Sister’s Horseshoe buy approved

John Wilen

Friday, June 12, 1998 | 11:02 a.m.

State gaming regulators Thursday approved Becky Behnen's buyout of her siblings' stake in Binion's Horseshoe Club, a transaction that will make Behnen sole owner of the legendary downtown casino and end her lawsuit against brother Jack Binion.

In separate meetings Thursday morning, the Gaming Control Board and the Gaming Commission approved a deal under which Binion siblings Lonnie (Ted) Binion and Brenda Binion Michael will sell their interests in the Horseshoe Club to Jack Binion, who will in turn sell the three sibling's combined interest to Behnen.

The sale was necessitated largely by gaming regulators' March decision to revoke Ted Binion's license to hold an ownership stake in the casino. Binion, who owns 20 percent of the Horseshoe Club, was stripped of his license for associating with reputed Mafia figures. Binion's gaming license was suspended years ago because of repeated drug problems.

Richard Wright, an attorney for Ted Binion, said Binion has filed a formal appeal of his license revocation with State District Court.

The deal will also settle a lawsuit Behnen filed against Jack Binion two years ago in which she accuses her brother of intentionally mismanaging the Horseshoe Club.

Behnen said she looks forward to recreating a warm, welcome feeling at the Horseshoe Club -- a feeling she says has been missing in recent years.

"I want to see the customs and the business of the Horseshoe go back to the way they were when I was being raised," Behnen told regulators.

"It goes back to the same thing daddy always said -- good food, good whiskey and a good gamble," she added later.

The Horseshoe Club was left to the Binion children by their father, founder Benny Binion, who died in 1989, and his wife, Teddy Jane, who died in 1984. The Horseshoe Club has long been a favorite hangout for professional gamblers. But its profits have waned in recent years as majority shareholder Jack Binion's attention shifted to casinos he owns in Mississippi and Louisiana.

In her lawsuit against Jack Binion, Behnen said the Horseshoe Club has lost $20 million over the past two years due to Binion's inattention.

According to George Vlassis, an attorney for Behnen, and Martin Nussbaum, an attorney for Jack Binion, the transaction will work like this:

--Jack Binion will pay Ted Binion $7 million in cash and a $3.8 million promissory note in return for Ted Binion's 20 percent stake in the casino;

--Jack Binion will pay Michael $6.5 million in cash for her 18.5 percent stake;

--Jack Binion will in turn receive a $20 million promissory note from Behnen for transferring his 42 percent stake to Behnen, as well as the shares he purchases from Ted Binion and Michael;

--Michael will receive an additional $3.5 million payment from the $20 million note, meaning Jack Binion will ultimately receive $16.5 million from the note.

The $20 million note will be paid over two years, the attorneys said. Behnen, who owns 18 percent of the casino now, will end up with nearly 100 percent. But Jack Binion and Michael will each continue to own small stakes in the company -- equivalent to less than 1 percent each -- allowing them to continue to be licensed as owners.

Behnen will pledge the Horseshoe Club and its parking garage as collateral on the $20 million note. In the event Behnen defaults on her payments to Jack Binion or Michael, they could take the casino back from Behnen. Because they will continue to hold small ownership stakes in the Horseshoe Club, they would not have to be re-licensed by gaming regulators.

In addition to the notes, Jack Binion has agreed to purchase the Horseshoe Club's outstanding gambling debt markers for $5 million in cash. In her lawsuit against Jack Binion, Behnen alleged that Binion intentionally allowed gamblers interested in investing in his Gulf Coast properties to run up large debts at the Horseshoe Club that he never expected to collect.

The attorneys declined to place a total dollar figure on the transaction, noting that it was a negotiated settlement that keeps the Horseshoe Club in the Binion family. Jack Binion rejected a $40 million buyout offer from Kansas City businessman Phil Ruffin in March. In 1994, the Horseshoe Club was appraised as being worth $110 million.

The transaction is set to close July 2, a full three weeks later than the June 11 deadline regulators set as the date by which Ted Binion had to divest his stake in the casino.

Both the Gaming Control Board and the Gaming Commission reluctantly approved the delay after receiving assurances that the new deadline will be met.

Attorneys for the Binions told regulators the financial terms of the deal would not change.

Regulators tried to impress upon Behnen their concern that her husband, Nicolas Behnen, not participate in the operation of the Horseshoe Club. In 1978, Nick Behnen withdrew an application for a gaming license to operate the Silver Star casino after regulators recommended denial. According to Gaming Board officials, Behnen failed to disclose prior illegal gambling arrests.

Becky Behnen assured regulators that her husband would not participate in casino operations.

"My husband will not have any involvement in the Horseshoe Club," Behnen said

Nussbaum, Jack Binion's attorney, said the sale would not affect the World Series of Poker, held at the Horseshoe Club every spring. Any move of the World Series of Poker is "not contemplated," Nussbaum said.