When Will Greektown Open?

3 May 2000

By David Waddell

The delays have been endless. Rumors keep surfacing, purported players keep changing, and the scenarios put forth get more and more complicated. According to the widely reported word on the street, Michigan gaming regulators have spotted "apparent" deficiencies with respect to Ted and Maria Gatzaros and Dimitrios and Viola Papas, the current 40 percent owners of the Greektown Casino, L.L.C. Under the State gaming laws, these investors are given a major financial incentive to sell their interests (at fair market value) rather than fight the battle over licensing. The Gaming Control and Revenue Act provides that if the investors do not succeed, they can only receive the amount they have actually invested in the project (an amount far less).

It has been widely suggested that somewhere between $160 million and $300 million is being offered by various parties for the 40 percent interest held by this group. Harrah's, MGM Grand and Millennium Management, L.L.C. are being touted as the leading candidates. However, under the terms of various agreements, contractually, the Sault Ste. Marie Chippewa Tribe (operators of the Kewadin casinos) a 50 percent owner of Greektown Casino, L.L.C. has the right to match any other offers.

The Greektown Casino is, for all practical purposes, ready to open. The construction of the facility is complete, equipment has been delivered and the only remaining steps are last minute training and temporary licensing of the employees. In a rather unusual move, on April 18, 2000, the Michigan Gaming Control Board even pre-approved many of the key executives and employees of Millennium Management for temporary occupational licenses.

The big question of "when" the casino will open depends, for the most part, on who acquires the interests and whether they have to go through the arduous investigation and licensing process. Under the quickest scenario, if the Sault Ste. Marie Chippewa Tribe exercises its right of first refusal, the casino could easily open in three to four months. Under one of the other scenarios, Millennium Management, L.L.C. has been rumored to be seeking many "institutional investors" to finance the acquisition who may qualify for "waivers" from the licensing process under Michigan law. This is somewhat unchartered legal waters, and it is unknown whether the Gaming Control Board will be willing to grant such waivers. If it is, then the casino could still open very rapidly (realistically in four months).

If a new party, such as Harrah's, comes into the mix, they would need to go through the investigatory process, which could delay things for many months, possibly even into next year. If that happens, the City and State stand to be hurt the most with the lost stream of new revenue that the third Detroit casino is expected to bring.

The City of Detroit is a perfect example. As a result of state, federal government and City of Detroit restructuring certain funding sources, the Mayor of Detroit and his staff have projected a $1.8 billion deficient over the next 11 years. Mayor Archer has viewed the casinos as providing an alternative revenue stream to keep the budget balanced, both through gaming taxes, and as a result of income tax revenue on the wages for all the new workers the casino will bring into the City. However, the Mayor