Lady Luck partner to buy Kansas City riverboat

David Strow

Tuesday, Feb. 8, 2000 | 11:10 a.m.

For the third time in 13 months, Park Place Entertainment Corp. of Las Vegas has found a buyer for the Flamingo Hilton Riverboat Casino in Kansas City.

Isle of Capri Casinos Inc., the Biloxi, Miss., company merging with Lady Luck Gaming Corp. of Las Vegas, announced today it would pay $33.5 million for the property -- a purchase that's bedeviled Trump Hotels & Casino Resorts and Station Casinos before it.

"(The casino) has had a very checkered history," said Joe Coccimiglio, gaming analyst for Prudential Securities. "Trump had problems with it, and then Station had problems with it. Now we're up to (owner) No. 4."

The property has 1,000 slot machines and 50 table games.

Despite difficulties in closing previous sales, Park Place has been able to bump up the price of the casino substantially with each new bidder. Isle of Capri's bid topped Station's earlier offer by $11 million -- and tops Trump's January 1999 offer by $18.5 million.

Allan Solomon, executive vice president for Isle of Capri, said that's the result of the introduction of "open boarding" in Missouri in November 1999. Open boarding allows Missouri casino patrons to enter a casino at will, rather than during specific entry windows.

"We think with the advent of the open boarding policy in Missouri, the operating results should improve dramatically," Solomon said.

Isle of Capri's offer is "less an adjustment for assumed liabilities," though the Mississippi company didn't say what those liabilities are.

The boat will be renamed under the Isle of Capri brand name, and the company plans to renovate the property.

Solomon said the company is well aware of the troubles that have surrounded previous attempts to buy the boat, but said Missouri regulators have assured the company that they will expedite the approval process for Isle of Capri.

"We like to close tricky projects," Solomon said. "I think (Missouri regulators) want to get it done as quickly as possible.

"This is our size property. We believe we know how to cater to these customers. It's similar to other casinos we operate."

Isle of Capri is also in the process of acquiring Lady Luck in a $59 million deal, a merger that will give it control of the Lady Luck hotel-casino in downtown Las Vegas. Lady Luck also owns casinos in Mississippi and Iowa. Once complete, the two mergers will give Isle of Capri 12 casinos in six states.

The Flamingo Hilton riverboat, built at a cost of $100 million, has come with regulatory difficulties for every company associated with it.

After building the casino, Hilton Hotels Corp. ran into charges that it had bribed Kansas City Port Authority Chairman Elbert Anderson in exchange for his support to build the casino on city-owned land. Hilton avoided a criminal trial when it agreed to surrender its Missouri gaming license to a new buyer. Park Place, which obtained most of Hilton's gaming properties in a spin-off, began trying to broker a sale on behalf of its former parent.

Trump appeared to be that buyer, but the company's application stalled as the Missouri Gaming Commission became concerned about Trump's high debt levels and previous bankruptcy. When the Aug. 31 deadline for the close of the sale passed, Park Place put the boat back on the market.

Within two weeks, Station stepped forward with a $22.5 million bid. But during Missouri's background investigation, regulators uncovered evidence of wrongdoing by St. Louis attorney Michael Lazaroff, who represented Station before the Missouri Gaming Commission.

Lazaroff was accused of taking bonus payments from Station without reporting them to his law partners. To date, Station hasn't been accused of wrongdoing, but the company withdrew its application to buy the riverboat in December. Station had attempted to convince Park Place to give it more time to close the deal, but pulled out after Park Place hiked its asking price.