Park Place says to develop Indian casino in New York
By Sarah Tippit
LOS ANGELES (Reuters) - Casino giant Park Place Entertainment Corp. signed a deal with a New York Indian tribe over the weekend to develop a casino in the Catskill Mountains, the tribe and several casino analysts said Tuesday.
The analysts said Park Place had signed a pact agreeing to grant a $3 million loan to the St. Regis Mohawk tribe for a resort in Monticello, N.Y., in exchange for the exclusive right to build, develop and manage its New York casinos.
The deal was said to have pushed aside one the tribe had been negotiating with privately owned Alpha Entertainment for a $500 million casino, said Robin Farley, an analyst with Deutsche Bank Securities. Farley said Park Place was smart to make the move and that it would serve as a hedge against the expansion of Indian gaming on the U.S. East Coast.
While a Park Place spokesman confirmed the company was negotiating with the St. Regis Mohawk tribe, he declined to comment on the nature or status of the deal Tuesday.
A spokesman for the tribe, reached at its headquarters in Hogansburg, N.Y., confirmed that a deal had been signed with Park Place, but was unable to provide details.
Park Place stock was up 1, or about 8 percent, at 13-1/16 in afternoon trading on the New York Stock Exchange.
The timing of any casino opening is uncertain, given the number of unknown variables, including legislative approval, and the design and financing of the facility, Bear Stearns analyst Jason Ader said in a report issued Tuesday.
Farley said she expected the Catskills casino to be open before the end of the year.
Ader said he thought the property could discourage further development in Atlantic City by competitors.
Farley said she thought that a Catskills Indian casino would have more of an impact on Connecticut-based tribal casinos, which are 160 miles away from the proposed site, than on Atlantic City resorts, which are 240 miles away.
Both analysts saw the move as a positive for Park Place.
``This is another example of Park Place's growth strategy of executing upon a low-risk, high-return project with substantial upside to earnings,'' Ader said.
``Given the strength of the North American gaming market, we believe that the proposed casino at the Monticello raceway in the Catskills could generate revenues of about $1 billion to $1.5 billion and earnings before interest, taxes, depreciation and amortization, a key casino indicator, of between $300 million and $450 million.''
Of that, Park Place could receive from $90 million to $120 million in management and development fees with the remainder going to the tribe, Ader said.
Farley said she saw the project, if completed, adding between 3 cents and 4 cents per share to Park Place's annual earnings.
Park Place's deal with the St. Regis tribe follows pacts signed by several other major U.S. casino operators with various tribes to develop and operate their casinos.
In January Harrah's Entertainment Inc. signed a deal with California's Rincon San Luiseno Band of Mission Indians to develop and operate a casino outside San Diego. |
