David Mckee's Stiffs & Georges - Stanley Ho

Great O'Day in the morning

Fri, 16 Oct 2009 14:15:00 -0700

Peepshow star/trainwreck-in-progress Aubrey O'Day likes to speak her mind, for whatever it's worth. Evidently the recklessly candid utterances of Ms. O'Day were worth not one, not two but, yes, three dispatches by Richard Abowitz.

The fascination is understandable, given an interview subject who readily owns up to being unhappy and describes her demi-celebrity as "fame-ish-ness." O'Day's costar, Holly Madison may have been dubbed "Queen of Vegas" but when Las Vegas Weekly tried to wrest similar prose mileage out of her, the result was better than Sominex. Strangely, I find myself rooting for the id-on-the-loose that is O'Day to go the distance here in Vegas.

A Bronx Tale. Kudos to Sheldon Adelson for rolling the dice on Chazz Palminteri's virtuosic one-man show, whose run has been extended for another week. Yours truly finds it a rather warm-and-cuddly depiction of Mob life but both Mike Weatherford and Joe Brown express nearly unmitigated enthusiasm. Whichever way you slice it, it's still three thumbs up for Palminteri.

Wynn still happy. If the Chinese government's aim in applying further curbs to Macao is to "tamp ... down" the Cotai Strip™, where Sheldon Adelson™ aims to build "Asia's Las Vegas™" no wonder Steve Wynn is a happy camper. Anything that handcuffs main rivals Las Vegas Sands and Stanley Ho is good news at Wynn HQ, especially with Encore Macau coming on line soon. How boring life would become if Wynn and Adelson ever suspended their running verbal gunfight.

Macao giveth, Macao taketh away

Tue, 13 Oct 2009 17:41:00 -0700

Casino operators in Macao better make the most of the recent relaxation of visa quotas into the enclave. What the government gives with one hand, it partly reclaims with the other. Casino expansion remains out of the question and the minimum age for gambling would go up to 21, from 18, under a bill draft soon to be put forward. (Steve Wynn can afford to be sanguine, as it's far more likely to impact his mass-market-oriented competitors. Investors didn't share his enthusiasm.)

If Wynn -- who continues to toe the Peking party line -- comes out a winner, facing negligible "obstacables," Lawrence Ho is the presumptive loser. As best S&G can ascertain, the curtailment of gambling in residential areas is aimed at his Mocha slot routes, one of the younger Ho's bread-and-butter enterprises.

Another proposal awaiting action by the Macanese Lege would cap table-game inventory. Writes J.P. Morgan analyst Joseph Greff, "we believe the Macau government believes the timing is right to implement these initiatives given the completion of the commission cap rule and the resumption of growth in the industry ... if the number of tables will be limited to 1,000 per operator, [Las Vegas Sands] may need to modify its future expansion plans, as it is already over the limit, while SJM will need to close down some of the older tables operated by the third parties, as it too is already over the limit."

None of this appears to bode especially well for Sands' long-in-coming IPO, although it remains to be seen whether this is a bonafide legislative agenda or simply a warning to inhibit growth. The news, however, managed to cast a pall over Sheldon Adelson's planned resumption of his Cotai Strip™. Also, it's not as though the Macanese government and its casino-owning subjects don't have to worry about an upsurge in gambling back on the Mainland.

Detroit, briefly. The depression continues to eat into Detroit's casino revenues, -2% last month. Despite a -6.5% drop, MGM Grand Detroit remains the big cat, grossing $42 million. Second place is up for grabs, though, as MotorCity continues to fall back (-7%) toward upstart Greektown (+12%), which is closing the gap, grossing $28.5 million against $33.5 million for MotorCity.

Stanley Ho: I'm not dead yet!

Fri, 09 Oct 2009 13:15:00 -0700

Either rumors of Stanley Ho's death, three weeks ago, were greatly exaggerated or the elderly casino magnate has made the most remarkable recovery since Jesus Christ. (I'm put in mind of a favorite bit of Babylon 5 dialogue in which Capt. Sheridan [Bruce Boxleitner] confirms that he indeed died, adding, "I'm better now.")

Today, Bloomberg News reports Lawrence Ho says dear old Dad is "looking better every day" and making a good recovery from -- as best we can conjecture via published reports -- a subdural hematoma brought on by a nasty fall. The younger Ho says his father's SJM has no plan of succession in place. Boy, when the Grim Reaper eventually comes for old Stan, the fight for control is going to make King Lear look like a tea party.

A compromise is shaping up in the Pennsylvania table-games wrangle and casinos won't like it one bit. According to J.P. Morgan summary, while the Dems in the lower house haven't budged off their preferred $20 million upfront fee/34% tax equation, the GOP-led state Senate has blinked.

The Senate's proposal would set the license fee at $15 million (a 50% increase) and the taxes at 14%, up from 12%. Casinos might be able to swallow that, on the presumption that the tax increase is small and the extra $5 million in fees can be quickly recouped. Even at $20 million, a bigger upfront hit can be regained by operators off the back end -- provided that the tax rate stays relatively low. Doubtless that's the lesser of two evils, from their perspective.

Bluhm: $45 million saved is $45 million earned.

On the money-saving front, the budget for the initial version of Neil Bluhm's SugarHouse casino is now announced at $310 million: a -$45 million shift. Considering that Bluhm's Rivers Casino and Sheldon Adelson's Sands Bethlehem came in at a staggering $1.5 billion-plus (combined), this new dollar figure suggests a welcome return to fiscal restraint. Your turn, Foxwoods.

Case Bets: California crisis, M cutbacks, "Guiding Light" in LV, etc.

Thu, 08 Oct 2009 11:50:00 -0700

Ist California kaput? That's the question posed by the The Observer and it makes for troubling reading. If Gov. Jim Gibbons (R-NV) is right that tourism from California is the carotid artery of Nevada's economy, then the Silver State is -- to put it politely -- screwed. A good thing the Lege didn't follow Midnight Jim's advice and shut down Nevada's outreach efforts in China.

Speaking of which ... Amidst a flurry of economic developments and positive indicators in Macao, the casinos of Stanley Ho are backing off the expensive VIP trade and going mass-market. (Translation: "We're coming after you, Sheldon Adelson.") Thanks to reader mike_ch for the link.

Colossal buMMer. Breakfast has just been eliminated from the offerings at the M Resort buffet. Unless one lives nearby (a relatively small clientele), M is a heckuva long detour to make for breakfast, so this economy move is understandable ... but depressing all the same. No casino buffet gets higher marks from LVA readers.

That's a bit weird. Stay with me here, folks. CBS cancels Guiding Light, replacing it with Let's Make a Deal, which is shot at the Tropicana Las Vegas. So what should be coming to Vegas in December (at The Rio) but a Guiding Light farewell tour -- yes, Reva, Josh and the whole kit 'n kaboodle. How much you wanna bet they won't be taking in a LMaD taping at the Trop? The only way to make this scenario more Banquo's Ghost-ly would be for the soap convention to be held at the Trop, too.

P.S.: Better get your tickets now before the 'Otalia' fans scarf them all up.

Company. Performances resume at UNLV tonight and it's a must-see. Mind you, the Review-Journal praises the Stephen Sondheim revival with faint damns, while the Sun's review reverses that formula. But I'd pay to see it again, which I don't say about many shows in this town.

Macao's blockbuster month

Fri, 02 Oct 2009 18:23:00 -0700

A flurry of good news to end the week, starting in Macao:

September, the first month affected by a relaxation of severe visa restrictions imposed on the mainland, saw a 53% jump in Macanese gambling revenues. In terms of market share, Stanley Ho opened a big lead on Sheldon Adelson, 30% to 20%, with Melco Crown Entertainment close behind with 16%. The remainder of the market was divvied between Wynn Resorts (14%), MGM Mirage (10%) and Galaxy Entertainment (8%).

Is Melco's City of Dreams (above) eating into nearby Venetian Macao's business? On the surface, it certainly looks plausible. Given the immensity of the facilities he's building on the Cotai Strip™, Adelson ought to be getting more bang for his pataca.

Vegas hearts gays. Earlier today, I was asked to reflect on my nearly 11 years in Las Vegas. It's been full of surprising twists of fate -- who ever thought Steve Wynn would be forced out of the Mirage brand he'd created, just for starters?

But I sure as heck never imagined I'd open my e-mail box at work and find the following casino promotions, all keyed to National Coming Out Day (Oct. 3):

"Two Queens Beat a Straight" (New York-New York)

... or the slightly more innocuous ...

"COME OUT and Celebrate at Luxor"

(Luxor was smart and didn't offer Criss F. Angel tickets as part of the, uh, package)

In the Vegas of even a few years ago, "Boys' Night Out Package at Excalibur" would have had more of a frat-party connotation. MGM Grand plays it safe with a "His or Her Getaway" which sounds like a generic singles-oriented deal. Even so, we're actually seeing progress from the days when Vegas marketed itself as a synonym for a very debauched and jaundiced vision of male heterosexuality.

There's nothing like a depression to make this a party town of equal-opportunity decadence. After all, LGBT dollars spend just as fast as straight ones.

$545 a night. That's what Mandarin Oriental is asking. If you read the fine print, you'll note that (through March 31), if you buy a room night at that rate, you'll get a comped night, too. Which makes the effective rate $272 and change. By current standards, that's still steep ... but maybe staying in a 392-room hotel instead of a 4,000-room behemoth is an intangible added value. What do you think?

Atlantic City sucks ...

Tue, 22 Sep 2009 18:05:00 -0700

... says the Motley Fool, in essence. Even Borgata, which posted a higher operating profit year/year, is deemed merely to suck less than everybody else. I'm not sure I'm with the Fools on this one. For instance, shouldn't Sands Bethlehem be doing better than fifth among Pennsylvania casinos, especially when you consider its proximity to New York City?

Elsewhere on the Boardwalk, the UAW is fighting Trump Plaza, the Plaza is fighting the National Labor Relations Board and Trump dealers are fighting amongst themselves. Since 32% of dealers initially voted against UAW representation, it should be a cinch to round up 30% to sign a decertification petition. Kudos to Trump Entertainment Resorts CEO Mark Juliano for going out of his way to soothe potential animosity between labor and management.

MILF convention in A.C.: On Oct. 3, former Bunnies and other veterans of the short-lived Playboy Hotel & Casino will return to the shore to relive the good old days. A few might even wriggle into their old Bunny costumes. Maybe a re-infusion of the Playboy brand is what Atlantic City needs. It can only help. Are you listening, Carl Icahn? Revel? Pinnacle Entertainment? Anybody?

Finally, a reason to visit Orlando ...

... or maybe not. And that dude from Scotland is in serious need of subtitles.

Resort-style casinos come to Colorado and doesn't Ameristar's new hotel look lovely? Now, if only somebody would build a mid-market property like this on the Strip. Why must average Americans settle for older, second-tier properties if they're to afford a Vegas vacation?

Health care reform + Internet gambling? Is it just me or is Sen. Ron Wyden (D-OR) onto something here? This may be just the carrot to dangle in front of legislators who still balk at allowing Americans to wager on the Web.

Creditors screwed again. How much is Greektown Casino worth? Is it the $725 million its creditors claim? Or the $540 million that Greektown asserts? Or maybe the lowball $485 million that lead bidder Tom Celani is willing to pay? Greektown's recent -- and well-publicized -- inroads into the market share of its Detroit rivals lend merit to the higher-end valuations. If the place was in the doghouse, I might sympathize with Celani (who's likely to boot the very management team responsible for Greektown's turnaround), but Fine Point Group has definitely enhanced a once-seedy casino's value.

It's official. VIP-player commissions in Macao will be capped. Since the war over junketeer commissions was threatening to make Macao a negative-revenue proposition, the new ceiling will greatly improve cash flow for Macanese operators. Middle-of-the-pack Galaxy Entertainment is expected to benefit the most (+27% EBITDA), followed at some distance by Stanley Ho (16%), with Las Vegas Sands and MGM Mirage bringing up the rear. Although the elderly Ho may be on his deathbed, he's lived long enough to broker peace in a potentially destructive situation where the only sure winners were the sought-after junket operators.

Bounce-back for Macao?

Fri, 21 Aug 2009 17:17:00 -0700

Remember how gambling revenues in Macao during July were up 3% from last year (the first positive comparison this year)? That was soon followed by the news that numbers for the first half of August are even more encouraging still (+20%). Though Macanese casinos are on track for a $1.5 billion August, analysts urge caution, noting that the first half of August '08 was exceptionally weak.

Still: Wherefore this sudden resurgence?

Perhaps it's the delayed effect of a February loophole that allowed Guangdong Province residents to circumvent a ban on travel to Macao on Hong Kong visas. Whatever the case, business should get better still on Sept. 1 when, the Macau Tourism Council says, restrictions on Guangdong Province will be loosened even further. That's music to the ears of every casino boss in Macao, needless to say.

Sheldon Adelson, in particular, has fallen in clover. This revelation comes just as he's putting the finishing touches on a planned IPO on the Hong Kong stock exchange (with Steve Wynn following suit). The stock offering, it is hoped, will generate sufficient liquidity to finish a quartet of stalled hotels on the Cotai Strip™ (with five more to come). Right now, the area looks like an outsize version of Miss Havisham's wedding, "leaving swaths of the nascent Cotai Strip covered by steel and concrete skeletons," in the words of Bloomberg News. Macao doesn't need more rooms right now. However, Adelson sure could use the lucre from the casinos onto which the hotels are piggybacked.

But what of Stanley Ho? While the casino baron ails, Bloomberg has unpacked Dr. Ho's June address to G2E Asia, in which he laid into his U.S.-based rivals. “The success of one market model cannot be migrated to another ... Ignoring Macao’s special characteristics and duplicating a Las Vegas or an Atlantic City would not be a successful strategy.” (The article also minces few words about the elder Ho's triad associations.)

Those of us who scoffed at Ho's antediluvian casinos are finding that the comparably ancient oligarch is having the last laugh, even if it may be from his deathbed. “The Macao audience is less focused on the ancillary things around gambling. Stanley, with his wealth of experience, understood that better," says Thornburg Investment Management analyst Alex Motola.

Meanwhile, various Ho clan members may be at daggers drawn. Favorite wife Angela Leong is the perceived successor, but daughters Pansy, Daisy and Maisy Ho (no, I didn't make that up) aren't going to step aside quietly, from the looks of things ... especially since Leong is only two years Pansy's senior. SJM CEO Ambrose So is also being tipped as a potential dark-horse heir to King Stanley's throne.

Business as usual at Hotel Lisboa.

But how would the Macanese government cotton to the notion of Pansy Ho controlling both the SJM concession and half of the MGM one? A third concession could be up for grabs if City of Dreams fails to perform, thereby becoming what Melco Crown Entertainment CEO Lawrence Ho calls his "endgame."

His father's death could also set off a philosophical war between the tried-and-true Stanley Ho business model, time-worn though it may be (and likely to be championed by Leong and So), and the Vegas Lite approach in which Lawrence and Pansy have dabbled. But with the Ho family having its fingers in three casino pies (MGM, Melco, SJM) simultaneously, they'll come out winners no matter which way the pie is sliced.

Stanley Ho's newest and oldest progeny: Grand Lisboa and Hotel Lisboa.

From Malaysia to Monticello. Do you recall those stock sales by Genting Bhd insiders a while back? At the time, it looked as though the money would go toward an acquisition of MGM Grand Macau. However, it now appears the lucre will purchase a stake in struggling Empire Resorts. That's the company whose executives were luxuriating in the low-tax suburbs of Las Vegas -- even though Empire's sole gaming asset was a racetrack in Monticello, N.Y., a full continent away.

City of (better) Dreams

Mon, 17 Aug 2009 11:19:00 -0700

J.P. Morgan has raised its 2010-11 cash flow estimates for Melco Crown Entertainment's $2.4 billion City of Dreams megaresort, bringing projected return on investment into the 11%-11.5% range. That comes in the wake of good news that gambling revenue in Macao was $1.2 billion in July, up 3% from last year. That's the first positive comparison of 2009.

What's still more stunning is July's sudden parity between Macanese operators. Stanley Ho commanded 23% of market share but Las Vegas Sands was nipping at his heels with 22%, followed by Melco Crown (18%), Wynn Resorts (15%) and MGM Mirage, leapfrogging past Galaxy (10%) into fifth place with 12%.

