Trump buys Kansas City Hilton

Friday, Jan. 15, 1999 | 10:28 a.m.

Donald Trump's gaming company is gambling on a Kansas City riverboat casino that has been a bad bet for Hilton Hotels Corp.

Trump Hotels & Casino Resorts Inc. is buying the Flamingo Hilton Kansas City for a reported $15 million in cash. Hilton invested about $100 million in the resort, which opened in October 1996.

The Flamingo has struggled financially from its opening, reporting negative cash flow of $7.7 million in 1997. Hilton wrote the Flamingo's full value off its books in early 1998. Analysts expect the Flamingo to generate positive cash flow for the first time in fiscal 1998.

Though it has grown to command about 14 percent of the competitive Kansas City market, the Flamingo is at the center of a controversy over allegations a Hilton executive paid a Kansas City Port Authority official $225,000 in 1993 to reward him for his help in Hilton obtaining the Flamingo site. In August, Hilton paid $655,000 to settle a federal criminal investigation of that incident.

But the Missouri Gaming Commission is investigating the incident as part of the Flamingo's gaming license renewal. Commission sources told the Press of Atlantic City newspaper they were unsure how the sale would affect the relicensing process.

The executive, who no longer works for Hilton, has been charged with perjury by Missouri prosecutors. The ongoing investigations forced Hilton to postpone transferring the Flamingo to Park Place Entertainment, the Las Vegas gaming company spun off Dec. 31 by Hilton.

The Flamingo is the smallest Kansas City casino, with 1,000 slots, 50 table games and 30,000 square feet of gaming space. Missouri's onerous gaming regulations -- requiring phantom cruises that restrict access to casinos for an hour and 15 minutes of every two hour period, and charging a 20 percent tax on gaming revenue -- have made Kansas City a tough market. In July, Boyd Gaming Corp. closed its struggling Sam's Town Kansas City casino and sold some of its assets to Harrah's Entertainment.

The Flamingo will give Trump its fifth casino, and the company's chief executive told the Press more acquisitions are in the works as Trump casinos expand to other gaming states.

"We believe we have a couple of other acquisitions in the pipeline over the next 30 to 45 days," Nicholas Ribis told the Press. "It's part of our growth pattern."

In October, a Las Vegas real estate agent said Trump was looking at buying a site adjacent to the MGM Grand on the Las Vegas Strip. Trump denied that claim.

Trump will upgrade the casino and continue employing its 800 workers, Ribis told the Press. The Flamingo will be rebranded as a Trump casino, said Ribis.

Trump owns three Atlantic City casinos and a floating casino in Indiana. Donald Trump owns about 40 percent of the company's stock.