Illinois regulators hold up Harrah’s-Players buyout

James Webb

Wednesday, Feb. 23, 2000 | 11:02 a.m.

CHICAGO - Illinois regulators are holding up the $425 million sale of Players International Inc. to Harrah's Entertainment Inc. over concerns about a pending lawsuit challenging state gambling law.

It was unclear whether the snag could be resolved before Feb. 29, the self-imposed deadline for the companies to complete the deal involving riverboats in Illinois, Louisiana and Missouri.

"We are prepared to work around the clock," said Tim Wilmott, head of Harrah's eastern division.

Casino officials pressed Tuesday for approval by the Illinois Gaming Board - the last major hurdle to the deal - and some of the regulators indicated their general support. But the regulators cited ongoing concerns about a lawsuit that threatens to invalidate recent changes to state gambling law, including a provision making it legal for companies to own more than one casino.

Harrah's already owns a casino southwest of Chicago in Joliet, and would acquire the Metropolis riverboat in far southern Illinois as part of the Players purchase, becoming the state's first dual operator. Regulators said they don't want to be in the position of having to shut down the Metropolis riverboat and throwing about 800 employees out of work if the new law is overturned.

They told Harrah's officials they couldn't approve the deal without a written agreement that Harrah's would voluntarily put one of the casinos into receivership - to avoid violating the old law - if the revised law is overturned.

"We need an agreement ... so there is something to ensure continuity in a worst-case scenario," board member Joe Lamendella said.

Gaming Board Chairman Gregory Jones said it might not be possible to get an agreement in place by Feb. 29, but he was willing to call a special board meeting to vote on the deal if it's ready before then.

Missouri and Louisiana casino regulators have already signed off on the proposal, which is playing out under the shadow of an extortion scandal in Louisiana.

Federal prosecutors claim that Players executives funneled money to former Louisiana Gov. Edwin Edwards and his son, Stephen, to get a license and protection while Edwards was governor. The men have pleaded innocent, and testimony on the Players portion of their wide-ranging racketeering trial is just now playing out.

Neither Players nor its current executives were indicted in the case, but Louisiana regulators required Players to pay $10.8 million in fines and sell its riverboat operations there as a result of the scandal.

Illinois regulators raised no questions about the scandal in their discussion of the Harrah's-Players deal. But they did mention it earlier in the meeting when they voted 4-0 to approve the renewal of Players' Metropolis casino license.

As a condition of that approval, they demanded proof from Players' officials that no one involved in the Louisiana scandal has anything to do with the Metropolis operation.

Harrah's, based in Las Vegas, is one of the nation's largest gambling companies, with 18 U.S. casinos. Players, based in Atlantic City, operates a Paducah, Ky. horse racing track in addition to the two riverboat casinos in Lake Charles, La., and the riverboat in Metropolis.

Under the deal, Harrah's would also gain complete control of a four-casino dockside facility jointly operated by the two companies in Maryland Heights, Mo.