Ladbroke plans riverboat casino
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Ladbroke, the Hilton hotels and betting shop company, is looking to break into the booming riverboat casino business in the US. An application has been made in Pennsylvania for a licence and a mooring just outside Pittsburgh.
A riverboat casino in Pittsburgh would complement Ladbroke's racing operations, encompassing the Meadow racetrack and five betting and entertainment centres in and around the City.
The growth in gaming revenues from riverboats has been phenomenal since they were legalised in 1991. More than $3bn (£1.84bn) was gambled and spent on food and drink on riverboats last year, almost as much as in Atlantic City, the second home of gaming after Las Vegas.
Riverboat operators have witnessed fast paybacks on investments. A boat bought for $20m last year in New Orleans paid for itself in just two months, and another costing $40m in downtown Chicago made a profit of $80m in its first year of operation.
Growth in gaming in the US has continued unabated through the recession, and the legalisation of riverboats came soon after Indian reservations were allowed a free hand in running gambling operations.
Ladbroke yesterday announced a better than expected rise in annual taxable profits from £106.8m to £128.5m before exceptional items, . After exceptional items and other non-cash accounting adjustments, the group showed a loss of £229.8m against a £51.4m profit in 1993.
Peter George, chief executive of Ladbroke, said the company would focus on hotels and gaming until the end of the century. He said re-uniting the Hilton hotel name worldwide was a possibility. Hilton Corporation, which owns the brand name in the US, may be sold, with Smith Barney, the US securities house, currently conducting a strategic review aimed at maximising shareholder value.
"We are interested in what happens. That company is also a mirror image of ourselves," Mr George said.
Hilton Corporation is valued at around $3.5bn, which, most leisure analysts believe, rules out a complete takeover by Ladbroke. Despite the pending £290m sale of the Texas Homecare business in the UK, Ladbroke is still saddled with £1.4bn of debts - equal to 72 per cent of shareholders' funds.
There was a slight strengthening in hotel room rates and occupancy levels around the world. Overall hotel profits were marginally higher at £126.8m, with gains in the UK, the Americas, and Asia and Australia offsetting the decline in Europe, Africa and the Middle East.
There are, however, some problems closer to home, particularly the Vernons football pools business, which has seen a 15 per cent decline in revenues since the National Lottery started in November. Ladbroke has written down the brand value of Vernons by £100m.
The dividend is being held at 6p. The share price, which has outperformed the FT All-Share index by 11 per cent this year, eased 1p to 171p.
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