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Commitments and contingencies
6 Months Ended
Jun. 30, 2011
Commitments and contingencies [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.
Reference is made to the legal proceedings discussed under the caption “East Chicago Local Development Agreement Litigation” in Item 3 of Part I of the Company's Annual Report on Form 10-K for the year ended December 31, 2010. On June 2, 2011, the Indiana Gaming Commission (the “IGC”) approved a Modified Local Development Agreement (the “Modified LDA”) for the casino in East Chicago, Indiana owned and operated by ACI's wholly owned subsidiary, Ameristar Casino East Chicago, LLC (“ACEC”). Pursuant to the Modified LDA, for the period beginning June 3, 2011, 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 (i) if directed by the IGC, ACEC must make the payments to one or more held bank accounts, (ii) if a recipient brings a judicial or administrative action challenging the terms of the Modified LDA, including any claim objecting to or contesting the economic development payment percentages or amounts or the payment terms, ACEC will instead make that recipient's payments into a segregated bank account maintained by ACEC or the IGC until the claim is finally resolved and will pay for its defense of the claim by deducting the amount of its defense costs and expenses from the payments and (iii) until certain pending court orders concerning the Prior LDA (as defined below) are modified, ACEC will continue to pay a total of 2.75% of its AGR (1.125% in respect of its obligation to the City and 1.625% in respect of its obligation to FEC) into two existing segregated bank accounts maintained by ACEC and will pay 0.50% of its AGR to the City as described above. ACEC's sole obligation under the Modified LDA is to make the economic development payments described above, and it will have no obligation to monitor or enforce the proper use of the payments by the recipients, which will be 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 modifies and supersedes 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 the two ACEC segregated bank accounts as described above. On June 7, 2011, the City filed petitions against the IGC to, among other things, stay and vacate the IGC resolution approving the Modified LDA and void and nullify the Modified LDA. 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. This settlement is subject to the approval of the IGC. The Indiana Attorney General (the “IAG”) has pending legal claims against Second Century and its principals relating to money Second Century received under the Prior LDA, and the IAG is not participating in the settlement and will not dismiss those claims. The parties may nevertheless proceed with the settlement if the IAG agrees not to oppose the settlement or bring any claims against the parties for complying with its terms, which the IAG has indicated it might be willing to do.
     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 June 30, 2011 and December 31, 2010, the estimated liabilities for unpaid and incurred but not reported claims totaled $10.0 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 estimates for these liabilities.