Isle of Capri Casinos, Inc.

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Isle of Capri Casinos, Inc.

1641 Popps Ferry Road
Biloxi, Mississippi 39532
U.S.A.
Telephone: (228)436-7000
Toll Free: (800)843-4753
Fax: (228)435-5998
Web sites: http://www.theislecorp.com ; http://isleofcapricasino.com

Public Company
Incorporated: 1990
Employees: 10,000
Sales: $684.9 million (2000)
Stock Exchanges: NASDAQ
Ticker Symbol: ISLE
NAIC: 72112 Casino Hotels; 71329 Other Gambling Industries; 711212 Racetracks

Isle of Capri Casinos, Inc., only a decade old in 2000, had by then already grown into one of the ten largest, publicly-held gaming corporations in the nation. By 2001, it ranked seventh and was still growing. The company owns and operates 11 riverboat and dockside casinos in Louisiana, Mississippi, and Missouri, plus a riverboat casino in Davenport, Iowa, that runs under the name Rhythm City Casino. In addition, the company owns or has an interest in two land-based casinos: the Isle of Capri Casino in Black Hawk, Colorado; and the Lady Luck Casino in Las Vegas, Nevada. The company also owns and operates Pompano Park Racing, a parimutuel, harness track in Pompano Beach, Florida, and, in partnership with Commodore Cruise Lines, runs the Enchanted Capri, a fully-appointed gaming cruise ship berthed in New Orleans. In 2001, the company also had two more casinos under construction in Missouri. Although Isle of Capri Casinos, Inc. is a public corporation, a 57 percent controlling share of it is owned by the family of the company’s principal founder, chairman, and CEO, Bernard Goldstein.

1990–91: Bernard Goldstein founds Kana Corporation

In 1990, Bernard Goldstein combined two of his privately owned businesses—Riverboat Corporation of Mississippi and Riverboat Services—into Kana Corporation. The resulting company, incorporated in Delaware, was designed as a vehicle to raise sufficient capital for the acquisition of or investment in other businesses. Of Goldstein’s two merged companies, the one, Riverboat Services, was a casino consulting firm; while the other, Riverboat Corporation of Mississippi, was a Biloxi gaming enterprise. Goldstein, a gaming-industry entrepreneur and attorney, had been involved in developing gaming in a number of states and had been actively engaged in lobbying for riverboat gaming in Iowa, where he had helped establish the industry. In the early 1990s, among other posts, he held the chairmanship of the steamboat companies which operated the Emerald Lady and Diamond Lady casino riverboats and served as president of Casino Cruises, Inc., which managed gaming on the Par-A-Dice Riverboat Casino in Peoria, Illinois. Goldstein also had behind him a long career in businesses totally unrelated to gaming. He had joined the Alter Companies in 1950 and served in various executive posts before becoming the group’s chairman in 1980. The Alter Companies include affiliates in the scrap metal recycling, trucking, and barge-line transportation industries.

With Goldstein at its helm, Kana immediately acquired the Casino Career Training Center, then owned by James Ernst and Allan B. Solomon. Along with Goldstein, Ernst and Solomon made up Kana’s top management, although Ernst resigned in 1995. Solomon, like Goldstein, was also trained in law and, prior to becoming a director of Kana Corp., had been a partner in Broad and Cassel, a Florida-based law firm.

1992–94: Reorganization and Expansion

In April 1992, Goldstein changed the name of Kana to Anubis II Corporation and in June of that year reorganized the company. The Riverboat Corporation of Mississippi, Riverboat Services, Inc., and the Casino Career Training Center, Inc., through stock-for-stock exchanges, became wholly-owned subsidiaries of Anubis, or, as it was quickly renamed, Casino America, Inc., The newly reorganized corporation then went public, trading on Nasdaq under the symbol CSNO.

It was also in 1992, on August 1, that Casino America opened the Isle of Capri, Biloxi, Mississippi’s first gaming facility, under the operational control of the Riverboat Corporation of Mississippi, alternatively known as the Biloxi Gaming Subsidiary. Through various stages in its development, the 50,000 square-foot dockside casino would become a major complex, boasting a 32,500 square feet gaming area accommodating 1,149 slot machines and 42 table games, with an adjacent land-based pavilion, a hotel, and parking for over 1,100 vehicles.

