SCOTT CITY -- With a signed contract in hand and three possible sites on the horizon, the Lady Luck Gaming Corp. is charging full steam ahead in a quest to be the first company to open a riverboat gambling facility in Southeast Missouri.

But among the hurdles in the path ahead of the Las Vegas, Nev.-based company is rights to the waterway it wants to use for its facility.

Lady Luck officials will meet Saturday or Sunday with four commissioners and the executive vice president of the Little River Drainage District, to begin negotiations over the channel.

The district expects the company to ask permission to float a boat down the Diversion Channel en route to the Mississippi River, or to moor one in the channel's headwaters.

"With any of the sites that involve the Diversion Channel, the company would have to get permission from my board of supervisors," said Larry Dowdy, executive vice president of the Little River Drainage District.

Scott City and Lady Luck signed a $63 million contract last Tuesday, which named a parcel of land east of Rhodes Travel Center on Nash Road north of Scott City as the primary site for a riverboat gambling operation. The site, about two-and-one-half miles west of the Mississippi River, necessitates the use of the Diversion Channel as a waterway to the river.

Also in the contract, Lady Luck listed two other sites on the Mississippi River itself, one at the end of Route N east of Scott City, and the other on a parcel of land at the head of the Diversion Channel.

The meeting between the gambling company and the drainage district won't be the first time the district has been approached by gambling firms. When the Southeast Missouri Regional Port Authority spurned riverboat companies' efforts to have a Scott City-based facility there, gambling representative turned to the next body of water north -- the channel.

In April, members of the drainage district said they would support a riverboat gambling operation on the channel, but the levees' integrity would be paramount.

As the board hears from the gambling boat representatives, it must keep the landowners that have a vested interest in the channel in mind, Dowdy said.

"We're in the levee, flood-control and drainage business, not in the boat business," said Dowdy. "Whatever proposal Lady Luck may have for the channel would have to preserve its integrity and have no ill-effects on the channel itself or the surrounding area."

In the meantime, Lady Luck is seeking a declaratory judgment from the state on a clause in the riverboat gambling regulations that requires the boat to float the Mississippi or Missouri rivers. The company contends the Diversion Channel is part of the Mississippi River.

But earlier this year, a gaming official said the channel isn't part of the river to which it serves as a backwash canal.

Lady Luck officials said Tuesday the verdict is still out on the Diversion Channel question, but it isn't slowing the company's progress on site acquisition and application for a state license.

If the state allows Lady Luck to use the Diversion Channel in its plan, it faces yet another problem in the channel itself. On Tuesday, with the river stage at 19.9 feet -- normal for this time of year -- the average depth of water in the channel itself is 5 to 7 feet. In many places, the water wasn't that deep.

"They would definitely have to do some dredging if they want to float a boat up and down the channel," said Dowdy.