David Mckee's Stiffs & Georges - Pennsylvania

MGM: CityCenter worth $4.88 billion

Tue, 20 Oct 2009 15:37:00 -0700

MGM Mirage has announced that it's writing off approximately $1.3 billion (i.e., taking an "impairment charge") against CityCenter, with $348 million of that chalked up to falling real estate values. (Some $174 million of that will apparently be fobbed off on MGM's partners, bringing MGM's writeoff down to $1.1 billion.) The value of MGM's half-share of the project has been restated at $2.44 billion (a 31% decline). No word yet from Dubai World as to what it thinks its half of CityCenter is worth.

Kirk Kerkorian's Tracinda Corp. shook a rhetorical fist at Wall Street, stating in a press release that there is "substantial unrecognized value in MGM and CityCenter that is not reflected in the market value of MGM’s stock." It's nice to know that even mega-corporations can feel underappreciated.

Bottoming out? Air traffic into and out of Las Vegas was almost flat, year over year, -1.2% in September, helped by passenger-load increases -- and I don't mean those hefty people who take up two seats -- on nearly every domestic carrier not named US Airways (-26%). Considering that international traffic was -21%, this is augurs well for a return of domestic consumer confidence in Sin City. And, yes, flat is the new "up."

Pennsylvania: Rendell intervenes. Never accuse the Keystone State Lege of acting in haste. The table games bill is still mired in conference committe, prompting Gov. Ed Rendell (D) to wade into the fray. Rendell's magic number for the amount of revenue table games must yield in fees and taxes is $200 million. To get there, the guv believes the tax rate must be 16%. But he's closer to the GOP position, warning that the higher levies favored by Dems would "kill the golden goose" and deprive Little Johnny's school of needed funding. Meanwhile, Rivers Casino continues to disappoint, with the lowest revenue-per-slot in the state.

Finally, a taker! Out of left field, a contender has emerged for the orphaned casino license in Cherokee and Crawford counties in Kansas. You'll recall that it was awarded to Penn National Gaming, seemingly ages ago, but Penn -- spooked by nearby tribal competition -- all but spat on the license before leaving in a huff.

Enter Ozark Trail Gaming, a consortium of Kansas businessmen, offering to build a $225 million, 900-slot, 30-table casino. After some bad experiences with carpetbagger casino developers trying to dictate terms to the Sunflower State, you have to think the Kansas Lottery Board will look kindly upon this native-son effort.

ColSux loses again. A $41.5 million summary judgment has been slapped on Columbia Sussex for abrogating its purchase of the President riverboat in St. Louis (now the property of ColSux arch-foe Pinnacle Entertainment). Regulators for Missouri didn't like the looks of ColSux and its CEO, William J. Yung III (above). The latter pulled his license application and used that as an excuse to void the President purchase, but a federal district judge wasn't buying it.

The former President owners were also suing ColSux for jacking up parking rates for casino patrons by 560% (no, that is not a typo), a truly Yungian move. If poetic justice were served in this case, the court would award the ship to ColSux. Since the President's days on the water are numbered and Yung will licensed in Missouri only in his wildest dreams, trying to dispose of that near-worthless asset might be the aptest punishment of all.

Is outsmarting a slot machine not a crime?

Fri, 16 Oct 2009 17:08:00 -0700

... as even Pennsylvania racinos face hard times. It was inevitable that the American appetite for casinos would achieve a saturation point. We've not only reached it, the ongoing depression has pushed us well beyond the point of inelasticity.

Hope for Boardwalk?

Tue, 13 Oct 2009 16:08:00 -0700

As you know, S&G puts more stock in year/year comparisons than sequential ones, but the most recent set from Atlantic City affords a slender reed of hope. With the help of tighter slots, A.C. held its September decline to 6%, the lowest of 2009 and the smallest drop in over a year. Even perpetual dog Resorts International had a good month, up 4% y/y.

Both in dollar volume ($63 million) and growth (6%), the leader was -- no surprise -- Borgata. In fact, the Boyd Gaming property made more than the four lowest-grossing properties (Resorts, Atlantic City Hilton, Trump Plaza, Trump Marina) combined. The two lesser Trump properties slipped below the Colony Capital ones, so one doesn't know whether to feel good for Colony or sorry for Trump Entertainment Resorts. The handover of Resorts Int'l continues to proceed slowly, as regulators enter uncharted waters with understandable caution.

Percentage-wise, Showboat, the Hilton and the Plaza had the worst of it, while gainers included Harrah's Atlantic City (3%) and even the Tropicana (1%). But the bloom is off the Trump Taj Mahal rose; it fell back to the middle of the pack, grossing $36 million.

One unexpected factor in the city's bump was a late-September, gay-themed promotion at the four Harrah's Entertainment properties. For all the lip service paid, year after year, to diversifying Atlantic City's appeal, Don Marrandino and his Harrah's colleagues backed up the talk with meaningful action.

Dead casino walking: Trump Marina

Back at Trump, its CEO, Mark Juliano declares "The real question is how long until we get back to the results we saw in past years, which is the question everyone in every business has." No, the real question is: On what planet is Mr. Juliano living? And: Do they have oxygen up there?

The math is inexorable. Excluding three months of sub-2% growth, Atlantic City's revenues have going one way -- down -- for the last seven quarters, often by double-digit margins. Casinos in Pennsylvania continue to ramp up, Delaware is talking very seriously about casino expansion, slot parlors in Maryland are in train and then there's prospect of additional competition from the greater New York City area.

Instead of asking "Where are the snows of yesteryear," S&G modestly suggests the Boardwalk's casino braintrust ought to be thinking about how to move forward into a future of diminished (i.e., more realistic) expectations.

Up the road, now that the novelty factor has worn off of Sands Bethlehem (above), the $724 million casino remains mired in fifth place. The solution? More and bigger promotions, it would appear. Judging by the lukewarm response to Sands and to Rivers Casino, the Pennsylvania market isn't big enough to support casinos built with Vegas-sized budgets.

Leaving Las Vegas

Mon, 12 Oct 2009 18:17:00 -0700

At least 28,000 have done so over the two years-plus (probably more when you allow for the people still moving here). What are the likely consequences of Las Vegas' pegging its future on a one-trick economy? And is it going to be like one of those Rust Belt cities (like Pittsburgh) that turned it around or one of those (say, Detroit) that continues to decline?

Those questions and others are posed in a splendid article that connects most of the dots regarding Vegas' economic plight. One of the most disturbing points raised by Las Vegas Sun reporter J. Patrick Coolican is that cities doing well at present tend to be ones that possessed robust institutions of higher learning -- and invested in them. Neither can be said of Nevada's dismal education system, the recipient of savage budgets, thanks to our governor and the ever-feckless Lege.

If Las Vegas' future hinges on well-funded and -respected academic institutions, then the near-term prognosis is grim.

Speaking of Detroit, casino owners and politicians there may be casting a wary eye on rising pro-casino sentiment in Ohio. In whichever form casino gambling is legalized by Buckeye State voters, it stands to take a big bite out of Motown casino receipts -- and sap state and local revenue collection, too. A helpful Detroit News map shows precisely which Detroit, Indiana, Pennsylvania and West Virginia casino operators have reason to be fretful about the emergence of a casino industry next door.

Like their Strip brethren, tribal powerhouses Mohegan Sun and Foxwoods Resort Casino went all-in ... into debt, that is. Now that it's time to pay the piper, they find themselves in binds comparable to those facing non-tribal casinos. However, they have fewer options for relief, as they discover the downside of being a tribal operation.

Dog's breakfast at Tiffany's. Few readers of this column can probably afford to buy anything at the Tiffany mega-boutique that will be part of the Crystals mall at CityCenter. However, it will make for some lovely window-shopping. (Click on the pictures to see them in a larger size.)

Atlantic City reprieve. Although New Jersey's three-way gubernatorial race is up for grabs, casino owners can take one consolation. Whichever of the two leading candidates is elected, continued opposition to racinos is promised.

East Coast antics

Mon, 12 Oct 2009 13:55:00 -0700

Wrong again. There I was, thinking the proposed $10 million upfront fee for table games in Pennsylvania was a done deal when the GOP-controlled state Senate upped it to $15 million (and if you don't pay by June 1, it goes to $20 million). Chalk that up as a "loss" for casino owners.

The latter did, more or less, get what they wanted on taxes, where they'll pay an aggregate state/local rate of 14%. Despite publicly requesting a 34% tax rate, Dems in the lower house are muttering that one in the "high teens" might be acceptable. The question is: In return for what?

Casinos also banked a "win" when the state Senate ashcanned an amendment that would have tripled the slot base at "resort" casinos. Since this amounted to preferential treatment for a tiny percentage of the Keystone State casino industry, it's good to see it get the back of Lege's hand.

Power play in New York. In the competition for the racino contract at Aqueduct Race Track, those in the hunt include MGM Mirage, Penn National Gaming, Harrah's Entertainment and Seminole Tribe-owned Hard Rock Entertainment, along with numerous and sundry joint-venture partners.

But none of the seems to have the juice of Larry J. Woolf's Navegante Group. After the New York Lottery Division had deemed Aqueduct Entertainment Group (in which Navegante is a partner) unqualified, Gov. David Patterson's underlings put the word out that the five-member consortium is indeed qualified. Somebody in Aqueduct Entertainment's got pull, that's for sure.

A win for Adelson. While no casino company was remotely near the top of Newsweek's ranking of the 500 greenest companies, Las Vegas Sands can claim a victory of sorts. Sheldon Adelson's firm clocks in at #128, well ahead of MGM Mirage (#164) and Wynn Resorts (#176). Given the extent to which MGM has publicized its green-friendly initiatives, particularly with regard to CityCenter, finishing so far behind LV Sands is tantamount to a smackdown by proxy.

Several years after the publication of Beneath the Neon (now available in e-book format) publications are still shocked -- shocked! -- to learn of Las Vegas' large (and growing) subterranean community. Alas, we no longer have the Hooverville that had sprouted about a half-block north of LVA HQ. Those hobos were a tidy bunch and made our street seem halfway populated.

Marie Osmond pix. I'm just sayin'.

Oh me of little faith

Sat, 10 Oct 2009 16:40:00 -0700

Pardon a smallish digression from the world of games to something truly important ... baseball. With painful memories of the '04 and '05 postseason meltdowns acid-etched into my mind, I've not been able to summon the intestinal fortitude to watch either of the first two Red Sox/Angels games. (And postseason Angels games really take a toll on one's stomach.)

Now, with the Halos up 2-0, I'm wondering if it's safe to peek between my fingers as the series repairs to Fenway Park. My gut-twisting gut-level feeling is that this series goes the full five games, which is my recipe for pure torture. But ... Angels pitchers seemed to have conquered their fear of BoSox hitters and shut them down.

Besides, I've been wrong before about this team -- 1,000% wrong about Bobby Abreu, who's been a tremendous influence for the better. His superb plate discipline has been worlds away from the bizarre flailing of Vladimir Guerrero (which you can only get away with if you're Vlad and can lift a far-outside pitch over the fence in straightaway center). Patient at-bats were the key to the Angels' '02 World Series run, which made up for less-than-dominant starting pitching. If there's an Angels/Yankees ALCS, it'll be a contest to see who can take more pitches: a real tortoise-and-hare match.

At least the Angels and BoSox share a common adversary: the umpires. "Country" Joe West and C.B. Bucknor are showing yet again why they are two of the worst in MLB ... although seemingly every American League playoff game this year (including the Metrodome miniseries that finished the Detroit Tigers) has been plagued by truly craptacular umpiring and amazingly poor calls. If this were the NFL, these clowns would be relegated to working late-season Rams/Raiders games or some purgatorial equivalent.

Speaking of the Yanks, I can't hold out much hope for my old home team, the Minnesota Twins. All the Homer Hankies in the world aren't going to do it for a pitching staff that can't hold a lead against the Bronx Bombers, and it pains me to type that.

