Fired exec competes with Station Casinos for Kansas City riverboat

Rick Alm

Thursday, Sept. 30, 1999 | 11:52 a.m.

KANSAS CITY, Mo. -- A former top Station Casinos executive is part of a group that hopes to beat out Station in buying the Flamingo Hilton Casino.

"We are going to make sure everybody understands the alternatives," said Joseph J. Canfora, president of Empress Entertainment Inc., which operates riverboat casinos in Illinois and Indiana. "We have officially informed Hilton that we are interested."

Station Casinos Inc. recently offered $22.5 million for the Flamingo after a proposed sale of the operation to Trump Hotels & Casino Resorts Inc. fell through. Station's bid was accepted by the Flamingo's owner, pending regulatory approval.

If Station is allowed to take over the Flamingo, Canfora said, the company would dominate the Kansas City market with nearly 60 percent of the total gambling capacity. "It's called a monopoly," he said. "Competition is good for everybody."

Canfora said his group included several Empress executives and investors, including Chief Executive Peter A. Ferro Jr.; William M. Grace, principal owner of the St. Jo Frontier Casino and The Woodlands; and several local investors, among them ethnic minorities who would hold about 10 percent of the ownership shares. Canfora said he could not yet disclose those names.

Station executives in Kansas City and at corporate headquarters in Las Vegas were caught off-guard by Canfora's move. In a brief statement, Station said:

"Station Casinos Inc. is proud of its contributions to the gaming industry in the state of Missouri.

"We have a contract to purchase and are committed to the acquisition of the Flamingo Hilton Casino in Kansas City. We are moving forward with that process, subject to Gaming Commission approvals. We plan on closing this transaction prior to the end of the year."

Geoff Davis, a spokesman for Hilton Hotels Corp., the Flamingo's owner, could not be reached Wednesday.

Canfora, Station's former Midwest president, built and opened the company's $300 million Kansas City casino in January 1997.

He was fired two months later and claimed in a lawsuit that he was made "a scapegoat" for construction cost overruns and the casino's weak financial performance in its first months.

That lawsuit was settled under a confidentiality agreement that prohibits either side from disclosing terms.

Canfora insisted Wednesday that his Flamingo deal was "not personal. This is business. I'm here because I know this market....I was looking at this deal long before Station announced (its offer)."

Canfora said the group intended to lobby the Kansas City Port Authority and the Gaming Commission to reject the sale to Station as anti-competitive. If successful, he said, the group is prepared to offer Hilton more than Station's $22.5 million bid.

If Station's offer for the Flamingo is approved, the company would control five of Missouri's 15 active casino licenses and three of the six operating riverboats in Kansas City.

And, Canfora noted, if Harrah's Entertainment Inc. completes its announced purchase of Player's International Inc., Harrah's would control six Missouri riverboat licenses, plus the defunct Sam's Town Casino in Kansas City that it bought last year and closed.

Left unopposed, "Station and Harrah's would own Missouri" with 11 of the state's 15 licenses, said Canfora.

The Canfora group's fair-competition argument may not find an audience at the Port Authority.

"That is something we don't want to hop into," Chairman Bill Johnson said Wednesday. "The board would not want to get involved with any preference over who the successful suitor would be."

Mel Fisher, Gaming Commission executive director, has already expressed concern about the shrinking competition issue in Missouri and said he expected the commission to discuss it with Station executives. Fisher could not be reached Wednesday.

Canfora said his group also would argue before regulators that Station had failed to live up to its promises in Missouri, including a long-stalled land redevelopment project in St. Charles, and unmet agreements with Kansas City to include more ethnic minorities as vendors, employees and partners in the local ownership mix.

An unaudited draft of the Port Authority's latest monitoring report for the first half of 1999 shows Station and the Flamingo have failed to achieve some minority business goals.

--The city requires the casinos to purchase 35 percent of all goods and services from minority- and women-owned vendors. In the first six months of this year, Station reported 6.5 percent compliance and the Flamingo 19.8 percent.

--Both casinos met or exceeded the city's 35 percent quota for minority and female employees.

Earlier this month, John V. Finamore, Station's Midwest president, said vendor goals had posed a challenge since 1997 for a variety of reasons, including restrictive wholesale liquor laws, unique purchasing needs such as slot machines and playing cards, and the necessity for vendors to pass background checks and be licensed by the Missouri Gaming Commission.

"We are not trying to shirk our goals," said Finamore. "It is difficult to find vendors who can pass the background check and are competitively priced."

Kansas City's Black Chamber of Commerce recently announced its opposition to Station's purchase of the Flamingo based on its vendor performance.

Finamore said the company had met with minority vendors in the past and had a meeting set Friday with the chamber to explain its position.