Betting excessively on leverage leads to bankruptcy for casino

Racetrack and casino operator Indianopolis Downs has today filed for bankruptcy protection in the district of Delaware with over $500 million in debt outstanding. This debt includes $98 million in first lien debt outstanding, as well as $375 million in senior notes and $72 million in subordinated notes. The firm missed an interest payment in November on its senior notes.

Indianopolis Downs runs a 'racino', a combined racetrack and casino, on a 283 acre site in Shelbyville, Indiana. In its bankruptcy filings, the firm claims that it generates enough revenue to pay its operating expenses but has been overleveraged since its inception.

According to the filings, Indianopolis Downs' majority owner is Oliver Racing which holds a 95.39% stake, while Ross Mangano and John Warriner hold stakes of 1.54% and 3.07% respectively.