Adelson wins one. Sands CEO Sheldon Adelson has vanquished at least one litigant. A federal district court judge scotched former Adelson flunky Moshe Hananel's claim on a share of Sands' Chinese revenues. The former Interface Partners International exec sought credit for having the Sands-in-Macao idea first and laying the groundwork for Adelson's Chinese overture. Adelson recently paid off one trio of claimants and is still battling former associate Richard Suen after losing badly in court.

Stanley Ho, ailing monarch

Mon, 10 Aug 2009 12:02:00 -0700

Not many of us make headlines by waking up in the morning and saying something. But when the future of over 50% of Macao's casino market hinges on A) your health and B) your plan of succession, and C) your name is Stanley Ho ... well, it's a big deal. Macau Daily Times is reporting that the elderly Ho is both conscious and articulate. However, it's also saying that he needs further surgery to extricate blood clots from his brain. My suspicion that the gambling oligarch suffered a stroke (or something very close thereto) and not a simple slip-and-fall -- was first reported -- is hardly dispelled by this latest news.

For reasons I was in the midst of outlining last Friday, just before the Big Computer Freeze destroyed it all, we're far from out of the woods on this. Also, the gathering of family members around the patriarch's sickbed is -- due to various business agendas -- somewhere between courtiers hovering around an ailing monarch and vultures circling potential prey.

Alas, all that must go onto the back burner until I deal with some outstanding business that includes reviewing L.A. Comedy Club at the Four Queens and Tickled Pink at Planet Hollywood. We had some extra time before the latter last night to contemplate CityCenter. Whether one likes it or not, it's going to make several nearby properties -- I'm looking at you Monte Carlo and especially New York-New York -- look very antiquated, bordering on tacky. With a few exceptions, the Wynn-initation themed resorts are proving to have surprisingly short shelf lives.

There's treachery afoot!

Fri, 07 Aug 2009 18:10:00 -0700

There I was, 90 minutes into composing a piece de résistance of blogging about palace intrigue surrounding Stanley Ho's sickbed ... when a defective link to some Macao TV coverage froze my computer. Dozens of links, paragraph upon paragraph ... all gone, force-quitted into oblivion. It's enough to make one retire to the nearest sickroom. Aaaaarrrrggghhh!

In the future, when I get the notion to engage in long-form blogorrhea, somebody please belabor me with the nearest heavy object until the fit passes.

Casino wars in Macao

Fri, 07 Aug 2009 16:25:00 -0700

Bloomberg's interview with Credit Suisse's Steven Chan is now online and is must-see TV:

Douchebags on parade

Mon, 03 Aug 2009 16:06:00 -0700

With a crowd like this ...

... is it any wonder that The Rio's Sapphire Pool became a PR catastrophe (complete with rogues' gallery)?

Too bad that Bloomberg News doesn't permit its video reports to be embedded. Credit Suisse analyst Gabriel Chan gives an interesting, fact-packed report on Macao. It's a somewhat long interview segment, but stay with it because the good stuff comes near the end. That's where Chan explains why Stanley Ho is able to build a new casino for only $200 million and how come the much-hyped relaxation of visa restrictions is still at least four months away.

Aztar deal the worst ever: it's quantifiable

Tue, 28 Jul 2009 12:39:00 -0700

When he acquired Aztar Corp., back in 2006, Columbia Sussex CEO William J. Yung III also became one of the company's debtors. So what's his $36 million worth today? According to the Wall Street Journal, 100 grand or less. If that weren't enough to make the ColSux/Aztar deal the all-time biggest casino-sector wipeout of the last 15 years, consider that Carl Icahn's "$200 million" credit bid (i.e., no money down) was placed with debt acquired at 27 cents on the dollar. So Icahn has himself a new casino for a tidy $54 million outlay.

In a less-reported development, Icahn also gained a controlling position in Tropicana Entertainment. Without either its Atlantic City or Las Vegas Trops, it'd be a car without an engine, a gaggle of riverboats and motels. Exactly where this leaves CEO Scott Butera and what role he'll play remains an open question. Hopefully, either his or Icahn's first move in Atlantic City will be to replace floundering Trop General Manager Mark Giannantonio (a Yung crony) with someone more up to the job.

Movement at Cosmo: The GM of Caesars Palace, John Unwin, has resigned. He'll become CEO of the stalled Cosmopolitan in October. While it's still unclear under whose aegis the casino will be run, Unwin's hiring is the first concrete move to get some gaming expertise on board since Deutsche Bank seized the property.

Whining in Macao: Those two "integrated resorts" in Singapore haven't even opened yet and won't for another half a year, but Stanley Ho (whose venerable Hotel Lisboa is seen above) already has his panties in a bunch. According to Bloomberg News, the ancient casino oligarch has been wringing his hands about the burdensome, "serious issue" posed by Macao's 39% tax rate.

Boy, Singapore must be a more serious threat than I'd given it credit, if it's got a Communist Party suck-up like Dr. Ho all a-twitter and taking issue with the government. He's still in better shape than his American rivals; the attempt to graft Vegas-style megaresorts onto Macao has left them badly exposed to anemic market conditions. Ho's gambling-centric strategy gives him less cause for worry.

Today Singapore, tomorrow the U.S.? Even while lender's remorse has paralyzed American banks and stalled any hopes of "unbundling" the U.S. casino industry, diversification may be coming from an unlikely corner. Malaysia's Genting Bhd, riding a sustained runup in its stock, has $2 billion in the kitty, is raising more and could pump $7 billion into casino acquisitions.

That isn't to say there aren't a lot of "ifs" and "buts." Still, Genting's fundamentals appear far more sound than those of say, Las Vegas Sands. It's also in a position to deal a serious blow to Sands in Singapore. Not only will its Sentosa Island casino-resort open before Marina Bay Sands, but customers who "subscribe" to a $1,388/year entrance fee to one casino or another must play exclusively at that casino for the year. Once again, Sheldon Adelson's inability to finish a megaresort on schedule threatens to bite him in the butt.

City of Nightmares?

Sun, 05 Jul 2009 17:29:00 -0700

Melco Crown International finds itself with the dubious distinction of having opened a megaresort and lost market share. The projected 7%, if accurate, would not only be 50% of what analysts expected, it could push Melco Crown behind MGM Grand Paradise and into last place in Macao. If I read Ian Sutton's footnotes correctly, Melco Crown is losing money on its VIP-player commissions at City of Dreams.

(Erratum: My mistake. City of Dreams is simply $40 million short of its projected rolling-chip play. The commission rate is a fixed cost.)

Meanwhile ...

The long arm of Stanley Ho reaches forth, extending his empire into the Pacific. Today Tinian, tomorrow ... ?

Stormy weather

Wed, 01 Jul 2009 12:40:00 -0700

It may be monsoon season in Las Vegas but there's a typhoon blowing through Macao's casino economy. A series of bulletins from J.P. Morgan outline a worrisome trajectory for China's gambling enclave.

City of Dreams: a flop

June 23: The South China Morning Post reports service cutbacks in Macanese air traffic during January-March. Low-cost carrier Air Asia held steady, but China Eastern Airline scrapped all flights, Xiamen Airline slashed service by 59%, followed by Malaysia Airlines (-38%). Single-digit declines were noted at Air Macau (-9%) and Viva Macau (-4%). Although recently de-licensed carrier East Star had been shedding flights (-40%), competitors did not appear to be moving to fill the void.

June 24: Macao's Special Administrative Region Statistics & Census Service reports a 20% visitation decline in May, to 1.6 million tourists. Of those, fewer than half were from the mainland (-27%) and 55% were day-trippers. Only 13% are coming from outside Hong Kong, Taiwan or the mainland.

July 1: News agency Lusa has preliminary revenue numbers for June (the first month for City of Dreams) and the comparisons, by Macao standards, are terrible: -17%, for $1.05 billion. So far, the casinos are tracking ahead of the government's revenue projections -- which were pretty dire ($892K/month) already.

There's a silver lining for Sheldon Adelson, whose Sands Macao and Venetian Macao rebounded, running Stanley Ho's myriad casinos a close second in market share, 26% to 30%. Wynn Macau fell toward the pack, which was as follows: Wynn 14% (a humiliating setback; it had been only three points behind Las Vegas Sands in May), Galaxy 12%, Melco Crown International down a point to 9%, and MGM Mirage bringing up the rear, as always, with 8%.

Sands Macao: Adelson's best-ever investment

Buoyed by Sands' Macao numbers, Morgan analysts are bullish on Adelson, mainly because of "reasonable near-term and achievable expectations for its LV Strip properties and our belief that its LV properties are outperforming its peers." Just when you think Sheldon's painted himself into a corner, he seems to find a means of escape ... which may be why some of us were less skeptical of the financial hurdles facing Sands Bethlehem and the Cotai Strip™ than we should have been.

There seems to be a school of belief that if one keeps saying that visa restrictions from mainland China to Macao are about to be relaxed, it will miraculously happen. Not if Peking muckety-mucks keep seeing headlines like this. More to the point, bailout money that was intended to induce Chinese banks into writing more loans, thereby stimulating production, is flowing to the casino tables instead. That's a scenario highly reminiscent of the circumstances that led Peking to crack down on Macanese traffic several times already.

Land of the Pharaohs

Tue, 16 Jun 2009 15:49:00 -0700

My attempt to answer a reader's question about MGM Mirage's franchise deal in Gaza, Egypt, fell victim to LVA's Comment-Eating Server, so here goes ...

Unlike Station Casinos shopping for dog tracks in Massachusetts while it's poor-mouthing employees and investors alike -- or Harrah's Entertainment batting its eyelashes at Stanley Ho -- MGM is doing the right thing, IMO. It's diversifying a revenue stream that's overly reliant on Las Vegas.

True, the official phrase "will provide ... brand fees" is rife with ambiguity (and I've got a query out to New Giza). Obviously, it's a better deal if MGM is the fee collector. Beyond that, I can't see a downside to hiring out the company's considerable hotel experience and pocketing a management fee in return. MGM is being strategically creative and I applaud them for it.

Pansy passes the buck

Wed, 03 Jun 2009 12:52:00 -0700

An understandably sheepish-looking J. Terrence Lanni toasts the opening of MGM Grand Macau alongside business partner Pansy Ho and, front and center, project co-financier Stanley Ho.

MGM Grand Macau co-owner Pansy Ho says it's entirely up to MGM Mirage to defend her honor before the New Jersey Casino Control Commission. The gaming company says it isn't going to take the "unsuitable" finding of the Division of Gaming Enforcement lying down, setting the stage for the most riveting regulatory confrontation since the NJCCC decked Columbia Sussex.

Meanwhile back in Macao, papa Stanley Ho says that because his company is publicly traded that means everything is ipso facto on the up-and-up. Gosh, what a relief. How could we have ever doubted the man?

Rumble in Macao

Tue, 02 Jun 2009 17:34:00 -0700

Although an oft-promised loosening of visa restrictions by Peking stubborny refuses to materialize, an air of cautious hopefulness has crept back into Macao now that City of Dreams has opened on schedule -- and it looks dazzling. Aggressive revenue projections have literally reversed the fortunes of co-owner James Packer, whose disastrous venture into the U.S. casino industry is now seen by some as a blessing in disguise.

At $2.4 billion, City of Dreams rivals the cost of Venetian Macao and is hoped to equal or surpass the latter's 20% return on investment. One projection has it leapfrogging Wynn Macau into third place, with 20% of the Macanese market.

It also represents a double-edged sword for Sheldon Adelson's mammoth casino-resort. If it draws more punters to the Cotai Strip™, good. If it dilutes Adelson's customer base, not so good, obviously. In comments to the Wall Street Journal, Adelson seemed at pains to temper some headstrong pronouncements he'd offered to Steve Friess. As expected, an Adelson without the restraining influences of William Weidner and Brad Stone, is a pedal-to-the-metal Sheldon, saying Las Vegas Sands should have gone faster, faster, faster with its Cotai Strip™ projects, not slower. (The mind reels.)

"I just came back from Macau and we have five or six different options that we can pursue, each one of which would solve our liquidity problems," the Venetian's doge proclaimed ... which doesn't sound a lot different from what he's been saying for months. That is, until he contradicted himself by buying up a truckload of LVS stock -- something he wouldn't have done were a major deal in the offing.

Adelson predicts all his suspended Macao projects will be back in gear by year's end. He's on the curve in one respect, suggesting that his aborted St. Regis condo-hotel on the Strip could be revived by Sands' acting as lender to prospective unit buyers. Palms Place just started doing that very thing.

Sheldon's Commissariat for Optimism never closes, so one tends to grow skeptical of each new variant of "Victory is mine!" Anyway, Adelson was just off the plane from China, so perhaps jet-lag accounts for this reality-challenged assertion: "Our numbers have been going up and the [Macau peninsula] have been going down."

'Fraid not. Scarcely had that Adelsonian utterance made print than Lusa reported May's revenue numbers. If April had seen Wynn Macau falling back toward the pack, with 13% of market share, it returned with a vengeance in May. Steve Wynn's 18% market share -- with far less capacity than Adelson -- put him only three points behind LV Sands and came at the latter's expense. Stanley Ho still leads everybody with 30% -- as much as Galaxy Entertainment, Melco Crown Entertainment and MGM Grand Macau combined.

A few days earlier came news that visitation from Mainland China to Macao had been -43% in April ... hardly propitious conditions for flooring the Cotai Strip™ gas pedal. Ditto a 10% drop in May gambling revenues. Until that much-mooted visa liberalization actually happens, going apeshit with casino-hotel construction makes no sense whatsoever.

Nor did Adelson do his public image any favors with a gratuitous slam against jilted sidekick Weidner. (The latter, given the opportunity to respond, took the high road.) This 'hit 'em when they're down' move will accrue exactly zero sympathy for Adelson -- and it might have some nasty repercussions should it hamper Weidner's attempts to find another job. Then again, he's as rich as Croesus, so he can probably spend the next few decades on the golf course, should he so desire.

There's been no additional movement on the rumored Genting Berhad offer for MGM Grand Macau. However, even in a $13.8 billion/year casino market, the numbers don't look great for MGM. After it splits its 8% market share with partner Pansy Ho, it would have $55 million from which to pay an onerous tax bill, plus operating expenses. (The ROI must be dismal.)

Borgata, in Atlantic City, does $55 million a month -- in a bad month -- and MGM basically cashes a check from Boyd Gaming. So if MGM elects to stay in Macao and vacate Atlantic City, it won't be because the Chinese enclave is contributing more to the bottom line. Who ever thought MGM Grand Macau would function as a glorified "loss leader"?

Steve Wynn has a dragon ... and now Lawrence Ho does, too.

Back home, MGM is going downmarket at The Mirage. And they didn't even have to sell the place to Penn National in order to get there.

Strangely enough ... Penn's recent expression of interest in both Planet Hollywood and Station Casinos passed with scarcely a murmur of comment locally. You'd think that a well-capitalized company like Penn's hanging of a target on Robert Earl's or Frank Fertitta III's back would make headlines -- or maybe Vegas journos have tired of Penn's endless feints and tuned the company out. Well, almost all of them, anyway.

Planet Hollywood, at least, is acting far more aggressively than one would expect from a property that is contemplating a sale. So perhaps Earl is more pursued than pursuer. However, his conversion of Desert(ed) Passage into Miracle Mile appears to have run out of steam -- or money -- at the halfway point. Try as he might, Earl is never going to completely de-Aladdin-ize that place. A magic lantern and three wishes would come in real handy down there.

Also flying under the radar was former Planet Ho boss Michael Mecca's enlistment with Galaxy. Mecca jumped -- or, more likely, was pushed -- from the Planet right when the Omar Siddiqui scandal was at its height. Informed speculation had it that Mecca was thisclose to being tapped to head up James Packer's projected North American gambling empire. Crown Ltd. CEO Rowen Craigie was noncomittal, though, and Crown's big Cannery Casino Resorts acquisition fell through soon thereafter, leaving Mecca hanging.

Success being the best revenge, Mecca not only landed a prestigious new gig -- it's with one of Packer's direct rivals in Macao. Mecca shoots, he scores!

Which brings us full circle to Macao. That worked out tidily, didn't it?

Macao: Genting in, MGM out?

