Jumer Hotels and Casinos, Inc. were forced to liquidate their entire portfolio of hotel properties as a function of their continuing Chapter 11 bankruptcy proceedings and the article focused on the purchase of the Galesburg facility. This discussion of the financial problems facing the Jumer's organization was done simply to make clear the circumstances behind the sale. I feel I should address Mr. Wick's concerns. The bulk of his letter is excerpted and presented in italics.
Dear Mr. Winick:
Yesterday, I received a copy of Mr. Kroll's article that appeared in the [October 11] edition of The Zephyr. To say the least, I'm upset with the inaccuracies of this report
First, I would like to know the sources of his statements. It's quite apparent he never contacted Mr. Bill Renk, vice president of Sales and Marketing of the Rock Island Boatworks, or myself. We would've provided accurate information as it pertains to Casino Rock Island. At this time I will correct the misstated facts
The Rock Island Boatworks, Inc., DBA Jumer's Casino Rock Island, is not part of Jumer's Castle Lodge or Jumer Hotels and Casinos, Inc. These are all separate corporations of the Jumer family.
There is also no disputing Mr. Wicks allegation that I did not attempt to contact either Rank or himself. As his letter makes pretty clear, neither gentleman would likely have contributed much to a story that really had little to do with Casino Rock Island. I did sit down to discuss the sale of the Galesburg Jumer's with Barash for over an hour-and-a-half on Tuesday evening prior to the Wednesday printing of that week's Zephyr. Barash was characteristically candid about his actions, reasoning and future plans -- but the subject of Casino Rock Island was never brought up with Barash.
My sources of information about the Jumer's companies included their own website <www.jumers.com>, information publicly available from the Federal Bankruptcy Court and the Illinois Gaming Board, and other press coverage of Jumer's and their casino operations.
I did err in my assumption that the riverboat casino and the hotels were parts of a single Jumer's corporation but this error was fostered by the corporation's own misleading name ''Jumer Hotels & Casinos, Inc.'' that graces the websites of both the hotel and Casino Rock Island. The history page of the Jumer's website intermingles discussion of both the hotel properties and the casino and the only incorporated entity mentioned is Jumer Hotels and Casinos, Inc. If this organizational distinction is so important to the Jumer's folks, perhaps they should rethink their own attempts at corporate identification.
Secondly, to state Mr. Jumer had a close relationship with then Governor Thompson is absurd and untrue. The Governor signed the Illinois Gaming Act into law at several locations, including the Quad Cities.
Also, Mr. Jumer held an ownership interest with the Peoria Paradice [sic] riverboat operation. Please note [that] there [have] never been any other investors in The Rock Island Boatworks. I suggest you contact the Illinois Gaming Board to substantiate the aforementioned statements.
The was prompted by the following two sentences in my article: ''In 1990, Illinois became the second state (following Iowa) to legalize riverboat gaming when governor Jim Thompson signed the riverboat gambling bill into law in Peoria using a blackjack table as a desk. The second license was awarded to the Rock Island Boatworks owned by Jumer and a group of investors with close ties to Thompson.''
Thompson did sign the law permitting riverboat gambling in Illinois at the Peoria Boatworks facility owned by Jumer and where Jumer originally planned to operate a riverboat casino but failed to be awarded a license. According to an August article entitled ''The Day Clout Struck Out,'' in Chicago Magazine and available on their website <www.chicagomag.com> ''The second license went to Rock Island Boatworks, owned by hotelier D. James Jumer, and stocked with friends of Thompson.''
If Wicks wishes to draw the tenuous semantic distinction between corporate board members and investors then perhaps I should stand corrected. As to the assertion that ''there [have] never been any other investors in The Rock Island Boatworks'' I did exactly as Wicks suggested and consulted with records of the Illinois Gaming Board. The IGB minutes show their approval of ''the transfer of 768 shares (256 shares each) of the outstanding stock of the Rock Island Boatworks, Inc. to James F. Jumer, Silvia M. Wicks, and John A. Jumer,'' D. James Jumer's three children (one of which is apparently Wicks' spouse). According to the IGB, D. James Jumer continues to maintain the vast majority interest in the Rock Island Boatworks with each of his children holding ''under five percent.''
To state the performance of the Casino Rock Island never met the Jumer expectation is false. From 1992 to 1994, the Casino Rock Island held 54 percent of the Quad City market, far exceeding our expectations. The vessel, Casino Rock Island, was built as a casino boat with a capacity of 1,080 passengers, not a converted excursion boat with a capacity of 750 passengers as stated.
In 1994, Iowa changed its gaming law that allowed for continuous boarding of patrons. This had an adverse effect on our ability to compete in the marketplace. However, in 1999, Illinois changes its gaming act and leveled the playing field. Casino Rock Island completed a major expansion in 2000 and is currently expanding an additional 4,000 sq. ft. of gaming area. We are quite pleased with our performances since dockside gaming.
