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Commitments and contingencies
12 Months Ended
Dec. 31, 2011
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure
Commitments and contingencies
Litigation. From time to time, the Company is a party to litigation, most of which arises in the ordinary course of business. The Company is not currently a party to any litigation that management believes would be likely to have a material adverse effect on the financial position, results of operations or cash flows of the Company.
East Chicago Local Development Agreement. Pursuant to a Modified Local Development Agreement (the “Modified LDA”), for the period beginning June 3, 2011, Ameristar Casino East Chicago, LLC (“ACEC”) is required to pay 1.625% of its adjusted gross receipts from operation of the casino (“AGR”) to the City of East Chicago, Indiana (the “City”) and 1.625% of its AGR to Foundations of East Chicago, Inc., an Indiana not-for-profit corporation (“FEC”), to be used by the recipients solely to support and assist economic development in the City through specified initiatives set forth in the Modified LDA and for reasonable and necessary administrative expenses. The Modified LDA provides that ACEC will make the payments to separate and segregated bank accounts maintained by each recipient within 20 days after the last day of each calendar month; provided, however, that if directed by the Indiana Gaming Commission (the “IGC”), ACEC must make the payments to one or more held bank accounts. ACEC’s sole obligation under the Modified LDA is to make the economic development payments described above, and it has no obligation to monitor or enforce the proper use of the payments by the recipients, which is the duty of the IGC. The Modified LDA will continue in effect until the termination or expiration of the East Chicago riverboat gaming license or until any final and non-appealable order or other action is taken by the IGC to disapprove or terminate the Modified LDA.
The Modified LDA modified and superseded in its entirety the prior local development agreement for the East Chicago casino (the “Prior LDA”), pursuant to which ACEC had been paying 2% of its AGR to FEC, 1% of its AGR to the City and 0.75% of its AGR to East Chicago Second Century, Inc., an Indiana corporation (“Second Century”), with the respective amounts payable to FEC and Second Century being deposited into two ACEC segregated bank accounts. On June 30, 2011, ACEC, the City, FEC and Second Century agreed in principle to accept the terms of the Modified LDA, allocate and distribute the funds in the two ACEC segregated bank accounts and dismiss with prejudice all pending claims against each other with respect to the Prior LDA and the Modified LDA. On September 29, 2011, the two lawsuits in which the Company was a defendant were dismissed with prejudice (except for certain claims not involving the Company). As of December 31, 2011 and 2010, the Company’s East Chicago LDA liability was $0.7 million and $28.0 million, respectively.
Self-Insurance Reserves. The Company is self-insured for various levels of general liability, workers’ compensation and employee health coverage. Insurance claims and reserves include accruals of estimated settlements for known claims, as well as accrued estimates of incurred but not reported claims. At December 31, 2011 and 2010, the estimated liabilities for unpaid and incurred but not reported claims totaled $9.4 million and $10.8 million, respectively. The Company considers historical loss experience and certain unusual claims in estimating these liabilities. The Company believes the use of this method to account for these liabilities provides a consistent and effective way to measure these highly judgmental accruals; however, changes in health care costs, accident or illness frequency and severity and other factors can materially affect the estimate for these liabilities.
Guarantees. In December 2000, the Company assumed several agreements with the Missouri 210 Highway Transportation Development District (“Development District”) that had been entered into in order to assist the Development District in the financing of a highway improvement project in the area around the Ameristar Kansas City property prior to the Company’s purchase of that property. In order to pay for the highway improvement project, the Development District issued revenue bonds totaling $9.0 million with scheduled maturities from 2006 through 2011.
The Company has provided an irrevocable standby letter of credit from a bank in support of obligations of the Development District for certain principal and interest on the revenue bonds. The amount outstanding under this letter of credit was $2.6 million as of December 31, 2011 and may be subsequently reduced as principal and interest mature under the revenue bonds. Additionally, the Company is obligated to pay any shortfall in the event that amounts on deposit are insufficient to cover the obligations under the bonds, as well as any costs incurred by the Development District that are not payable from the taxed revenues used to satisfy the bondholders. Through December 31, 2011, the Company had paid $2.0 million in shortfalls and other costs. As required by the agreements, the Company anticipates that it will be reimbursed for these shortfall payments by the Development District from future available cash flow, as defined, and has recorded a corresponding receivable as of December 31, 2011.