Louisiana regulators approve buyout of Players by Harrah's

BATON ROUGE, La. - The proposed $425 million buyout by Harrah's Entertainment Inc. of Players International Inc., which is embroiled in an extortion scandal in Louisiana, was approved Tuesday by the state's gambling regulators.

The action by the Louisiana Gaming Control Board leaves approval by Illinois casino regulators as the only major hurdle before Harrah's can absorb Players and its two riverboat casinos in Lake Charles.

Harrah's officials are pushing for the Illinois Gaming Board to approve the deal at its Feb. 22 meeting, but the board has not said whether it will be on the agenda. The regulators are concerned about a lawsuit that threatens to invalidate recent changes to state gambling law, including a provision making it legal for companies to own more than one casino.

Harrah's already owns a casino south of Chicago, and would acquire the Metropolis riverboat in southern Illinois as part of the Players purchase, becoming the state's first dual operator.

Federal prosecutors claim that Players executives funneled money to former Louisiana Gov. Edwin Edwards and his son, Stephen, through consultant Ricky Shetler, to get a license and protection during Edwards' last term, 1992-1996. The Edwardses have pleaded innocent of federal charges. The trial in the case began last month and is expected to continue for several more weeks.

Neither Players nor its current executives were indicted in the Edwards case, but Louisiana regulators were questioning whether the company should have its two licenses for the Lake Charles operation revoked.

Players agreed late last year to get out of the gambling business in Louisiana and pay the state a $10.2 million penalty.

On Tuesday, Players agreed to pay another $600,000 penalty to settle the claims that the state may have against its former executives, including former Players president Howard A. Goldberg. Goldberg is contributing $300,000 to that settlement from his $2.25 million termination agreement with the company.

However, Goldberg still stands to receive $1.95 million from leaving the company, plus an additional $2.24 million for stock options he has if the Harrah's deal is completed.

Special State Assistant Attorney General Raymond Lamonica said the additional penalty was about the best the state could do. Pursuing a regulatory claim, at best, would result in an unsuitability finding against Goldberg and a $100,000 fine, he said.

Gambling board chairman Hillary Crain defended the panel against previous criticism it received for its handling of the Players' case, saying the penalties were much more than the law provided for through fines.

Crain also said Louisiana had broken a national pattern of allowing casino companies to fire executives whose activities are questioned, while permitting the companies to keep their licenses.

"We have said you cannot just get rid of certain people and get a clean bill of health," Crain said.

Crain also said it would not have been responsible on the board's part to have engaged Players in a long licensing fight in court while its properties in Lake Charles continued to go down, perhaps with the loss of 1,600 jobs. Over the past six months, the two boats have experienced sharp declines in revenue. Economic development officials in Lake Charles have favored the sale to Harrah's.

"I would have preferred to have waited until the end (of the Edwards trial) and see what these people (former Players executives) said under oath," Crain said. "But if we did that, we could have lost a viable company taking over an enterprise that is no longer viable for Lake Charles."

Harrah's officials say they plan to invest about $150 million in the property, including a 300-room hotel.

The board voted 4-2 to approve the sale with members Sherian Cadoria and Robert Fleming voting against it.

In addition to the Lake Charles casinos, Players owns a riverboat casino in Metropolis, Ill., and is a partner with Harrah's in a two-boat casino complex in Maryland Heights, Mo.

In Louisiana, Harrah's has a dockside casino in Shreveport and owns 43 percent of the land casino in New Orleans that carries its name.

Missouri casino regulators approved the deal in December.

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