Casino Rock Island is currently seeking permission to build a 90 million-dollar state of the art floating casino.
Wicks is understandably attempting to paint the performance of the Casino Rock Island in the best possible light since, as president, he is apparently directly responsible for the business. However, the financial history of this riverboat does seem pretty bleak. While it is true that I have no direct information as to what expectations Jumer and his company had for the performance of the Casino Rock Island, it seems reasonable to assume they expected the business to be profitable and produce a competitive return on Jumer's investment.
According to official figures from the IGB, in 2000 the total adjusted gross revenue for the Casino Rock Island was $31 million (the second best year ever) -- but still a mere 1.9 percent of the statewide total of $1.658 billion for all nine casinos -- placing it in last place! The most financially successful Illinois casino last year was the Elgin Grand Victoria that earned $385.7 million (more than 12 times Casino Rock Island) and the second poorest performing casino was the Metropolis Players Riverboat at $108.8 million (3.5 times Casino Rock Island). Jumer's operation has consistently been the weakest performer in the Illinois gaming industry and has annually accounted for less than two percent of the statewide adjusted gross revenues for the nine active casinos since 1995.
As to the nature of the Casino Rock Island riverboat I can only point to the Jumer's website as my source for this information: ''Completing the Boatworks is the 'Casino Rock Island,' a 200-foot, 750 passenger paddlewheel excursion boat with the added excitement of riverboat casino gaming. The 'Casino Rock Island' is widely regarded as the most beautiful casino boat on the Rivers, and attracts a large and loyal following.'' I apologize if my confidence was misplaced in assuming information on the official Jumer's website was accurate and not misleading. If they did indeed purchase a new boat, they should have made that clear.
Finally, the Quad City gaming market is the most saturated industry in America. Example, if you would combine the revenues of all three operation in the Quad Cities it would be ranked sixth in comparison to the other eight operators in Illinois.
Wicks appears to be exaggerating somewhat even if what he meant by ''industry'' was local legal gambling. It is true that there is direct competition from two Iowa casinos in Bettendorf and Davenport as well as indirect competition from two other Iowa casinos in Burlington/Fort Madison and Clinton, However, the St. Louis area market appears to have much more direct competition with two Illinois boats (Alton Belle and East St. Louis Casino Queen) plus three Missouri casinos (Maryland Heights, St. Charles and St. Louis) yet together the two Illinois casinos had a total AGR of $268.9 million in 2000 or 16.2 percent of the that year's total Illinois AGR.
Since the financial reporting for the Iowa Racing and Gaming Commission is based on fiscal years rather than calendar years as in Illinois, it is difficult to come up with a precise comparison of AGR between the President Riverboat Casino, the Isle of Capri and Casino Rock Island. According to the IRGC the fiscal year 2000 AGR for the President Riverboat Casino in Davenport was $68.5 million and Bettendorf's Isle of Capri AGR was $89.4. Even in this comparison the Casino Rock Island accounts for less than 20 percent of the gambling revenue generated in the Quad Cities alone.
The marginal performance of the Casino Rock Island has also led to its Illinois gaming license being provisionally renewed for single years in 1999 and 2000. The Riverboat Gambling Act specifies that the usual license term is four years but permits the IGB to renew for shorter terms at its discretion. According to the IGB minutes of their May 18, 1999 meeting the IGB staff had serious concerns over ''the [Casino Rock Island's] cash flow, the management of the operation, continued compliance with Internal controls and employee retention.'' The IGB's chief council told the board that D. James Jumer had assured staff of his personal commitment ''to provide the financial resources needed to continue operations.''
The IGB agreed to a one-year renewal of the Casino Rock Island's license subject to monthly financial reporting to the board, Jumer's personal commitment to provide a line of credit of at least $1.7 million, and the imposition of independent quarterly audits. In May 2000, the Casino Rock Island was again awarded a provisional one-year license renewal subject to meeting IGB financial and management conditions. This past May the IGB awarded Casino Rock Island a restricted two-year renewal of its license subject to the casino's hiring of three separate individuals to serve as general manager, internal auditor and director of surveillance (Wicks was filling all three roles simultaneously to the consternation of the IGB) and maintenance of a line of credit of at least $1.5 million.
Mr. Winick, I would appreciate an immediate response from you on your plans to rectify these misstated facts.
I hope Mr. Wicks and his colleagues at Jumer Hotels and Casinos, Inc. and the Rock Island Boatworks, Inc. are satisfied with this attempt to address his concerns with the October 11th article. Frankly, had it not been for their demands, I sincerely doubt whether we would have invested this much newsprint to document the precarious financial condition of their non-Galesburg business interests.