Fri, 29 May 2009 13:22:00 -0700

I've speculated elsewhere -- I believe it was on the TwoWayHardThree forum -- that Genting Bhd might be a logical, even inevitable successor, should MGM Mirage bail out of Macao. Seems that while I was laid up, news surfaced that Genting insiders are selling shares and rolling up a $425 million nest egg. They've also snapped up $100 million in secured MGM Mirage notes.

MGM Grand Macao co-owner Pansy Ho's dad, Stanley Ho, has played footsie with Genting in the past -- something the Singaporean government frowned upon fiercely. Hence the delicate footwork that key Genting players will have to execute if they're to convince Singapore (where Genting is building a multi-billion-dollar resort) that there's more than an arm's length between any potential dealings with the Ho family and Genting's investments on Sentosa Island.

That'll be a difficult minuet to dance but for what's been called "the golden ticket" -- entry to Macao -- Malaysian investors would surely find it worth twirling an ankle or two. Unless Boyd Gaming has waived its right of first refusal on Borgata, this sudden accumulation of Malaysian cash can have one purpose only.

Quote of the Day

Fri, 29 May 2009 12:56:00 -0700

"North Korea, meanwhile, warned it would retaliate if provoked." -- from an Associated Press story about the latest bout of saber-rattling from Stanley Ho's buddy, degenerate playboy and North Korean despot Kim Jong-Il. Seems to me that if you conduct a thermonuclear detonation and fire six missiles in one week, you're the one doing the provoking and it's the fired-at people who have the prerogative of retaliating. But that's just me.

Pansy Ho: time for Plan C

Fri, 22 May 2009 18:12:00 -0700

In my usual cart-first, horse-later fashion, I elicited a legal opinion regarding the scenario I postulated the other night: MGM Mirage spinning off either its Atlantic City holdings or MGM Grand Macau into a quasi-autonomous entity, much as Sheldon Adelson proposes to do with his Macao properties.

Well, unless Pansy Ho can sit down with the New Jersey Casino Control Commission and charm them into turning a blind eye to the penumbra of unsavoriness that surrounds her father, Stanley Ho, MGM is up against a wall. It could put MGM Grand Macau into a limited partnership in which it would have equity but no power.

Did MGM spend so much time and money getting into Macao just so it could be a passive investor? Probably not. So either MGM has to scrape together the cash to buy out the Ho family or Pansy and her sister can exercise their right of first refusal on the property.

Likewise, Boyd Gaming holds the prerogative of acquiring MGM's Borgata share, but of all the possible scenarios on deck, that appears the most unlikely. Here's why:

Borgata represents no ongoing cost to MGM. It can sit back and collect 50% of the profits in perpetuity, while Boyd does the heavy lifting. In Macao, not only does MGM have to run the place, it's in a market with narrower profit margins, thanks to a confiscatory tax rate and the commissions charged by junket operators -- to say nothing of the draconian meddling of the Chinese government. And if it's relying solely on mass-market play, it's not enough to get MGM out of single-digit market share.

MGM took too long and spent too much getting into Macao to be happy with being stuck in sixth place among operators. If it's going to have to amputate a limb, losing Macao may be the less painful cut.

It could also be the more lucrative one because, even in a down market, Macao has two very price-boosting qualities: a finite number of casino concessions and a comparable limitation on casino-zoned land. Neither freeze is likely to thaw anytime soon.

Macao is still a seller's market. But if Boyd were to decline its option on MGM's half of Borgata, other suitors are going to be very hard to find. Nobody wants in on Revel or Bader Field and the Tropicana is essentially being given away. The accomplished Ms. Ho could still pull MGM's chestnuts out of the fire but if she can't, her family could wind up with 2.5 of the six casino concessions in Macao.*

* -- slightly more, actually, as James Packer's stake in Melco Crown Entertainment is exceeded by that of Lawrence Ho.

Solving the Pansy Problem

Wed, 20 May 2009 01:34:00 -0700

Amidst today's crush of news, I forgot at least one other potential solution to l'affaire Pansy. Perhaps MGM Mirage can have its cake and eat it as well, by taking a page from Sheldon Adelson's playbook. It'd be a transparent move, a change more cosmetic than substantive. But it also might be procedurally deft enough to sidestep a potential head-on collision with the New Jersey Casino Control Commission.

Were either the company's Macao or Atlantic City assets walled off from everything else stamped "MGM Mirage," it just might do the trick. It's at least worth trying and I'll bet the MGM legal team is burning the midnight oil right this very minute, working on some smooth move of that ilk.

Incidentally, former Atlantic City mayor -- and current state senator -- James Whelan has proposed removing one step from the Garden State regulatory process. Deeming the Division of Gaming Enforcement and the NJCCC to be redundant, he proposes eliminating the latter. Imagine the alternate reality in which Whelan's proposal had already become policy: Columbia Sussex would still be ensconced at the Tropicana Atlantic City but MGM would be metaphorically packing its bags. That just doesn't sound right.

The MGM/Pansy Ho verdict: It's in and it's bad

Tue, 19 May 2009 11:15:00 -0700

After nearly four years of investigation, the New Jersey Division of Gaming Enforcement has released its long-awaited "suitability" findings on MGM Mirage joint-venture partner Pansy Ho. As MGM itself reported to the SEC yesterday, "While the report itself is confidential, at the conclusion of the report, the DGE recommended, among other things, that: (i) the Company’s Macau joint venture partner be found to be unsuitable; (ii) the Company be directed to disengage itself from any business association with its Macau joint venture partner; (iii) the Company’s due diligence/compliance efforts be found to be deficient; and (iv) the New Jersey Commission hold a hearing to address the report."

The grinning ghost of MGM Grand Macau

While the reason for the DGE's disapproval isn't given, it's also not difficult to guess. When someone with the sleazy reputation of Stanley Ho has an interest in your casino -- by dint of loans to two of his daughters -- a jurisdiction that takes probity as seriously as New Jersey is unlikely to give its benediction.

Slightly further down in its SEC bulletin, MGM offers one of the most Pollyanna-ish statements of recent memory: "The Company does not believe that the report will have a material adverse effect on it."

Let's back up a second. The matter of Ms. Ho now goes to the New Jersey Casino Control Commission for adjudication. The NJCCC is not obligated to act on the DGE's findings. However, the last time it exercised such discretion, it was to override the DGE's recommended probation for Columbia Sussex in favor of kicking ColSux out of the Garden State forthwith.

So the likelihood is that MGM will be faced with a choice between liquidating its New Jersey holdings or its Macao ones. The latter include a 50% stake in Borgata (and Boyd Gaming can afford to buy its partner out), plus some undeveloped land, which will be a much tougher sell.

As for MGM Grand Macau, it would revert to the Ho family. MGM could still, in all probability, count on an ongoing stream of revenue by leasing out the brand name or even by negotiating a management contract for itself (although management is rumored to have been the casino's Achilles heel).

Unless the NJCCC grants clemency (in which case, MGM loses face but nothing more, as one analyst puts it), "material adverse effect" is inevitable. But there may be a silver lining for CEO Jim Murren. He was able to get debt-covenant violations waived in return for an accelerated repayment of the company's whopping debt load. The diñero from a Borgata or MGM Grand Macau sale would come in mighty handy as the company tries to de-leverage itself.

Walking (out) in Memphis. A 21-year veteran of the Harrah's Entertainment hierarchy resigned last week, another casualty of the company's downsizing.

And then there were 135. It used to be the execs jumping from the sinking Cosmopolitan ship reached for a lifeline from Fontainebleau. Now they'll be looking for another rescue vessel. (Hey, the Tropicana may be hiring soon.) A F'bleau spokesman says negotiations with Deutsche Bank are continuing, in a notable ratcheting-down of the bellicose rhetoric that's been lobbed to and from F'bleau of late.

Heard last night as part of an act at Sin City Comedy, re the Vegas Trop: "A $20 bill and all my teeth -- I'm a whale!" Conclusion: Alex Yemenidjian cannot arrive soon enough.

Sands Macao: An offer you can refuse

Tue, 28 Apr 2009 12:02:00 -0700

For the present, Las Vegas Sands continues to keep mum regarding a South China Morning Post report that it's trying to sell Sands Macao. Does the old legal maxim, "silence gives consent," still apply? The lack of an outright denial leads me to believe this story is still very much alive. However, Sands' chances of swinging the deal described in the Post appear quite long indeed.

Sands Macao: Priced to stay put.

Sands is reportedly asking $1.3 billion for Sands Macao -- approximately 8X cash flow for a casino-hotel that has been a money spinner from the get-go. However ... Sands would continue to operate the casino and pocket the revenue therefrom, paying a rent that's pegged to the casino's performance. It'd scarcely be an unusual arrangement. Stanley Ho achieved his broad reach, in part, through pacts with other hotel owners who farmed their casinos out to his Sociedade de Jogos de Macau.

But $1.3 billion is pretty steep if you're looking at having to make your nut off of hotel rooms and restaurants. That's a ton of shark's fin soup you'd have to sell. Indexing the casino rent to gambling revenues hardly incentivizes Sands to drive up business at its original Macao casino.

Unless somebody at Sands is thinking way outside the box and offering to pay rent in inverse proportional ratio to what the casino rakes in, but that makes even less sense. Sheldon Adelson would have to be promising massive rents for his mooted sale to pencil out for the buyer. Owning a hotel in Macao without the casino is like getting kissed but not ... you know.

I've been expecting Adelson to float an offer like this for a few weeks now. He wouldn't do it with Venetian Macao unless he could somehow hang onto the convention center as well as the casino. But desperate times are at hand and, seeing as Sheldon's Cotai Strip™ malls aren't finding any takers, Sands Macao may well be expendable.

Ironically, Sands Macao, which was intended as an expedient, low-cost vehicle for getting into the Macanese market was the one opening that Adelson pulled off right. MGM Mirage would have done well to have following a similar route into Macao, instead of taking so long and spending so much money to get all its Peking duck in a row. What would happen if you built a megaresort and nobody came? It looks like MGM Grand Macau, the tail-end Charlie of the Macao market, answers that question.

Bad news for Pennsylvanians. The Associated Press reports that $743 million Sands Bethlehem "has put off finishing the restaurants, entertainment and other non-gambling elements planned there." Can you say "grind joint"? I thought you could. No wonder Sands is projecting such steep (17%) ROI if it's going to open the place as a slot house.

"Ugly Americans"?

Tue, 28 Apr 2009 11:15:00 -0700

G2E Asia has announced its keynote speakers and it's looking like a family affair. If you're up bright and early on June 3, you'll be treated to the insights of Stanley Ho, recipient of this year's "Visionary Award." The keynote address proper, the day before, goes to son -- and Melco Crown Entertainment CEO -- Lawrence Ho (above) who should be flush from the opening of City of Dreams.

So who's not on the roster of headliners? Ohhhhh ... anybody from Las Vegas Sands, Wynn Resorts, MGM Mirage. You know: all the capitalist running dogs. They can take comfort in the fact that no keynoters have been invited from Hong Kong-based Galaxy Entertainment. That company just imported two new top execs from the U.S., so maybe it will be a proxy recipient of some of the anti-Americanism that's currently en vogue in Macao. At least, since G2E Asia is being held at his Cotai Strip™ CotaiExpo, CEO Sheldon Adelson will be crying all the way to the bank.

If you've ever been curious as to what LVA HQ looks like, here it is in all its glory. Be it ever so humble, there's no place like Huntington Press. No Stella Artois beer on tap these days, though. Darn that recession.

Morrison counsels MGM

Wed, 22 Apr 2009 14:39:00 -0700

Why keep making fun of the Las Vegas Review-Journal? Because the R-J persists in making it so easy, that's why. For instance ...

Call the Sun. Columnist Jane Ann Morrison has some deep thoughts on MGM Grand Macau. Namely that co-owner MGM Mirage should consider "a reasonable offer" from partner Pansy Ho. Gadzooks! With that kind of insight, it's a wonder Morrison isn't running MGM in lieu of CEO James Murren.

Actually, she might want to put in a call to Las Vegas Sun/In Business Las Vegas veteran Jeff Simpson, who'd explain to her -- as he did to fellow panelists on a "Vegas Gang" podcast -- that Macanese subconcessions can only be sold back to their original concession-holder ... in this case paterfamilias Stanley Ho. Which would be one reason why "Morgan Stanley hasn’t been asked to screen offers for the [sic] MGM Grand Macau." But, hey, if Dr. Ho comes knocking, make sure it's with "a reasonable offer," 'kay?*

R-J to Sun, "Nyah-nyah!": Yeah, so what if the Sun won a little old Pulitzer Prize. The R-J nabbed a "Best of the West" from Arizona-based First Amendment Funding. So there! That Sun is, like, so totally spanked.

On the upside, today's R-J has a good exposition of why banks and other lenders are exercising so much forbearance (in both senses of the word) when confronted with insolvent casino companies. Money quote, as it were: "... the creditors are thinking the way things are now, we just might as well string them along for a little while thinking you'll get more of a return on the bonds that way." Forced asset sales will probably be remunerative a ways out, too ...

* -- Morrison is at least in good company here. Charlie Rose's recent 60 Minutes piece on Steve Wynn repeatedly committed the solecism of referring to Wynn's newest pleasure palace as "The Encore." If you see Rose, be sure to tell him how much you enjoyed his The 60 Minutes segment on The Steve Wynn, which you watched on The CBS.

Icahn vs. Kerkorian II; Ho hearts Adelson

Fri, 17 Apr 2009 11:18:00 -0700

Yesterday saw some intemperate spluttering in newspaper comment threads, along the lines "How dare the Wall Street Journal report the news? It might damage stock prices!" (One hothead even bruited the possibility of a libel suit.) All of which was predicated on the assumption -- and we know what happens when we assume -- that the WSJ was merely chasing rumors when it reported that Carl Icahn and Oaktree Capital Management were putting the squeeze on MGM Mirage, trying to steer it into bankruptcy. (Some -- including The Economist -- think a CityCenter-driven bankruptcy is inevitable, regardless.)

Undeterred, the WSJ is back with the full story today and it's the real deal. Icahn and Oaktree are not acting in concert and their agendas are different. Icahn is thought to be angling for a piece of the company while Oaktree likes MGM the way it is, if only it could "clean up its balance sheet." Were they able to force the bankruptcy issue, their rights would supersede owner Kirk Kerkorian's and regime change would surely follow.

But that presupposes a great deal ... not the least the 'great deal' MGM got from its bankers when it was able to borrow $7 billion unsecured. Also, crunch time is still a long way off. Icahn and Oaktree's best chances for bending MGM to their will won't come until July or October, when an aggregate $1.5 billion in bonds must be repurchased. In order to prevail, either Oaktree, Icahn or both would have to thwart that repurchase, presumably by refusing to tender their bonds. But MGM still has a few cards to play in the meantime.

Across the Pacific, Bloomberg has the skinny today on what went down at Sheldon Adelson and Stanley Ho's secret lunch at Venetian Macao earlier this week and a subsequent summit meeting yesterday. (Melco Crown Entertainment CEO Lawrence Ho joined the oligarchs, as did MGM Grand Macau co-owner Pansy Ho, along with a local proxy for Wynn Resorts).*

It seems that detente is the word for the day, with the two ancient enemies agreeing to forego their arms race in favor of cooperation. Or, as the 87-year-old Ho put it, “Everyone agreed not to compete, to have enough rice to eat and to get more taxes for the government." (Adelson was uncharacteristically mum.)

... where the elite meet.

Considering the "cutthroat competition" (as Ho once put it, shortly after some junket operators had their throats slashed) that's prevailed so far in Macao, this new entente cordiale sounds like something that's going to be far easier said than done -- especially when the market begins to rebound. The latter already shows signs of bottoming out. MEAG Hong Kong Ltd. Investment Director John Koh speculated prior to Thursday's superpower meeting that the Adelson/Ho accord would mandate:

• one standard rate for junketeer commissions

• a salary freeze

• a hands-off policy toward one another's VIP ~~players~~ hosts and/or key executives

Since Adelson has several Cotai Strip™ projects -- including a St. Regis and a Shangri-La -- gathering rust, could his sudden amity with the Ho clan be a means of courting bailout money? And how would the Macanese government -- to say nothing of Steve Wynn -- react to the prospect of a polyamorous alliance betwixt SJM, Las Vegas Sands, Melco International and Ms. Ho's Shun Tak Holdings, say? Such a hyrda-headed oligopoly would give competitors a great deal to worry about and seems far from inconceivable, given the desperate circumstances of certain of the parties involved.

