directed an industry group, the Missouri Gaming Association, to spend the next month developing a plan to combat underage gambling.

The Missouri Gaming Commission fined Pinnacle Entertainment Inc. $60,000 for the following violation --

On May 20, a 19-year-old man was caught on the gambling floor, but only after he played table games and an electronic gaming device. A security guard, table game supervisor and dealer all failed to verify his age, the report said. He was caught when a cashier checked his ID.

That same day, a 20-year-old played blackjack and roulette, and was served alcohol before a cashier checked his identification, learned he was underage, and contacted security.


At Ameristar's Kansas City casino, a 19-year-old got onto the gambling floor on April 19 when a security guard checked his ID but failed to notice his age. The young man left, then was caught when he tried to re-enter.

The passage of Proposition A meant that casino patrons no longer had to show a card allowing them to gamble, a move that previously added another roadblock for those under 21 trying to sneak onto a gambling floor. McNary noted it was the gambling interests who pushed hard for passage of the measure, and it is up to them to keep out underage gamblers.