Woes Continue for Don Barden
The Majestic Star Casino LLC and its affiliated companies have filed Chapter 11 bankruptcy papers in Indiana. The company owns two riverboat casinos and a hotel in Indiana, a casino and hotel in Mississippi, and a casino in Colorado. This filing and the presumed subsequent takeover by creditors in the bankruptcy process could mean the end of Don Barden’s ownership of the company. He is expected to leave the company.
According to news reports, Majestic Star has $540.5 million in assets, $941.7 million in liabilities. The company claims that given its finances it is unable to compete with new or renovated casinos in Indiana. The motion states the bankruptcy is necessary so that it can become "better equipped to compete in the highly challenging casino gaming marketplace."
But these troubles are nothing new. As we documented in our Policy Briefs (Vol.8, No. 48 and Vol. 9, Nos. 47 and 59) Barden’s capital woes are a long standing problem. After winning Pittsburgh’s coveted gaming license, he did not have enough capital to finish the project, defaulted on a bridge loan, and was forced to sell. We called into question the process by which the Pennsylvania Gaming Control Board vetted Mr. Barden’s financial capabilities. This bankruptcy filing reinforces the argument that the Control Board did an inadequate job.
Even though this latest episode may end his involvement with Majestic Star he will maintain his 16.6 percent stake in Pittsburgh’s Rivers Casino. And that might not be a profit maker for him either given the lackluster performance of the Rivers Casino in its first year of operation. Inquiring minds would like to know how much the other investors in the Rivers Casino would pay him for his share.