Boyd Gaming Corporation announced that it is canceling its plan to sell its Dania Jai-Alai racetrack operation in Florida for $80 million.

According to the company, the buyer, the private investment group Dania Entertainment Center LLC (DEC), was unable to close the sale within the deadline specified in the original contract. That deadline passed last week.

“Since the closing did not occur within that timeframe, Boyd Gaming is exercising its right pursuant to the terms of the agreement to terminate the transaction,” Boyd said in a statement.

Dania Jai-Alai is a 47-acre parimutuel wagering property with live jai-alai, a poker room and simulcast wagering on jai-alai, thoroughbred racing, harness racing and dog racing. Boyd bought the 235,000-square-foot fronton for $150 million in 2007, after Florida’s 2006 statewide referendum amended the law to permit slots at all parimutuel facilities in the state. Boyd’s plan was to turn it into a racino.

Boyd officials, though, were hesitant to go through with the racino plan as the economy worsened. Dania is the only Florida parimutuel that has yet to add slots.

Last May, Boyd announced the agreement to sell the facility to DEC. “After a careful analysis, we determined that Dania Jai-Alai no longer fits our current growth strategy,” said Boyd CEO Keith Smith at the time. “The sale of this asset is consistent with our priority of strengthening our balance sheet, and will be immediately accretive to earnings.”

Anticipating taking over the racino’s expansion project, DEC tapped Lyle Berman’s Lakes Entertainment to redevelop and manage the facility, which was approved by the city for 1,800 slots in a 60,000-square-foot casino, a cabana club, a two-building hotel with 500 rooms, retail shops, restaurants, bars, lounges, poker rooms and 60-slip marina.

DEC paid a non-refundable deposit of $5 million to Boyd back in May, and the original deadline to close the sale was September 26. That deadline was extended to November 28, in exchange for an additional $2 million non-refundable deposit from DEC. When that deadline passed, Boyd pulled the plug.

Analysts say DEC’s inability to close the deal may be the result of a tight credit market, and investor uncertainty over competition resulting from the likely legalization of mega-resorts in South Florida. Hurting the sale even more is the lack of a provision in the proposed bill to lower the tax rate on existing parimutuel gaming operations.

Macquarie Securities gaming analyst Chad Beynon agreed that the property will be difficult to move with uncertainty about gaming’s future in Florida.

“This failed transaction provides the company with one less source of capital and leaves them with a property that will most likely be hard to market to potential buyers," Beynon wrote in a note to investors.

Lakes CEO Berman said in a statement that DEC is filing a lawsuit over the termination of the deal. “We understand that Dania has filed a lawsuit pertaining to the termination of the asset purchase agreement,” he said. “Although Lakes is not involved in the lawsuit, we continue to closely monitor the status of this project.”

Boyd recently closed on a deal to buy the IP Casino Resort in Biloxi, and operates 16 other casinos and racinos in the U.S.

By Staff