*--Galaxy Entertainment seems to have been conspicuous by its absence, but that underachieving company has other Koi fish to fry. The fact that Galaxy is writing down the value of its license, though, says less about the Macao market than about Galaxy and its failure to make substantial inroads, despite being one of the first companies on the scene.

Adelson meets Ho: Shall we dance?

Wed, 15 Apr 2009 11:17:00 -0700

It's appropriate that a top-hush luncheon between Sheldon Adelson and chief adversary Stanley Ho was held in a Venetian Macao ballroom: Even in such a spacious venue, it must have been a tight squeeze fitting both tycoons and their respective egos in there. A Las Vegas Sands mole told Macau Business it was a social encounter "with no particular business agenda."

"What a nice casino you have, Sheldon. I'm really going to enjoy owning it."

Perhaps the duo simply commiserated over the recent decimation of their personal wealth. If so, it was a waste of time because the two men have quite a lot else to discuss. Adelson, for one, has performed a volte-face on the issue of junket commissions. Sands used to be the worst obstructionist of Macao CEO Edmund Ho's commission cap, even when escalating commission wars threatened to render Macao casinos a revenue-negative venture.

Now Adelson and Ho are on the same page, wanting commissions to be lower still. (It's amazing what a little mutual adversity will do.) They also share a desire for a lower casino tax. Lotsa luck there, although they might be able to sell it to Peking as an palatable tradeoff for continued visa restrictions.

Perhaps a large heaping of crow -- a dish not customarily favored by CEOs -- was on Adelson's plate. According to Macau Business, "the SJM managing director [Ho] also said he would be interested in buying part of LVS business in Cotai." It would be the comeuppance to end all comeuppances if the price of keeping the Cotai Strip™ alive would be for Adelson to cede partial ownership to Stanley Ho. The latter's been Adelson's verbal whipping boy ever since the sultan of Sands vowed to reinvent Macanese casino industry. Which he did, but it's been a Pyhrric victory.

A grudging Adelson-Ho detente -- perhaps even alliance -- is no longer the preposterous scenario it would have been just six months back. Public pronouncements to the contrary, Sands appears nowhere near to landing equity partners for its frozen Cotai Strip™ projects and Adelson's recent stock purchase was regarded as a critical "tell" in this regard. Or, to put it another way, if a deal were in the offing and Adelson -- knowing that -- bought LVS low, he'd soon find himself spending quality time with the SEC. Adelson may be rash but he's nowhere near stupid.

It will be poetically apt if Tuesday's ballroom setting prefigures the emergence of Stanley Ho as Sheldon Adelson's dancing partner. The Sands CEO could do much worse. Dr. Ho is a trophy-winning terpsichorean tycoon, famous for cutting a stylish figure on the ballroom floor. An Adelson-Ho pas de deux would be the most fascinating Dancing with the Stars pairing yet.

P.S. Special thanks to GamingFloor.com Editor Ian Sutton for the heads-up.

Never a dull day in Nevada

Wed, 08 Apr 2009 16:56:00 -0700

At least one good thing happened today. In other news ...

"Infidelity is not relevant ... in Nevada": Faced with being all over the teevee and not in a good way, Gov. Jim Gibbons set off a series of distractions. First, he tried to score a photo op with the BMOC. (Midnight Jim's blustery public comments form a droll contrast to the obsequious tone of his letter to POTUS.) Then he managed to piss off the Armenian community. Whoops, there go those campaign contributions from MGM Mirage, governor.

Maybe those dollars will go to former casino owner and outgoing Reno Mayor Bob Cashell. He's the latest Nevada Republican to pass up the chance of taking on Sen. Harry Reid, preferring his odds against the decreasingly viable Gibbons. Cashell says he's got "well-connected" backers down here in Southern Nevada.

Ensign for President? Despite having been an ineffectual fundraiser and candidate-recruiter during his tenure at the RSCCC, Nevada's junior senator (and Circus Circus scion) appears to have his eye on the Oval Office. S&G encourages such presidential aspirations, if for no other reason than that all the other presumptive candidates for 2012 are from the anti-gambling subset of the GOP. Since Ensign's nickname on Capitol Hill used to be -- and perhaps still is -- "Johnny Casino," he can expect to hear a lot of that on the campaign trail.

Elsewhere ...

The chicken is back! The tic-tac-toe-playing chicken is the new star attraction at Greektown. When you're $777 million in the hole, a bit of fowl play can't hurt. The chicken is only playing Detroit through June 9 but an extended engagement would be advisable: With MGM Grand Detroit openly on the market, Greektown's chances of finding an interested buyer just took a mighty wallop.

St. Stanley. The benediction of the American Gaming Association will be bestowed upon Stanley Ho during G2E Asia. Quoth AGA President Frank Fahrenkopf, "we are excited to hear his thoughts during his keynote address.” Yes, Frank, especially the part where Stanley starts ranting about the pernicious effects upon Macao of American capital, as he is so wont to do these days.

MGM Mirage sells family jewels

Mon, 06 Apr 2009 17:39:00 -0700

Desperation has well and truly hit the fan at MGM Mirage. The company's Strip casinos may not be priced to move ... but it's said to be quite a different story where MGM Grand Detroit and Beau Rivage are concerned. (A Bloomberg report implies that Gold Strike in Tunica may be on the table, too.)

How desperate? We're talking about sacrificing $231 million in cash flow (in a down year) to keep CityCenter alive. Outside of Vegas, all the company would retain would be "halfsies" of Borgata, MGM Grand Macau and the Grand Victoria riverboat in Elgin, Il. We'd by definition be talking about considerably increasing MGM's Vegas exposure, especially since CityCenter would -- one hopes -- be mostly open for business by the time these potential sales cleared the regulatory process.

Strategically, it stinks. MGM would be putting nearly every chip it has on the Strip. At a time when regional markets are outperforming Las Vegas, MGM would be removing two of the most vital bet-hedges it has and doubling down on the Strip. With a $7 billion debt payment hitting shore in 2011 and MGM about to go into competition with its existing Strip properties on an undreamt-of scale, if CityCenter doesn't lift all MGM boats, it'll be curtains for the company.

True, that $7 billion balloon payment could be -- has to be -- restructured. That may have been MGM's thinking all along: Confronted with reality, lenders would become more flexible with the deadline. Or perhaps the company expected CityCenter to throw off sick amounts of cash flow, solving the problem at one fell swoop.

Time is of the essence. MGM still has three financing hurdles, at least, to surmount. A) It has to dig under the sofa cushions for as much as $800 million [assuming Dubai World continues to sulk and welsh on its financial commitments] to keep the project going; and to get to B) $1.8 billion in additional debt financing; which still leaves it short of C) $1.2 billion in completion money ... the capital that not even the combined efforts of Sens. Harry Reid and John Ensign could jawbone loose from a suddenly risk-averse banking industry.

By selling Treasure Island to Phil Ruffin for 7.75X cash flow -- and if we discount the theoretical premium that comes with being on the Strip -- MGM has put itself in a spot where the logical price for MGM Grand Detroit is $917 million and Beau Rivage fetches $700 million. If it could realize that $1.6 billion (or more), MGM would have its back-end costs on CityCenter covered. But that still leaves a short-term need for $800 million, which is where ...

Colony Capital comes in. Seems that the private-equity firm is thinking in terms of a secured loan rather than a piece of the action. Worst-case scenario, Colony walks away with one of MGM's better Strip casinos in lieu of repayment (or more than one). It makes a helluva lot more sense than the prospect being floated last week whereby Colony would take Dubai World out of the project -- an expensive proposition that would get MGM no closer to having the money it needs to finish what will be either its crown or its masoleum.

Stranger still was the here-today, gone-tomorrow story that James Packer would be teaming up with Colony to help rescue CityCenter. This popped up online in the wee hours of Saturday and was kiboshed on Sunday evening. Crown Ltd., for its part, helped keep the story alive through some semantic footsie. It said it wasn't in talks with MGM or Dubai World -- which left open the possibility it was dickering with Colony instead. A less-equivocal denial was several more hours in coming.

Having a flutter on CityCenter would provide a convenient explanation for Crown's drawdown of its acquisition of Cannery Casino Resorts. However, one can but imagine the displeasure that would have erupted up the street at Fontainebleau if it emerged that a key investor (Packer) was flirting with an archrival project. Besides, it's not as though Packer doesn't have other problems with which to deal.

MGM could really use some good news but it's not going to come from Macao. Shun Tak Holdings, steered by MGM Grand Macau partner Pansy Ho, saw its profits wither by 90%. With Pansy and father Stanley Ho going through hard times, if MGM entertains any hope of flipping its Macanese subconcession back to them, it'll surely be a good ways off.

Bridge of Sighs. It was across aforesaid Venice landmark that the condemned passed on their way to execution. Outsted Venetian Macao executives don't have to traipse over a replica Bridge of Sighs but there's been quite a doleful procession of late.

Last week, President Mark Brown made the trek, according to the Macau Daily Times. It also reports that casino boss Vince Mascio and international marketing director Ming Lien were close on Brown's heels. Thanks to his recent stock purchase, Las Vegas Sands CEO Sheldon Adelson is more in control than ever. Is this Macanese purge a sample of Adelson Unleashed?

Case Bets: Macao, Icahn, Atlantic City, MGM Mirage, Sin City Kitties

Tue, 17 Mar 2009 17:17:00 -0700

According to Telegraph correspondent Ben Bland, Macao finds itself in a bind. Peking's efforts to prevent money from being siphoned out of the country have crimped high-roller play, forcing a greater reliance upon mass-market customers. But the recession is cutting into their gambling budgets, too. Who's having the last laugh in all of this? Who else but Stanley Ho? As we're learning, never underestimate old Stan's ability to survive. He's probably found a loophole out of death, too. (But somebody needs to clue Bland in that Celine Dion doesn't play Vegas these days.)

Icahn's in: Well, sorta. Although the former Stratosphere owner is officially making a play for the Tropicana Atlantic City, he wants -- get this -- another six months to close the deal. Since the sale of the Trop was supposed to have been wrapped up 11 months ago, regulatory patience is finally running thin. Keeping the Trop in a 21-month limbo is grossly unfair to its long-suffering employees, too.

Icahn's equivocations could send the Trop caroming straight into the arms of Cordish Co., although it's unclear whether Cordish is still interested. Had chowderheaded, state-appointed trustee Gary Stein -- who was characteristically out of the loop on the Icahn bid -- closed the deal when deals were still to be had, all of this would be ancient history. New Jersey Casino Control Commmission members should be marched off to the woodshed for appointing Stein and then tolerating his interminable (and very expensive) bungling.

Elsewhere in New Jersey, solons have relieved Atlantic City's denizens of their second-class citizen status, albeit with many clauses and exceptions. This was accompanied by the usual howls about casinos wielding untoward influence (they can't even make political donations, which seems blatantly unconstitutional), although "juice" from other industries -- like the sacrosanct horse-racing business -- is implied to be hunky-dory. The horsey set's constant pining for slot machines gets a cold shoulder from the voting public, however.

Remember how I forecast that MGM Mirage's $1.2 billion writeoff of much of the value associated with former Mandalay Resort Group properties was going to kill 4Q08 earnings? Well, it did. However, the company supposedly still doesn't want to take on equity partners in anchor-around-the-neck CityCenter. "I'd be surprised if they dilute the joint venture [with Dubai World]," says a Reuters source. Geez, seems like if they'd "diluted" it with additional partners earlier on, they might not be hawking the family silver to raise completion money. Pride goeth before a ... well, you know.

Literacy-challenged Kitties: There's no better topless show on or off the Strip than the Sin City Kitties, who perform all the way out at Whiskey Pete's (which boasts a surprisingly spacious showroom). OK, I haven't seen Fantasy, probably because Luxor insists on advertising it as "Carrot Top Fantasy." As one wag observed, those are three words that should never inhabit the same sentence.

Anyway, Sin City Kitties is the only topless show I've seen that's predominantly erotic, as opposed to having a good number or three. And none of the girls betrayed signs of "enhancement" on the night we saw it, when it played to an appreciative audience of leathernecks and other servicemen.

However ... somebody needs to inform these pussycats that what they perform is not a "topless review [sic]" -- unless they plan to critique other topless shows from their stage in Primm.

"The Harry Reid Train": The asshat who made this fumbling attempt at an "ambush interview" might want to learn what the "Harry Reid Train" is (or more accurately, isn't) before attempting to smart-mouth Rep. Dina Titus (D-NV). Titus brushes off the uninformed oaf with the contempt he deserves. And hey, that's the "Sin City Express," bucko. Don't go messing up our catchy new brand name.

Destroying the MGM Mirage village to save it

Mon, 16 Mar 2009 13:39:00 -0700

Over the weekend, several quasi-apocalyptic scenarios have arisen vis-a-vis how MGM Mirage could extricate from its enormous debt burden and liquidity crisis. The direst of the lot has the company shopping around two of its top performers -- Bellagio and comparably profitable MGM Grand Detroit -- to prospective acquirers. MGM is trying to dictate sale prices but that may no longer be a viable option.

MGM is at a dire pass if it's really peddling its Strip crown jewel, Bellagio, in order to preserve that X factor (or albatross, as some would have it) that is CityCenter. A ways back on the Vegas Gang, we saw auguries that any and all of MGM might be put on the CityCenter sacrificial altar. I daresay we hoped that day wouldn't come. CityCenter is going to be the company's defining achievement ... but perhaps not in the manner intended.

Several alternate possibilities are marginally less catastrophic and sometimes considerably more convoluted. These include A) simply pledging existing MGM properties as collateral against CityCenter; B) an outright swap of casinos for debt cancellation; C) offloading casino-hotels to third parties who then reimburse bondholders at above-market rates. Third-party buyers wouldn't qualify for the new tax deferral on distressed-debt buybacks, though.

Almost every one of those hypotheticals would accelerate the "unbundling" of the Strip that Steve Wynn predicted last winter. It'd be a buyers' market for healthy mid-cap gaming companies (though even they are struggling) and a bonanza for management companies whose expertise would come in handy for casinos that are in receivership and suddenly rudderless.

What with a seemingly unhinged (but actually Machiavellian) Stanley Ho railing against foreign devils in Macao, perhaps this is the moment for MGM to challenge old Stan to put his money where his mouth is: Buy back MGM's subconcession or loan daughter Pansy Ho the patacas to take the other 50% of MGM Grand Macau private.

After witnessing slow-motion traffic stretching several miles up I-15 from the California border yesterday, I'm prepared to say that the necessity of high-speed rail service to SoCal is beyond debate. Not so Rep. Mike Simpson (R-ID) but at least his "sin express train" japery makes it clear that his agenda is a moral one. It's damn near refreshing to have someone express his opposition honestly, instead of mincing about in fiscal-conservative drag.

Quote of the Day

Fri, 13 Mar 2009 17:56:00 -0700

"We are Chinese. We should unite against foreign capital. We cannot keep silent. If not, the foreign capital will bully us." -- comments attributed to Macao casino mogul Stanley Ho. The casino kingpin has fallen 588 spots on the Forbes list of billionaires and is now in 701st place.

Shipwreck for Sheldon Adelson

Sat, 21 Feb 2009 17:22:00 -0700

Another dagger blow was dealt this week to the staggering Pacific Rim fortunes of Las Vegas Sands. Its Cotai Waterjets ferry service in Macao has had its contract voided, although the Macanese courts will allow the hydrofoils to remain in operation until the appeals process has run its course.

If Sheldon Adelson's ferry fleet is beached, that leaves water-borne transportation to Macao in the hands of archnemesis Stanley Ho. That ancient casino vizier doubtless supped upon a cold dish of revenge upon hearing the news of Adelson's latest reversal of fortune. As for Adelson, about the only comfort he can salvage is that Secretary of State Hillary Clinton is singing psalmody from his "let's appease the nice ChiComms" hymnal now.

Speaking of carrying water, Ho's Astroturf "grass roots" ally, Concerned Macau Residents Group, continues to push the line that Adelson's asset sales in Macao must be stopped lest they destabilize the local real estate market. (Which sounds like an odd bugaboo for an allegedly ad hoc group of citizens to have at the forefront of its agenda ... but it sure would be a logical concern for a rival magnate like one S. Ho.)