Thanks for your indulgence. We now return to our irregularly scheduled blogging. As soon as I find my Rally Monkeys, that is.

P.S.: It's a damnable shame that our server won't load previously unused images into the blogs. 'Cuz I've got a great Philly Phanatic photo that would be perfect should they make it to the Fall Classic.

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.

What's a Trump casino worth?

Thu, 08 Oct 2009 15:07:00 -0700

Only $14 million in cash (plus a $100 million equity infusion), according to The Donald. Bondholders say, we'll see your $115 million and raise you $100 million. The latter would recoup at least some -- but not very much -- of their $1.25 billion debt under their plan, while Das Trump would send them away virtually empty-handed. (Moral: When Donald Trump asks you for a loan, take a page from Nancy Reagan and Just Say No.)

The bondholders' assignment of a $75 million valuation to Trump Marina seems awfully optimistic for what is, in essence, a corpse that can't be sold. In essence, the real value proposition is resurgent Trump Taj Mahal, with the other two casinos scarcely better than throw-ins. The Marina is, if anything, an albatross around the company's neck. Still, given that CEO Mark Juliano is going to exceptional lengths to champion the Trumpster's bid, which is a big "screw you" to the debtholders, here's hoping Judge Judith H. Wizmur holds firm for a more responsible solution.

Ho: No! "I don't see major resorts opening for the next couple of years now," says Lawrence Ho. thereby raining pessimism on the expansion plans of Las Vegas Sands, Wynn Resorts and Galaxy Entertainment. The younger Ho also speculates upon the Chinese government's motivation for throttling, then somewhat relenting upon travel to Macao. Interesting tidbit: Marketwatch.com reports that "Venetian Sands" [sic] has cut its number of table games by 25%.

Nevada revenues in. And yeah, they suck. They're much less sucky than usual (-9%), showing an upward trend in baccarat plus two locals-oriented bright spots in the form of Aliante Station and M Resort. It's unclear, though, how much of the growth generated by the last two is new business vs. redistribution of dollars from elsewhere in the valley. The Sun's analysis is far more informative than that found in the R-J.

Wait 'til next year. That's the timeline for casinos in Massachusetts. Even though western Mass looks like slim pickings, lawmakers will probably have to put a casino there just to get the bill onto the floor.

Penn bid falls. Lenders to bankrupt Fontainebleau won a small victory or two, as the judge overseeing the case seems determined to keep lead developer Jeffrey Soffer as far from the disposition of F'bleau as possible. (Soffer is both a debtor and creditor on the project.)

F'bleau, for its part, revealed that Penn National Gaming's offer is now "substantially less" than $300 million, but would include money to replace the windows that are reportedly falling off the building. (One more reason not to build a Strip megaresort tower flush against the "pedestrian realm.")

Groundbreaking today for the long-awaited SugarHouse casino in Philadelphia, under the shadow of a stick-it-to-SugarHouse tax that's been proposed in the Lege. Table games, meanwhile, might be off the table in the face of a $200 million lawsuit. You see, non-racino casinos are allowed to have 5,000 slots (in return for a $50 million fee). Small "resort" casinos -- known as "Category 3" -- only have to $5 million and get 500 slots (accessible only to guests). That's proportional, obviously, and seems fair.

However ... lawmakers want to tilt the playing field by giving Category 3 casinos 30% as many slots as, say, Rivers Casino or SugarHouse, instead of 10% ... and open those games to the general public, not just guests. Of course, the state can't go to the one existing Category 3 casino and ask for another $10 million -- can it? Casino operators are also solidly behind the GOP position on table games: $10 million upfront plus a 12% tax. But, unless House Dems completely capitulate, the gaming bosses are unlikely to get what they want, at least where the tax rate is concerned.

Penn whiffs again. Although Penn Nat'l was supposed to be a bidder in the bankruptcy auction for the Lone Star Park racino, it evidently didn't get into the action and the track went to the Chickasaw Nation for $27 million. (A lot less than Harrah's Entertainment paid to get into Ohio.)

Which means that if/when gambling is legitimized in Texas, the Chickasaws will have a double advantage (parimutuel + tribal status), while Penn will be looking at yet another missed opportunity. Penn's corporate strategy is a baffling alternation of rashness and hyper-caution.

In other tribal news, much-criticized National Indian Gaming Commission Chairman Phil Hogen is gone, thank God, and with him his new, more-restrictive Class II rules. Hogen was justly pilloried for attempting a rollback of hard-won gains in what games tribes could offer. His new rules reflected Bush administration paternalism toward tribes and while they're officially postponed for a year, I think it's safe to say they're dead.* No wonder Rep. Dan Boren (D-OK) is smiling. Watch out for that doorknob, Mister (Ex-)Chairman.

(* It's probable the same thing would have happened under a President McCain, as either candidate would have brought a more enlightened attitude to D.C.-tribal relationships.)

Supporters of video gambling are starting to push back in Illinois, at least in rural, conservative McHenry County. So far it's been the urban areas where this expansion of gambling hasn't been gaining traction.

A repeal of UIGEA continues to gain ground in the House of Representatives, even if it got pulled off the floor in the Senate. (Thanks for nothing, Harry Reid.) The money quote, literally, is a reference to an amendment Rep. Jim McDermott (D-WA) which would would specify that "corporate taxes owed on regulated Internet gambling activities are collected, as they currently are from the land-based casino industry." [emphasis added]

If that means what it implies, it would remove the spectre of industry-wide federal gambling taxation from the discussion and leave taxation to the states. If not, then the nose of the federal casino-tax camel is still sticking through the legislative tent. And you know where that leads.

We've seen a nationwide gaming tax get shot down during the Clinton administration but there are desperate times, obviously. Republicans like Mike Huckabee and Rep. Steve King (R-IA) have been looking to sock it to casinos at the federal level for some years now, so I fear it could have bipartisan support, should such a debate come to pass.

It's playoff time. A tired, flat-footed Minnesota Twins squad looked positively dreaful last night, flailing at outside pitches from C.C. Sabathia (if you couldn't reach that slider in the first inning, your arms aren't going to be any longer in the seventh, son). Cliff Lee made short work of the Colorado Rockies (besides, Jim Tracy can't win in the postseason), the St. Louis Cardinals look set to continue their tradition of postseason underperformance and my Anaheim Angels are forever reduced to a quivering heap of Jello in playoff games against the Boston Red Sox. Why am I having visions of brooms?

Case Bets: Corzine, Penn vs. MTR, Pinnacle, Manilow & strippers

Wed, 07 Oct 2009 15:06:00 -0700

Forbidden by New Jersey law from directly contributing to political campaigns, casino companies are making an end run through Virginia. Harrah's Entertainment, Boyd Gaming and IGT are among those funneling campaign cash into a reverse version on the Underground Railroad. No wonder Gov. Jon Corzine (D) is able to carpet-bomb his opponents with advertising, if he so chooses.

Hey, big spender. The New Jersey gubernatorial race may be chump change compared to the cash being expended in the battle over Issue 3, which would permit four Vegas-style casinos in the Buckeye State. This is boiling down to a proxy fight between Penn National Gaming (pro) and racino specialist MTR Gaming (con). You'll recall that the Ohio Supreme Court nixed Gov. Ted Strickland's plan to unilaterally add slots to the state's horse tracks, which might have given MTR a level playing field with Penn.

While I can understand why Penn or Harrah's would be willing to pay 23% in taxes in Iowa or 27% in Kansas, it's mind-boggling that Harrah's would be chomping at the bit in Rhode Island, where the rate is 73%. Oy vey!

A green shoot. The Baton Rouge Business Journal reports that Pinnacle Entertainment is inking contracts to begin driving piles for its Lake Charles project. Called "Sugarcane Bay" and budgeted at $407 million, this is the first positive movement we've seen out of Pinnacle in a while (unless you count its hijinks with the President license up in Missouri). Good on them.

Manilow on the move. The Las Vegas Hilton has confirmed what all suspected: Barry Manilow's contract expires Dec. 30 and will not be renewed. As we reported in Question of the Day, it's nearly a done deal that he will now set up shop at Paris-Las Vegas, whose main showroom has gone long unused.

Good luck trying to get the Vegas constabulary interested if your car is stolen or your home burglarized. They're too busy going undercover to get lap dances. As Richard Abowitz notes, rampant prostitution on the Strip goes unchecked in the meantime. It's an open secret around here, although many of the "working girls" look downright scary, so you have to wonder how they turn tricks, especially in this economy.

Want your ass kicked?

Mon, 05 Oct 2009 17:16:00 -0700

Then go hang out at Stack. If they don't like your looks, the in-house goons will be sicced on you. And Las Vegans wonder at the schadenfreude so many people feel with regard to Sin City's current doldrums.

No magic bullet. Liberalization of casino rules in Colorado will raise considerably less revenue than expected. Whoever made the projections that are now coming up 60% short obviously didn't take the recession into account.

Opposition grows. An effort by Illinois Gov. Pat Quinn to saturate the state with video gambling devices is encountering widening opposition. Chicago suburbs Evanston and Naperville are among the areas that have nixed the prospect of slot routes.

Don't like our roads? Mail your thanks to Gov. Jim Gibbons, who just got his knuckles rapped by the chairman of the House Committee on Transportation & Infrastructure for laggard deployment of federal highway funds. It's pretty slow around Carson City once the Lege decamps, so what's Midnight Jim's excuse this time?

Sanity 1, Drunks 0. A trio of boozing bozos who rampaged through Buffalo Bill's before piling their car into a ditch can't sue MGM Mirage for their own asshattery, Nevada's high court rules. Since they were drunk off their asses and getting into fights, the trio of boozehounds maintained, casino management had an obligation to keep them on-property ... presumably so they could have continued terrorizing other patrons and otherwise letting the good times roll. In an unrelated victory for common sense, it is no longer a crime in South Carolina to play poker in the privacy of your own home.

Keystone stalemate. Casino owners like Las Vegas Sands who have gone ahead with preparations to add table games will soon be rewarded -- but not until endless legislative machinations play out. House Democrats appear to be backing off a 34% tax rate for tables (J.P. Morgan reports that leadership is now floating a 21% figure) and may even come down to the 12% rate favored by their GOP colleagues. The $10 million upfront fee, though, appears to be a done deal.

All that said, solons managed to spend much of a special weekend session dickering over matters that ought to be none of their business. Like: Should casinos be allowed to serve free drinks to their patrons? Or: Can they operate on Christmas? Now, nothing sounds more depressing than spending Christmas Day at Harrah's Chester, but aren't these matters that ought to be the prerogative of the individual casino owner? Also, ostensibly pro-business Republicans wanted to put table games before the voters, which could render the whole legislative exercise moot ... and relief can't come soon enough for racinos like Penn National Gaming's Hollywood Casino, which is starting to slash its payroll.

Masters of the Obvious II

Tue, 29 Sep 2009 13:36:00 -0700

Regarding the punting of casinos from Penghu, the great minds of Wall Street put on their thinking caps and came up with the following, as paraphrased by the Las Vegas Review-Journal: "analysts said the vote could be a viewed as a positive indicator for Macau's gaming market, eliminating a source of competition."

Gee, ya think?

Actually, Union Gaming Group's Bill Lerner adds a dash of sanity, rating the Taiwanese market as "marginal" and raising the hitherto-unasked question: Just what's the likelihood Peking would allow Chinese citizens to start hopping planes and ferries to Taiwan, to fritter away Mainland currency?

Too bad, though, for Navegante Gaming Group founder Larry J. Woolf, who bet heavily on Penghu and lost at the ballot box. Having taken the proactive (or rash, according to one's perspective) step of cobbling together beachfront acreage, Woolf has the unenviable choice of trying to sell it -- in which case, he's dealing from a weak hand -- or trying to make lemonade by building a non-casino resort. That way, he can at least bide his time until the '12 elections come around.

Even before the wheels started coming off the casino industry in earnest, there were portents that it was reaching a saturation point in the U.S. It was inevitable. New jurisdictions were steadily opening, established ones became thicker with competition and the average American's income hasn't been rising at a level that would keep pace with galloping casino growth.

