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UNITE HERE Warns that the Economic Benefits of Issue 6 May Not Materialize Given the Track Record of Lakes Entertainment |
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Today, UNITE HERE, the largest gaming union in the United States, released a report questioning whether the promised tax benefits of Issue 6 would materialize given the troubling track record of Lakes Entertainment (NASDAQ:LACO) and its CEO, Lyle Berman. |
On November 4, Ohio voters will vote on Issue 6, a constitutional amendment that would effectively provide Lakes Entertainment, Inc. and their Ohio partner, MyOhioNow.com, LLC, a legal monopoly over the only gaming site in Ohio. Lakes Entertainment claims it will develop and operate a $600 million casino in Clinton County, OH.
'Granting a monopoly to a company with a track record like Lakes Entertainment is a risky proposition,' said Chris Bohner, UNITE HERE Deputy Director. 'Issue 6 is a gamble on an overextended company that has shaky finances, a poor track record, and a history of accounting issues,' Bohner added.
Key findings of the report include:
• While supporters of Issue 6 cite the gaming experience of Lakes Entertainment and its CEO Lyle Berman, Berman led the Stratosphere casino in Las Vegas into bankruptcy in 1997, and he has not successfully developed a commercial casino in the United States since the bankruptcy.
• From 2001 through 2007, Lakes Entertainment posted net losses in every year except 2006. Lakes Entertainment lost $12 million through the first half of 2008.
• In addition to the $600 million project in Ohio, Lakes Entertainment is seeking to develop and finance three additional casino projects in Mississippi, California, and Oklahoma. Given that Lakes Entertainment only had revenues of $28 million in 2007, it is questionable whether the company could obtain financing for any of these projects.
• Lakes Entertainment has a history of accounting and tax issues, including disputes with the Securities and Exchange Commission and the NASDAQ stock exchange.
Rather than legalize gaming in Ohio by granting a monopoly to a specific company with these problems, the report suggests that taxpayers would be better served by following the lead of other states that have legalized gaming by requiring competitive bids for gaming sites. 'A competitive process ensures that well-capitalized and managed companies are selected for gaming sites, providing real benefits to taxpayers,' added Bohner.
Copies of the report may be obtained by emailing UniteHereGaming@gmail.com.
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