3 Top Execs Resign From Hilton Amid Casino Flap

Hilton Hotels Corp. shocked the gambling world Friday by announcing the resignations of three senior executives--including former President Raymond C. Avansino Jr.--in the aftermath of delays and an investigation of its effort to open a Kansas City, Mo., riverboat casino.

Hilton Chief Executive Stephen Bollenbach announced the resignations during a meeting of the Missouri Gaming Commission, which in August postponed issuing the Beverly Hills-based company a gambling license to operate the casino. The commission said it needed to look more closely into alleged misconduct by Hilton in building the casino.

The Missouri regulators were looking into charges that Hilton made a $250,000 grant to a business associate of the former head of the city’s port authority, who was involved in the riverboat talks.

But the commission on Friday issued Hilton a preliminary license after the announcement of the resignations of Avansino, who had remained as a consultant and a Hilton board member; F. Michael O’Brien, executive vice president of gaming development; and Mark Rousseau, senior vice president of development for Hilton’s gambling unit.

“When people make mistakes in judgment, there are penalties associated with that,” Bollenbach said. “I was very happy that they resigned prior to this hearing.”

Hilton executives were not available for further comment.

The resignations and investigation are an embarrassing blow to Hilton as it prepares to complete its $3-billion takeover of Bally Entertainment Corp., which will make Hilton the nation’s largest gambling operator. Hilton has been able to crack new gaming markets with its squeaky-clean image.

Bally Chairman Arthur Goldberg will run Hilton’s gaming operations.

The controversy surrounding the Missouri license could have derailed approval of the Bally acquisition in Mississippi, Louisiana, Nevada and New Jersey, analysts have said.

Marvin Roffman, a Philadelphia money manager and gaming industry observer, said Hilton had to act quickly and dramatically to protect its reputation.

“These people are expendable because the most important thing is the preservation of the Hilton name and its pristine reputation,” he said.

The departure of Avansino was particularly startling in the industry because of the respect and stature he had gained as a Nevada gaming regulator and during his three-year run as president of Hilton. Avansino cited personal reasons when he resigned the president’s post in November.

“I just say, ‘Wow,’ ” said William N. Thompson, who studies the gambling industry as a professor at the University of Nevada in Las Vegas. “He’s a top-notch man in terms of integrity. It’s a little disappointing to hear this.”

Hilton allegedly made a $250,000 grant to an employee of Elbert Anderson, who was involved in riverboat negotiations as former head of the city’s port authority. The employee worked at a public relations firm owned by Anderson.

The grant was allegedly made three years before Hilton was to pay for any grants to local groups under contract with the city.

It could not be determined whether the gaming commission would continue with its investigation.