There's only so much discretionary income to go around and the industry was bound to hit the wall. The current depression merely accelerated and amplified the resultant "Thud!"

One casualty of this collision is Rivers Casino in Pittsburgh, whose slot revenues are running 22% below projections. That's causing Standard & Poor's to hint darkly at default, maybe even bankruptcy. Despite being in a prime market, Rivers Casino is performing seventh among Pennsylvania's nine casinos, which means fifth-place Sands Bethlehem has to be upgraded from "flop" to "mild underachiever."

One can't really blame current Rivers ownership. It inherited the $800 million (!) project after original owner Don Barden ran way over budget, then ran dry. However, it's a good thing the local property-tax assessor is currently undervaluing the Rivers site because Neil Bluhm (who breaks ground in Philadelphia next week) needs those extra $$ far worse than we thought.

Robo-poker reprieved ...

Mon, 28 Sep 2009 18:08:00 -0700

... but maybe not long for long. A momentary uptick in the price of PokerTek stock temporarily rescued it from penny-stock status. But after decisive rejections of dealer-less poker in both Las Vegas and Atlantic City, the future of PokerTek as anything other than a marginal supplier looks bleak.

Vegas casino operators continue to learn that you can't export the Strip business model to Macao (our over-optimistic expectations to the contrary). Case in point: Wynn Macau, which is cannibalizing restaurants, kitchens and even a showroom to make room for more gambling positions. A sanguine-sounding Steve Wynn, meanwhile, yawns in the face of competition from Singapore and tries to spin his Macanese IPO as a philanthropic gesture.

Neil Bluhm's big break. Although $800 million Rivers Casino in Pittsburgh maybe up and running, the county assessor continues to tax the site as though it were empty land. As the bureaucrats let tens of millions of property-tax dollars slip through their fingers, casino owner Neil Bluhm has a chance to bank some serious coin here. That'll take a little of the sting out of Pennsylvania's 55% gross-revenues tax rate.

A Texas track that's now come into tribal hands may hold the key to the future (if any) of limited Vegas-style gambling in Texas. The Lone Star State's gubernatorial aspirants are all over the map. Sen. Kay Bailey Hutchison (R) has cozied up to the Stone Age anti-gambling crowd, making Gov. Rick Perry's (R) qualified pro-gambling position preferable ... even though Perry would still relegate Indian tribes to the back of the bus.

S&G likes candidate Kinky Friedman best on this issue (the Kinkster is pro-casino, period), while Tom Schieffer (D) is back in the Dark Ages somewhere with Hutchison. Hank Gilbert occupies a wussy, "let's take a poll" middle ground somewhere between Perry and his GOP rival.

Quote of the Day

Fri, 25 Sep 2009 18:51:00 -0700

"To see our legislators trying to raise money by signing a pact with Satan is unconscionable." -- Black Clergy of Philadelphia Vice President Rev. Terrence Griffith, driven to hysteria by the prospect of table games in Pennsylvania.

Crime doesn't pay; Wyden wimps out

Fri, 25 Sep 2009 14:19:00 -0700

Five dimes worth of damage, $40,000 bail -- and all to wrest a measly two grand from some vending machines at Harrah's Atlantic City. That's the losing bet made by two security guards. Couple this with the floormen who destroyed their careers for a comparably picayune sum of money they allegedly scammed from Planet Hollywood, and we're seeing a level of desperation in casino crime the likes of which I can't recall.

City of Dreams. Voters in Ohio haven't approved casinos in any form yet, but that's not stopping Cleveland Cavaliers owner Dan Gilbert, who's already had a design executed. Gilbert has lined up critical support by promising to forego hotel rooms and restaurants (though he's left himself a little wiggle room there).

But don't be fooled: Phil Satre used the same Trojan Horse strategy to get an onshore casino in the heart of New Orleans. A few bankruptcies and legislative showdowns later, Harrah's N.O. has a hotel and a couple of restaurants. (Like it or not, Satre was brilliant.) I'll be so not surprised if Gilbert gets his casino, then discovers the numbers don't pencil out at a 33% tax rate, and starts waffling on his non-aggression pact with hoteliers and restaurateurs.

Damn that vox populi! Seems that Harrah's Entertainment had a bit of contractual noblesse oblige written into its pact to purchase Thistledown Racetrack. If the issue of racinos has to be put to a vote of the people, all bets -- so to speak -- are off. Which means that Harrah's can take its $89 million and skedaddle, leaving bankrupt Magna Entertainment holding the bag. For the moment though, Harrah's is playing the issue down, saying talk of a pullout is "premature" and hasn't been given much thought.

Even Las Vegas Sands appears to be feeling disappointed with early results from Sands Bethlehem. A massive, 2,000-slot expansion, slated for November, has been scaled back by 88%. Even so, Pennsylvania casinos are busy planning for the addition of table games (although the Lege hasn't approved it yet). The price of table games will probably be higher (18% tax + $15 million upfront) than casinos want, but at least they've been successful in battling back an expansion-sapping 34% tax rate on tables. For slots, they still have to pay a usurious 55%, one of the worst rates in the nation.

But if Sands wants to maximize its drawing power, it might want to think about finishing the hotel and other amenities that got shoved onto the back burner when Sheldon Adelson's coffers began to run dry. At least Sands has gotten a temporary reprieve from sliding to sixth place because -- even with financing in place -- Neil Bluhm is taking a go-slow approach to his $355 million Philadelphia casino, out of deference to historical preservations. (Funny how Bluhm can build a Philly casino complex for half of what Adelson blew on his unfinished Bethlehem resort.)

Fortune favors the bold, which means it won't smile upon Sen. Ron Wyden (D-OR), who apparently caved to pressure from increasingly useless and counterproductive Sen. Harry Reid (D-NV). It looks like Hapless Harry is behind Wyden's craven withdrawal of an amendment that would have taxed Internet gambling to help pay for health care reform.

Incidentally, an amendment that would have authorized $100 billion to close the infamous Medicare "doughnut hole" was voted down yesterday. Jeez, those 'Net-bet taxes could have come in handy as an alternative means of plugging the hole. (Oh, and fuck you too, Max Baucus.)

And that goes double for you, stock-picker Jim Cramer, whose spam rips through our LVA filters like Japanese torpedoes through the hull of the U.S.S. Oklahoma. It makes me sorry I ever said anything nice about you, Jimbo.

Cro-Magnon economics; Packer play?; Harrah's boycotted

Wed, 26 Aug 2009 13:57:00 -0700

Still snowed under with non-S&G commitments, but here's a brief dispatch. First, with apologies to Woody Allen ...

"The federal stimulus package is so bad"

"Yes, and such small portions."

That's the sum and substance of this diatribe, penned by the old biddies over at the Las Vegas Review-Journal. The federal stimulus dollars which the R-J opposed (as did its man-crush, Gov. Jim Gibbons) aren't trickling down in sufficient numbers for the editorialists' liking.

Ergo, 13% unemployment and a housing market that's "years away" from recovery are things from which Uncle Sam is meant to rescue us. Yes, and never mind that the real culprit is the overreliance of Nevada on a service economy, plus insane overexuberance in the real estate sector -- two phenomena for which the R-J has never had a discouraging word.

Mistaking one owl for a winter, R-J Publisher Sherm Frederick goes into full doom-and-gloom mode. His can't-miss economic barometer? A half-full flight into Las Vegas. (From Austin. On a Tuesday.) I've been flying into and out of this city for nigh upon 12 years and many's the half-full flight I've taken into McCarran International Airport. It's a side effect of Las Vegas being so liberally serviced by the major airlines.

Also, Frederick's half-baked "analysis" reeks of that local entitlement mentality whereby Americans are obligated to spend their money here -- during a recession, no less. (Maybe more of them would do so if we didn't continue to shift our tax burden onto their shoulders.)

We've got to take our lumps with the rest of the country and, as I've pointed out several times before, Southern Nevada would be weathering the current doldrums much better had it not been for an insanely euphoric attitude in our business community, with its pie-in-the-sky economic models. Harrah's Entertainment claims that, in the course of its mega-optimistic LBO, it projected a worst-case scenario in which revenue fell 30% and Harrah's came through just fine.

I don't believe it. Either that or Gary Loveman needs to sack his number-crunchers and find some ones who use real math.

Trouble at Cannery. Who knew? Things seemed to be going pretty well for them. But President Tom Lettero has been demoted from chief operating officer to CFO. His vacated portfolio will be taken up by Xavier Walsh, from Crown Ltd. Is minority shareholder James Packer flexing some muscle? Or has Cannery Casino Resorts decided that what works for Crown in Australia might be worth trying in Nevada and Pennsylvania?

Harrah's attempt to play hardball with its dealer unions has caromed off the company's noggin. The American Federation of Teachers is pulling its convention business from Harrah's-owned properties until contract negotiations with the dealers at Bally's Atlantic City and Caesars A.C. You might say that Caesar's fine Roman nose has been cut off to spite his face,

A provocative question is posed by Dr. David G. Schwartz. If there are fewer slots and table games on Nevada's casino floors, does this bode an ongoing decrease in casino revenue? Prof. Schwartz is far better educated than am I in these matters ... yet it seems that the proposition boils down to More gaming positions = More revenue.

But how many casinos are running at 100% game usage even a small part of the time? Also, with penny slots yielding higher hold percentages than their nickel and quarter brethren, denominations are trumping sheer numbers. Lord knows, people are drawn to those penny machines as though to a spider web because the (perceived) value overrides the (documented) less-favorable pay tables. In any event, Dr. Schwartz's in-progress study promises to be one of the most interesting casino-related documents emerging this year.

Mixed prospects for Foxwoods

Tue, 25 Aug 2009 14:20:00 -0700

First, the good news. Lyle Berman has folded his hand in Kansas. His Lakes Entertainment is scrapping its own casino bid and taking a partnership role in Foxwoods' Wichita-area bid. Apparently Lakes is no closer to finding financing than when it started ... but neither is Foxwoods. Both companies will be digging into their own pockets to pay for the $225 million casino.

With 1,300-1,500 slots and 30 tables, the Foxwoods/Lakes joint venture will be smaller than any of the previous casino proposals for the area. A J.P. Morgan report also implies that hotel facilities and other amenities will be sloughed off onto a third party to be named later. So Foxwoods emerges the de facto winner and Mike Ensign is left to wonder how different things might have been had hadn't bailed out his errant son ... and to come up with incredibly lame excuses for his withdrawal.

Remember Philadelphia? No, there is still no casino in the City of Brotherly Love, even as some outstate facilities are into their second iteration. Having failed to open -- or even build -- its casino within the time period alloted by statute, Foxwoods is going to petition the Pennsylvania Gaming Control Board for an extra two years.

It'd be a surprise if Foxwoods' request isn't granted. True, all Foxwoods has to show for itself is a much-criticized South Philadelphia site plan (which has been aptly likened to a big-box retail outlet) and a couple of possible fallback positions downtown. The way things look now, Foxwoods may be prodded back toward South Philly, though it's no likelier to find a friendly reception there than it's done anywhere else.

The alternative, however, looks far worse. Pennsylvania would have to restart the application process, select a winner and then pray it could open its slot house within the statutory 12 months. Which also means that Philadelphia has to go through site-review Hell all over again ... and casino opponents aren't going to be caught napping this time around. Could a new entrant accomplish more than Foxwoods by September 2011? It's highly improbable, given the rocky history of bringing casinos to Philly.

Rivers Casino by the numbers

Mon, 10 Aug 2009 14:30:00 -0700

Now that you can play the slots in Pittsburgh, just what's on tap? J.P. Morgan has published the slot inventory of brand new Rivers Casino and the slot floor (which is 55% reel-spinning) breaks down by denomination as follows:

Pennies: 973

Two-cent: 320

Nickels: 348

Quarters: 673

50-cent: 38

$1: 351

$5: 85

$100: 4

$500: 1 (plus sundry $2, $10, $15 and $25 slots)

Electronic roulette: 26

Electronic blackjack: 70

Three-card poker: 10

Interesting to see how penny slots, despite being a poorer value play, are now dominant over quarter machines and have thoroughly routed nickel slots. Congratulations to Neil Bluhm and his executive team for getting Rivers Casino up and running in what seems like no time at all, especially after initial developer Don Barden had left it stuck in the mud. Thankfully, the only lasting damage will be to Barden's ability to get future casino licenses.

