Case seen as test of regulation in Louisiana

Alan Sayre

Monday, July 10, 2000 | 11:19 a.m.

As Louisiana gambling regulators consider the state's final and 15th riverboat license, which played a role in the recent conviction of Edwin Edwards, a major applicant enters the competition with a black eye.

On June 30, the Illinois Gaming Board declared that key owner Jack Binion of Horseshoe Gaming was unfit to hold a license for a riverboat casino in that state, a potentially disastrous finding for any gambling company.

Although casino gambling is regulated on a state-by-state level, a finding that a company should not hold a license in one state can boomerang into other states where the company operates.

Louisiana gambling board chairman Hillary Crain has said the state is awaiting the detailed findings of the Illinois investigation, which have not been made public. He would not speculate on possible action. The state already is conducting a suitability investigation of Binion for license renewal of his Bossier City riverboat and for the 15th license.

Horseshoe wants to add a second boat in the lucrative Shreveport-Bossier City market where it already, on a routine basis, wins the most money from gamblers monthly against three other casinos.

An Illinois staff recommendation said Horseshoe Gaming head Jack Binion was unsuitable because of his "background, character and integrity." Once Binion receives the written decision, which will make the specific reasons public, he has five days to respond.

Horseshoe indicated an appeal of the Illinois decision was planned and pointed out that both Horseshoe Gaming and Binion were licensed and in good standing in Nevada, Indiana, Mississippi and Louisiana.

For Louisiana, it will be the second major case involving a questioned licensee in the past year. After Players International was implicated in questionable business dealings involving former Gov. Edwards and cronies, the company was allowed to sell out to Harrah's Entertainment Inc.

That deal was heavily criticized by gambling opponents. However, many members of the Lake Charles business community, where Players operated two riverboat casinos, pushed for the deal because of the potential of lost jobs and revenue. The boats are now being converted to the Harrah's name.

Players International was not charged in the riverboat extortion case that resulted in the federal convictions of Edwards and four others, but dealings with the company figured heavily in the case.

Gambling critics say the Horseshoe decision in Illinois makes the case a first-of-its-kind for Louisiana.

"Unless Illinois relents, I think this state also is going to have to deny suitability," said longtime gambling critic C.B. Forgotston of New Orleans. "This is about to be the first true test of the Gaming Control Board."

Horseshoe has had licensing problems in Louisiana before. State police found the company unsuitable in November 1993 because of accounting problems in Nevada and some of its investors in its Bossier City casino. That decision was overturned by the now-defunct State Riverboat Gaming Commission, which was upheld by the Louisiana Supreme Court.

Walter Abbott, a Louisiana spokesman for the National Coalition Against Legalized Gambling, which was highly critical of the Harrah's-Players merger, said he doubted that Horseshoe and Binion had much to worry about -- at least in Louisiana.

"Given their (gambling board's) track record, I suspect they will torture logic as much as is necessary to arrive at the desired outcome," Abbott said.

Binion currently has five casinos in Louisiana, Mississippi, Indiana and Illinois. The trademark Horseshoe in downtown Las Vegas is controlled by his sister.

However, industry observer Larry Pearson, publisher of the Riverboat Gaming Report, said Binion has several years of appeals possible in Illinois -- and would have similar rights should he be found unfit to operate in the other states.

"There isn't going to be anything happen soon," Pearson said.

The 15th riverboat license already has a checkered history.

In 1997, then-San Francisco 49ers owner Edward DeBartolo Jr. won the nod for a Bossier City casino, but gave up the project after a federal grand jury began probing Edwards' business dealings. DeBartolo later pleaded guilty to failing to report a felony and testified against Edwards, saying he gave the ex-governor _$400,000 to set up the riverboat deal.

There have been unsuccessful legislative proposals to do away with the license. Horseshoe is competing with Isle of Capri, which owns two boats in Lake Charles and wants a casino in the New Orleans suburb of Chalmette; and Pinnacle Entertainment, which proposes a fifth boat for Lake Charles.