In the next year, 1993, Casino America opened the Isle Capri-Vicksburg, which began operations on August 9. It was the first of four casinos to open in the Vicksburg, Mississippi, area. Located on an 18-acre site adjacent to the Mississippi River, the facility originally started as a riverboat and barge casino with 21,000 square feet of gaming space. The operation’s temporary facilities were replaced in 1994 with a 32,000 square-foot dockside casino and a land-based pavilion housing administrative offices and various non-gaming conveniences.

It was also in 1993 that Casino America entered a 50-50 partnership arrangement with Edward J. DeBartolo, a successful mall developer and owner and operator of Louisiana Downs, a horse racetrack in Shreveport, Louisiana. Because he had a 20-year record of running a profitable, untainted gambling operation in the state, DeBartolo seemed a certain bet to get one of the 15 casino gaming licenses to be granted by Louisiana. The plan was to open a new riverboat casino in Bossier City, just 5 miles from Louisiana Downs. Casino America put up $35 million in cash, and the partnership borrowed another $25 million to build the boat. Under the terms of the joint venture, styled the Louisiana Riverboat Gaming Partnership, DeBartolo put up no capital but had to wait for Casino America to recoup its investment before he could take a share of the profits. The new Isle of Capri Carribean-themed casino opened in May 1994 and was an instant success, partly because it had been heavily promoted in the Dallas area, just a three-hour drive away, and from which it drew a steady stream of customers.

1995–96: Casino America Improves and Acquires

The following year, 1995, Casino America began buying DeBartolo’s share in the Bossier City riverboat casino. It also bought a half interest in a casino that opened in Lake Charles, Louisiana, in the summer of the same year. At that time, besides its Isle of Capri Casino in Biloxi, Casino America also owned the casino in Vicksburg, Mississippi.

On June 30, 1995, branching out in the gaming industry, Casino America acquired Pompano Park, a harness racing track situated in Pompano Beach, Florida, about half way between West Palm Beach and Miami. The only licensed harness racing track in the state, Pompano Park consisted of approximately 180 acres of owned land used for the racing operations. In addition, Casino America bought a lease-purchase agreement for an additional 143 acres that were used for training operations. Speculating that Florida would eventually legalize casino gambling, the company purchased the extra acreage for $12 million but later sold it to developers. Competition for Pompano Park came primarily from other south Florida parimutuel enterprises, including thoroughbred and greyhound racing tracks and jai alai frontons.

In August of the same year, as part of its Biloxi Improvement Program, Casino America held the grand opening of new facilities featuring an array of non-gaming amenities designed to make the Isle of Capri-Biloxi into a more customer-friendly vacation spot. Included were a 367-room, 15-story hotel tower—the Isle of Capri Casino Crowne Plaza—and the 32,000 square foot pavilion, which housed three restaurants and offered such entertainment as Las Vegas-style revues. Other improvements included the addition of new island-theme decor designed to enhance the casino’s distinct image. By the time its Biloxi Improvement Program was completed in 1996, Casino America had spent about $50 million on its additions and renovations.

It was also in 1995 that Casino America applied to the Securities Exchange Commission for approval to trade on the New York Stock Exchange, switching from Nasdaq. It also filed a registration statement planning an offering of three million shares of common stock plus 664,167 shares owned by certain sellers. However, the change did not materialize, and Casino America remained on Nasdaq.

1997–2001: Millennium Expansion Plan

In June 1997, Casino America announced its joint venture plans to open a new casino in Black Hawk, Colorado in a partnership with Nevada Gold & Casinos. Land for the new Isle of Capri-style operation, 45 minutes away from downtown Denver, was bought from a Caesars World affiliate. It was a carefully selected site, chosen because the Denver metropolitan area was one of the fastest growing areas in the country and offered Casino America a new, very strong market. However, it was not wide-open; Colorado law limited gamblers to slot machines, poker, and blackjack, with a bet limit of $5.