When hackers attack

Fri, 07 Aug 2009 15:35:00 -0700

Unlike the now-debunked ATM scams at the Riviera and The Rio, this is the real deal, as it played out at Mount Airy Casino in the great state of Pennsylvania:

Adelson bombing in Pennsylvania; RoboPoker returns; Dissent over Wynn

Thu, 06 Aug 2009 17:26:00 -0700

Both the opening of Sands Bethlehem, and recent expansions of Meadows Racetrack & Casino (+29%) and Mohegan Sun at Pocono Downs (+21%) drove an 18.5% increase in slot revenue this July. With $19.6 million in gross revenue, Sands was only good for fifth place, barely behind Mohegan Sun ($19.8 million).

Adelson's new slot parlor was well off the pace set by Philadelphia Park Casino & Racetrack ($30.8 million) and The Meadows ($29.9 million). Harrah's Chester didn't perform too shabbily, either, pulling in $27.3 million from the one-armed bandits. Both it and Philadelphia Park were less than 2% down from their July '08 revenues, putting paid to the theory that Sands Bethlehem would draw -- at least in any significant degree -- from the Philadelphia area. Only nearby Mt. Airy Resort & Casino is taking a serious hit.

Downtown Reno's nicest casino, the spacious Silver Legacy, is taking a big step downmarket by succumbing to the cheesy allure of RoboPoker. Even that bit of good news for PokerTek wasn't enough to keep Aristocrat Leisure from writing down its share of the company.

Steve Wynn is The Man, at least in Macao, according to the controversial Jim Cramer. I agree.

Why then, is Wynn Resorts COO Marc Schorr cashing out at a time when the stock is arguably undervalued? Maybe he's just one more American who got overextended in the go-go Bush Era.

Donald Trump, comedian

Tue, 04 Aug 2009 12:54:00 -0700

This is a joke, right? Three Atlantic City casinos for a slim $100 million? Then again, if Trump Entertainment Resorts financial advisor Lazard only values unloved Trump Marina at $24 million, maybe exiled chairman Donald Trump isn't so far out of the ballpark after all. What's even more surprising than the measliness of Trump's offer is the alacrity with which CEO Mark Juliano capitulated.

"My daughter Ivanka and I will work tirelessly to make this company great again," pronounced The Donald, displaying yet again his peerless ability to deliver drop-dead laugh lines with a perfect deadpan. He added, "As I have done in the past, we will make Atlantic City hot once more."

If anybody's going to make Atlantic City "hot," Donald Trump it's not -- especially since he's still scheming to get a piece of the Philadelphia slot-parlor action. For those of you waiting until 2020 to redeem your Trump Entertainment debt, the good news is that you'll (eventually) get 94 cents on the dollar. Holders of secured notes due in 2015 get wiped out, along with unsecured creditors. As usual, Trump gets the gold mine, the financiers get the shaft.

But the real winner is MyFox.com, which perhaps unwittingly filed this story under the perfect headline: "Cash for Clunkers."

Case Bets: F'bleau, Adelson, Oscar

Fri, 17 Jul 2009 14:03:00 -0700

Whether it's the banks or the subcontractors, somebody's going to take a big screwing at Fontainebleau. That's the nub of a new lawsuit, whereby developer Jeffrey Soffer asserts that Turnberry West Construction (which he also owns) has superior repayment rights to those of the project's backers.

I believe this is called, "One hand washes the other." However, the legal issues involved make fascinating reading. Some new-to-Vegas casino developers have screwed the pooch and eventually come out smelling like roses (Sheldon Adelson, for one). I don't Soffer's going to make into that elite club. And you can forget about Big Bleau opening before July 1, 2010, at the very least.

Speaking of Sheldon ... results at his new Sands Bethlehem continue to disappoint. Adelson's tradition of half-assing his casino openings, dribbling the product onto the market, may finally be catching up with him. Marina Bay Sands should be the acid test of this managerial style. (Personally, I believe it's going to be Adelson's Waterloo, at least to the extent that the casino is expected to drive everything else.)

Sands Macao: Sheldon's best bet

Ironically, it was the comparatively "quick and dirty" Sands Macao, built for considerably less than any other Adelson casino, that has been his biggest hit. The cost-to-date of Sands Bethlehem, by the way, has been revised downward to $675 million (from $743 million), which ought to help the ROI numbers. However, early predictions that Sands Bethelehem was going to siphon business from the Philadelphia area were clearly unrealistic and should have been reported with greater skepticism.

Berzon: caped crusader

Truth, justice and the American way have one less champion in the Las Vegas area now that Pulitzer Prize-winning Alexandra Berzon has been hired by the Wall Street Journal. Good for Berzon, better still for the WSJ. But who will keep a gimlet eye on OSHA enforcement and the CityCenter clusterfuck now? (And she was moving into gaming coverage, too ... the prospect of a Berzon/Liz Benston/Rick Velotta trifecta would have dwarfed all other casino reportage in this burg.) With the loss of Berzon and editor Drex Heikes, the Las Vegas Sun is suddenly in a world of hurt.

Oscar gets whacked. Somebody's fantasy, anyway. (Were there any thumbless graffiti taggers in the house? Homeless advocates? Civil libertarians?) Hizzoner was the celeb-victim at the reopening of Marriage Can Be Murder in its new digs at Fitzgeralds. MCBM recently left the Four Queens and a good move it was, seeing as the 4Q is at risk of being evicted. Movie veteran Goodman (Casino) evidently forgot whatever he learned from The Master (aka Martin Scorcese) and didn't hit his "mark."

As for MCBM, a dinner-theatre show, I can't say it compared favorably with the ones we did at Grinnell Community Theater. I was the "juvenile lead" in several shows there and humbly submit that our gung-ho amateur troupe could have done better. Hey, we "killed" with Ten Nights in a Barroom. That thing could have run for six months, easily.

Big Brother 1, Casinos 0: Round 2

Thu, 02 Jul 2009 14:47:00 -0700

Journalists are working gambling metaphors overtime as they chronicle Vladimir Putin's casino crackdown. Although my previous CNN link dead-ended (pun unintended) are yet more Michael Jackson necroph ... er, coverage, that proved a blessing in disguise. The best and most comprehensive short-form report on the situation in Russia comes from ...

... Al-Jazeera, believe it or not. If you've got a half-hour to spare, Russia Today goes in-depth on the situation. (Ian Sutton has been aggregating links with remarkable thoroughness over GamingFloor.com, if you want even more coverage of Boss Putin's power play.)

For an insight into the paternalistic mentality that led to the Putin Putsch, you can't do better than this:

Not that Americans can afford the luxury of smugness. Consider this Philadelphia TV station's condescending report on Atlantic City, with its snide, disparaging, cliché-ridden attitude toward both gambling and the players themselves:

Atlantic City strip tease; Sheldon sacks the help, etc.

Thu, 02 Jul 2009 12:37:00 -0700

Unfortunately, it does not involve some Cinemax hottie like Kim Dawson but rather Mayor Lorenzo Langford, who's doing a fan dance involving Bader Field. He's had discussions with interested developers -- too interesting to discuss! He'll have "exciting" revelations -- too exciting to reveal! And it will -- brace yourselves -- "have some connection with casino gaming."

Why, you could knock me over with a feather.

Right-sized into oblivion. The workforce at Palazzo-Venetian has fallen below 7,000 with yesterday's purge of 194 employees. "It's an effort to continue to right-size our business," wailed the company. Geez, if they're so intent on trimming the ship, how 'bout asking for a give-back from their $2 Million Man, President Michael A. Leven?

Sands bombs in Bethlehem. Forget those roseate cash-flow projections Sheldon Adelson made when building Pennsylvania's second-most-expensive casino. Revenues at Sands Bethlehem have been in a steady decline since the place opened, reducing it to the #5 casino in the Keystone State.

Primm and proper. Although Sin City Kitties has closed (sniff!), there's still reason aplenty to visit the Herbst Gaming trio of casinos in Primm, Nev., Liz Benston contends. Most of those reasons entail copious freebies ... or at least bargain-basement prices.

The story doesn't mention the single most interesting phenomenon I've observed out there: a higher-than-[Strip]-average number of African-American and Latino players (it's the most integrated casino floor I've set foot upon). But Benston's look-in makes a strong case for those of us who think Herbst CEO Ferenc Szony is the man to turn these places around.

The money quote is from Szony's man in Primm, General Manager Michael Starr, who says, "I have yet to make money on a vacant room in this business." There's but a few CEOs in Vegas who couldn't stand to have that chiseled into their bedroom wall so that it's the first thing they see in the morning and the last thing at night. Those are words of wisdom, Mr. Starr. Long may you flourish.

There's theatre in Vegas. True, you have to poke around behind the dodgy Sportsman's Royal Manor on Boulder Highway to find it sometimes. But the trip to the dark side is definitely worthwhile.

Michael Jackson, casino baron?

Fri, 26 Jun 2009 17:16:00 -0700

As the media rages down Memory Lane, here's one from the Strange But True file: Michael Jackson partnered with Detroit entrepreneur Don Barden in a scheme to gerrymander a Motown casino into Barden's hands. I covered the story for Casino Executive at the time but have no recollection of the Jackson angle.

Allah stands on soft 17: These guys are so busted. Eighteen Muslims got nailed for gambling in Java. Guess they couldn't wait for those Singapore casinos to open.

What does a bankrupt casino look like? Sort of like this. If you watch the full video, you'll see that Twin River Casino is literally going to the dogs.

Slots soaked. Heavy storms claimed 75 one-armed bandits at Rivers Casino, in Pittsburgh, a trouble-plagued project from Day One. A four-day delay of the opening is the result. I hope they've got a rainy-day fund.

Bad news for Sands and Genting: Potential Singaporean high rollers are fewer in number these days. The island-state is also in a tourism slump of unpredictable duration. Not only are Marina Bay Sands and Resorts World Sentosa hoped to turn that around, they'll have to. So, no pressure there.

The Trop heist that wasn't

Fri, 26 Jun 2009 14:49:00 -0700

"An improvident indictment." That's what New Jersey officials are calling a case that was quietly quashed in May. Sacked Borgata veep John Conklin and two other men had been charged with plundering the Tropicana Atlantic City's database when they were in the Trop's employ (and when the Trop was still owned by Aztar Corp.).

Closer examination revealed that nothing had been purloined and the data in question was not particularly sensitive, either. All three indictees have been exonerated ... but where does John Conklin go to get his career back?

Phantom redux: Defying the odds, the Venetian's production of Phantom of the Opera celebrated its third anniversary Wednesday night. I jotted down a few observations for CityLife. (Tina Walsh fans, take note.) Having seen the Broadway production -- albeit many years ago -- I'll be the first to allow that it actually improves on the original in a respect or two. Oh, and my CityBlog entry misspells choreographer Gillian Lynne's last name. My apologies.

Two titans of American popular music "played Vegas" last weekend. Actually, Loretta Lynn was in North Las Vegas and Aretha Franklin all the way out in Primm ... not remotely near the Strip. What's wrong with this picture? Or this one ...

Midnight Jim: taking down Big Oil

It's summer and gas prices are -- like, duh! -- on the increase. Gov. Jim Gibbons doth suspect that dark, foul, untoward schemes are afoot. But Midnight Jim assures us he is on the case. I feel safer already.

Gay cowboys. They're queer, they're here and they're at The Rio specifically. A straight-gay coalition turned out in force last night to celebrate its victory over Midnight Jim's benighted opposition to domestic partnerships. (Because that's not how he rolls, y'see.) Speakers included Harrah's Entertainment Vice President Jan Jones, who led the charge on Carson City.