In making its case, CMRG read right off the Stanley Ho script. So word-for-word was its delivery, in fact, that group leaders had to concede they "shared the same view with Stanley Ho who also made comments recently in response to the sale of the Four Seasons apartment hotel." Boy, I haven't seen such poor ventriloquism since those old Edgar Bergen/Charlie McCarthy movies.

Adelson is also encountering headwinds in the construction of Marina Bay Sands, which has shot $2.2 billion over budget. (Yes, that's "billion" with a "B.") You could build a pretty awesome Vegas megaresort from the cost overrun alone. Either Sands seriously "misunderestimated" this project or let it get completely away from them. Either way, with a $5.4 billion tab it simply beggars credulity that is going to be the world's most profitable casino, as has been claimed.

Yes, Singapore's population base far outnumbers of that of Macao. Big deal. When the guvmint is planning to charge citizens and permanent residents $65 a day to get into a casino -- and isn't backing down -- that's a near-insuperable obstacle to overcome. I heard quite a bit of skepticism when Singapore's "integrated resort" concept was rolled out and there seems to be little reason to change that outlook as runaway costs for both Marina Bay Sands and the rival Genting megaresort begin to suggest this could be the Heaven's Gate of gaming markets.

On the subject of movies, with illegal immigration being a hotter-button issue than ever, you'd think Gregory Nava's 1983 El Norte would own ever greater relevance today. Think again.

Quote of the Day

Thu, 12 Feb 2009 18:36:00 -0700

"Our casinos are the equivalent of printing money. We are printing every day, how could we be getting poor?" -- the one, the only, the incomparable Stanley Ho, uttering one of the great non-denial denials of all time. The Macao kingpin was being queried about reports that his fortune has shriveled.

Case Bets: Seminoles, Tropicana, Shuffle Master, Stanley Ho

Tue, 03 Feb 2009 14:12:00 -0700

Seminoles offer to lay $288 million and 12,000 new jobs on the table, for starters. Sunshine State Republicans blow them a raspberry. Constitutional or not, Gov. Charlie Crist's compact put a good deal in place for both sides. (It wasn't so good if you were a non-tribal casinos, but they'd been underperforming even before Crist gave the Seminoles table games.) Unfortunately, Florida solons seem bent on pissing it away for a variety of reasons, spite -- mainly toward Crist -- not least among them.

Good news at Trop(s). It's a rare and welcome day for Tropicana Entertainment when it can announce not one but two pieces of good news in the same day. At the Tropicana Las Vegas, a marketing firm has been retained to try and reposition the LV Trop as a service-and-value-oriented property. TropEnt promises "to elevate its service and value standards,” in a slap at Columbia Sussex, its nominal parent company.

Out East, you can stick a fork in the Cordish Co. purchase of the Tropicana Atlantic City, now that the former has missed the deadline for reaching an agreement. What's the response from hapless Trop trustee Gary Stein? Why, to extend the sale another three months, of course. His Plan B would involve dropping any minimum-bid requirement from the bankruptcy auction.

Sending the Trop to Chapter 11 auction without a stalking-horse bidder hardly looks like a strategy that will drive the price up. ColSux was a lousy owner but neither it nor its creditors deserve to be ripped off like this.

As for Cordish, Stein is playing the role of battered spouse in a co-dependent/abusive relationship. Cordish, he coos, is still "actively engaged ... They have certainly not withdrawn." Why anybody would still listen to Stein, whose credibility is somewhere south of zero by now, is a mystery for the ages. Enough! It's well past time that the New Jersey Casino Control Commission sacked this sorry excuse for a trustee. These monkeyshines aren't remotely funny anymore and the vaudeville hook is way overdue.

Unless the NJCCC knows something the rest of us don't, there's no longer any viable excuse for not giving TropEnt at least a probationary interval as owner/operator. Its creditors have every incentive to make revenue grow there if they're to see their money again -- unlike ColSux which was acted as though it was perfectly happy to drive financial performance straight into the ground so long as the Trop was run on the cheap.

At least one Wall Street analyst likes Shuffle Master's choice of CEO better than I do. Timothy Parrott is a great guy for all I know, but there's little in his recent background to suggest that he's the turnaround specialist Shuffle Master needs.

Stanley Ho, sugar daddy. The godfather of Macanese gambling has shown a sudden upsurge of interest in the fortunes of Australia's Labor Party, funneling $587,000-plus into its coffers. As though to prove it isn't completely Dr. Ho's bitch, the ALP returned $326,000 from Angela Leong (aka Mrs. Stanley Ho). Because, you know, they've got standards. Yeah, that's it. (It's not unlike the Obama administration's exception-proves-the-rule attitude toward appointing lobbyists to critical guvmint jobs. Plus ça change and all that.)

Seems the ALP has been talking a good game about cleaning up campaign finance -- and the conservatives who've been resistant -- while raking in beaucoup HoBucks, even if they say they returned two-thirds of the money. Because $195K is totally cool but $587K would be de trop, I guess.

Or was the total extent of ALP-accepted Ho largesse even larger still ... like $912,000 maybe? The numbers are all over the one place but one thing is for sure: In the words of Opposition parliamentarian Michael Ronaldson, "The whole deal simply doesn't pass the sniff test."

Stanley Ho's comeback

Mon, 02 Feb 2009 12:48:00 -0700

Citing the Lusa news agency, J.P. Morgan says that Macao casino revenues for January came in higher than expected, at $1.1 billion. The shocker, though, is the revision of market-share figures, which previously had shown Stanley Ho and Sheldon Adelson each holding a quarter of the market. Lusa's revised numbers show Ho thrusting Adelson firmly into second place -- 28% to 22%. This is a sobering setback for Las Vegas Sands, whose CEO had forecast the demise, at least a dramatic downsizing, of Ho's casino empire.

Let this also be a lesson to those us (present company included) who thought Vegas swankiness would trump customer loyalty to Ho's older -- some would say seedier -- product. The "B" plotline is that Wynn Macau's market share is 17%, only five points behind Sands Macao and Venetian Macao despite far less capacity. Galaxy Entertainment (13%), Melco Crown Entertainment (11%) and MGM Mirage (9%) divvy up the remainder, with the latter paying the price for being last into the market and a reportedly disadvantageous location. This is one race where those who bet on the tortoise over the hare will be chagrined.

Speaking of Stanley Ho, he and an associate have dropped $284,000 into the coffers of the New South Wales branch of Australian Liberal Party. This is significant because Ho made a run at a New South Wales casino years ago but was deemed "unsuitable." Don't be surprised if the Liberals suddenly discover him to be cleaner than a hound's tooth.

Shakeup at Sands. With its Macao and Singapore projects lagging badly, Las Vegas Sands has tasked a new executive team for its Asian portfolio. Senior Vice President Leonard DeAngelo comes by way of Penn National and, before that, a different kind of Sands -- the vanished Sands Hotel & Casino in Atlantic City. Former Langham Hotels & Resorts executive Nigel Roberts has been named president of behind-schedule Marina Bay Sands.

Executive VP Brad Stone has been promoted to the newly created role of president of global operations and construction, which puts him in charge of design and building for all Sands projects worldwide. It's a thankless task but expectations for Sands have fallen so low that if Stone effects even a modest improvement it will seem a triumph.

Adelson ambushed?

Thu, 22 Jan 2009 17:46:00 -0700

That ostensibly grassroots movement to run Las Vegas Sands out of Macao looks suspicious-er and suspicious-er. So far Macau Residents has been fortunate to find journalists who are either downright gullible or at least credulous.

Any claim to be shocked -- shocked! -- by Sheldon Adelson's Singapore project, Marina Bay Sands, indicates either disingenuousness or remarkable incuriosity, seeing as how Marina Bay has been in train for nearly three years (longer, if you count the courtship process). Nor has Sands proposed to "abandon" its Cotai Strip™ projects but rather to indefinitely suspend them ... although if you're an unemployed Macanese or a expat construction worker, that's probably a distinction without a difference.

Saying that LVS "recovered its capital investment within the first year of operation of the Sands Casino in Macau" is true only insofar as it applies to Sands Macao. When it comes to Venetian Macao and everything else, Sands is nowhere near being out of the woods. (I've seen much worse business plans than rolling the proceeds from Casino A into the construction of Casino B, which in turn bankrolls Casino C, but I doubt this one will be emulated anytime soon.)

As for the contention, "there was no significant incremental foreign tourism as originally represented and no substantial increase in convention business," what's Chinese for "bullshit"? To cite but one of innumerable tourism metrics, Macanese officialdom recently announced that it was seeing double-digit increases in visitation from Great Britain. It may not be a stampede yet, but you've got to start somewhere. Nor are Venetian Macao's convention and meeting statistics anything at which to sneeze -- not even remotely.

Sheldon Adelson may have a remarkable facility for making enemies but that doesn't mean this isn't a put-up job. Irate guest workers might want to redirect some of their wrath toward Peking, which is conducting a purge of non-Macanese labor (and if there's one thing Communist China is exceptionally good at, by golly, it's purging).

Oh, where did Macau Residents stage its press conference? At the Grand Emperor Hotel. And who holds the Grand Emperor's casino concession?

Why, it's good old Stanley Ho, of course.

The plot thickens ...

'Gang' at Encore

Thu, 15 Jan 2009 11:49:00 -0700

Yesterday saw an unusual -- but altogether pleasant -- change in the Vegas Gang routine, as we taped "on location" from a seventh-floor room in Encore, overlooking Echelon and the increasingly ominous Fontainebleau (so disproportionately massive it looms over its neighbors like Godzilla or Gammera over mere mortals). Both David G. Schwartz and Jeff Simpson joined us by speakerphone, giving the conversation a certain Charlie's Angels vibe.

It's Fontainebleau ... coming to stomp us all! Run for your lives!

Spoilers ahead ...

I'm clearly very much in the minority on the likelihood of a Mirage or Bellagio sale. Cash cows they may well be, but there seems to be a strong consensus that their tires are being kicked and serious talks are underway, as well as that The Mirage has become a stodgy property.

Also that MGM Mirage is a Vegas-Vegas-Vegas-obsessed company and would be willing to sacrifice the Gulf Coast and Detroit markets -- the latter of which it utterly dominates -- to keep the CityCenter bucks a-flowin'. (And why would MGM bail on Detroit and not on the sickly Illinois market instead? Or Tunica? Or ... ? If Alex Yemenidjian would pay $435 million for an Illinois license, what might he put down on actual, operational asset?)

Such a strategy would fly in the face, if not of sense, at least of recent casino industry thinking, whereby you try to maintain strong footholds in the second-tier markets and not put all your chips on Vegas (unless you're Steve Wynn and even he tried it once). It would be like Harrah's Entertainment evacuating Atlantic City to raise money for its stalled Octavius Tower.

And you could knock me over with a feather if MGM sells its Macao demi-concession to partner Pansy Ho or back to her father Stanley, especially after all the hoops MGM had to jump through to get into Macao. Bailing on the world's #1 casino town would be an indicator of extreme desperation bordering on insanity.

Unfortunately, we weren't able to get into the provenance of the urban legend that Phil Ruffin's Treasure Island purchase was just a big-ass/short-term loan to MGM, with "T.I." serving as collateral -- and at 55% interest, no less.

Lean prospects for City of Dreams

Tue, 13 Jan 2009 12:59:00 -0700

Or "City of -- interrupted -- Dreams" as it's called on Flickr. Whatever the case, Melco Crown Entertainment is committing to a 2Q09 opening of City of Dreams, hopefully absorbing some of unemployment currently stemming from Las Vegas Sands' stuttering Macanese operations and from struggles and the company's own Crown Macau. (Most of the 9,000 Sands-related pink slips are in construction, so don't expect City of Dreams 7,000 job openings to make much of a dent there.)

Either CEO Lawrence Ho has a back channel to Peking or he's engaging in wishful thinking. Either way, he predicted to reporters that visa restrictions from the Chinese mainland would be eased in "the next few months" (just in time for the City of Dreams opening, imagine that) and that last weekend's visit to Macao by the vice president of China means that economic relief is on the way. While Peking needs to reopen the throttle on visitation to Macao, its stated priority -- wrongheaded or otherwise -- remains that the semi-autonomous zone must diversify its economy. (Talk about "easier said than done"!)

Ho's views stand in stark contrast to those of a pair of Morgan Stanley analysts who foresee no visa relief -- plus a further 10% decline in casino revenue -- for the balance of 2009. Furthermore, Deutsche Bank's Karen Tang points out that high-end Melco Crown is an unlikely beneficiary of increased mass-market play (think SJM, maybe Sands).

If average casino revenue continues at the diminished rates projected by Macao über-boss Edmund Ho (no relation), Melco Crown would be looking at a 19% falloff from its 3Q08 pace. It would also mean that casino revenues in the enclave are flat with 2007, despite a considerable infusion of new capacity. As discomfiting as it may be, taking a "go (very) slow" policy on additional construction is -- with the arguable exception of overachiever Wynn Macau -- clearly the prudent course of action.

Case Bets: Stanley Ho in Vegas?, HRH grows but Morgans shrinks

Thu, 11 Dec 2008 13:47:00 -0700

A local columnist raises the spectre of Stanley Ho getting back-door access into Las Vegas via James Packer's acquisition of Cannery Resorts. This isn't the first time I've heard this question raised and, call me complacent, but I believe it stems from confusion. Namely, a conflation of Crown Ltd., the umbrella under which Packer's U.S. casino investments are huddled, and Melco Crown Entertainment, his joint venture with Lawrence Ho, son of dear old Stan.

While the Packer and Ho heirs do business together in Macao (and belatedly tried to get into Singapore), there hasn't been a whiff of Lawrence Ho being involved in Packer's U.S. ventures. (Obviously, because we're talking about discrete companies here.) Concern about Stanley Ho getting his mitts into Cannery are not only a stretch, but far more of one than the worries that were aired when MGM Mirage built a casino in Macao that was half-financed with money borrowed -- by Pansy Ho -- from the ancient casino vizier.

Doom, gloom in context. While the headlines are full of apocalyptic pronouncements on the subject of October's Nevada casino revenue decline, note where it says these numbers are the lowest "since April 2005." That was when the Las Vegas economy was on an upward trend that would make "bargain" and "Strip" virtually oxymoronic. So 2005's good numbers become 2008's panic-inducers ... of course, Las Vegas' ability to sustain its ensuing merge-n-splurge spree (and the ensuing Excedrin headache of ebt) on 2005-level revenues is a whole 'nother story.

April '05 would postdate the point in our economy where Americans started saving money at a negative rate and living off credit. At the time (i.e., March of that year), then-Council of Economic Advisers Chairman Ben Bernanke said, as recounted in the Dec. 1, 2008 issue of The New Yorker, "the main source of imbalance in the global economy was not excess spending at home but, rather, excess saving in China ... "

Darn those party-pooping Chinese! Everything would be just ducky if it weren't for them! But seriously, folks ...

Hindsight being 20/20, this was probably the point where the casino industry ought to have recognized that the U.S. economy (goaded by three-plus years of easy-money policies at the Federal Reserve) was on an unsustainable course and started curbing its growth projections -- and development plans. Instead, it stomped on the gas pedal and we got (in no particular order) leveraged buyouts of Station Casinos and Harrah's Entertainment, crazy land inflation on the Strip -- peaking at over $40 million/acre, CityCenter, Echelon, Palazzo, Viva, umpteen failed or undersold condo projects, bankruptcy at Tropicana Entertainment and the Cosmopolitan, potential bankruptcy at Herbst Gaming and Isle of Capri, and now a loud screeching sound as the brakes are belatedly applied.

Morgans' Faustian pact. What doth it profit Morgans Hotel Group to acquire the Hard Rock Hotel & Casino only to sell it back to the bank in little bits and pieces? Morgans' stake in the exponentially expanding HRH barely exceeds 14% and is on track to get smaller still. Some of us thought from the start that Morgans had bitten more than it could chew. Or, to look at it another way, what a long, strange trip Morgans has taken to wind up with a glorified management contract.

Chrysler cars getting worse? Yup, it looks like another triumph for private equity buyouts.

