Harrah’s Has Back-Out Option In Ohio Track Buy

COLUMBUS, Ohio —A state Supreme Court decision that allows a vote on a slots proposal could derail plans by Harrah’s Operating Co. to purchase a horse track in northeast Ohio.
   
The company agreed last week to buy Magna Entertainment Corp.‘s Thistledown track for $89.5 million, but is permitted to back out of the deal if the state’s plan to put lottery-run slot machines at horse tracks is put on hold for a vote.  The Supreme Court on Monday said the governor’s plan is subject to approval by voters.
   
LetOhioVote.org, a committee of three private citizens, seeks to put the question on the November 2010 ballot and has three months to collect the necessary number of signatures to get the vote. The lottery had intended to have slots operating at tracks by this May.  It’s too early to say whether Harrah’s will back out of the deal, said spokesman Gary Thompson.  “I don’t think there has been a great deal of thought about that here,“ he said. “I think we are excited about the potential of being at Thistledown.“
   
The state has said the governor can use his executive power to authorize slots without a vote. Lawmakers could also put the slots question on the May primary ballot.  The plan to place 17,500 video slot machines at tracks is expected to generate $933 million to balance Ohio’s current two-year education budget.  Harrah’s Operating Co., a wholly owned subsidiary of Nevada-based casino giant Harrah’s Entertainment Inc., offered $42 million in cash at closing and contingent payments of $47.5 million for Thistledown in Northeast Ohio.
   
The contingent payments hinge upon successful resolution of legal challenges, that also include two lawsuits questioning the constitutionality of expanding the Ohio Lottery to include slot machines.  All seven of Ohio’s horse tracks met an application deadline for the slot machines last week, but only two - Raceway Park in Toledo and Northfield Park in northeast Ohio - submitted $13 million initial payments for gambling licenses.
   
Thistledown-owner Ontario-based Magna Entertainment, the largest horse-track owner in the United States, filed for bankruptcy protection in March, saying it was unable to obtain new financing while supporting its existing debt.
   
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