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Rod Smith

MTR Gaming Buys Binion's

19 February 2004

LAS VEGAS -- In the end, Binion's Horseshoe in downtown Las Vegas is being sold not to Harrah's Entertainment, but to Chester, W.Va.-based MTR Gaming Group, which owns the Speedway Casino at the Ramada Inn in North Las Vegas.

MTR and Harrah's submitted license applications to the Nevada Gaming Control Board on Wednesday, with Harrah's filing to be "a key employee" and operator of the Horseshoe, board Chairman Dennis Neilander said.

"MTR is actually going to purchase the real property assets," Neilander said. "Harrah's will be the operator with MTR acting as a landlord."

Neither company indicated Wednesday how much MTR is paying for the downtown property or how many of Binion's approximately 900 former employees would be rehired.

MTR, if the license is approved, would own the Horseshoe through a subsidiary, Speakeasy Gaming of Fremont doing business as Binion's Horseshoe.

Neilander said the license approvals are being fast-tracked with back-to-back special meetings of his agency and the Nevada Gaming Commission being set for 3 p.m., and 4 p.m., respectively, March 3.

He said it is not unusual to fast-track such applications when the buyer and operator already are licensed and when there are issues involved such as getting employees back to work.

Harrah's spokesman David Strow said his company hopes to close on the transaction during the first week in March.

"Pending regulatory approvals, we hope to reopen no later than April 1," he added.

Culinary Local 226 Secretary-Treasurer D. Taylor said Harrah's indicated it hopes to reopen the hotel-casino in mid- to late March, but the company has not said how many workers will be rehired.

"Our bargaining unit should be largely rehired because (the Horseshoe was) running a pretty lean operation when they shut down," he said.

Strow declined to discuss the transaction further and MTR President Ted Arneault could not be reached for comment.

Still, University of Nevada, Las Vegas professor and casino industry expert Bill Thompson said the partnership with MTR will be good for Las Vegas.

"(It's) Mountaineer track (in West Virginia) makes a lot of money and that's the No. 1 consideration for any owner. They'll be able to refurbish it, get rid of the asbestos and operate it successfully with Harrah's," he said.

"It can be viable again, which is in the real interest of Las Vegas -- not just having a storefront on Fremont Street with closed windows," Thompson said.

Neilander said there is a great deal of paperwork involved in a license application investigation, but he is optimistic the tight time line can be met.

MTR owns the Mountaineer Race Track and Gaming Resort in Chester, W.Va., as well as the Speedway Casino at the Ramada Inn.

The West Virginia property includes a year-round thoroughbred racetrack, 3,200 slot machines and 359 hotel rooms. The North Las Vegas property includes a 131-room hotel and a casino with 400 slot machines and 10 table games. Altogether, MTR has 1,860 employees.

The company is building a new horse track near Erie, Pa., and has signed a merger agreement with Scioto Downs near Columbus, Ohio.

MTR Gaming Group closed its Speakeasy Gaming unit in Reno, including its casino and restaurant, in 2001.

The Horseshoe has been closed since Jan. 9 when deputy U.S. marshals, accompanied by Gaming Control Board agents and armed with two court orders, seized cash from the casino and forced the shutdown of the 52-year-old landmark's casino and hotel.

On Jan. 21, a definitive agreement was reached for Harrah's to buy the Horseshoe in a $50 million deal mostly in the form of assumed Horseshoe liabilities.

Harrah's was primarily interested in buying the right to use the Horseshoe brand name in Nevada and the World Series of Poker, which is slated to start April 22, rather than the downtown hotel-casino.

Harrah's President Gary Loveman previously said the poker tournament would operate at the Horseshoe this year, but company spokesmen have been noncommittal about the venue for the poker series in the future.

Sources have said Harrah's likely will move the tournament to a new property, as soon as it can develop a much-rumored, Horseshoe-branded megaresort on the Strip.

Since the agreement with Harrah's was completed, issues have arisen over the failure of the Horseshoe to cover nonunion employee medical claims under the company's self-insurance plan, asbestos contamination in the property and covering the liabilities run up by former Horseshoe owner Becky Binion Behnen.

Harrah's shares closed Wednesday at $51.96, up 12 cents or 0.23 percent. MTR shares closed at $9.78, down 4 cents or 0.41 percent.