By September 1998, the month and year in which Casino America officially changed its name to Isle of Capri Casinos, Inc., the company owned and had in operation four island-themed casinos under the Isle of Capri name—the two in Mississippi and the two in Louisiana—plus its parimutuel track in Florida. In addition, the Black Hawk casino, which it owned in an even partnership with Nevada Gold, opened in December. That same September, Isle of Capri had begun negotiations with Harrah’s in an attempt to purchase one of that competitor’s gaming properties in Tunica County, Mississippi. The facility, closed at the time, was known as “little Harrah’s” and had first opened in 1993 and remained in operation until 1997.

Company Perspectives:

The Isle of Capri Casinos’ Mission is to be the Best Gaming Entertainment Company … Best for its Guests …Best for its Employees … Best for its Communities … Best for its Investors. … Not the Biggest—But the Best!

Isle of Capri completed the purchase of the Harrah facility early in 1999, paying a reported $9.5 million for the 62,100square-foot casino. Although considerably smaller than other facilities built or purchased by the company, the casino gave the company a presence in the northwest corner of Mississippi. Drawing customers from Memphis, Tennessee, and Little Rock, Arkansas, Tunica County had become the fasting growing gambling area in the state.

Because revised gaming regulations in Mississippi required that licensees spend an amount equal to 100 percent of what they spent on the gaming facility on land-based improvements, Isle of Capri immediately began making additions, including two theaters and a hotel. In March 1999, the company entered into a joint venture with singer-showman Wayne Newton to develop theaters at Isle of Capri sites, setting up a Wayne Newton Theatre complex in Tunica as the partnership’s venue.

As part of its “Millennium Expansion Plan,” in 2000 the company purchased and converted four Lady Luck properties into Isle of Capri Casinos. These properties, located in Lula and Natchez, Mississippi, and Betterndorf and Marquette, Iowa, were refurbished and decorated in accordance with the Isle of Capri’s signature Carribean theme. Somewhat later, the company purchased another Lady Luck Casino, located in the nation’s gambling epicenter, Las Vegas. The company also purchased the Kansas City, Missouri, Flamingo Casino, which it also converted into an Isle of Capri-themed casino in early 2001. Earlier, in May 1999, also as part of the its Millennium Plan, the company entered a partnering arrangement with Bally Gaming and Systems, a business unit of Alliance Gaming Corporation, and SystemSource to co-develop a casino marketing and management system under the name Gold Casino System. Over the next two years, the new system was to be implemented at all of the company’s casinos, providing information enhancement and data collection as well as better service for the casinos’ customers.

Additional changes came in early 2001. Notably, in its first departure from its standard policy of acquiring gaming emporia and converting them into Isle of Capri styled casinos, the company purchased the President Casino in Davenport, Iowa, with plans to turn it into the company’s first “Rhythm City” branded casino. It completed the conversion of that property in February 2001.

So far luck has been with Isle of Capri, despite ammunition fed to the anti-gambling movement by strong evidence of graft and corruption in states like Louisiana. Gaming has become a major means of raising revenue in the poorer southern states, where legislators are loathe to add new taxes by doing away with homestead exemptions or increasing income taxes. As long as the legal door remained open and the popularity of gaming stays strong, Isle of Capri would likely prosper. It had shown an enviable record of being in the right places at the right times.

Principal Competitors

Alliance Gaming Corporation; Ameristar Casinos, Inc.; Casino Magic Corp.; Harrah’s Entertainment, Inc.; Park Place Entertainment Corporation; President Casinos, Inc.

Key Dates:

1990:: Isle of Capri Casino founded as Kana Corporation.
1992:: Kana Corp. becomes Casino America and opens Isle of Capri-Biloxi.
1993:: Casino America opens casino in Vicksburg, Mississippi.
1994:: Company opens casino in Bossier City, Louisiana.
1995:: Casino America purchases Pompano Park Racing in Florida and opens a new casino in Lake Charles, Louisiana.
1998:: Company changes name to Isle of Capri Casinos; Enchanted Capri makes maiden voyage; company opens Isle of Capri-Black Hawk in Colorado.
1999:: Isle of Capri opens a new casino in Tunica, Mississippi.
2000:: Company acquires five Lady Luck Gaming casinos, the Kansas City Flamingo Hilton Riverboat Casino, and President Casino and Hotel in Davenport, Iowa.