Casino Queen Bought By Employees For $170m

In what is believed a first of its kind in the USA, the Casino Queen in East St. Louis has been bought for $170 million by 700 of its employees as part of an employee stock ownership plan (ESOP). The ESOP will now be managed by co-trustees Chief Financial Officer Robert Barrows and the Casino Queen’s general manager Jeff Watson who, after the sale was completed, commented:
“To my knowledge, it’s the first ESOP casino in the country. It allows employees to become beneficial owners in the company. The more successful the company is, the more value employees have individually in their retirement accounts.”
In 1995, the Koman family replaced the then riverboat casino with a new $92 million casino development, which in the process became the first Illinois casinos to move from the river to a land-based location. Since then the Koman family have maintained a 20% stake in the Casino Queen, with the rest accounted for by private investors.
Due to the recession and increased competition, however, the Casino Queen has suffered from declining business and back in 2006, a $200 million offer by Columbia Sussex to buy the Queen fell through. So far this year the casino’s revenue has totaled $120.9 million, around one-third down on its 2007 peak of $172.1 million.
The latest deal to buy the Casino Queen includes assuming $31 million of its existing debt. It is also hoped that the new owners will be able to return the 1,100 slot machines and 27 table casino to profitability, and as Loren Rodgers from the National Center for Employee Ownership, explains: “It tends to be a more stable form of ownership. ESOP companies know they have something to lose if there is a change in ownership.”