Buyers of Continental casino receive approval to take over slot route

Thursday, Oct. 5, 2000 | 10:44 a.m.

Jackpot's profit

Jackpot Enterprises Inc. of Las Vegas, which is being renamed J Net Enterprises Inc. pending shareholder approval, announced a profit for its fiscal year ended June 30 of $6.6 million or 75 cents per share vs. $4.6 million or 53 cents in the prior year.

The results include one-time gains of $11.1 million from a terminated merger fee and a $2.4 million gain from the sale of short-term investments. Also included are $2.8 million in severance costs for former Chief Executive Don Kornstein.

Jackpot is transforming itself from a gaming company to a technology company and a manager of technology investment funds. It's selling its slot route to E-T-T Inc.

CARSON CITY -- After three years of talks and negotiation, a $45 million deal is one step closer for the Herbst family of Southern Nevada to acquire Jackpot Enterprises' Cardivan Co., one of the larger slot machine route operators in Nevada.

E-T-T Inc., owned by the Herbst family, will have 6,000 slot machines and be the "largest chain store" of slot machine route operations, said Ed Herbst, president of the corporation.

The state Gaming Control Board Wednesday gave preliminary approval to the sale. The state Gaming Commission meets Oct. 26 to take final action.

The deal is being financed through bank loans and high yield bonds. It will double the size of E-T-T's current slot route operation.

E-T-T presently owns two casinos in Pahrump and is nearing completion of the rehabilitation of the former Continental Casino in Las Vegas, which it recently acquired. Herbst said he hoped the rooms could be opened by Thanksgiving and the club is now taking applications for employment.

Board Chairman Steve DuCharme issued a cautioning note to Herbst.

"What we have seen is compliance issues. It is keeping us constantly on the phone with you guys," DuCharme said.

With the expansion, DuCharme said the company needs a "full-time compliance officer" to make sure state rules and regulations are followed.

Board member Bobby Siller echoed DuCharme.

"You're a big dog now," he told Herbst.

Siller said he had "some uncertainties" about the company's compliance with regulations and whether it has an effective management team.

"You have got to get a hold on this," Siller said. "I'm convinced you will do well. I hope you can avoid pitfalls."

Neither DuCharme nor Siller expanded on what compliance problems the company might have.

Timothy Herbst is vice president and Troy Herbst is secretary of E-T-T Inc.