French Lick casino lags state in revenue

FRENCH LICK, Ind. – The French Lick Resort and Casino – hailed as a key to a potential economy recovery for Southern Indiana – continues to wage an uphill financial struggle eight months after opening.\nFrench Lick continues to lag Indiana's 10 other casinos in every significant category – including admissions, gross revenues and the average amount it wins from patrons at each slot machine and table game chair, state figures show.\n"Even based on published data and public data from the Indiana Gaming Commission, they weren't doing quite as well as originally anticipated," Standard & Poor's analyst Ariel Silverberg said.\nFrench Lick ranked last in the amount of money won per admission and per gambling position, state figures from last November and May showed.\nThe casino averaged $69 per admission, compared with the statewide average of $97. Its average winnings from each gambling position – $6,784 per month – compared with a statewide average of $11,563.\nFrench Lick executives met last week with Indiana Gaming Commission staff to discuss ways to improve the figures. Neither the owners nor state officials would elaborate on the discussions.\n"As of right now, we're obviously being very observant," Ernie Yelton, the gaming commission's executive director, said. \nBut he added, "We have no grave concerns about future success."\nFrench Lick faces competition from established casinos, and its remote location about 60 miles northeast of Evansville doesn't help, said Dennis J. Farrell Jr., a gaming analyst with Wachovia Securities who follows the Ohio River casino market.\n"It's definitely been a difficult ramp-up period," he said.\nCasino executives counted on longer stays by visitors, even during the week, which gaming analysts say is crucial for boosting gambling revenue.\n"I think there was a higher expectation that people who came to game would probably stay overnight," Cook chairman Steve Ferguson acknowledged.\nNow, the remote casino faces more potential competition from slot machines lawmakers have approved for central Indiana's two horse racing tracks.\nFrench Lick's startup has been closely watched by analysts who advise bond investors who are due to receive financial reports this month.\nBloomington-based medical device maker Cook Group and Lauth Property Group of Indianapolis partnered two years ago to build the casino. French Lick and West Baden – with a combined population of about 2,100 – counted on the development and related restoration of two historic hotels for a much-needed economic revitalization.\nThe plan was to repay debt for a $270 million bond and $25 million in bank loans with casino proceeds while creating a destination that would draw customers for the spa, golf and gambling.\nStandard & Poor's, a bond-rating service, recently downgraded French Lick's bond from B- to CCC+ amid concerns over delays in financial reporting. They assigned the initial B- rating because the casino was still under construction last year and was set to open in a competitive market.\nThe casino's ongoing performance is another concern, Silverberg said.\n"But in terms of drawing customer traffic and the levels of gaming play, those are things that the property has to perform on its own," she said.\nYelton, the gaming official, said French Lick officials discussed several ideas for overcoming the challenges.\n"It's going to take a little time to mature," Yelton said, but added, "we got a strong sense of a commitment to make this financially solid going forward"