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Analyst: Isle of Capri is favorite for casino

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Wednesday, Oct. 11, 2006

With the clock winding down toward a decision on who will win Pittsburgh's lone slots license, Isle of Capri Casinos has made a comeback.

Isle of Capri is the frontrunner for the license, according to Robert Shore, an analyst for Philadelphia-based Susquehanna Financial Group. Shore's report, released Monday, said IOC has a 55 percent chance to win.

In March, Shore's group listed Harrah's Station Square Casino as the leader for the slots license, with Isle of Capri running second. However, Harrah's odds dipped to 3 to 2 (40 percent) after news last week that its parent company might be bought out by two private equity firms.

"Usually, when private equity comes in, it reduces capital spending," Shore said. "So, that's a negative factor because it creates uncertainty. When the (state) gaming board looks at that, it might (wonder), 'Where is Harrah's going to be in 10, 20 or 30 years?' "

If the deal for Harrah's goes through, it would be one of the largest leveraged buyouts in history. Harrah's, which operates about 40 casinos across the country, has equity of more than $12 billion and about $10 billion in debt.

In Pittsburgh, Cleveland-based Forest City Enterprises would own the casino and Harrah's would operate it.

The IOC slots license bid, which includes an offer of $290 million for a new hockey arena, also got a boost last week when Canadian billionaire Jim Balsillie signed a purchase agreement for the Penguins.

Balsillie has been linked to a group that is trying to bring an NHL franchise to Hamilton, Ontario. The Penguins' lease at Mellon Arena expires June 30.

"With him being from outside the area, it generates more steam for the possibility that he could move the Penguins," Shore said. "He also has been strongly supportive of the IOC plan."

The Penguins have a partnership with IOC to construct an arena in the Hill District, near the slots casino site.

Detroit businessman Don Barden's group, which wants to open a Majestic Star Casino on the North Shore, is rated a 19-to-1 long shot.

"He doesn't have Harrah's strong brand name or the arena offer that IOC has," Shore said.

Susquehanna Financial Group compiled its odds for investors trying to decide where to put their money. Company analysts will attend the licensing hearings Nov. 20 for IOC and Harrah's and Nov. 21 for Majestic Star.

Shore said his firm could revise its ratings after those hearings.

The State Gaming Commission is expected to award the license Dec. 20 in Harrisburg.

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