Jackpot's Carnival merger collapses

A bid by Jackpot Enterprises of Las Vegas to acquire Miami-based CRC Holdings Inc. was derailed by a Canadian casino's reluctance to go along with the deal, officials said today.

CRC, which operates as Carnival Resorts & Casinos, manages Casino Rama, an Indian casino near Toronto. A statement issued today by Jackpot said Ontario Casino Corp., owner of Casino Rama, refused to consent to the deal because it believed a change in control of CRC was not in Casino Rama's economic interest.

Jackpot attempted to acquire CRC for $56 million in a bid to diversify its slot route business.

The termination of the deal with CRC won't affect Jackpot's plans to acquire another company, Atlantic City-based Players International Inc., for $424 million. That deal was announced in February at around the same time Jackpot was finalizing the CRC transaction.

Players generated about $61.5 million in cash flow in 1998 and owns five riverboat casinos in the Midwest and South, and a racetrack in Kentucky.

Jackpot operates 4,300 gaming machines on a slot route, and owns the Owl Club of Battle Mountain and the Pony Express in Jackpot, two small casinos the company has been trying to sell for years.

Privately held CRC owns part a riverboat near Baton Rouge, La., and has agreements to develop a casino at Lake Las Vegas and operate an Indian casino in Washington state in addition to the management agreement with the Chippewas of Rama First Nations tribe on the Canadian property.

"I was very surprised and extremely disappointed with the arbitrary nature of the Ontario Casino Corp. decision because I believe that Jackpot would have provided significant benefits for Casino Rama," said Don Kornstein, chief executive officer of Jackpot.

"The primary attraction of the deal was the strong cash flows of the Rama casino operation and the Baton Rouge operation."

Kornstein said the companies' mutual agreement to terminate the deal should enable Jackpot to move faster and easier through the approval process on the Players deal. There was no break-up fee associated with the CRC acquisition agreement.

"It seemed like a sound transaction," said Ken Pavia, a Miami investor who controls 5.4 percent of Jackpot through his position as general partner of Bolero Investment Group L.P.

"It's regrettable that Rama didn't want to learn more about Jackpot.

"The good news is that there are many opportunities in gaming today," Pavia said. "There are a lot of roll-up companies that are too small for sale to the big companies, but just right for someone like Jackpot."

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