Harrah's Included in Louisiana Suitability Investigation
Updated: Wednesday, September 18, 2002 2:03 PM
by Hector San Miguel
Posted: Wednesday, September 18, 2002 12:49 PM
The Louisiana Gaming Control Board has ordered a suitability investigation into Harrah's Entertainment in regard to its announced purchase of Louisiana Downs.
The board voted Sept. 17 at its monthly meeting to amend a previous order that called for the state police to conduct an investigation of Downs Entertainment Group, which has been working to buy the track in partnership with the casino company. Harrah's in August asked to be included in the pre-licensing check.
Harrah's has signed a letter of intent calling for itself and Downs Entertainment Group, which consists of Shreveport and Bossier City, La., investors, to form a new company that would own Louisiana Downs and the Harrah's Shreveport Hotel & Casino complex. Under the partnership, Harrah's would initially own a 95% interest in the new company, and DEG would own 5%. Harrah's would manage both the racetrack and the hotel-casino if the sale is approved.
"The matter before the board is to amend the original pre-suitability investigation to include, in addition to the Downs group,Harrah's Entertainment," gaming board chairman Hillary Crain said.
The proposed sale calls for the payment of $73.2 million for the track by Harrah's if it receives the necessary approvals from the Louisiana Racing Commission and the gaming control board. The track's primary owner is Dr. John York II of Youngstown, Ohio.
Harrah's officials said Sept. 17 the 5% ownership of the track and riverboat casino by Downs Entertainment could increase. "After a repayment of a loan involved in the transaction, and other conditions being met, Downs has an opportunity to increase its interest by 2.5%," an attorney for Harrah's told the board.
Harrah's proposes to spent another $87 million on the track to renovate it inside and out. It has been estimated by track officials that installing the slot-machine parlor could cost as much as $40 million.
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