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LAS VEGAS -- Las Vegas-based Boyd Gaming Corp. jumped into the middle of the Florida gambling debate, agreeing Wednesday to buy a privately owned Fort Lauderdale jai alai fronton and its adjacent 50 acres for $152.5 million.
The jai alai fronton, which offers poker and pari-mutuel wagering on dog racing and horse racing, is one of four locations Broward County voters approved to operate up to 1,500 slot machines each in a ballot referendum more than a year ago.
Gov. Jeb Bush signed the legislation into law in January after a long deliberation. Florida authorities are expected to approve final regulations as soon as July, which may allow the locations to begin offering temporary slot machine casinos.
Boyd Gaming spokesman Rob Stillwell said Boyd isn't planning to open a temporary casino but would expand and rebuild the existing location.
Dania Jai Alai is the closest gambling facility to the Fort Lauderdale International Airport and is adjacent to the Broward County Convention Center. More than 6 million people live within a 100-mile radius of metropolitan Fort Lauderdale. South Florida's most populated city, Miami, is less than 30 miles away.
"We've been looking at Florida ever since the legislation passed," Boyd Gaming President Keith Smith said. "We think it's a great market and we're always looking for an opportunity to expand our business into new jurisdictions."
The transaction is subject to closing conditions and regulatory approvals. Nevertheless, Smith said Boyd Gaming has begun master-planning a design for the location that would expand the gaming floor, increase the size of the poker room, and add restaurants and entertainment lounges. No budget was announced.
Smith said the company would begin construction in early 2007. The company hopes to open the slot machine casino 2008. The site would continue to offer wagering on live jai alai and off-track betting both during and after construction.
The Florida casino, when completed, will be allowed to operate just 16 hours a day.
Boyd Gaming is trying to get a gaming license for a casino complex outside of Philadelphia that could eventually house up to 5,000 slot machines.
Like Pennsylvania, Florida is expected to enact a tax rate of more than 50 percent on gross gaming revenues.
Smith said he didn't see the high tax rate as a deterrent.
"With a limited number of licenses and the huge population density of south Florida, it's much easier to accept the higher tax rate," Smith said. "(The population is) a huge dynamic that we believe adds to the attractiveness of our location."
Gaming analysts saw the move into Florida as a positive for Boyd Gaming.
Florida American Indian casinos, now operating more limited bingo-style Class II games, are reporting gaming win of up to $500 a day per machine, Wall Street analysts say.
"In our view, this is a strong acquisition for Boyd Gaming, as the Florida market has the potential to be a highly lucrative gaming market due to its attractive demographics and wealth characteristics," Goldman Sachs gaming analyst Steven Kent said.
Morgan Joseph gaming analyst Adam Steinberg said 1,500 slot machines could generate $300 a day in revenue per machine and could contribute up to $40 million in annual cash flow to Boyd Gaming.
He predicted Boyd Gaming would spend between $100 million and $150 million to expand the Florida site.
Boyd Gaming shares rose on the news, closing at $45 on the New York Stock Exchange, up 74 cents or 1.67 percent.
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