Showdown near for Hollywood Park card club plan.

State Legislature to deal with measure to clear the way

Whether Hollywood Park may own and run a card club is on the front burner of the California Legislature's agenda when it reconvenes this Monday (Aug. 16).

The bill that could give Hollywood Park the go ahead is slated as the 24th item to be voted on by the state Senate. It has already been passed by the Assembly. According to one legislative staffer, the state Legislature is expected to give thumbs up or down on 400 bills this week.

AB 995, like two other gaming bills for off-track betting, is marked "urgent," which means it could become law one week after the governor signs the measure (vs. being effective Jan. 1, 1994). The bill's sponsors hope the bill will clear both houses of the Legislature and the governor will sign off on the legislation by Sept. 1.

The bill was proposed by Democrat Assemblyman Curtis R. Tucker, whose district includes Inglewood, site of Hollywood Park. In its current form, the bill permits a publicly traded racing association to own or operate a gaming club if it meets certain criteria.

One of these criteria would require all corporate officers, directors and shareholders with more than 5 percent of the outstanding shares to be registered with the state Attorney General under the Gaming Registration Act.

Corporations would also have to be licensed by the California Racing Board and be situated either in L.A. County or in a city or county that has approved gaming clubs prior to Jan. 1, 1993.

As acknowledged by the Senate floor analysis of the bill, "the only racing association currently meeting these criteria is Hollywood Park Operating Co."

Although Inglewood voters narrowly approved a ballot measure in 1992 to permit a card club on the grounds of Hollywood Park, the corporation has not been able to register as a gaming club because of its corporate status. To date, the state Department of Justice, which enforces the Gaming Registration Act, has stated that an owner or operator of a gaming club must be an individual, partnership or closed corporation -- not a publicly traded corporation.

Hollywood Park President Don Robbins says he's "cautiously optimistic that the bill will pass."

On June 26, Hollywood Park completed an offering of 4.6 million new shares of common stock at $26 each, including a 600,000 share overallotment. Corporate officials are using $15 million of the proceeds to renovate the company's Pavilion facility to house the proposed card club.

Both Robbins and Chief Executive Mike Finnegan denied talk that Hollywood Park is eyeing the Bicycle Club or Commerce Club for acquisition as its on-site card club. Finnegan told the Business Journal, "We're having no discussions with either one." Finnegan would not comment on other acquisition candidates beyond saying that other clubs were, in fact, being considered.

In its July 14 report, New York investment firm Oppenheimer & Co. estimated the proposed card club "could generate revenues of $44-45 million" in its first year. Oppenheimer further estimated that in its second year revenues "would increase to $99-100 million as the number of tables is doubled" from 100 to 200.

According to analyst Martin Cosgrove, who follows the stock for downtown L.A.'s Wedbush Morgan Securities, "Stockholders are expecting them (Hollywood Park officials) to open a card club on Jan. 1, 1994."

Cosgrove said because the stock is "fairly thinly traded," he believes passage of the pending legislation "would probably add a couple of dollars to the share price" (which closed at $26.00 on Aug. 10).

However, "passing this bill is not critical to having the card club open," he noted. "It would just streamline the process and make it a little more profitable." If the bill fails to pass, Cosgrove said, Hollywood Park could lease space to a third party which would run the card club.