For all the failings of CEO Gary Loveman's stewardship of Harrah's, on his watch the company has expanded its already-enlightened attitude on social issues. It's not just a question of being gay-friendly; it's good business.

Worth -$23 million?

Isle of Blight. Is the woebegone Greek Isles casino-hotel worth less than nothing? In a sense, yes, since it owes $67 million on a book value of $44 million. Even a resale price at book value seems wishful thinking, considering the Isles' chequered history.

Asserts the Las Vegas Sun, "With its strategic location near the Las Vegas Strip and the Las Vegas Convention Center, the Greek Isles and its associated real estate are seen as having long-term value after the recession ends."

Yeah, but it's had that "strategic location" for as long as it's been in existence and the Isles' progress has been a steady one from Bad to Worse. I wouldn't give a plug nickel for the place -- not with Strip land prices in freefall and vast acreage there lying fallow.

Miracles are possible. Work on Marina Bay Sands is, believe or night, a fortnight ahead of schedule. Next step: Hold the line on that (already swollen) $5.4 billion budget.

The waiting continues in the great state of Kansas. Its lottery commission wants another two months to review applications for the Wichita and Kansas City markets. Considering the recent flurry of dropouts (including Vegas' own Golden Gaming), you'd think this would expedite the process. Instead, the coronation is six months away.

Squeeze play. No time is being wasted as Pennsylvania rushes toward expanding into Class III casinos. Two rival proposals to add table games are presently on the table. Casino lobbyist Steve Rittvo is forwarding a plan that would tax new games at 12%. This is projected to generate $165 million for the Keystone State (assuming that slot play concurrently increases sufficiently to generate a $61 million impost).

House Whip William DeWeese (D) counters with a 21% tax, combined with a one-time $10 million/casino fee, for a potential Year One windfall in excess of $300 million. I wish Rittvo luck but fear that solons will -- as they so often do -- gravitate toward the bigger dollar sign. It's an institutional failing.

Neil Bluhm, Philadelphia's Sugar[House] daddy

On a happier note, Neil Bluhm's revised design for his Sugarhouse Casino, on the Philadelphia waterfront, has received the green light from the City of Brotherly Love. Barring further legal mischief by sore loser Donald Trump, this means the project can finally move ahead, with a temporary, 1,700-slot casino slated for a Spring 2010 opening. Hallelujah!

Just when you thought ... the sequel

Thu, 25 Jun 2009 14:15:00 -0700

Just when you thought we'd heard the last of ultra-vile "Slick Rick" Santorum, the troglodytic former Pennsylvania senator turns up as the leading suspect in the "Who tipped off John Ensign?" scandalette. Most GOP senators are admirable men and women doing what they think is right (pun unintended) for the country, but the terminally self-righteous Santorum raised being a dickhead to the level of an art form.

Anyway, the good news for conservatives in all of this is it appears to take Fox News at least partly (but not wholly) off the hook for seemingly being asleep at the switch. Closer to home, CityLife is hot on the trail of a previous "Johnny Casino" imbroglio that, if it can be corroborated, would make the Ensign/Hampton ménage look like a church picnic.

As F'bleau turns ...

Fri, 19 Jun 2009 16:48:00 -0700

Fontainbleau's grisly zillion-grievance bankruptcy has been sent to mediation. (I don't envy the mediator.) In the process, F'bleau has obliquely confirmed lenders' accusations of cost overruns. F'bleau has a union-affiliated financier lined up to provide funding above and beyond the final $656 million that the $2.9 billion (and climbing) resort's bankers have withheld.

One possible instance of profligacy involves F'bleau's on-hold condo component. Then-CEO Glenn Schaeffer had a handsome preview center erected along the Strip and staffed it up. But ... no matter how much you might want an F'bleau condo they wouldn't sell you one. No, they'd just take your contact information and get back to you -- sometime. With such half-assed decisionmaking, no wonder F'bleau alienated its backers.

And now the lawsuits pile up and contractor Turnberry West is being accused of featherbedding. This project really needs a third-party rescurer, but who would want it?

Burton is back? That's what Mike Weatherford is reporting. Lance Burton, it is hinted, will be returning to his Monte Carlo gig on July 1. Why all the delay and mystery? If I had to guess (and I do), my hunch would be that MGM Mirage is angling for a bigger slice of the gate receipts.

Atlantic City Death Watch: This is particularly worrisome -- Pennsylvania Gov. Ed Rendell is opening the door to full Class III status for the Keystone State's slot parlors. Sensibly, Rendell advocates waiting and seeing until all of Pennsylvania's planned slot houses are up and running before upping the ante.

However, he's also giving legislators his tacit blessing to force the issue. His advocacy of expanded video poker in Pennsylvania isn't going to do besieged Atlantic City any favors, either.

The Stepford Casino

Wed, 17 Jun 2009 14:52:00 -0700

Welcome to the casino of the near future. Those robo-dealers are looking more and more lifelike ... and foxier.

(Kudos to Ian Sutton of GamingFloor.com for unearthing this gem.)

Robopoker is on the march, too.

If you're not winning ...

Tue, 09 Jun 2009 18:39:00 -0700

... change the rules of the game (literally). After opening-week results from Sands Bethlehem were softer than expected, Sands supremo Sheldon Adelson now wants table games. Without even waiting for all of the state's allotment of slot parlors to open -- and, given the situation in Philadelphia, that could be long wait -- the Pennsylvania Lege is contemplating going to full-bore casinos. That's a development which would be absolutely catastrophic for Atlantic City, which has suffered aplenty.

Danny Gans must have been in unimaginable pain to use a substance two to eight times the strength of morphine. I've had morphine and it'll put you down for the count (or make you wish you were). If Dilaudid has at least double the potency, I wouldn't go anywhere near the stuff. Gans would have had to have, as his manager claims, the constitution of an ox to take a Mickey Finn like that and remain functional. Steve Friess seems to find the whole thing a mite fishy.

Having left one sinking ship (the administration of Gov. Jim Gibbons) for another (Black Gaming), former Midnight Jim advisor Grant Hewitt has found yet a third vessel. Only time will tell if the Dr. Joe Heck gubernatorial bid is a more seaworthy barque than were Hewitt's last two.

Case Bets: Packer & Ho, Sands Bethlehem, MGM Mirage, Ameristar, Penn, Harrah's, etc.

Wed, 03 Jun 2009 14:40:00 -0700

• Smashing guitars -- but not over each other's noggins -- James Packer and Lawrence Ho christened City of Dreams. The younger Ho downplayed expectations of foot traffic, saying his $2.4 billion megaresort could get by on far fewer visitors than the nearby (and comparably expensive) Venetian Macao, which draws 70K visitors daily.

• After a record-setting opening, Sands Bethlehem fell into fourth place during last week's casino action in Pennsylvania. Not surprisingly, Philadelphia Park and Harrah's Chester led the state.

• Beau Rivage is safe. Although MGM Mirage was peddling several of its regional casinos, J.P. Morgan reports that "we have heard from some bidders that this process is close to dead, so we don’t expect to hear asset sales chatter in the near to medium term."

• While yours truly was critical of staffing cuts at Ameristar Casinos, they appear to be paying off. The company projects flat revenue comparisons in 2009 but better cash-flow margins, pegging the savings as $40 million-$48 million, annualized.

• When in doubt, Penn National Gaming falls back on what it knows: racinos. It's angling for the Laurel Park concession left on the table when Magna Entertainment collapsed. Both Penn and rival David Cordish appear to be trying to chisel a loophole into Maryland's slot-parlor law, which limits companies to one slot house apiece. Penn is already committed to Cecil County but wants Laurel Park ... as does Cordish, who has a pre-standing commitment to the Arundel Mills area. The latter project has run into serious opposition. Expect a nip-and-tuck fight for Laurel Park.

• Penn is evidently getting cold feet in Ohio, however.

• Casino expansion in Iowa will have to wait until 2010, at the earliest. This delay is a disguised blessing. The Hawkeye State market has been holding its own during the recession but the timing for diluting the market with four new casinos could scarcely be worse.

• If wishes were horses, Harrah's Entertainment would be galloping along the shores of the Yangtze River this very minute. Seriously, would you lend Harrah's more money? Would you give an alcoholic the keys to your wine cellar? Well, you might get the empties back so you could redeem the deposit on the bottle.

Big Love: Sheldon + Unions

Tue, 26 May 2009 13:55:00 -0700

As best we can ascertain, Hell has not frozen over -- nor have we engaged in any clumsy Photoshop fakery. That is an actual newspaper ad, as photographed by Steve Friess, who's out East, covering the opening of Sands Bethlehem. Since he's there and I'm not, I refer you to his series of on-the-scene dispatches: The Exterior (he deems the casino "the least interesting part" of the whole shebang) ...

The Interior (copious imagery, including that creepy robotic blackjack you see at G2E); The "very, very soft opening" (by Las Vegas Sands? Shocking!); The Sudden Crime Wave (two careless people lose their wallets; clueless prudes vent outrage).

It's droll, there's lots of pictures and it's the first good news we've had out of Sands in what feels like forever. Go, read, enjoy.

Surrender in Atlantic City?

Wed, 20 May 2009 12:20:00 -0700

Yesterday, I mis-reported New Jersey state Sen. James Whelan's proposal for downsizing the state's regulatory apparatus. He didn't call for elimination of the New Jersey Casino Control Commission in favor of the Division of Gaming Enforcement, merely an unspecified removal of what he perceives as a redundancy.

(Such are the perils of working from memory. Mea culpa, mea culpa, mea maxima culpa.)

Today's paper has a longer clarification of Whelan's position. He'd like to see a DGE/NJCCC merger, although Gov. Jon Corzine sounds strongly resistant to that and other aspects of Whelan's plan. And, after hearing for years that one of Atlantic City's problems is that it has too few hotel rooms to be destination resort, it's quite a turnaround to hear Whelan advocate a 200-room minimum (like Nevada's), a ~~150%~~ 60% reduction from the current mandate.

What's certain to paint a target on Whelan's back is his endorsement of aggressive employment of eminent domain to clear out distressed properties and encourage development. That's a real sore point in Atlantic City, where Donald Trump once tried to use eminent domain to push an elderly woman out of her home. (He lost.) Also, imagine how confrontational matters might have become if Pinnacle Entertainment had eminent domain in its holster when it was trying to expand its 'sphere of influence' around the old Sands site and was trying to berate the local real estate market into acquiesence.

But ... we're talking about a casino market where emergency measures are required. Would the city be using eminent domain to obtain property and then offer it around? Or would the city be taking sides, using eminent domain to pressure Citizen X on behalf of Casino Z? As craptastic an idea as eminent domain is, generally speaking, it's a good thing Whelan's put it into play, because this looks like a debate that has to be conducted as Atlantic City decides what its future is going to resemble.

However, Penn National Gaming COO Timothy Wilmott is welcome to put a sock in it, at least as regards his own aggressive eminent-domain advocacy. Penn has basically given Atlantic City the finger, bypassing several opportunities to get into the market, so who cares what its braintrust thinks? I dare them to operate there. I double dare them!

Aw hell, I dare them to do anything besides sit on their $1.5 billion hoard of gold and bemoan the fact that they can't obtain Tiffany properties at Walmart prices. Wilmott probably didn't mean to come off sounding like, "Kick some old folks and small businesses out and maybe we'll build something," but Penn needs to clearly state its intentions in re Atlantic City and stop playing subtextual footsie. Otherwise, any further discussion is meaningless.

But the Missing the Boat Award goes to Casino Reinvestment Development Authority boss Thomas D. Carver. OK, he's probably right when he says, "I don’t think we’re going to see $2.5 billion casinos anymore." The market's not going to support and, at those prices, you're not building for the ROI but the bragging rights.

But then we get: "We may see $400 million facilities."

