Casino operator files for bankruptcy
November 24, 2009 (GARY, Ind.) (WLS) -- There is a push for major changes in the casino gambling landscape in northwest Indiana. The company that owns two casinos in Gary has filed for bankruptcy as Indiana lawmakers consider allowing casinos on land.
The Majestic Star will continue to operate while it restructures.
Both casinos are floating one. The owner of the Majestic Star has been lobbying lawmakers to allow land-based gaming.
The Majestic Star Casino finds itself the farthest from Chicago of the three northwest Indiana casinos. There is a big fear that if Chicago one day decides to get into the casino business, Indiana gambling boats will suffer. It's why Indiana mayors and casino operators are lobbying legislators to change the rules and allow a land-based casino right on Chicago's doorstep.
Indiana is considering doubling down on its casino business. It comes as increased competition collides with an industry unaccustomed to losing money.
"What does our industry get? We don't get low taxes. We don't get tax breaks. We get penalized for creating jobs," said Don Barden, Majestic Star Casino chairman and CEO, in September.
Majestic Star's CEO is lobbying legislators to let him move one of his riverboat licenses in Gary to a site alongside Interstate 80 / 94. Despite a multi-million dollar renovation, gaming revenue for the first four months of this year at Majestic Star is down by more than $7 million.
Majestic Star's parent insists cash flow is strong, but a heavy debt load is forcing the casino company into bankruptcy. It's of concern a few miles away in downtown Gary, where the city is accustomed to big payouts from Majestic Star and the other casinos. Majestic Star has stopped paying into a fund that had provided $6 million a year to pay for everything from police cars to the demolition of abandoned buildings.
"We're very concerned about his unwillingness to pay us," said Kimberly Robinson, Gary City Council.
Gary Mayor Rudy Clay says he is not as worried about collecting the cash as he is making sure all of Gary's casinos stay afloat. And to do that, he says, the state needs to let Majestic Star come ashore.
"The state of Indiana is living in the Rip Van Winkle age of riverboats," Clay said.
Mayor Clay says the era of gambling on floating betting barges is over, especially if Chicago joins the casino crowd.
"The problem is that fewer people are now gambling on the Majestic because of the location. If we get the land-based, more people will gamble, more people will lose money, and the city will get more money," said Clay.
In two weeks, a panel will issue its recommendations on allowing land-based casinos in Indiana. After that, it's up to the Indiana legislature.
As for Majestic Star, its owner says the bankruptcy will not impact operations, rewards programs or employees.
casinos, local, ben bradley
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