2002 - Harness Tracks of America, Inc.

HARNESS TRACKS OF AMERICA
Executive Newsletter
A daily fax and e-mail report on racing and gaming developments in North America and beyond
Stanley F. Bergstein, Editor
TRACK CASINOS WIN IN IOWA
The Iowa Supreme Court yesterday announced
that it will not review its June ruling that the state’s
racetrack casinos are unjustly taxed in relation to
the state’s riverboats. That ruling found that the
Iowa legislature had illegally provided for higher
taxes at the track casinos than at the riverboats,
which have been paying 20% of gross revenues to
the state. The track casinos have been paying
32%, with a 2% increase a year to top out at 36%
in 2004. The June high court 4-3 decision turned
back the state attorney general’s argument that
the differential fell within the authority of the legislature,
saying such taxation was arbitrary and
discriminatory. The state petitioned for another
hearing, but the court now has rejected that request
and remanded the matter to the trial court,
with a Polk county judge to decide how much the
state owes the tracks. Track operators think the
number could be as much as $100 million, with an
additional $10 million in interest. HTA member
Prairie Meadows Racetrack and Casino alone
thinks it is entitled to $54 million, but called that
figure negotiable, given the state’s $217 million
budget deficit. The state treasurer has proposed
offering tax credits over time rather than a cash
refund. Iowa’s governor, Tom Vilsack, up for reelection,
thinks the legislature should consider
raising taxes equally among all casinos in order to
restore $39 million in annual gaming revenue lost
through the Supreme Court decision. State officials
have estimated that a uniform 24.5% tax rate
would keep revenue steady, according to the Des
Moines Register, but the legislature is likely to
consider establishing a new statewide casino tax
during its next session, which convenes in January.
In another Iowa development, the Register
reports that a telephone poll of 3,635 people
found that 38.3% -- or almost 4 out of 10 --
Iowans said they had gambled in the last 12
months.
August 8, 2002
PENN NATIONAL EXPANDS
Penn National Gaming has expanded again, announcing
a $780 million buyout of Hollywood Casino
corporation, which owns gaming properties in
Aurora, Illinois; Shreveport, Louisiana; and Tunica,
Mississippi. The first includes the Chicago
market, the second serves Dallas, Texas, and the
third draws from the Memphis market. Penn National
CEO Peter Carlino calls the acquisition,
which involves $347.5 million in stock (at a 20%
premium over closing price yesterday) and assumption
of $569 million in debt and $136 million
in cash and cash equivalents “a significant growth
and expansion opportunity for Penn National that
is attractive both strategically and financially.”
Carlino says he expects the Aurora operation will
contribute 30% of Penn National sales, compared
to 23% of its business currently supplied by its
Charles Town Races operation in West Virginia.
That track was involved in a settlement announced
yesterday in which Penn National and the West
Virginia Department of Environmental Protection
agreed the track will discontinue its present sewage
treatment system and connect with the city of
Ransom’s system, build a manure storage area and
horse washing stalls, and pave and curb a stable
area within the next 90 days.
WOODBINE DEVELOPMENTS
The Woodbine fire of last Sunday morning continues
to generate major news in Toronto. The
Ontario Harness Horse Association has voted to
donate $10,000 to the Barn 7 Recovery Fund, and
Woodbine says its is reevaluating its safety procedures,
including the issue of sprinklers, which
the burned barns did not have, as “good, prudent
business practice.” The cause of the fire still has
not been determined, and Woodbine and a sprinkler
system supplier differed over the issue of
whether sprinklers could have prevented
the devastation.