No, no, no, no, no! Four hundred million smackeroos is roughly half -- I repeat, half -- the budget for a Pennsylvania slot parlor. It's a locals-casino budget ... and not a top-of-the-line locals place, either. Maybe some of those creaky old monoliths along the Boardwalk need to go away but replacing them with a bunch of Aliante Stations is likely to hasten Atlantic City's decline.

What do the city's three top performers -- Borgata, Harrah's Marina and Trump Taj Mahal -- have in common? Significant capital reinvestment, that's what. The numbers do not lie: Customers are not flocking to the places that are run on the cheap. If Carver's line of thinking gains currency, Atlantic City can forget about competing with Pennsylvania and just run up the white flag. What he advocates is tantamount to unilateral disarmament.

Diversity initiative at MGM Mirage

Tue, 19 May 2009 16:43:00 -0700

As in revenue diversity. Just when it looked as though CEO Jim Murren was getting locked into a Vegas-(almost)nothing-but-Vegas strategy, he busts out a couple of initiatives that would further expand and diversify his company's global reach and revenue stream.

After getting out two years back, MGM has quietly gotten back into the running for a 4,500-machine racino in Queens, N.Y. The company also has Florida-based developer R. Donahue Peebles in its corner. Others in the field for the Aqueduct contract include discrete bids by Steve Wynn and Penn National Gaming.

The latter is the only one currently involved in racinos and would seem like the logical choice, but observers seem to favor MGM's bid. If it goes through, the Aqueduct racino would pose a serious threat to other casinos in the region -- even MGM's own joint venture at Foxwoods Resort Casino. At least Foxwoods has table games, whereas slots-only Sands Bethlehem could see a huge chunk of its projected customer base gravitate back to the five boroughs.

In a low-risk deal, MGM is also franchising its MGM Grand, Skyloft and Bellagio brands to a trio of boutique hotels in Dubai. Developed by Dubai Pearl FZ, the threesome comprises a grand total of 630 rooms. Back here, that wouldn't add up to one wing of an MGM Mirage resort hotel. Otherwise, the Dubai Pearl project sounds awfully familiar: "an 'integrated city' with 5-star hotels, apartments, condominiums, retail and convention space." Kinda like ... oh, what's that big place down on the Strip? Yeah, CityCenter, that's it!

Exit the king? He's not quite off the stage, but in an event of historic proportions, Kirk Kerkorian's stake in MGM has fallen to 39%. Holy King Lear's abdication, Batman! Does this simply presage another Kerkorian comeback ... or the end of an era?

Inside the mind of Trump

Tue, 19 May 2009 16:14:00 -0700

It's a scary place. According to a story in Monday's Wall Street Journal, "world famous ... television personality" Donald Trump's net worth is determined subjectively. According to the Trumpster, "it goes up and down with markets and with attitudes and with feelings, even my own feeling."

So what if banks estimate that net worth to be, say, $788 million (to cite a 2005 Deutsche Bank determination)? If the scowling mogul feels that he's worth 10 times that amount, say, it must be so! All of this is according to a deposition that the WSJ managed to get hold of, part of a Trump lawsuit against the French publisher of a book which he blames for, among the other things, his failure to land a Philadelphia casino.

Trump is piqued by author and New York Times editor Timothy O'Brien's 2005 contention that his net worth was as low as $150 million. Reached on the golf course by WSJ reporters, Trump stuck by his deposition, which included the statement that "mental projections" stored in his noggin and never committed to paper were part of his valuation process. As of Sunday, the Value According to Trump was $5 billion -- plus at least $2 billion in implied brand value.

When testifying, Trump admitted to exaggerating the value of his properties, "Not beyond reason." He also considers the sub-licensing of his name to other condo developers "a form of ownership. I'd rather have this than own the building." He also believed himself to be half-owner (or more) of a project in which he actually only held a 30% stake because he was getting management fees, too.

The deposition also contained this exchange ...

Attorney: "Have you discounted in your mind for the risk that you won't sell [country club memberships] at the prices you are anticipating?"

The Donald: "I think I will, but it's possible I won't. But I think I will."

Perhaps the official Trump corporate motto should be, "I think I can, I think I can, I think I can ..."

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.

Case Bets: Seminoles, Iverson, Harrah's, PartyGaming, Station's luck, etc.

Wed, 15 Apr 2009 16:01:00 -0700

Down in Florida, the tide may be turning in favor of the Seminole Tribe. Both the Florida Retail Federation and Restaurant Lodging Association have thrown their support behind the status quo, as represented by Gov. Charlie Crist's Class III casino compact. Crist's unilateral gambling expansion has the not-so-small problem of being unconstitutional but this latest turn of events ratchets up the pressure on solons to pass a version of the compact that meets judicial muster.

That'll be no problem with the state Senate but the uptight House would like to roll back the Seminoles to slots-only status (and would get rid of the casinos altogether, if only they could in their benighted heart of hearts). The table-game genie isn't going back into the bottle -- at least not until the federal courts have their say -- so the Solomonic question at hand is how to level the playing field for private-sector racinos without sacrificing the Seminole tax revenue that Crist secured. Easier said than done, obviously.

"Is too!" "Is not!" Both MGM Grand Detroit and Greektown are refuting a report in the Detroit News (with which MGM has taken issue before) that they'd 86'd former Philadelphia 76er Allen Iverson from their casinos. Let's face it, the man is a boor but he's a wealthy boor, so neither casino is likely to turn him away as long as he only bounces basketballs, not checks.

Headless casino. Not only did Harrah's Entertainment sack the GM and five other execs at Harrah's Reno, it won't be replacing them. At almost any other company, running a casino by remote control would come as a surprise but Harrah's has the reputation of employing a ruthlessly standardized business model. Besides, the company has to free up some dough to pay its new Internet/World Series of Poker guru Mitch Garber, whose former employer, PartyGaming.com, just cut a deal with the feds.

The luck of the Fertittas. Dodging yet another bullet, Station Casinos extended negotiations with its debtors by another month. While some form of bankruptcy at Station is inevitable, the company continues to fend off a takeover attempt by Boyd Gaming. However, Station says that when it comes to the terms offered to unsecured creditors, it's hanging tough. If that's the case, what's to discuss? (Or is Station being more flexible than it's letting on publicly?) My money, so to speak, is still on Station brass and co-owners Colony Capital retaining possession of Station and at a substantial discount to its market value, too.

An obscure racino company is cleaning house and relocating from Las Vegas (where it had no logical business being headquartered) and back East, where all its business is. The board of Empire Resorts really wasn't minding the store, was it?

The company might at least saved a bundle on long-distance charges if it had condescended to have its corporate offices in New York State, where its physical operations were, and not in tax haven Green Valley. But don't cry for outsted CEO David Hanlon, who parachutes out with 100 grand and plus another hundred large for nine months of "consulting services." These days, nothing succeeds like failure -- provided it's done on a grand scale.

Update: These are the same clowns whose Maryland slot application got tossed because they didn't bother to include the mandatory application fee when they filed.

Pennsylvania's biggest gaming screwup is history ... sort of. Former Mount Airy casino owner Louis DeNaples is guilty as hell of hanging out with the wrong crowd but innocent of perjury and will maintain one degree of separation from the casino, which remains in the DeNaples family. The Pennsylvania Gaming Control Board can claim a semblance of victory but the four-and-a-half-year imbroglio is a lingering embarrassment to a body whose vetting process has been inarguably the sloppiest in the U.S.

The PGCB needs to pay more attention to background checks and less to "juice" (see Barden, Don) -- and also to develop questionnaires that aren't so "imprecise and potentially confusing" they could open applicants to charges of perjury. It would also behoove Pennsylvania to quit "stovepiping" PGCB and state police investigations. Were it not for a lack of information-sharing (prohibiting by Keystone Kop, er, State law), this whole mess would probably have been avoided.

Where's Sheldon?

Wed, 08 Apr 2009 12:10:00 -0700

Down in the Lone Star State, where else? The Las Vegas Sands CEO was making some Texas-sized boasts to the Lege, trying to impress them with a show-and-tell presentation of "large glossy photos of his company's properties -- the Venetian and the Palazzo in Las Vegas, and a casino development in Macao that cost billions of dollars to build."

Never mind that Sands has an abortive condo project on the Strip (where its latest marquee retailer is ... Walgreens), has had to scale back Sands Bethelehem and the Cotai Strip™ has ground to an ignominious halt -- at least until equity partners materialize. No, Adelson says he's prepared to expand into Texas and the money will be there. Indeed, he says he'll spend "Whatever it takes."

The money certainly isn't there in Macao, where "there's nothing imminent," despite hopeful talk of two Chinese construction moguls vying for a piece of Sands' Macanese action. It wouldn't be the first time Adelson's crystal ball came equipped with a rose-colored filter.

The proposal before the Texas Lege appears doomed not only because of the fierceness of its opposition but due to its over-ambitious scale. Fifteen casinos (including three tribal ones), an unspecified number of racinos, a related push for legalized and regulated poker ... it's too much for such a profoundly conservative state to swallow in one great gulp.

Besides, there's a huge disparity in the proposed tax rate for casinos (15%) and that paid by tracks (35%), meaning the Lege would have to bite one or more bullets: Raise the casino tax, lower the parimutuel one, or do some combination of both that isn't revenue-negative. If the gaming industry wants to get its boot in the door, the competing racino-only bill looks like a more viable and incremental means of establishing a Texas footprint.

The current debate has also provided another excuse for Phyllis Schlafly's Eagle Forum to make a nuisance of itself. One of its harpies squawked, "Why in the world would we want our children to grow up to be card dealers and waitresses?" I presume she would prefer that they grew up to be unemployed.

Case Bets: Station Casinos, CityCenter, Pittsburgh, James Packer

Fri, 03 Apr 2009 11:22:00 -0700

Credit-default swaps, some of those financial instruments that have played hob with the U.S. economy, are making a cameo appearance in the tortured saga of Station Casinos. ~~If you insured Station's debt, that insurance is worth more than the paper your CDS is printed upon --~~ ~~but not by much~~.

Congratulations, MGM Mirage. Your probable rescuer is a bottom-feeder who's preparing to root around amidst the dregs of the banking industry. However, with CityCenter as much as $3.8 billion shy of the finish line, MGM isn't in a position be picky about going into business with the K-Mart of casino owners.

Rivers Casino, the former Majestic Star, has some CityCenter-style construction problems. This project has been so vexed and hexed that nothing comes as a surprise anymore.

Interesting business model. Halfway around the globe, Melco Crown Entertainment's got a lot riding on its City of Dreams megaresort. To bring back the whales, it's essentially promising that they can welsh on their markers with impunity. Or, as the company puts it, "Aggressive enforcement actions against a customer [may] unduly alienate the customer and cause the customer to cease playing at our casinos." And, gosh knows, nobody wants to alienate a deadbeat debtor.

Case Bets: Wynn, Adelson, casino closings & Number One

Mon, 30 Mar 2009 18:45:00 -0700

Last winter, I got a break on my rent -- but not nearly as good as the one Steve Wynn did. That's a nice deal, if you can get it.

Las Vegas Death Watch: In the latest "Stripper Poll" posted by Steve Friess, he asks which Strip casino should close first "if economic conditions warrant it." Through some glitch, the Tropicana was listed twice, so voters may be using two of their three votes on it. Either way, it's out in front with 40 votes, with hanging-by-a-thread Hooters second (31 votes) and Circus Circus, the casino people to hate -- and patronize -- third with 29, as of this writing.

The fourth-place showing by the customarily derided Imperial Palace counts, in this context, as good news for the IP. As for the Tropicana's prospects, I'd still count them better than Riviera's ... assuming Trop management gets its act together, which it shows few signs of doing.

Good news for Adelson: An analysis of the East Coast casino market finds Sands Bethlehem relatively sheltered from strong competition and likely to swipe business from two rival Pennsylvania slot parlors.

Whatever service workers get paid, it's not enough, as this story demonstrates. The indignity alone is impossible to quantify.

