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Bidders clamor for Louisiana’s last riverboat license

Posted on December 21st, 2010

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The recent hubbub surrounding Louisiana has been brought about by the state putting their last casino license up for auction. The last license was made available when Pinnacle, returned the license to the state when its plans for a second casino were cancelled. The proposed casino was supposed to be located in Lake Charles and is a casino-resort complex that would cater to the gambling needs of the residents in the area. Pinnacle, still in possession of the State’s 14th casino license, continues its plans with its other casino in Baton Rouge.

With the license up for grabs, and the economy showing signs of recovery, numerous developers have expressed their interest. The highest bid so far was made by Creative Casinos LLC. The company plans to tap into the Lake Charles market offering a bid of $400 million. The owner of Creative Casinos LLC, Daniel R. Lee, is the former chairman of Pinnacle Entertainment Inc. and both are currently embroiled in a legal battle brought about by an alleged breach of contract between both. Pinnacle Entertainment Inc. alleges inter alia that Daniel Lee broke the terms of their contract, specifically a stipulation that prohibits Lee from competing with Pinnacle, by having constructed plans for the Mojito Pointe Casino—the proposed facility for Louisiana’s last license. Lee denies the allegations and faces Pinnacle in a series of court battles.

Other developers that have shown interest in the state’s last license are Penn National Gaming Inc. and St. Gabriel Downs LLC. Penn National Gaming Inc. offers a casino proposal that would be built in phases. The first phase of the construction would cost $145 million. No estimates have been given for the next phase of the project. St. Gabriel Downs LLC, also has a similar proposal with a $167 million price tag for its first phase. They claim that as their proposed casino will be a well known one, Hard Rock Hotel & Casino, it would be in a better position to attract more customers, thus generating more income. All three developers have presented predictions on impacts to the local market, to existing casinos and to residents in the area. The developers have also presented financing statements that would back their proposed projects. The state’s gaming board will have a decision ready by the third quarter of next year. “This is the introduction to your projects. The board will have a lot of interesting reading, and we look forward to having you back again before the board before we make any decisions,” Dane Morgan, chairman of the gaming board, told the applicants.

Penn national gaming has expressed their tenacity on their proposed project by offering an escrowed amount that would serve as assurance that the developer is indeed serious in their proposal. The amount is pegged to be at $75 million, more than half of the proposed amount for the first phase of their proposed project. “We can assure you this project is financed from the very first. We can write a check and we will,” said Peter Carlino, chairman and CEO of the company. The competing bidders have raised the question on whether or not Creative Casinos could finance it’s significantly greater bid, given the dismal economic climate. Lee, however, is confident that it would be able to do so. “We think we can grow the market. We think we can stimulate people’s imaginations. We think we can bring people in from other states.” Lee said.

The different companies all had different locations for their proposed casinos. Penn National Gaming will have their casino in Harvey, one of the suburbs of New Orleans. St. Gabriel Downs will have their proposed Hard Rock Hotel & Casino in Lake Charles, which is the same location for the proposed Mojito Pointe by Creative Casinos. All three developers hope to have the state’s last license awarded to them. All of them believe that the market is perfect for their own proposed locations. If all goes according to plan, one of the three developers would be able to commence construction of their casinos by late 2011.