Argosy Casino for sale - Tuesday 12th of April 2005

Penn National Gaming, parent company of Casino Rouge, announced Tuesday it would sell off Argosy Casino Baton Rouge in order to proceed with its $2.2 billion merger with Argosy Gaming Co.Officials with Penn National said during a conference call with analysts and reporters they were concerned the merger could be delayed by the Federal Trade Commission and state regulators who took issue with one company owning both of the gambling boats in Baton Rouge.Penn National expects to close its purchase of Argosy in the third quarter, a deal which will make it the third-largest casino company in the United States."We, not surprisingly, have had more questions about the city of Baton Rouge, the two boats and so forth, from the FTC," said Peter Carlino, chief executive officer for Penn National. "It's been our judgment that we've got to keep our eye on the big picture. The big picture is completing the Argosy merger. That's goal one, two, three, four, five and 10 for this company. … We just think it's in the best interest of this transaction to sell that other property."Penn National will begin immediately searching for a buyer for Argosy in Baton Rouge, but Carlino said he doesn't expect to close a deal until after the corporate Penn National-Argosy merger is completed.Casino analysts said that Argosy Casino Baton Rouge was put up for sale in order to smooth the way for Penn National to enter the Midwest riverboat casino market.Wyomissing, Pa.-based Penn National has 11 casinos and horse-racing tracks, mostly on the East Coast and in Mississippi.Argosy, based in Alton, Ill., has five other casinos, in areas such as metro St. Louis and Kansas City, Mo."I don't think Penn National wanted to sell the Argosy casino here," said Wade Duty, executive director of the Casino Association of Louisiana, a trade association for riverboat casinos. "Their preference was to keep both. But the merger is the much bigger picture."Duty said he expects Baton Rouge will remain a two-casino city."The market is definitely able to support two boats," he said. "Business is steadily going up."Both Argosy and Casino Rouge saw their annual revenue go up during 2004, despite increased competition, such as the slot machines at Evangeline Downs. And since the American Bowling Congress tournament set up at the Baton Rouge River Center in February, the number of people boarding Argosy has gone up by 50 percent.But there's another reason why Duty thinks Baton Rouge will continue to be home for two riverboats: There's nowhere else in Louisiana for a gambling boat to go.The Shreveport casino market is saturated and facing competition from the slot machines at Louisiana Downs. The state's 15th riverboat, the glitzy L'Auberge Du Lac resort, is set to open in Lake Charles at the end of May. New Orleans has a resurgent Harrah's casino and is set to add slot machines to the Fair Grounds racetrack."The Isle of Capri showed that it's not easy to move a boat," Duty said. The Isle wanted to move one of its two Lake Charles riverboats to the foot of the Huey P. Long Bridge, but that plan was rebuffed earlier this year by the Jefferson Parish Council.Duty said he doesn't know who will buy the Argosy."There are not a long line of companies wishing to pay one of the highest gaming taxes in the country," he said. "You saw that when the state went out to bid for the 15th casino license."The companies who were runners-up for the license that Pinnacle Entertainment was awarded in October 2001 were Horseshoe Entertainment and a joint proposal from Louisiana Horizons LLC and Isle of Capri.Horseshoe was bought out by Harrah's last year. Harrah's has two riverboats, the land-based New Orleans casino and slot machines at Louisiana Downs, so Duty said the company would have obstacles to acquiring more Louisiana casinos.Along with trying to find a new home for one of its Lake Charles riverboats, the Isle of Capri has several major projects in the works. The company is adding a hotel tower and replacing the gambling barge at its flagship Biloxi, Miss., resort.Les McMackin III, senior vice president of marketing for Isle of Capri, said buying a Baton Rouge riverboat doesn't fit in with the company's growth strategy.Davis Rhorer, Downtown Development District executive director, said he's confident a good company will buy the Argosy casino. Rhorer noted the deal would include the 300-room Sheraton Baton Rouge Convention Center Hotel and Atrium."There are a lot of positives with this casino site," he said. "With all the companies that are moving downtown and the Shaw Center opening, it's part of an entertainment district."

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