Bally to sell casino, says profit will fall below expectations
Las Vegas-based slot machine maker Bally Technologies Inc. today announced the sale of a casino and said its annual profit will be less than anticipated — in part because casinos aren’t buying as many gambling systems as expected.
The company estimated it will earn $2.15 to $2.25 per share for the fiscal year ended June 30, with the fourth quarter being stronger than the third quarter. This is down from previous guidance of $2.30 to $2.55 per share.
“The company has revised guidance principally based on its expectations of the following: 1) slower than expected deployment of capital by customers thus far in calendar 2010; 2) the interruption of gaming in Alabama; and 3) lower-than-anticipated win per unit in gaming operations in the third quarter,” Bally said.
In Alabama, legal battles and investigations involving gaming are under way. Gov. Bob Riley’s task force on illegal gambling has raided several electronic bingo halls and there’s uncertainty over whether such gambling is legal in the state.
“The company continues to monitor the Alabama charitable bingo market closely.” Bally said in today’s statement. “In the coming weeks, gaming in the state may resume and, based on possible voter action in November, gaming in Alabama could be expanded or reduced at that time.”
Bally said that in Alabama it has advanced about $5 million in development financing; it has 1,750 recurring-revenue games in four locations with a book value of approximately $7 million; and it has $1 million in uncollected receivables. The value of those assets could be affected by the evolving regulatory situation in Alabama.
Bally’s gaming operations mentioned in today’s statement involve its linked progressive systems and the rental of gaming devices and content around the country.
In another announcement, Bally today said it’s selling its Rainbow Casino in Vicksburg, Miss., to Isle of Capri Casinos Inc. for $80 million in an all-cash deal.
The Rainbow is one of five casinos in Vicksburg and in the December quarter of 2009 produced $8.5 million in revenue and operating income of $2.1 million — a small part of Bally’s $213.5 million in revenue for that quarter.
“We have enjoyed a successful, 16-year run owning and operating Rainbow Casino,” Richard Haddrill, CEO of Bally Technologies Inc., said in a statement. “We are very proud of the property and our team of employees. However, it is important that we focus on our core business of providing industry-leading games and systems technology, and we are confident that under the ownership of Isle of Capri, Rainbow and its employees will be in very competent hands.”
“We are pleased to return to the Vicksburg market and expand our presence in Mississippi through this transaction, which creates a mutually beneficial situation for Isle of Capri and for Bally Technologies and allows both of our companies to focus on what we do best,” said James B. Perry, chairman and CEO St. Louis-based Isle of Capri. “Rainbow is a successful
property with a solid core business that will fit very well into the Isle portfolio and benefit from the operational expertise of our management team. Additionally, Bally has made important investments at the Rainbow facility and maintained a solid team of employees, who we look forward to welcoming to Isle of Capri.”
Perry said Isle plans to fund the transaction under its existing credit facility.
The Rainbow has some 350 employees, 25,000 square feet of gaming space, 831 slot machines, 10 table games and an 89-room hotel.
Also today, Bally said Isle of Capri signed a master agreement for company-wide installation of Bally’s SDS slot-management system. Isle will also select, based on individual property needs, Bally marketing, player communications and media-management products.