Case Bets: Harrah's, Penn Nat'l, Stanley Ho's truffles

Wed, 03 Dec 2008 18:34:00 -0700

Harrah's Entertainment Vice Chairman Charles Atwood is calling it a day. His stated reason for leaving -- to pursue philanthropic activities -- is the same one given by J. Terrence Lanni when he abruptly left MGM Mirage (after giving Kirk Kerkorian less than 24 hours' notice). But since Atwood isn't departing for another 10 days -- and apparently was beseeched by CEO Gary Loveman to stay on last January, for what proved to be one more year -- there's no reason to believe Atwood's departure is anything but on the up and up.

That said, Atwood is choosing a prudent time to step off the deck of the sinking Harrah's ship. A ways back, I asked if it was too soon to call for Loveman's resignation. Upon reflection I've decided that, no, it's too late. Much too late. Any successor would simply find him/herself rearranging deck chairs on the R.M.S. Titanic.

Remember Baha Mar? The lawsuit against Harrah's, filed after a resort project in the Bahamas turned turtle has been unsealed. It accuses the company and an affiliate of "secretly and improperly plotting to delay or pull out of the project and ... avoid contributing their $212 million share of equity." This promises to be juicy.

Money for nothing. It could be worse. You could be Penn National, which faces the best-case scenario of being out $5.5 million in free slot play, plus $770,000 in free buffets. See, this is what happens when you farm out your direct-mail marketing. An offer intended for 1,000 patrons was mistakenly mailed to 55,000 -- and they want their MTV, metaphorically speaking. If Penn -- which self-reported the goof to authorities -- is held to the full terms of the offer, it could be on the hook for a $29 million promotional allowance. Oy! If you're a recipient of the offer, the number to call is (717) 469-2211 to see if you can make a deal.

Life's good. If you're one Stanley Ho and can afford to spend $530,000 on truffles and tubers. Those better be some mighty good veggies. Then again, Dr. Ho -- who has proven Sheldon Adelson's (and my) reports of his imminent business demise to be greatly exaggerated -- surely knows that revenge is dish best eaten cold. With truffles. Cheers, Stan.

Macao: It's OK to panic now

Fri, 03 Oct 2008 16:03:00 -0700

Just when I was breathing a sigh of relief that maybe Peking wasn't going to drop a thrice-yearly quota of Macanese visits on the citizens of Guangdong Province, along comes a bulletin from JP Morgan that'll cause alarm. All right, September revenues on the order of $862 million are nothing at which to sneeze.

But those 6.9 billion clams represent a 3% decline from September '07. Since casino revenues grew 44% this August, despite weather- and Olympics-related disruptions, this isn't just the market absorbing new capacity. Remember, since Sept. 1, visitors holding visas to Hong Kong can't pass on through to Macao anymore.

So, even without putting additional curbs on the movement of people and money into Macao, the Chinese government has already inflicted damage. It's too soon to know the degree of severity, but a reversal this sudden isn't going to restore investor confidence. JP Morgan is already telling them they "are best served on the sidelines in the near term."

In descending order, market share was divvied up as follows: Las Vegas Sands (28%), Stanley Ho (25.5%), Wynn Resorts (19%), Galaxy Entertainment (10%), MGM Mirage/Pansy Ho (8%) and Melco Crown Entertainment (8%). Those numbers aren't weighted toward high-end play, which might give us a very different picture, one more favorable to Melco Crown, which is getting some love as a bargain stock play.

Given the disproportionate amount of market share he's garnered, I still think Steve Wynn is the primary victor in Macao, especially when you consider the enormous head start enjoyed by archrival Sheldon Adelson. I suppose Wynn could offer to help prop up Sands' loan covenants, if he felt like rubbing salt in the wound.

JP Morgan visits Macao

Fri, 05 Sep 2008 18:32:00 -0700

Wednesday's clutch of JP Morgan research notes included a "Macau Market Update," which puts current Macao-related jitters into perspective. Salient points include ...

• A 44% revenue growth in August was unexpectedly good (despite what you may have read elsewhere), especially considering the pincer effect of the Olympic Games in Peking and typhoon season.

• There's no hard evidence of further visa restrictions into Macao, which would impinge upon 25%-33% of the current customer base.

• Expect some mass-market decline, though, now that Hong Kong visa-holders from the mainland can't pass on through to Macao.

• A formal commission cap for junketeers should be in place by mid-month. "We have heard of some operators going above [the current maximum] in an effort to win business after the commission cap goes into place. Sounds short-sighted to us."

• No sign of write-offs of player debt or "irrational promotions," though.

• Oct.-Dec. is likely to see a dramatic slowdown on revenue growth, into the 10%-20% range (partly because the huge capacity influx represented by Venetian Macao will make for tougher year/year comparisons). But this A Good Thing, paradoxically, because the Chinese government will be less inclined to clamp down on travel to Macao if it's convinced that the casino market is decelerating on its own.

• "We were impressed with the quality" of Four Seasons Hotel Macao. Its shopping mall reminded them of Wynn Las Vegas. (It's hard to guess whether Sheldon Adelson will take that as a compliment or a slight.)

• There's not a lot of new capacity coming into the market the rest of the year. Most of what remains to be added in '08 will stem from a MGM Grand expansion and Stanley Ho's new Arce [sic] de Triomphe.

• Huge amounts of new capacity in '09 -- including a 50% increase in slots -- the considerable plurality of that stemming from Las Vegas Sands' Sheraton/St. Regis and Shangri-La/Traders properties ... not to mention the debut of Melco Crown Entertainment's much-anticipated City of Dreams.

• 2010 will be an absorption year, with only a modest infusion of new casino positions, courtesy of Encore at Wynn Macau ...

• ... and then a tidal wave of casino-hotel product hits town, in the form of three new Sands properties, and one each from Wynn, MGM and Melco Crown: 2,380 tables and 8,985 new slots on top of an installed base of 7,007 and 18,312, respectively. (Interestingly, Galaxy Entertainment's new-project pipeline seems to peter out after next year.)

• Both mass-market and VIP play at Sands Macao have been, on the whole, depressed since Venetian Macao's opening -- but it's perilous to draw conclusions here because the VIP numbers swing wildly from month to month, among other factors. (Some of the non-Sands Macao charts appear to be misprints and can't be cited.)

Cotai Strip™: too much, too soon?

• Market share. This is a biggie. According to JP Morgan's data, Stanley Ho has finally slid into second place, a few fractions of a point behind Crown Melco (co-owned by son Lawrence Ho). But the real story may be Steve Wynn. With one casino, he's garnered 17% of the market to Adelson's 19% and the elder Ho's 21%. If I were a Sands shareholder, this would worry me.

MGM shareholders, on the other hand, take some relief from the news that MGM's lone property -- for all its well-publicized struggles -- has captured almost as much market share (10% vs. 11%) as all of Galaxy's casinos put together. MGM's share of chip purchases grew to 7.5% in July (from a 1% start), while Stanley Ho's and Galaxy's percentages steadily declined over the same 10-month period.

• Sands may profess unconcern with travel restrictions on its mass-market customers but no company has more mass-market exposure in Macao than does Adelson's (with Ho's SJM running a close second). Crown has by far the least.

• Long-term forecast. Steady double-digit growth through 2011, somewhat offset by single-digit declines in win per position, as new slots and tables saturate the market. For 2009-11, JP Morgan projects 10% growth in VIP-based revenues, plus two years of 15% growth in the slot- and mass-market segments, followed by an expansion to 17.5% in 2011.

There's more, but it's Friday, it's late and you've suffered enough. Enjoy the weekend.

Nobody spins like Sands

Fri, 22 Aug 2008 16:30:00 -0700

We still don't know if the Peking government will further restrict access to Macao -- at least for residents of Guangdong Province, who've already been cut back to six visits a year. But even the mere rumor of further visa constriction in China was enough to send Wall Street into a tizzy. (Larry Klatzkin remains bullish, though, God bless him.)

Whereupon Las Vegas Sands President William Weidner went into full Rapunzel Mode, spinning golden threads of sunshine and happiness from what may or may not turn out to be another dump taken on him by the ChiComm potentates that Sands execs idolize.

Now, you or I might think that Peking is micromanaging the Macanese economy virtually to the point of throttling it altogether, but erstwhile free-market advocate Weidner considers this A Good Thing. It's a quality-control move, y'see: "they want to separate the wheat from the chaff. The restrictions are aimed at bringing a higher quality of visitors." What a lovely thought. Weidner's Guandong patrons are "chaff."

He also contended that most of Sands' Macao customers come from outside Guandong Province. Given the amount of mass-market business Sands needs to make its nut, I'm a bit skeptical of that contention, but Weidner's got a good point when he says that the (unaffected) Peking and Shanghai markets are the ones Sands need to tap, especially in order to ramp up overnight and vacation stays. Sands' ultra-metaresort concept of Macao isn't going to be achieved out of the wallets of day-trippers, that's for sure.

According to the Wall Street Journal, Weidner also identified Jakarta and Calcutta as target markets. Then again, those two cities would rank high among the ones central to the success of Sands' Marina Bay resort in Singapore. Another problem Weidner probably doesn't want to discuss right now (although every other casino operator in Macao is going to feel the pinch, too) draws nigh on Sept. 1. That's when visa-holders from mainland China to Hong Kong will no longer be able to proceed onward to Macao.

Given this kind of meddling from on high it's miraculous that Sands, Wynn Resorts et. al. have done so well over there. If access to Las Vegas were constantly being rationed like this, the resultant indignation would cause businessmen to spontaneously combust (and -- need it be said? -- rightly so). I can't help but have a recurrent suspicion that China's Communist government perceives "running dog" American companies earning a fortune in Macao, and periodically feels the need to put its foot on their throats, whether to choke off some of the money flowing out of the country or merely to remind everybody who's boss over there.

But amidst the general sell-off, guess whose shares actually rose 1%? Why it's our old buddy Stanley Ho. What's bad news for Melco Crown Entertainment, Galaxy Entertainment, MGM Mirage, etc., is paradoxically good for Ho's SJM, sayeth the market.

Perhaps it's because SJM's (mostly) rattletrap old casinos constitute less financial exposure than the multi-billion-dollar pleasure palaces his competitors have erected. Or maybe his customer base is believed to be more entrenched and reliable. Whatever the reason, this ancient casino vizier has more lives than a cat.

MGM's quarter: Not as bad as it sounds

Tue, 05 Aug 2008 18:22:00 -0700

Although MGM Mirage's latest earnings report inspired some apocalyptic headlines, William Spain of Marketwatch has ferreted out numbers that put MGM's earnings announcement into a less-sensationalized context. True, any profit falloff in 2Q08 was cushioned by the insurance payout from the Monte Carlo fire.

But ... we're also measuring last quarter against an aberrant 2Q07 because, as Spain points out, it was a year ago that MGM booked $264 million from the sale of its Primm, Nev., properties to Herbst Gaming. (Which proved to be Herbst's near-undoing, but that's a story for another day.) Besides, if your occupany fell to "only" 97%, you're clearly doing something right. I can vividly remember a period, during the pre-9/11 boom, when 89-92% occupancy was a sign of vitality.

Headline to the contrary, the Sun story paints a fairly reassuring picture of MGM's health, except for the fact that -- as company execs freely admit -- the company is having its ass kicked in Macao. MGM's business model over there is clearly a dud if Steve Wynn is pulling down 6.7X as much operating profit. Even Las Vegas Sands, which went into a panic shortly after Venetian Macao opened, is doing six times as well as the MGM/Pansy Ho operation. (The Wynn metric is more impressive because it's being achieved with only one casino vs. Sheldon Adelson's two.) Geez, if the numbers get any worse, Stanley Ho will be too embarrassed to keep referring to MGM Grand Macau as "my casino." Maybe MGM's plan to add more VIP-play capacity will start to turn things around.

The shoe's on the other foot in Vegas, where Bellagio is walloping "Megacenter," posting $7 more operating profit than the undynamic duo of Venetian and Palazzo combined. MGM may be reaping the fruits of Steve Wynn's labor (or Glenn Schaeffer's, in the case of Mandalay Bay) but it's also displaying the power of something Sands evidently lacks: brand equity.

Other interesting footnotes, courtesy of Liz Benston: While MGM CEO J. Terrence Lanni acknowledged getting clocked by Wynn in Macao, Adelson seems to have gone unmentioned. Is this Lanni's payback for Adelson trash-talking MGM not so long ago?

And while you'd expect big-ticket entertainment to be an expendable expense right now, Cirque du Soleil's box office is actually up. Which means two things: A) The producers of Believe can heave a sigh of relief, and B) a recession makes people seek the comfort of French-Canadian clowns. Which is the really scary part, if you ask me.

ABBA > Coldplay. So say British pop fans, judging by the fact that a long-available compilation CD has evicted Coldplay from the #1 spot on the best-selling album chart. Couple this with a $200 million-plus worldwide gross for the Mamma Mia! film, and Benny & Bjorn are enjoying sweet revenge on all those people -- like me -- who made fun of them 30 years ago. Now we're doing penance by learning that while "Waterloo" phonates beautifully in French, it sounds bloody awful in German.

The vocal stylings of Stanley Ho

Mon, 04 Aug 2008 17:28:00 -0700

No, really. It's amazing what turns up on the Internet. Now that Dr. Ho has thrown down the karaoke gauntlet, will Sheldon Adelson, Steve Wynn, James Packer or J. Terrence Lanni take up the challenge? They've nothing to lose except the chance to be the next William Hung.

We're no Pyongyang!

Tue, 29 Jul 2008 18:25:00 -0700

A story about an unsightly, unfinished ziggurat in Pyongyang, North Korea afforded an architecture critic an opportunity to throw a roundhouse right at Las Vegas. Lumping it together with Shanghai as the bad-architecture capital of the world, California Polytechnic State University (San Obispo) Architecture Dept. professor Bruno Gilberti couldn't single out a single Vegas property for opprobrium, lumping the entire Strip together as something that “has no authentic sense of place and is thus more than a little soulless.”

Well, unlike Gilberti, I can nominate a single-worst building in Las Vegas and it's ...

Yes, Harrah's Las Vegas, the hotel that put the "Ugh!" in "ugly." This weird behemoth brings the charm of Warsaw Pact architecture to Sin City. The Bulgarian State Central Bureau of Collective Internal & External Revenue would feel right at home here.

Harrah's LV is also the despair of photographers, partly because of the extreme width of its façade (not shown) and the considerable distance that the hotel towers (I wanted to say "clump") are set back from the street. I'm reliably told there are only two decent photographic angles on this place: right up close to the façade, concentrating on one or two details (like the jester), or an extreme wide angle -- in which case you'll be lucky to pick out any detail at all.

Harrah's big makeover plan for the east side of the Strip is generally believed to start with the demolition of the Imperial Palace (just barely visible to the right). But at least the IP looks good at night, under the blue wash of its floodlamps. No amount of lipstick can spruce up the pig that is Harrah's LV. (But its casino does an extremely good volume of business, possibly the best on the Strip, so what do I know?)

In second place ...

If Michael Gaughan's South Point doesn't eclipse the fugliness of Harrah's it's not for lack of trying. Not only does it obtrude from the South Strip landscape like a swollen thumb on steroids, it's as unimaginative as all get-out. It's just one gargantuan Stalinist block, its charmlessness ever so slightly ameliorated by its canary yellow paint job.

In Gilberti's defense, he singles out the much-abused (but still lovable) Tropicana for embodying the "real and popular style that the old Las Vegas ... once had," which was pretty much my reaction when I walked in there for the first time in 1998. Of course, that was before Aztar Corp. began letting the place go to seed and then allowed Columbia Sussex to club it like a baby seal.

Gilberti also lauds the old Golden Nugget but I think he ought to take a gander at its current incarnation. Anyone nostalgic for golden age Vegas ought to feel at home there, since Tilman Fertitta has the place looking like the hundreds of millions of bucks he's reinvested there.

And as for the clunker "that has sat unfinished for more than a decade [it's North Korea; whaddya expect?] and has been ... called 'The Hotel of Doom'," surely Kim Jong-il can get his bosom buddy Stanley Ho to take on the task of finishing it. The Hotel of Doom looks like the sort of white elephant that old Stanley goes bananas over, thinking himself on the very cutting edge. If Kim Il-sung's degenerate playboy heir throws in a casino concession, it's a done deal.

