Vegas companies lose out in Detroit casino bidding

Friday, June 9, 2000 | 10:56 a.m.

SUN STAFF AND WIRE REPORTS

DETROIT -- One day after Mayor Dennis Archer threatened to find new bidders for Detroit's third casino, owners of the troubled Greektown Casino said they reached an agreement allowing it to open this summer.

Under the deal announced Thursday, the Sault Ste. Marie Tribe of Chippewa Indians will buy the 40-percent stake held by investors Ted and Maria Gatzaros and Jim and Viola Papas, raising the tribe's share of ownership from 50 percent to 90 percent. Local investors own the balance.

Terms of the transaction were submitted to the Michigan Gaming Control Board, casino spokesman Roger Martin said.

Neither side provided the board with any details about how the Sault tribe planned to finance its buyout of Gatzaros, Papas and their wives, director Nelson Westrin said. More documentation was expected next week, he said.

"We know the price but not who the lender is," Westrin told the Detroit Free Press on Thursday. "They haven't reached a loan agreement yet."

The gaming board's deadline for receiving a final sale agreement is June 21. Its financial advisers will scrutinize the proposed deal to ensure the Sault tribe can carry debts related to the temporary and permanent Greektown casinos, Westrin told The Detroit News.

If approved, Greektown Casino will begin hiring the first of more than 2,000 employees, Martin said. The casino is to feature 2,500 slot machines and 96 table games in a new, 75,000-square-foot building in the Greektown entertainment district.

On Tuesday, four pension funds withdrew as potential investors in the Greektown Casino. Archer said the next day that it appeared the casino would not open until sometime between September and January. If it isn't licensed by Dec. 31, Greektown automatically loses its development agreement with the city.

Archer then could start looking for a new developer of the third temporary casino, although he told the Free Press that the city might proceed with only two permanent casinos.

"If it indeed looks like it's going to be protracted, then the question becomes whether or not the entity itself is capable of moving forward," Archer told the Free Press. "At some point, we'll have to determine whether that third casino needs to be rebid."

The pension funds, which were never identified, were the financial backers of Las Vegas-based Millennium Management Group. Millennium is controlled by William Paulos, former president of Primadonna Resorts, William Wortman, owner of two Las Vegas-area casinos, and Guy Hillyer, a former member of the Nevada Gaming Control Board.

Two other major Las Vegas gaming companies, Harrah's Entertainment Inc. and MGM Grand Inc., were also interested in purchasing the 40 percent stake. Interest was particularly high at Harrah's, which does not own a Detroit casino, and executives at the company said they continued to be interested in a possible acquisition, even after Millennium was announced as the winning bidder in early May.

Archer heard about Thursday's agreement only after his office received calls from the media, spokesman Greg Bowens said.

"The mayor has not seen anything on paper about this agreement," Bowens said. "He's going to reserve comment on it until he does have a chance to review it."

The statement from casino spokesman Martin said that under the Gatzaroses' and Papases' agreement with the Sault tribe, the couples retained the right to repurchase their shares in the future.

The couples, however, have been trying to sell their shares since January, after the gaming board cited problems that surfaced in their background checks.

Archer told The News that those same problems also could force the Gatzaroses' and Papases' to sell their stake in the Trappers Alley complex that houses the temporary Greektown casino.

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