2007 Annual Report - Ameristar Casinos, Inc.

We have limited opportunities to develop new properties.The casino gaming industry has limited new development opportunities. Most jurisdictions in which casinogaming is currently permitted place numerical and/or geographical limitations on the issuance of new gaminglicenses. Although a number of jurisdictions in the United States and foreign countries are considering legalizing orexpanding casino gaming, in some cases new gaming operations may be restricted to specific locations, such as parimutuelracetracks. Moreover, it is not clear whether the tax, land use planning and regulatory structures that may beapplicable to any new gaming opportunity would make the development and operation of a casino financiallyacceptable. We expect that there will be intense competition for any attractive new opportunities that do arise, andmany of the companies competing for such opportunities will have greater resources and name recognition than wedo. Therefore, we cannot assure you that we will be able to successfully expand our business through newdevelopment.Our business may be adversely affected by legislation prohibiting tobacco smoking.Legislation in various forms to ban indoor tobacco smoking has recently been enacted or introduced in manystates and local jurisdictions, including several of the jurisdictions in which we operate. On January 1, 2008, astatewide smoking ban that includes casino floors went into effect in Colorado. We expect this ban will have somenegative impact on business volume at our Black Hawk property, the magnitude of which we cannot yet predict. InJanuary 2008, the City Council of Kansas City, Missouri enacted an ordinance prohibiting smoking in most indoorpublic places within the City. The ordinance, which goes into effect on March 24, 2008, contains an exemption forcasino floors. There will also be a separate proposal on the April 8, 2008 ballot in the City of Kansas City to prohibitsmoking in most indoor public places, including restaurants, which also contains an exemption for casino floors.Legislation continues to be considered in Iowa that would ban smoking. In January 2008, a bill was introduced inthe Indiana legislature to ban smoking in most indoor public places, excluding casinos and bars. If additionalrestrictions on smoking are enacted in jurisdictions in which we operate, particularly if such restrictions are notapplicable to all competitive facilities in that gaming market, our business could be materially adversely affected.The Estate of Craig H. Neilsen owns a majority of our common stock and may have interests that differ fromthose of other holders of our common stock.Craig H. Neilsen, our founder and former Chairman of the Board and Chief Executive Officer, died in November2006. At the time of his death, Mr. Neilsen beneficially owned approximately 56% of our outstanding CommonStock. As a result of his death, these shares passed by operation of law to Mr. Neilsen’s estate (the “Estate”). Theco-executors of the Estate are Ray H. Neilsen, our Co-Chairman of the Board and Senior Vice President, andGordon R. Kanofsky, our Co-Chairman of the Board and Executive Vice President. Craig H. Neilsen’s estate planprovides that 25,000,000 shares of our Common Stock owned by the Estate (or approximately 44% of our sharescurrently outstanding) will ultimately pass to The Craig H. Neilsen Foundation, a private foundation primarilyfocused on funding spinal cord injury research and treatment (the “Foundation”). Messrs. Neilsen and Kanofskyserve as the co-trustees of the Foundation, and they also serve on the Foundation’s five-person board of directors. Asofficers and directors of ACI, executors of the Estate and trustees and directors of the Foundation, Messrs. Neilsenand Kanofsky may be subject to certain conflicts of interest.In light of their control over a majority of our Common Stock, Messrs. Neilsen and Kanofsky jointly have theability to elect the entire Board of Directors over time and, except as otherwise provided by law or our Articles ofIncorporation, to approve or disapprove other matters that may be submitted to a vote of the stockholders. As aresult, actions requiring stockholder approval that may be supported by a majority of the other stockholders,including a merger or sale of our assets or the issuance of a significant number of additional shares of CommonStock to finance acquisitions or other growth opportunities, could be blocked by Messrs. Neilsen and Kanofsky.In addition, the Estate’s ownership affects the liquidity in the market for our Common Stock and sales by theEstate could affect the price of our Common Stock. Messrs. Neilsen and Kanofsky, as co-executors of the Estate,disclosed in a Schedule 13D amendment filed with the Securities and Exchange Commission in October 2007 that,on behalf of the Estate, they will continue to review the Estate’s liquidity needs and other factors impacting theEstate’s investment in our Common Stock and may evaluate strategic alternatives to the Estate’s holdings in theCompany, including possible sales of some or all of our Common Stock held by the Estate or one or moretransactions that could influence or change control of the Company. Some of the factors influencing the Estate’sinvestment decisions with respect to our Common Stock may not be relevant to other holders of our Common Stock.33