Ewwwwwwwwww!

Wed, 16 Jul 2008 13:42:00 -0700

That was my spontaneous, uncensored and incredibly articulate reaction to the lead of this Detroit Free Press story on casino cheating. It begins with a Greektown Casino employee blowing her nose, then using the same hanky to snatch up $480 in nearby cash. Brain bleach! I need brain bleach!

The two salient points of the story are the brazenness (read: stupidity) of Detroit's would-be casino cheats, and the hanging-judge justice meted out by the state's casino regulators. It doesn't surprise me that Greektown seems to suffer the plurality of pilferage, if only because it impressed me as a third-tier operation when I went there last December.

Stanley Ho insists he's still relevant to Macao

Stanley's little boo-boo. All sorts of interesting information has emerged in the course of Stanley Ho's IPO. Like how the roster of Sociedade de Jogos de Macau shareholders somehow went missing. If it were any other company, you'd chalk it up to simple (if inexplicable) incompetence. But, given the seamy nature of Stanley Ho's casinos and some of his businesss associations, it's difficult to give the crafty old dinosaur the benefit of the doubt.

Even Ho's much-praised business savvy now has to be questioned. In 2006-07, when the rest of the Macao market was booming, SJM's gambling revenues fell 6%. While I once said that the rising tide in Macao was lifting all boats, it looks like Stanley Ho's caravel has sprung a leak.

Update: The SJM IPO had a "lacklustre" debut, as both institutional investors and SJM insiders couldn't give back the stuff fast enough. If you've got a little spare time, the Cotai & Macau blog has the juicy parts of the Ho IPO. Reuters calls the document "a lengthy health warning." (For instance, 2% SJM earnings growth projected for 2009-10, against 13%-22% for everybody else.)

Well, if it makes old Stanley feel better, both Galaxy Entertainment and Melco International are having crummy runs on the Hong Kong stock exchange. No surprise there, China having recently further curtailed visitaton to Macao, part of its ongoing effort to micromanage the Macanese economy, much as you or I might constantly fiddle with the burners on a stove -- now hotter, now cooler.

Junketeer A-Max, meanwhile, took a massive bath on its purchase of a half-interest in the Greek Mythology Casino. Last year's $12.5 million profit becomes this year's $154 million loss. A-Max says Greek Mythology has $295 million in "intangible assets" (a reference to those "massage services" in the basement?) that will be amortized over the next 13 years, but I'm skeptical. Thirteen years is a helluva long time and the Macanese market will, at its current pace, have long since left places like Greek Mythology in the dust.

Case Bets: Macao, Calvin Ayre, and the Curse of the Dome

Tue, 01 Jul 2008 13:12:00 -0700

Back from G2E Asia, GamingFloor.com Editor Ian Sutton has posted a remarkable gallery of photographs taken during his visit. There are some pretty extraordinary juxtapositions to be seen. Wynn Macau looks diminutive next to Stanley Ho's Grand Lisboa, yet it towers over the original Hotel Lisboa, almost a microbe by comparison. (I'll admit that, from the outside, the funkier, quirkier design of Hotel Lisboa has an oddball charm that Wynn lacks. Inside, I gather, it's been quite a different story until recently.)

For stunning exterior design, MGM Grand Macau takes the cake, with nothing else even coming close. Grand Lisboa, on the other hand, could be the textbook definition of 'fugly.'

Calvin Ayre, the erstwhile high-profile CEO of Bodog is profiled at length by Fast Company magazine. Aside from a charitable interest in ending the practice of bear-bile farming, Ayre comes off as exceptionally obnoxious and narcissistic, which probably suits his high-roller millieu but leaves it open to question whether he can maintain his sudden "retirement." Anyone this fond of the spotlight is bound to re-emerge sooner rather than later.

But the best quote concerns not Ayre but Sheldon Adelson's Venetian Macao: "By even the grandest of Las Vegas standards, the Venetian Macao is a monster. Forget the gaming floor and hotel; we struggled to navigate the convention center, a labyrinth of oriental-carpet-lined halls that could easily accommodate freight trains."

Philip Anschutz says, "I spent $11 million and all I got was this lousy dome." Or if he's not saying it he's got to be thinking about it, when he considers his busted supercasino play in the U.K. As The Telegraph puts it, "The Curse of the Dome lives on."

SJM's IPO: Too little, too late?

Tue, 24 Jun 2008 14:49:00 -0700

Sociedade de Jogos de Macau (SJM) Holdings Ltd., the gambling arm of the business octopus that is Stanley Ho, has finally rolled out its long-ballyhooed IPO, prompting a yawn from the market. Ho hopes to scare up between $454 million and $654 million (a big comedown from his initial target of $1 billion) but, given the sums being invested in Macao by his competitors, even hitting the high end of the projection may turn out to be chump change. When a Las Vegas Sands or Wynn Resorts can pump billions into the Macanese market, Stanley Ho threatening to bring $650 million in investment capital to bear is like using a cap gun to take down a lion.

Market skepticism is evident in the fact that SJM shares are expected to trade at a P/E ration that's half to a third of their competitors' -- and an eight of the ratio at which Sands. It's a bitter victory of sorts for Ho's estranged sister, Winnie. Her litigation against old Stanley kept his IPO off the market for months on end. Now that it's finally out there, Winnie can presumably gloat over the downsized return that the market expects.

Don't count Stanley Ho out, of course. He's got a high-end club, L'Hermitage, on the way this fal. Still, with only 40% of the IPO's proceeds earmarked for construction, Ho's going to have a hard time shaking his image as a bottom feeder par excellence. He could pull a Crown Macau-style palace out of his hat -- but it's highly doubtful.

Turnaround for Lady Luck?

Fri, 20 Jun 2008 17:04:00 -0700

A reliable source sees some light at the end of the Lady Luck tunnel: "CIM took ownership of the timeshare property last Oct. as LL Timeshare. Just this month they're doing the individual deed assignments."

Don't get your hopes up for a big makeover of the Gold Spike, downtown's skankiest casino. However, some modest improvements are being requested, including improved fire sprinklers and "upgrading the restaurant," which would barely qualify as a lunch counter.

Gloom over Macao: Coverage of the Macao market has been initiated by Majestic Research and it's less than thrilled with what it found, including a April-May flattening of the mass-market sector. Also, the physical amount of play at Venetian Macao "is still below its share during its first few months of operation last year." (Guess the novelty factor has worn off.)

Game occupancy -- the number of positions in play -- is described as well below average ... 25% below average. Again, this may reflect the plopping of a casino behemoth onto the market, as opposed to rolling out its gargantuan new amounts of casino capacity in stages (and by that I don't mean a "soft opening"; Las Vegas Sands has had enough of those). "There continues to be very little play at The Venetian's high end mass market tables," the report concludes.

PBL Melco's Crown has "ramped significantly" in its mass market play, although it's now sacrificing some of that for VIP play "much of which occurs behind 'closed dooors,'" and therefore beyond Majestic's ability to measure.

Business at Wynn Macau, meanwhile, was observed to have "increased sharply" following the opening of nearby MGM Grand Macau. However, this doesn't cut both ways: "MGM's share of game usage has not ramped up since it opened. In fact, its share ... declined slightly each of the past few months."

Is Pansy Ho the instrument of Stanley Ho's revenge? Majestic reports that MGM made a brief dent in SJM's amount of play, but that Stanley Ho's fleet of decrepit casinos "rebounded sharply later in January and further increased following the opening of Ponte 16 in early February." Majestic does note some possible SJM market-share erosion in April and May, though.

Note: A contrasting, and sometimes complementary, first-hand report on Macao can be found at RateVegas.com. It's must-reading.

Paging Harrah's

Wed, 04 Jun 2008 14:06:00 -0700

GamingFloor.com Editor Ian Sutton is in Macao for G2E Asia and filing a series of reports from the show floor. He's liked what he's seen of Venetian Macao, which appears to be sucking the lifeblood out of Stanley Ho's nearby Greek Mythology (you know, the Greek-themed casino guarded by Roman centurions).

But the low point so far has been a visit to Galaxy Grand Waldo:

"The unsuccessful punt was on Craps on one of the poorest run games I've ever seen. Dealers stopping the game mid roll to count out money across the come box. Hello! What's the boxman there for! On one particular loosing [sic] roll it was not clear if the shooter actually had a line bet at the time he threw. The news from this operation is that they have recently sacked a number of expat staff so it's odds on that the game conditions and efficiency will deteriorate further."

It's unclear (read: dubious) that Harrah's Entertainment could lever up the billions necessary to buy out Galaxy Entertainment, as has often been proposed, and get a share of the Macanese market. (James Packer's 2.5% interest in Harrah's would also be problematic, as that would give one owner [Packer] a percentage of two of the six concessions.)

But ... could Harrah's run the casinos owned by Galaxy (a construction company that suddenly morphed into a gaming concern when Stanley Ho's Macao monopoly was ended) better than Galaxy does? It's a lead-pipe cinch.

What's in a name?

Fri, 16 May 2008 18:32:00 -0700

Not that much if you're MGM Mirage and trying to leverage your brand recognition into Mainland China. Toward the tail end of his most recent earnings call, MGM Mirage CEO J. Terrence Lanni said the company had made an erroneous assumption that "because MGM is a known name because of our former sister company, the [film] studios, that people would flock there in the mass market and the slot area ... frankly, those people may recognize the studio but they didn't recognize the fact that there was an MGM Grand hotel casino, if you will, in Macao."

So all those Chinese watching pirated DVDs of Stargate SG-1 (and selling them on eBay) aren't making a connection between Leo the Lion and the MGM/Pansy Ho pleasure palace on the South China Sea. Lanni estimates MGM's share of the Macao market at 8%, putting it in last place behind -- and these percentages are approximate, based on the best available figures -- Galaxy Entertainment (11%), Wynn Resorts (17%), PBL Melco Entertainment (18%), Las Vegas Sands (22%) and Stanley Ho's SJM (24%).

Which would mean only seven percentage points now separate fading frontrunner SJM from relative newcomer Wynn (which has but one property to Ho's 19), and Wynn itself has already gotten taken down a peg by PBL Melco's Crown Macau. As for getting a larger slice of that pie, MGM is putting its focus on mass market/slot players "because that's where the real margins are."

Wall Street sets too little store by the fable of the tortoise and the hare, but ... has MGM's being the last entrant into the Macanese market hurt it? Macao players can be fickle, given the right incentives, but did MGM lose the first round of the customer-loyalty war by being so late to the battlefield?

"Culture? Bah!"; Terrence & Sheldon

Tue, 29 Apr 2008 18:33:00 -0700

Anybody looking to build a culture-friendly climate in Las Vegas won't get much help from the philistines at the Dogpatch Daily, er, Las Vegas Review-Journal. When Tony Award-winning songstress Christine Ebersole alighted last Saturday, the excellent Anthony Del Valle was dispatched to review her concert of Broadway standards. (His verdict: "sensitive ... simple, respectful")

So far, so good. Then the sleepy old Rip van R-J waited three days to run Del Valle's review. I did my fair share of "overnights" during my Twin Cities years, so I know the paper could have had it on the Web by Sunday or in print by Monday. And people wonder why newspapers are dying.

Given such glacial pacing, perhaps it's just as well the paper probably didn't review Sunday's presentation of Rossini's Stabat Mater at Guardian Angel Cathedral (in the shadow of Wynn Las Vegas). It was an admirable presentation of a difficult score -- especially considering that an organ had to substitute for the woodwind and horn parts -- and well-attended, too. That only comes as a surprise because performing-arts groups like this have to put their message out in the face of a gaping yawn of indifference from Bonanza Road.

At the Sun, editors with too much time on their hands end up writing this kind of dreck. Say, isn't there a disturbingly high rate of construction accidents about which you could be editorializing? (A comment like "as safe as possible given the volume of construction" [emphasis added] is particularly un-reassuring.)

Lanni speaks. To Jon Ralston. At length. Whether or not you agree with everything he says, it's a generous serving of food for thought.

Adelson's payday. Sure enough, the online grousing about his $3.1 million compensation package has begun. Heck, that's chicken feed -- really -- compared to what the CEO of America's worst airline gets for not letting the doorknob hit him in the butt. In view of how grossly overpaid most American CEOs are, the ones in the casino industry, while hardly practicing a monastic lifestyle, generally come at a bargain price.

And finally, just for laughs, it's ...

Another cutting-edge casino concept from the incomparable mind of Stanley Ho. Really, you can't make this stuff up. What can I say? It's so ... so ... so Baton Rouge.

Stanley Ho warbles a new tune

Mon, 28 Apr 2008 17:49:00 -0700

According to the Macau Daily Times, the city's casino big shot, Stanley Ho, says he's A-OK with Macao CEO Edmund Ho's clampdown on casino-industry growth. (The two men are unrelated.) Which is sort of like me saying the sun has my approval to rise in the East tomorrow. While Ho probably likes seeing his competitors reined in (at the price of some discomfort to himself), it's unlikely his views carry much weight up in Peking. Edmund Ho's edict came as a stark reminder as to who holds the cards in Macao -- and its not any of the casino barons.

“It is no good with all the six operators always fighting together using cut throat measures of getting customers into their casino, this is not correct because there is enough room for all six of us," said Stanley Ho -- quite a turnaround considering his predictions of gloom and doom were anyone to be allowed to challenge his longstanding monopoly on Macao's casinos. “There is no need to do this monkey business, cutting throats, it's the worst thing possible.”

Given who some of Stanley Ho's business associates are, his use of the term "cutthroat" seems poorly chosen. And what are these tactics to which he refers? More of that anon. The first repercussion has been ...

Oceanus is history. Every so often there's a casino project so eccentric and improbable that you want to see it happen, against all odds. Such was the case with Stanley's next attempt at a megaresort: Oceanus, which looked for all the world like a giant snail or slug, majestically turning its back on Macao and heading out to sea. (I'm sure the prospect that Oceanus would impede views of Sheldon Adelson's Sands Macao and interdict foot traffic from the ferry terminal bothered Dr. Ho not one whit.)

Architect Paul Andreu has devoted an entire Web site to this truly one-of-a-kind project, including a 24-page gallery of the surprisingly graceful design, including elevations, cutaways, models and some simulated interior views that show intriguingly designed elevator pods. Who knows, maybe the ancient Dr. Ho actually could have taught those young Vegas whippersnappers a thing or two? We'll never find out now.

(Chuck Monster of MacauTripping.com dissents, describing Oceanus as "a beached whale that would more likely hinder the Macau experience than enhance it.")

In lieu of building Oceanus, Ho will reconfigure the city's oldest casino, Jai Alai, which MacauTripping proclaims "an unadulterated horror to visit" (see review here). Casino Jai Alai was to have met an apparently overdue date with the wrecking ball, to make way for Oceanus, but now Dr. Ho will be content to put some lipstick on the pig and proceed with bidness as usual.

Chuck isn't greatly more enthused about the prospects for the square of Cotai Strip land on which Ho's SJM intends to build a casino, wedged between Melco PBL's Studio City and the back entrance to Venetian Macao. He called SJM's blue-sky revenue projections "sheer lunacy," predicting it would end up with something akin to Vegas' Casino Royale (and not in a good way). "Crumbs that fall from a bag of potato chips are not equivalent to feeding a proper meal to the family dog," was how Mr. Monster put it.

(Geez, I wish I could turn a phrase like that!)

Meanwhile, Harrah's Entertainment watches all this from its now-unflippable/undevelopable golf course, just south of Studio City ... and weeps.

As for the casino freeze, one can imagine Ho manfully suppressing the urge to rub his hands with glee when he said, “I am fully in favour of such an action and I think not only that, we must all agree that in Macau now we have far too many casinos and there is no point of opening up more casinos, more than enough, more than rice shops, so that is something we don't want to encourage.”

Macao's ancient oligarch

It's easy to say that when you've A) got the most casinos in the market, B) have been losing market share hand over fist, and C) have historically defined "far too many casinos" as "any single casino not owned by me, Stanley Ho." The crocodile tears about rice shops are a nice touch, too. The old mastermind hasn't lost any of his smooth moves -- not for nothing is he a ballroom-dancing champion.

Nor is it any surprise that Ho would endorse the government's proposed cap on junket commissions. It's a war that he's been losing; first to Las Vegas Sands, then to son Lawrence's co-owned Crown Macau. Other operators may feel the same: MGM Mirage has opted out of the rat race for VIP players altogether.

