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Friday, February 08, 2002
Copyright © Las Vegas Review-Journal

DOWNTOWN GAMBLING: Horseshoe, Fremont case escalates

Casino appeals seizure order to state Supreme Court

The high-stakes game of brinkmanship between Binion's Horseshoe and the Fremont Street Experience entered a new phase Thursday, as the casino appealed a $1.9 million writ of attachment to the Nevada Supreme Court.

The $1.9 million represents dues owed by the Horseshoe for the upkeep of the downtown Fremont Street Experience.

Robert Draper, one of the casino's attorneys, said the Horseshoe sent its request to Carson City via Federal Express late Wednesday night.

"We've also asked the court to stay the enforcement of Judge (Gene) Porter's order so they can take a look at the issues we raised," Draper said.

The Horseshoe has accused the management of the Fremont Street Experience of multiple violations of federal antitrust law, a claim attorneys for the pedestrian mall and District Court Judge Porter rejected at a hearing last month.

If the Nevada Supreme Court doesn't intervene in the matter by noon Monday, lawyers for the Fremont Street Experience could ask Sheriff Jerry Keller to seize $1.9 million from the Horseshoe's casino cage, in accordance with Porter's Jan. 28 order.

However, Draper fears seizing the funds from the cage might force Nevada gaming regulators to shut down the entire casino.

Under state gaming regulations, casinos must keep certain levels of cash in their cages at all times or risk closure by Gaming Control Board agents, regardless of whether the casino has sufficient other assets to stay in business.

The rule is intended to protect the interests of players and the reputation of the state by ensuring that casinos have enough cash on hand to pay jackpots.

Nevada Gaming Control Board Chairman Dennis Neilander was unavailable for comment Thursday. Board sources told the Review-Journal last week that the state's attorneys were still reviewing the situation and had not made any recommendations to Neilander.

Since the Horseshoe is privately owned, outsiders can only guess at the state of its health. According to a December report by the Information Access Co., a division of Lexis/Nexis, the Horseshoe employs 2,400 people and had $128 million in revenue last year.

If Keller's officers raid the Horseshoe's cage in accordance with the writ and Neilander orders the Horseshoe to close down, it could send shock waves as far as Mississippi, Indiana and Louisiana.

According to documents filed with the Securities and Exchange Commission, when Jack Binion sold his interest in the Horseshoe Club to his sister, Becky Binion Behnen, in 1998, he received a perpetual license to use the "Horseshoe" trademark outside Nevada.

Binion has made the most of this opportunity, building his Horseshoe Gaming Holding Corp. to the 280th spot on Fortune's list of the top 500 private companies in America. According to the company's most recent annual report filed with the SEC, it employs 9,699 people and grossed more than $1 billion in 2000.

However, in 1999 the company warned potential purchasers of its bonds that there could be a joker in its financial deck if the Horseshoe in Las Vegas ever went bankrupt.

"There can be no assurance, however, that a party would not claim in a bankruptcy proceeding of Horseshoe Club that the various trademarks and trade names are valuable and constitute a fraudulent conveyance under Title 11, United States Code or applicable state fraudulent transfer laws, " corporate officials wrote in August 1999.

Binion could not be reached for comment Thursday, but University of Nevada, Las Vegas Professor Bill Thompson said he wasn't overly concerned.

"I don't think (Binion's) casinos are going to close down," said Thompson, who helped Binion obtain his Louisiana gaming license. "He'll just call it 'Jack's Horseshoe' or something like that.

"But given this squabble between Jack and his sister, nothing's beyond a monkey wrench."

In the meantime, Fremont Street Experience attorney Patrick Reilly said his client is preparing to post a $1.9 million bond, as Porter directed, and to deliver the writ on Monday afternoon -- unless the Supreme Court tells him otherwise.