Inside the Harrah's filing:

Fri, 20 Mar 2009 12:28:00 -0700

Hare 1, Tortoise 0: After reading through the March 13 Harrah's Entertainment 4Q08 filing this earlier this week (one of the benefits of using mass transit), I set it aside for a few days, enabling the Las Vegas Review Journal's Arnold Knightly to beat me to the punch. What caught both his eyes (presumably) and mine (definitely) was a line of copy in which Harrah's acknowledged that its poor Las Vegas Strip performance was partly driven by "fewer hotel rooms availabe due to room remodeling and remediation projects at three Harrah's properties [including The Rio]."

You will recall that, whether to save time or money (or both), Harrah's made an end run around the Clark County permitting process when it wanted to make changes to several of its hotels. In some instances, these alterations not only didn't match the blueprints submitted to the county, they also compromised fire safety. (Lax inspection on the county's part allowed the problem to mushroom.)

Harrah's is presently under indictment for these cheeseparing measures, which were uncovered by dint of a forceful R-J investigation. It was a rare instance of the R-J speaking truth to power and the paper has suffered mightily for it, as Harrah's has retaliated in measures both great (an advertising boycott) and petty, like banning the R-J from Harrah's Las Vegas properties.

Whatever punishment the judicial system may or may not levy upon Harrah's will be nothing compared to the dent this misadventure put in Harrah's balance sheet. (By the way, I should acknowledge that Knightly read the Tolstoyian 160-page version of the quarterly report, while I settled for the 34-page "Cliff's Notes" version.) Harrah's may have thought it was saving money by going rogue but that false economy has now come back to bite it in the ass, to the tune of $60.5 million.

Gargantuan writedowns swung income from positive to negative in almost every jurisdiction. The international sector has bled red ink for two years, as London Clubs has proven to be a money-loser. The venture, like the company's hapless flip-flopping in Kansas, is typical of the spasmodic decisionmaking that has characterized CEO Gary Loveman's stewardship. Seemingly random projects (Slovenia, Singapore, the U.K.) were lunged at and toyed with briefly, then ditched. Having settled for one of the smaller fry of the British casino industry -- London Clubs -- and then unable to swap it for a piece of the big boy, Rank PLC, Harrah's must settle for selling off a little bit of LCI here or there.

Harrah's Atlantic City numbers would look much worse if the company didn't cleverly roll its Pennsylvania competitor, Harrah's Chester, into the A.C. portfolio for reporting purposes. If you had to assign Harrah's Chester to a region (as opposed to "Other"), the only one that fits is "Atlantic City Region," though that's a bit like rolling Laughlin numbers into "Las Vegas Region."

Debt service is murder, up 2.7X from 2007. 'Nuff said.

If asset sales are necessary, a non-Total Rewards property like Bill's Lake Tahoe would be already positioned for spinning off. However, Harrah's would have difficulty justifying more than a $160 million average sale price for any of its outlying Nevada properties, where cash flow is comparatively small. If significant relief is to be achieved from unloading casinos, some trophy properties will have to be sacrificed. After all, why should the bondholders be the only ones taking a bath?

Big bounce in Pennsylvania

Thu, 05 Mar 2009 14:04:00 -0700

Casino revenues in the Keystone State leapt 14% from February of Leap Year to this year, at least at six of the state's seven casinos. (Hollywood Casino at Penn National Race Course is excluded; it wasn't open a year ago.) That's $126 million against $110 million, even with one less day in the month, which is divided 55/45 between the state and operators. A 1,578-machine increase in slots, mostly at Mohegan Sun at Pocono Downs really helped, too, as you'll see.

The comparisons of gross-revenue (not to be confused with cash flow, which can be considerably less) are as follows ...

Mohegan Sun @ Pocono Downs: $12.4 million/$17.8 million (44%)

Philadelphia Park: $28.5 million/$30.3 million (6%)

Harrah's Chester: $28.5 million/$27.9 million (-2%)

Presque Isle Downs: $12.1 million/$13.9 million (15%)

The Meadows [Cannery Casino Resorts]: $17 million/$20.6 million (20%)

Mount Airy Resort: $11.6 million/$15.3 million (32%)

Plus another $19.7 million realized at Penn National. Once expansions are completed at The Meadows and Philadelphia Park (more bad news for Harrah's Chester), and Sands Bethlehem and Rivers Casino in Pittsburgh open, the state expects the annual take to swell to $2.25 billion, with industry employment growing to 8,500 souls.

Three-fourths of the value of the troubled, $1.7 billion Cannery/Crown Ltd. deal now rests on The Meadows. Crown says it expects an annual cash flow contribution to be $115 million versus only $35 million from the two Canneries in Las Vegas. If New Yorkers really are willing to drive an hour and 50 minutes to pull the slot handles in Bethlehem, then Sheldon Adelson's 17% projected ROI won't be as zany as it appeared at first blush.

Wall Street swoons for Sands

Wed, 04 Mar 2009 18:32:00 -0700

That must have been some mighty tasty Kool-Aid that Las Vegas Sands CEO Sheldon Adelson was ladling out at the Reuters Travel & Leisure Summit yesterday. Had we not been hearing it from other news sources, one wouldn't put much credence in Adelson's prediction of wider access to Macao from mainland China, mainly because his recent forecasts of what Peking would and wouldn't do have tended to be dead wrong.

Marina Bay Sands: A 28% return on investment? Sheldon says that's a lowball figure.

But what really staggered the imagination were the ROI projections Wall Street's making for Marina Bay Sands, in Singapore. Putting cash flow anywhere between a half-billion and $900 million is a scattershot figure, to say the least. But even those seemingly giddy estimates are "somewhat low," according to Sands' grand vizier. Depending on which of three reported Marina Bay budgets is the correct one, here's how the ROI range would shake out ...

$3.2 billion (original): 16%-28%

$4.5 billion (interim): 11%-20%

$5.4 budget (alleged final budget): 9%-17%

Those are some extraordinarily optimistic projections for the most expensive casino megaresort in history (unless you count CityCenter as one property). But it gets better. The $743 million Sands Bethlehem project, in Pennsylvania, is going to do a 17% return on investment, according to Adelson.

Let's hope he's right, because that'll mean we're busting out of this recession something fierce. Of course, Sands saved itself a pile of money in Pennsylvania by simply deferring its contracted retail mall and hotel until an unspecified future date. But if $743 million represents not the total cost of the project but what Sands has spent on the casino alone, that $800 million Don Barden/Neil Bluhm behemoth in Pittsburgh may start to look like a paragon of frugality.

Cannery sale on ice?

Wed, 25 Feb 2009 15:41:00 -0700

Nevada Gaming Control Board Chairman Dennis Neilander was kind enough to ring up pesky old NGCB detractor S&G today and provide some clarification on why Crown Ltd. and its supremo, James Packer, passed muster in the Silver State but have run into heavy weather in Pennsylvania.

"When we first started ... the Packer shares are held in a variety of trusts," controlled by Packer himself, Neilander explained. NGCB representatives met with trust counsel and "pored through all of the trusts," concluding that Packer was the controlling shareholder. "We have no concerns about it here. It was all disclosed to us."

(A government source adds that trustees fear Keystone State confidentiality provisions are less airtight than Nevada ones and information provided to regulators would become public. Which is why three Crown Ltd. participants are suing -- under aliases -- for declaratory relief, in a Delaware court.)

As for a spate of recent developments, Neilander said that Gretel Packer (above) -- who's suddenly gotten cold feet about Pennsylvania licensure -- didn't reach the 10% ownership threshhold necessary to mandate Nevada scrutiny. "We did" have contact with gambler Harry ~~Kanavos~~ Kakavas, Neilander added, saying that at the time there was no indication that Kanavos had tapes of Crown executives allegedly making illegal overtures to him. (Pennsylvania has sent an investigator Down Under to hear the recording.) And with regard to bribery allegations connected to Melco Crown Entertainment's City of Dreams project, those arose late in the proceedings, the chairman said, and there was not enough evidence from which to reach a conclusion as to their validity.

Neilander added that the NGCB is monitoring both the Kanavos and Macanese situations for potential post-licensure action. But with Cannery Casino Resorts bosses William Paulos and William Wortman accusing the Packers of colluding to scuttle the sale, these questions may soon be extremely moot.

Earth to Colony Capital

Mon, 23 Feb 2009 18:38:00 -0700

"If I had a crystal ball two years ago, I would never have taken on that debt. Never, ever. But looking back, we saw growth. That's why we put up that beautiful new tower, with a plan to do extensive renovations [on the older hotel tower] next door. We're not able to do that now." -- Resorts Atlantic City CEO Nicholas Ribis

Growth? Two years ago? Would somebody please buy Nick Ribis that crystal ball? By early '07, casinos in Pennsylvania were a done deal. How could anyone have foreseen growth for Atlantic City in that scenario?

Just asking ...

Another setback for Packer

Mon, 23 Feb 2009 14:57:00 -0700

Several potential owners of Cannery Casino Resorts want to withdraw from the process rather than disclose their identities to Pennsylvania regulators. In addition, Gretel Packer, sister to Crown Ltd. CEO James Packer, has asked to pull back her license application.

This development inspires no end of questions. If Pennsylvania holds its ground and the Crown affiliates who are insisting upon secrecy pull out, does the whole Cannery deal begin to unravel? (Crown says no.) Was a similar identity waiver granted in Nevada? If so, why? Who are these mystery investors and why is their anonymity so important?

Considering that a gaming license is a privileged and highly prized asset (to say nothing of a potentially lucrative one), there's no conceivable justification for the citizens of Pennsylvania to be kept in the dark about who's behind the Crown Ltd. bid. If the Pennsylvania Gaming Control Board accedes to Crown, its already shaky credibility will be shot.

Case Bets: Foxwoods, Greektown, Mesquite, iPhone follies

Sat, 21 Feb 2009 14:19:00 -0700

Foxwoods Casino Resort's Philadelphia beachhead is financially beleagured by problems on the home front. Says one economist of the Connecticut metaresort, "Their plan for growth was built on an economy that no longer exists and is not coming back."

A glimpse of Greektown:

Blackout? Casino oligopolist Randy Black is contemplating ditching his three Mesquite casinos (one of which is barely operational). Considering that the bottom has fallen out of the Mesquite market, it's difficult to imagine who'd buy.

Own-goal for Control Board: An overreaction by the Nevada Gaming Control Board to an iPhone card-counting program has sent the latter's sales to stratospheric levels. Silver State regulators have unwittingly made Travis Yates the entrepreneur of the year.

Trump: The end

Sat, 21 Feb 2009 13:40:00 -0700

So Trump Entertainment Resorts has such little worth that it's facing delisting, having become quite literally a penny stock. In a move described as "petulant," not only is Donald Trump taking his ball and going home, he wants the name of the company changed.

He claims he could have done better, had he simply been allowed to exercise his incomparable casino mojo ... but this emperor's been naked for the better part of a decade. As for the "wasteful spending" he decries, one can only guess he's referring to the capital improvements at Trump Taj Mahal (the sort of thing Trump himself could rarely be bothered with) which have goosed business there substantially.

The already discounted sale of Trump Marina to Richard Fields (who hasn't lined up the dough and recently liquidated his Manhattan pied-a-terre) looks shakier than ever -- and it was not a deal that inspired confidence to begin with. Trump's tantrum could easily kill it outright. Fields' company is hemming and hawing ominously. And if that sale doesn't come through, one analyst predicts a "death spiral" for TER.

View the video at CNN.com

Bloviation alert: Trump disses own casinos, says they're not worth beans.

Meanwhile, the Trumpster is engaging in a little revisionist history, complaining that the company hasn't diversified outside Atlantic City. Oh, its various incarnations have tried. A Trump-branded riverboat in Gary, Ind. (now Don Barden's Majestic Star II) enjoyed an early vogue, then went into steep decline. A Trump tribal-casino-management arrangement in California was short-lived. An effort to get in on the Philadelphia market went nowhere, except to court. As always with Trump, when in doubt ... sue!

