Company: Suit Threatens Ownership of Track

By Hector San Miguel

Boyd Gaming says it would have to Delta Downs in Vinton, La., to a "third party" if it's unable to defeat a lawsuit opposing its slot-machine parlor. That's according to recent filings by the Las Vegas-based company with the U.S. Securities and Exchange Commission.

Boyd had hoped to operate 1,700 slot machines in December at the track, but a lawsuit filed by the Isle of Capri put the project on hold. A 19th Judicial District Judge in Baton Rouge, La., issued a preliminary injunction Nov. 20 that prevented a gaming license issued to Boyd Gaming from going into effect. The order is in effect pending a trial on the lawsuit.

Boyd appeared before the state Gaming Control Board on the same day to work out a configuration plan for its proposed 15,000-square-foot slots parlor.
The injunction centered on whether former Delta Downs owner Shawn Scott had to undergo a suitability check before the track's slots operation can begin.

The Isle of Capri petition raised an issue over whether Scott still had an economic interest in the track since part of the sales agreement requires Boyd to pay him $27 million on top of the $125-million purchase price if certain criteria are met.

State District Judge Duke Welch ruled Scott must undergo financial and criminal background checks because he stands to gain from the project.

In SEC documents, Boyd officials wrote, "Moreover, if the claim seeking to permanently enjoin the legal effect of our license to operate slot machines at Delta Downs is ultimately successful, we would have to look at strategic alternatives for the property, including the sale of Delta Downs to a third party."

The company said it "can provide no assurances that the injunction will be overturned, or if the action proceeds to trial, that we will ultimately be successful in defending against the action at trial. In the event the claim seeking to permanently enjoin the legal effect of our license to operate slot machines at Delta Downs is ultimately successful, we would not be able to commence the operation of slot machines at Delta Downs."

The company has spent $35 million to expand and renovate the racetrack and equip the slots casino. The Boyd project features a 350-seat buffet, a 200-seat fine-dining restaurant, a sports bar, and smaller food outlets.

Boyd filed an appeal Nov. 21 with the state Supreme Court to overturn the injunction. The high court denied the supervisory writ on procedural grounds.

The high court stated the injunction "was an appealable final judgment" and sent the matter back to state district court, according to Boyd's SEC filings.

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