Real Estate & Retail and Transportation, Distribution & Logistics

CHRIS KATTERJOHN Commentary: Orange County casino a losing bet?

August 7, 2006

I'm starting to get a bad feeling about the Orange County casino project. Truth be told, I've had the bad feeling for a long time, and now it's getting worse.

The latest blip on the radar in what has been a challenged project from the get-go is the contentious legal battle that has surfaced between the two partners: Bob Lauth of Lauth Property Group and Bloomington billionaire Bill Cook.

I guess that's not that unusual. Ed Feigenbaum, publisher of Indiana Gaming Insight, tells me that more than half the casinos that have been built in Indiana have been plagued by partnership disputes.

In this case, the men are at odds over how to manage the $382 million project and the level of luxury that should be built into the renovation of the historic hotels and the new riverboat gambling casino planned for the site. Bill wants gold leaf; Bob thinks that's extravagant.

In my mind, the prospects for the project have been dubious from the start. Even though IBJ in the past advocated that the last remaining riverboat license go to Orange County, personally I've always been skeptical about its long-term viability.

I'm all for Orange County, and wish its residents the very best. And this project has been hyped as the economic salvation for that struggling county. But is the lure of gambling and staying in a beautiful, historic hotel enough of a draw to attract the numbers needed to make it work-I mean really work-when you basically can't get there from here?

Bob Lauth and Bill Cook apparently think so. And to date, everyone has underestimated the amount of revenue Hoosier casinos would generate, according to Feigenbaum. What's more, they are all going gangbusters, and many are expanding, he adds.

Still, I don't like the prospects for Orange County. Access and transportation-not to mention high gas prices-are major stumbling blocks.

French Lick was wildly successful in the days when such attractions were few and far between and regular trains delivered wealthy patrons from all over the world to its doorstep. Those days are long gone. Entertainment options have grown exponentially-heck, you can gamble on the Internet in the comforts of home-and the trains no longer run.

The process of awarding the license was a fiasco in the first place. Then, when the Indiana Gaming Commission initially gave the deal to Donald Trump-at a time when a good chunk of his business empire looked like it was collapsing-I laughed out loud. It was a clear-cut case of the commission getting swept up by the celebrity of The Donald instead of making a sound business decision.

When the Trump group eventually backed out of the deal-thank God-Lauth teamed up with Cook for the second round of bids. To make way for Cook as a partner, Lauth dumped its original mate, Chicago-based Merit Gaming, which promptly sued Lauth.

But the clash between Lauth and Cook is the most provocative turn of all: two high-powered Indiana business guys in a battle royale in a high-profile deal.

Prior to the casino project, Bill Cook, 75, had already invested millions to save the historic West Baden Springs Hotel, the building with the ornate, domed atrium that is such an Indiana icon.

Clearly, the French Lick project is a labor of love more than anything else for this self-made, successful businessman who has already made a bold and indelible mark on the Indiana business landscape. Tough and determined, he has built a big business and a fortune from scratch.

On the other hand, Bob Lauth, 55, is a hard-charging, successful real estate developer at the peak of his career. He doesn't have the emotional connection to the project; he just wants to make a good deal. Whether his instincts on this one are on- or off-target, he sees gold in them thar hills.

Myself? I wouldn't want to tangle with either one of these guys.

For the sake of the project and the future of Orange County, I hope the two can settle their differences and make it happen together, but my gut tells me it's going to be one or the other. And, as for the viability of the entire project, I'll keep my fingers crossed, but I'm hedging my bets.



Katterjohn is publisher of IBJ.To comment on this column, go to IBJ Forum at www.ibj.comor send e-mail to ckatterjohn@ibj.com
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