Discontinued Operations

6 Months Ended

Jun. 30, 2011

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

Discontinued operations as of June 30, 2011 consist of our Atlantic City operations, our former President Casino operations, our former Casino Magic Argentina operations, our former Casino Magic Biloxi operations and our former operations at The Casino at Emerald Bay in The Bahamas.

Atlantic City: In the first quarter of 2010, we made the decision to sell our Atlantic City operations. During the twelve months following, we have actively marketed our operations, however, events and circumstances beyond our control have extended the period to complete the sale of this operation beyond one year. We have continued to reflect our Atlantic City operations as discontinued operations and the related assets and liabilities as held for sale.

During the second quarter of 2011, we determined that a triggering event had occurred due to the extended time frame in which the operation has been listed for sale and the market conditions in Atlantic City. We reviewed the carrying value of both our land and our New Jersey Casino Reinvestment Development Authority ("CRDA") investments. We reviewed the carrying value of our land holdings for recoverability using a sales comparison approach, and based on the results of these tests, recorded an impairment charge of $4.9 million in the second quarter of 2011.

We reviewed the carrying value of our CRDA holdings for recoverability using a market and cost approach, and based on the results of these tests, recorded an impairment charge of $9.4 million in the second quarter of 2011. The CRDA was established in the New Jersey Department of Treasury as a means by which urban redevelopment could occur in Atlantic City. The CRDA fulfills this obligation by administering funds created by taxes imposed on casino licensees. This investment alternative tax is 2.5% of gaming gross revenues, or is limited to 1.25% of gross gaming revenues if funds are deposited directly with the CRDA to be used to purchase CRDA bonds or make direct investments in CRDA projects. While we do not currently hold a New Jersey casino license, we purchased entities in 2006 that owned a former casino site, and had deposits with the CRDA. Our net deposits with the CRDA were $5.5 million and $15.3 million as of June 30, 2011 and December 31, 2010, respectively.

In addition, during the second quarter we increased our legal accruals by $6.0 million.

President Casino: We closed the President Casino on June 24, 2010, and have reflected the entity in discontinued operations and the remaining assets and liabilities as held for sale. In October 2010, we sold The Admiral Riverboat, on which the President Casino formerly operated.

Casino Magic Argentina: On April 29, 2010, we entered into an agreement to sell our Argentina operations. On June 30, 2010, we completed the sale of our Argentina operations for approximately $40.0 million.

Casino Magic Biloxi: Casino Magic Biloxi closed after significant damage from Hurricane Katrina in 2005. In February 2010, we settled all remaining insurance claims in exchange for a final payment of approximately $23.4 million. We received payments totaling approximately $215 million from our insurers related to this asset. Prior insurance advances that exceeded the book value of destroyed assets and certain insured expenses were recorded as a deferred gain of $18.3 million. As a result of this final settlement, we recognized this deferred gain in February 2010 in addition to the gain associated with the proceeds.

The Casino at Emerald Bay: The Casino at Emerald Bay in The Bahamas was closed during the first quarter of 2009. In February 2011, we completed the sale of the final asset and we recorded a gain on sale of $0.1 million. After this sale, we should incur no further costs associated with this entity.

Revenue, expense and net income for entities and operations included in discontinued operations are summarized as follows:

	For the three months ended June 30,						For the six months ended June 30,
	2011			2010			2011			2010
	(in millions)
Revenues	$	0.7		$	13.5		$	0.9		$	28.5
Operating loss	(23.5		)	(3.9		)	(25.7		)	(9.7		)
Non-operating income	—			(0.2		)	—			41.5
Income (loss) before income taxes	(23.5		)	(4.1		)	(25.7		)	31.8
Income tax expense	—			(4.5		)	—			(4.6		)
Income (loss) from discontinued operations	$	(23.5	)	$	(8.6	)	$	(25.7	)	$	27.2

Net assets for entities and operations included in discontinued operations are summarized as follows:

	June 30, 2011		December 31, 2010
	(in millions)
Assets:
Property and equipment, net	$	33.1	$	38.0
Other assets, net	9.8		22.1
Total assets	$	42.9	$	60.1
Liabilities:
Total liabilities	10.9		5.4
Net assets	$	32.0	$	54.7