Wednesday, November 25, 2009

Barden's Majestic Star Files For Bankruptcy

Chart From Wall Street Journal

Desperate Gary, Indiana now a major creditor.

"Gary and Majestic Star, the owner of both local casino licenses, have been in negotiations for years now over its local development agreement. Former Mayor Scott King signed an amendment to that agreement in 2005 which required Majestic Star to pay the city 6 percent of its adjusted gross revenue.

Previous agreements set that amount at 7 percent. It also capped the maximum amount of money Majestic Star would pay to Gary at $6 million annually.

However, attorneys for Mayor Rudy Clay have disputed the validity of that agreement because it wasn't approved by Gary's Board of Public Works and Safety. In February 2008, Majestic Star filed a lawsuit against the city, asking a judge to sort out the matter."

How far off we are from this situation is open to debate but so far revenues from the new Rivers Casino are far below the company's projections even as the city's need for cash grows.

"I believe this stopgap funding measure is crucial," said state Rep. Chelsa Wagner. She added that a long-term solution may come if the General Assembly dedicates 1 percent of Rivers Casino table games revenue to libraries."

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