Harrah’s is poised to win Illinois license

Friday, March 12, 2004 | 11:02 a.m.

SUN STAFF AND WIRE REPORTS

CHICAGO -- An analyst says Harrah's Entertainment Inc. is likely to win a Chicago-area casino license after making the highest cash offer of $520 million at an auction Thursday.

Harrah's, which had offered $375 million before the auction, was the highest bidder over Isle of Capri Casinos Inc. and closely held Midwest Gaming and Entertainment LLC after an 18-hour auction, Illinois Gaming Board spokesman Gene O'Shea said.

The board is to meet Monday and had been scheduled to make a decision that day.

But the Chicago Tribune reported today that the decision could be delayed past Monday.

Each of the bids contains elements besides the dollar amount offered for the license, such as separate monetary sweeteners, projected gambling tax revenue and promises to share proceeds with poor communities, the Tribune said.

Because of the remaining complexities, the Gaming Board might need more time than anticipated to sort through the bids and announce a winner, Chairman Elzie Higginbottom said, the Tribune reported.

The dormant license is now held by Emerald Casino Inc., and its sale must be approved by a U.S. bankruptcy judge. Emerald's creditors, which are owed $120 million, and the state of Illinois, which seeks to close a budget deficit, would share the proceeds from the license sale, court papers say.

"It clearly looks like Harrah's will be selected as the winner," Deutsche Bank analyst Marc Falcone said. "It was the highest bid. It has very strong merits on its location and is generally well-recognized as a strong operating franchise."

Harrah's wants to build a 50,000-square-foot casino in Waukegan, a town north of Chicago along Lake Michigan. The development also would include restaurants and a hotel of 250 to 500 rooms. The company already operates 25 U.S. casinos, including casinos in Joliet, Ill., and East Chicago, Ind.

Isle of Capri seeks to build a casino in Rosemont, a Chicago suburb adjacent to O'Hare International Airport. Isle of Capri offered $518 million in cash, while Midwest, which wanted the casino in Des Plaines, also near O'Hare, bid $476 million, O'Shea said.

Falcone said he was surprised at how much the bidding escalated.

"Harrah's obviously has done the analysis and believes it can generate a respectable return for shareholders at that price," he said.

During the auction, both Biloxi, Miss.-based Isle of Capri and Midwest said their casinos would generate more taxes for Illinois.