A forthcoming Urbino report (previewed in the local papers) depicts "significantly eroded" profit margins, thanks to the commission-fee wars, which leave little room for error in the low-house-advantage baccarat biz. Advance snippets of the Urbino report assert that commissions have gone about as high as they dare, that SJM is having to eke along on 5% of gross revenues (after taxes), and that while they talk tough, Wynn Resorts and LV Sands are as knee-deep in the commission war as anybody.

The report, as previewed, suggests that Peking will widen the Chinese populace's access to Macao. More sensitively, it posits that a guest-worker program will have to be set up in order to keep Macao's casinos stocked with line employees and to give Macanese citizens a chance to move up in the ranks. Right now, it seems, they can't be spared from their current duties.

Most worrisome of all are predictions of a "credit bubble." To wit:

“Pressure may be exerted on some concessionaires to extend credit to junket operators or even consolidators to continue to fuel the growth in volume at the baccarat tables,” reports urbino.net.
“Thus, while credit risk for concessionaires seems to be relatively insignificant at present, the prospect of a shift in credit risk from junket operators to concessionaires could result in increased bad and doubtful debt coming onto the concessionaires' books.”*
Liquidity from the Hong Kong stock exchange has also allowed junket aggregators to “be more liberal with their credit” and extend “their balance sheet assets” to sub-agents, the report states. In turn this has led to the sub-agents offering “credit with less rigourous principles governing their lending decisions”, it states.

*-- emphasis added

Is it just me or does that sound like the same sort of business practice that led to the subprime mess, the affereffects of which we're feeling most keenly right now. We can't afford a credit bubble in Macao -- literally. There's too much riding on that sliver of land in the South China Sea.

Macao applies the brakes

Thu, 24 Apr 2008 17:28:00 -0700

Edmund Ho's Tuesday blockbuster that new entrants weren't going to be allowed into the Macao market and that existing casinos would be frozen at their current size is part of a wider range of policy nostrums. Their obvious intent is to address the social discontents that had arisen during the enclave's casino boom.

Components of the new policy include: A) no additional casinos beyond those currently in progress or in negotiation; B) an eventual maximum number of slots and table games; C) a cap on the commissions paid to junket operators; D) cash payments to all Macanese residents; E) subsidies for public housing; F) an eventual minimum wage and a ban on imported construction labor, and G) a curtailment of freestanding slot arcades away from residential areas. The need for some of these measures is being blamed on the casino sector having grown much faster than anticipated.

Mind you, certain items are more in the nature of wishes than firm promises. As Jefferies & Co.'s Larry Klatzkin put it, Ho's remarks were "broad comments and need to be fleshed out." The Keeping A Straight Face prize, meanwhile, went to Harrah's Entertainment, which said it hadn't wavered in its ambition "to run a world-class golf course in Macau."

Edmund Ho's Peking overlords may have felt they had little choice: With casino tax revenues accounting for 78% of the Macanese budget, the gaming industry has a strong hand to play. Hence the call for economic diversification. The comment that "casino operators will no longer be permitted to take part in running public utilities businesses," looks like a shot across the bow of über-tycoon Stanley Ho, long perceived as the uncrowned king of Macao.

Ditto the rebuff to Mrs. Ho, when she proposed giving casino owners a governmental policy-making role. Stanley Ho's SJM put a good face on the whole matter -- a cap on casino licenses shields SJM from new rivals and old Stanley (who's lost 70% of his former market share) has the most to lose from increased competition.

However, given the amount of new casino product in the pipeline, it could be years before the impact of Edmund Ho's proposed legislation is felt. With the market still growing and new capacity still being absorbed, Macao should continue to be a reliable money spigot, especially for those companies who are seeing the Vegas market start to wilt, as the prices of food and fuel take a bigger and bigger bite out of customers' bank accounts.

Macao: Six is Enough

Tue, 22 Apr 2008 12:38:00 -0700

So says the enclave's CEO, Edmund Ho, in a blockbuster announcement. While a new wave of concessions and sub-concessions was hoped/forecast for 2009, Ho's announcement appears to slam the door on new market entrants for several years to come. Sheldon Adelson, who predicted a casino freeze -- and possibly a rollback -- proves prescient once again.

Stocks of MGM Mirage, Adelson's Las Vegas Sands and Wynn Resorts all responded positively to the news, ditto Melco PBL. None of them will be able to add so much as one slot machine or table to their existing casinos under Ho's decree, but those companies (and Galaxy Entertainment and Stanley Ho) will probably all gladly swallow that in return for a protected market.

Projects in progress, and land grants to Wynn and MGM, are expected to go ahead as scheduled. (Exactly how many in-progress casinos will be grandfathered is presently unclear.) Macao's government likes to make casino operators squirm, but usually comes through at the last minute.

Ho cited social unrest in Macao as motivation for his status quo policy, although a Sunday Dow Jones report laid down an ominous forewarning: "officials of the State Information Centre complained there was US$80 billion of capital unaccounted for in the first quarter." If Peking thinks Macanese megabucks are already slipping through its fingers, it's not likely to smile upon new entrants into the market.

The article also cautioned that the battle for junket customers was volatile --Wynn might lose one of its junketeers -- and cut deeply into casino earnings. (On another note, did you know that a Hello Kitty casino is planned for Macao? I didn't.) But, as MacauTripping.com points out, those who already own casino-enabled acreage in Macao can hunker down as that real estate escalates in value and potential buyers come calling.

The big loser. Pundits agree it's Harrah's Entertainment. The company wagered its hopes on a new round of concessions. "It looks like their investment into what they hoped to become Caesars Cotai just turned into ... a golf course," quoth blogger Chuck Monster. Both he and TheStreet.com's Nicholas Yulico identify Galaxy and -- more likely -- Melco PBL as attractive takeover targets, but note that the situation will inevitably be complicated by Harrah's already-staggering debt load.

Barring a massive sell-off of Harrah's assets, it's difficult to see how Texas Pacific and Apollo Management could swing the additional billions necessary to buy their way into Macao. But they're probably crunching the numbers, figuring out how to make it work, this very minute.

Sad But True Dept.: With the exception of Sunset Boulevard, Andrew Lloyd Webber hasn't had a breakout hit in 20 years. So what's next? A sequel to Phantom of the Opera ... set in Coney Island? And, no, it's not a joke. But the notion of a deformed, deranged composer playing madly upon a calliope just doesn't strike the same note of menace.

Business booming in Macao

Fri, 18 Apr 2008 18:53:00 -0700

Casino revenues are up 62% for Q108, bringing in $3.7 billion. That's a lot of patacas, baby. Almost 70% of that was derived from baccarat play, even though slots outnumber tables 3-to-1 in the new gambling capital of the world. Stanley Ho's market share has shrunk to 30%, but that was still enough for him to nab first place over arch-nemesis Sheldon Adelson. Fast-rising Melco was in third, followed by Wynn Resorts, Galaxy and newcomer MGM Mirage, still trying to establish a beachhead.

But why is veteran Galaxy in fifth place? Even so, it managed to post huge increases in revenue and cash flow, despite operating at a loss.

Double whammy in Atlantic City

Thu, 10 Apr 2008 17:11:00 -0700

Casinos made a bad bet in Atlantic City. They wagered that the City Council didn't have the resolve to ban smoking altogether (except in what promise to be hellish little cells). So they dragged their feet when it came to complying with the city's 75/25 ratio of smoke-free/smoking-enable casino square footage.

Bad idea.

The A.C. City Council voted unanimously last night to escalate to a total ban, motivated in large part not by the merits of the issue but anger at casino intransigence. Some had taken the stance that they might as well not comply with 75/25 because they casinos would eventually be made to go 100% smoke-free ... a self-fulfilling prophecy if ever I heard one. A few were complying, but not fast enough to please the city fathers.

The latter may have cut off their collective nose to spite their face, especially if smokers flee en masse to casinos in Pennsylvania and New York. This certainly isn't the best time for Atlantic City to sustain an exodus of customers. But, faced with casinos that were essentially daring the City Council to do something about their noncompliance, local political leaders were in one of those unenviable spots where you have to choose between being disliked or being a doormat. Obviously, they didn't opt for "doormat."

But, for pity's sake, who was in charge of message discipline for the casinos? "Casino officials have contended that the languid pace is common," writes The Press of Atlantic City. Call me eccentric, but a slow-moving industry doesn't seem like the best PR image to be putting out there. And, sure as shooting, shareholders don't react well to the notion of languor in the executive suite. Maybe those same officials can try that "Don't hassle us; we're lazy" argument on newly disgruntled smokers and see how well it plays with them.

Another month, another set of unfavorable revenue comparisons for Atlantic City, -10% from last March. The good news/bad news dichotomy is a familiar refrain: Slots are down (-11%) and table games are up (-6.6%). So, for all the bad news, we are seeing a kind of forcible reinvention of Atlantic City as a table-game destination, which was probably inevitable once slot machines were no longer a novelty along the Eastern seaboard.

Mind you, we're still talking about the fourth-highest March in Atlantic City and, measured against last year's best-ever March, comparisons were bound to be unflattering. Unsurprisingly, Borgata leads everyone in average daily revenue, almost $250K/day ahead of Bally's Atlantic City and raking in triple the amount won by tail-end Charlie Trump Marina.

Nobody was spared some degree of decline but Harrah's Marina kept it below 1%, thanks to an exceptionally lucky month at the tables, +40%. Trump Plaza and Taj Mahal held their revenue shrinkage below 5%, followed by Trump Marina (one of several casinos to have good table play wiped out by lower slot win), at -6%.

Bally's was the poster child for this, a 1% table win increase negated by an -18% drop in slot win, worst on the Boardwalk. Borgata, Resorts Atlantic City and the Tropicana got walloped on both fronts, with the latter suffering 15% and 32% lower win at tables and slots, respectively. Nobody gained ground at the slots but at least Bally's, Caesars, Harrah's Marina, Showboat and Trump Marina posted higher table win than last year.

Higher revenue is bad? So claims one Macao gaming executive. However it's the managing director of a Stanley Ho affiliate, one that owns the Grand Emperor, so there may be some sour groups there, born of the fact that Melco's Crown Macau is drinking everybody's milkshake at the moment.

On the other hand: looser lending standards by junketeers? That sounds like something that could easily come back to bite them (if not the casinos) in the @$$. This could be a situation worth monitoring.

Whu...What?!?!

Tue, 04 Mar 2008 15:35:00 -0700

Sheldon Adelson is nobody's idea of a cuddly teddy bear and he's wont, at times, to conduct himself with a petulance ill-befitting one of the world's leading businessmen (and third-richest man). Then again, how boring might life be without the amusement afforded by the incessant backbiting betwixt Adelson and arch-nemesis Steve Wynn.

However, Adelson has just been done a grave injustice. Upon receiving HP's new copy of Winner Takes All by Christina Binkley, I turned to the index and found a bare six mentions of Adelson. Six!

That's a raw deal for someone who revolutionized the Las Vegas Strip business model by leveraging the Sands Expo Center into the platform from which the Venetian and Palazzo megaresorts arose. Not to mention that it was Adelson who cracked the Macao and Singapore markets -- a head start that has other companies running to catch up. Heck, Macao may soon be as much Adelson's as it was once Stanley Ho's.

So, whatever you think of him, he deserves better than six shabby mentions in a 304-page book.

Adelson: Stanley Ho's days are numbered

Wed, 06 Feb 2008 18:53:00 -0700

Toward the bottom of an otherwise run-of-the-mill report on Las Vegas Sands' year-end numbers, Sands supremo Sheldon Adelson lets fly with a bombshell: Not only will there be no new casino concessions in 2009, when Macao Chief Executive Edmund Ho leaves office, there will be fewer. (Bad news for Harrah's, this. They're really banking on a new round of concessions and, perhaps, subconcessions too.)

"Some of the bottom, the older, individual non-known (Stanley Ho-run operations) ... like Golden Dragon and Greek Mythology" and others could have their casinos closed, Adelson predicts. However ... it turns out that Adelson is merely "hoping" that this scenario will come to pass, basing it primarily on a "feeling" he gets with talking to Macao's Communist overlords in Peking.

"(T)hey indicate to us that they feel that there have been too many licenses out there," quoth Adelson. Of course, there's still a big difference between feeling there's too much of X on the market and actually constricting the supply of X. So we'll have to wait and see.

Bush sticks it to tribes once more: The most anti-tribal administration in recent U.S. history is at it again. Presumably to help pay for his quixotic war in Iraq, Shrub proposes to slash the Bureau of Indian Affairs budget by $100 million. Monies earmarked for fighting meth, increasing student achievement and economic development (the latter up 35%) will be increased.

And what are the 'frills' that have been targeted for the meat cleaver? Oh, how about school building, public assistance, scholarships, road maintenance, adult education, tribal courts, Johnson O'Malley education grants, land consolidation and housing improvement? (The last three would be zeroed out completely.)

As far as tribes are concerned, a John McCain administration probably can't come soon enough. They're one group of Americans who will undoubtedly be heartily relieved to see the last of this current administration and its contemptuous disregard for those at the very bottom of the economic ladder.

Motown's best month yet

Tue, 15 Jan 2008 16:23:00 -0700

... at least for the casino biz. A variety of construction-related hurdles didn't deter gamblers. Greektown Casino is losing some market share to MGM Grand Detroit and Motor City, but not much. I'll be getting a chance to scope out the competitive landscape this weekend and find out what "Cutting Edge [sic] Gaming" means. (Sounds painful.)

Another setback for Stanley Ho: The onetime emperor of Macao's casino scene hits a speed bump in his IPO. While the article estimates that Ho still clings to 42% of a Macao market that was once entirely his, Deutsche Bank is quoting as saying he could retain "at least 20 percent," which isn't exactly comforting news if you're Stanley Ho.

Glass half-empty: That'll be spread pretty thin over Sociedade de Jogos de Macau's plethora of casinos. Glass half-full: It will be 20% of a much larger market than existed when Ho had it all to himself. So while SJM's decline is an inevitable by-blow of a competitive Macanese market, it's not like the durable Ho isn't seeing some benefit along the way.

Given Melco PBL's troubles in Macao, how did its stock get to a 142X earnings multiple (mega-lucrative Las Vegas Sands trades for a quarter of that)? Does the phrase "irrational exuberance" spring to mind? But it does look like a market correction is in progress.

Station goes mobile: The locals giant is hopping aboard the mobile-gambling bandwagon, at least to the extent of sports wagering.

Congratulations

Mon, 14 Jan 2008 17:28:00 -0700

... to publishing heir and budding casino mogul James Packer, for whom another little Packer is en route, courtesy of the stork. Packer could use some good news, what with his stock getting hammered, due to various Macao-related concerns. Spiraling construction costs and the baffling decision to open Crown Macau without the all-important VIP salons didn't help. (More on the handsome property here, here and here [a rave review from VegasTripping.com]). Packer's American strategy, meanwhile, appears scattershot from the outside, but he's managed to get large shares of two Strip projects for relatively little capital outlay, plus a Pennsylvania slot parlor, so it's far too early to second-guess him.

Meanwhile, the Chicago Tribune reports that Peking's thirst for Macanese gambling revenue is overwhelming the enclave's infrastructure. The story's best line? A description of Stanley Ho's Casino Lisboa as possessing "the ambience of a minimum-security prison." (Click on the Lisboa's Web site and you'll get a blank page. At least that's what happened when I tried it.)

Feds boot the ball on compacts. A Feb. 5 referendum on expanded tribal casinos in California may become irrelevant, thanks to Interior Department bungling. Seems that a quartet of compacts went missing for three months. Then, because the federal-review period had expired, the Interior Dept. had to approve them. The department has received several black eyes for its handling of tribal affairs, particularly its close ties to felonious influence peddler "Casino Jack" Abramoff.

Proving you can't please everybody -- or anybody -- Interior has managed to infuriate several tribes through its denial of several land-in-trust applications. By invoking a brand-new set of rules, plus the standard of "commutability," Interior Secretary Dirk Kempthorne has earned the wrath of California's Los Coyotes Band, which deemed his action "cruel and arbitrary." Kempthorne is already at loggerheads with the St. Regis Mohawks for denying the latter a New York State casino on similar grounds.