Contrary to Trump's ever-bombastic contentions, things are not coming up roses for him elsewhere, either. (On a personal note, I balked at purchasing an otherwise appealing necktie at Filene's Basement because it bore the Trump moniker on the reverse. Would you call that "negative brand equity"?)

About the only good thing that's come out of Trump's insufferable TV series, The Apprentice, is that the mainstream media finally began paying attention to the thing of smoke and mirrors that was Trump's casino kingdom.

Case Bets: James Packer, Isle of Capri

Mon, 09 Feb 2009 18:30:00 -0700

Geez, maybe the Nevada Gaming Control Board shouldn't have been in such a hurry to green-light James Packer's purchase of Cannery Casino Resorts. (In a bow to noblesse oblige, Packer wasn't even required to put in an appearance at the Nevada Gaming Commission's vote on the matter.) At least the NGCB might have wanted to see how the Harry Kakavas scandal plays out, especially when Kakavas purports to have Crown Ltd. execs committing improprieties on tape. And since one of the people in the hot seat is Crown CEO Rowen Craigie -- with whom Nevada regulators have become quite familiar -- close attention is warranted.

Regulators from Pennsylvania -- a state not heretofore known for the thoroughness of its casino due diligence -- are taking this matter a little more seriously. In fact, they're sending a deputy Down Under to hear Kakavas' sub rosa recordings in person. Having dropped the ball on Don Barden and Louis DeNaples, the Pennsylvania Gaming Control Board clearly doesn't want a third botched background investigation on its ledger.

Packer, money soon parted: A $300 million writedown of other stateside Packer casino investments is on the way. Reuters' dispatch implies that some of Packer's Fontainebleau stake may be written off. That's neither a vote of confidence for Packer or F'bleau, which looks more and more like the wrong project in the wrong place at the wrong time. At the time Packer bought in, it'd looked like he'd found a "steal" -- and that F'bleau had been hard up for investors. Well, the second part may still be accurate.

Update: Then again ... maybe both still hold water. All though all of Packer's U.S. casino holdings (exclusive of Cannery) may be only worth $65 million combined, getting 20% of F'bleau for 65 mil still qualifies as a steal.

Isle bags U.K. venture: Even had it stuck to its knitting (U.S. regional casinos), Isle of Capri Casinos would still be in the doldrums -- its revenues weren't growing on a same-store basis. A duff casino project in the bowels of Coventry's Ricoh Arena just made things worse and now its end is nigh. Perhaps, as Isle contends, Britain's regulatory regime is partly to blame, but that's an excuse which suggests Isle didn't quite know what it was getting into -- nor would a strong performance in Coventry have cured the company's underlying malaise. Couple this with a 'debacular' Bahamas venture and Isle can't come home soon enough.

Dancing Tsar? No, not he: Normally admitting to be an ABBA fan wouldn't be a problem ... unless you happen to be Vladmir Putin, that is. Bjorn Again probably never imagined they were onto the publicity coup of their careers.

Mixed message from Penn

Fri, 06 Feb 2009 12:10:00 -0700

Having pulled the plug on his latest Atlantic City venture, Penn National CEO Peter Carlino served the city a heaping plate of gloom with a side dish of pessimism. In fact, he pretty much slammed the door on the besieged metropolis, although his spokesman reopened it a wee bit.

Quoth Carlino: "I think as we've watched New Jersey, sadly, that's a market at the moment that is significantly less appealing to us, and that shouldn't be a surprise. There is much more bad news coming ... [Pennsylvania slot parlors are] nothing but bad, bad, bad news for Atlantic City. It's going to be a while, and maybe a long while, before the picture changes in Atlantic City. It's not a pretty picture."

In other words, he didn't just plunge a dagger into the heart of Atlantic City, he twisted it around a bit for good measure. Also, Penn's legal representative on the Boardwalk is a co-owner of A.C. nemesis Harrah's Chester. Coincidence perhaps, but the symbolism is painful.

Then again ... a Penn representative says the company will "evaluate the opportunity" as Bader Field continues to be shopped around. So Penn isn't really giving up on Atlantic City after all and Carlino's verbal barrage begins to sound like a "softening up" bombardment, preperatory to pushing for a better deal on Bader Field.

Carlino is right to wary of the potential threat from Philadelphia but anybody contemplating an Atlantic City investment is going to find themselves between that rock and the hard place that is the realization that new (or significantly refreshed) product and nothing else will suffice in A.C. Unfortunately opportunity -- the gnarled casino-development process in Philly -- and crisis, in the form of an economic deep-freeze -- have coincided, leaving the status quo drifting along.

There's a variety of low-hanging fruit in Atlantic City: the 14 acres MGM Mirage is peddling; Pinnacle Entertainment's stalled Sands site; the Tropicana; perhaps even Bally's Atlantic City or a management contract at Resorts Atlantic City, if the foreclosure goes through. Not to mention the Trump Marina sale, which seems to have devolved into slow-fizzle mode. But if Penn is sending a signal, it's translating as "Bader or Bust!"

Atlantic City: Two strikes, no balls

Thu, 29 Jan 2009 18:05:00 -0700

This was originally going to be "Death Watch VI" but three of those in a week is positively ghoulish. So, on to the latest disheartening developments from Atlantic City, the casino market that just can't catch a break.

Cease the revels! Taking a page from the Harrah's Entertainment playbook, Revel is calling a halt to interior work and will concentrate on finishing the exterior of the $2 billion resort. It had weathered the loss of several key executives in a plane crash and an attempted shakedown by Unite-HERE, but now it's basically running out of money. The possibility of a joint venture has now been floated. (Hey, Penn National, here's your chance to get onto the Boardwalk without having to buy the land or even put up most of the construction cost.) Starting a multi-billion-dollar resort project without all of one's financing in place may be standard practice, but it's caused project after project to go begging as Wall Street's purses snap shut.

It seems disingenuous, though, for Pinnacle Entertainment to cite Pennsylvania casinos as a potential reason not to move forward in Atlantic City. True, Columbia Sussex CEO William J. Yung III completely "misunderestimated" the Pennsylvania threat, but he wasn't the sharpest knife in the drawer when it came to running casinos and evidently never familiarized himself with the A.C. market. Pinnacle, they're supposed to be the smart guys, so they had to know full well what they'd be up against when they took a wrecking ball to the Sands back in '07. One would expect no less of them.

The cruel irony to all of this is that, during a time when casino development in Philadelphia has been deadlocked and ineffectual, buying precious time for Atlantic City, the economic crunch has sent project after project either into paralysis or onto the slag heap.

The New Jersey Casino Control Commission in executive session.

Trop the madness! If such a thing were possible, the Tropicana Atlantic City has even fewer slot technicians now than during the slash-and-burn ColSux days. And the techs have voted to strike, which may trip a rolling series of walkouts. Table game dealers would be the next ones out the door.

There's a mixed message coming from Trop HQ. President Mark Giannantonio insists he's been bargaining in good faith. But his hands may be tied by slowpoke trustee Justice Gary Stein, whose public posture has been that it would be unfair to the next owner of the Trop to be saddled with a labor contract negotiated by state-appointed interim management.

I agree, in principle. But in practice that admirable restraint has resulted in Trop employees being strung along while Stein takes his own sweet time getting a sale into place. A picket line would be yet another unfunny act in the farce caused by the New Jersey Casino Control Commission's lack of testicular fortitude when dealing with its dawdling surrogate. It should have told Stein to get the most viable deal and get the hell on with it 10 months ago.

Which is one more argument for taking a chance on Tropicana Entertainment CEO Scott Butera (a dice-throw that seems like less and less of a gamble by the day). When ColSux brinksmanship seemed to have the Tropicana Las Vegas headed for a strike, Butera brought the crisis to a swift and statesmanlike conclusion. He'd probably do the same thing in Atlantic City. It's a situation that calls for decisiveness, a quality not greatly in evidence right now.

The prodigal son

Mon, 19 Jan 2009 18:03:00 -0700

Poor Kerry Packer; the late Australian mogul and famous high roller must be doing all his rolling in the grave now. Reputed for being daring at baccarat and cautious in business, the media baron is at least spared the indignity of seeing son James Packer blow through his patrimony at a record pace.

Going is the $33 million yacht; on hold is the $40 million corporate jet. Even work on the $2.5 million backyard swimming pool has been suspended. (Don't you hate it when that happens?) At least the pin placements on Packer's Greg Norman-designed golf course are still "changed every day at massive expense," reports Rupert Murdoch's News.com.au.

More seriously, Packer is reported to be suffering from depression, though other media reports dispute this. Given the debilitating, even paralyzing nature of the disease (something for which I can vouch firsthand), it puts a potentially very different cast upon Packer's December no-show for a Nevada Gaming Control Board hearing.

When Packer did turn up, Chairman Dennis Neilander admitted to being somewhat foxed by Packer's acquisition of Cannery Casino Resorts (for $1.8 billion). "You and me both," I thought. As Packer seemingly played Pin the Tail on the Donkey, buying not only Cannery but positions in Fontainebleau, Station Casinos, Harrah's Entertainment and the flaccid Crown Las Vegas 'failsino'-tower, I tried to convince myself that an overarching strategy was at work. In retrospect -- especially after the writedown of the Station and Harrah's investments -- what we were witnessing was James Packer, Shopaholic. (How did he manage to miss out on the Cosmopolitan?) One begins to see why Steve Wynn steered clear of Packer, back when the talk of a Wynn-Packer joint venture was the buzz du jour on the Strip.

Even the Crown Macau cash spigot has been sputtering, although Melco Crown CEO Lawrence Ho keeps insisting that Chinese access to Macao will improve in time for the City of Dreams opening. (Either he's whistling past the graveyard or he knows something for which others would pay a very great number of patacas.) Market share is down at Crown Macau and the Macanese government is predicting a serious diminution of gaming revenue for for the overall market in 2009, placing it somewhere near $10.7 billion.

Plus, the ripple effect doesn't stop there. Aristocrat Leisure, which could really stand to have some good news, had been hoping for a fivefold increase in its installed slot base in Macao over the next two years. Not only is that unlikely, operators are trimming their existing slot inventory.

Underscoring their pessimism regarding reduced visa restrictions, Macanese tourism officials are turning their gaze at least partly away from China. Among the newly coveted markets are Singapore's presumed feeder markets -- India, Indonesia, Malaysia, the Philippines, Thailand, and even Australia and New Zealand -- to say nothing of Singapore itself. It's long been presumed that Singapore's got a tough row to hoe when its casino megaresorts come on line and it just keeps getting tougher.

Not-so-Great White North

Fri, 09 Jan 2009 15:51:00 -0700

OK, so casino revenues are down in Nevada and Atlantic City. That's unfortunate, to say the least. But look on the bright side: You could be operating in Ontario, where the leading casinos aren't simply making less, they're operating in the red.

There's not much of a profit motive for operators in Ontario as it is, since all net income goes to the state, according to the Windsor Star. But the current situation isn't just bad for the tax-happy province but also for ...

Harrah's Entertainment: What is now Caesars Windsor is now grossing over 50% less than in it did in '99-00, when it was (under different ownership) Casino Windsor. By all accounts, it's much more of a hassle to get from Detroit to Windsor since 9/11 and the Motown-side casinos -- well, two of them, anyway -- have upgraded beyond recognition during that time. Windsor veteran Holly Ward invokes the trifecta of Total Rewards, a new showroom and a rebaptism under the Caesars name to implicity contend that her casino can turn things around. It will be interesting to see where Caesars Windsor stands when the '09 numbers come in.

Neil Bluhm: The Chicago-based developer's companies manage two casinos in the Niagara Falls area and they're both bleeding red ink. This economy probably entitles Bluhm to a mulligan but these aren't the kind of performance numbers you like to post when you've been positioned as the casino-powered rescuer of Philadelphia, Pittsburgh and Des Plaines, Ill.

Tribes: Profits from tribally owned Casino Rama are distributed to Canada's First Nations peoples. But when there are no profits to go around, hard times become that much harder.

MGM CEO sez, "Make me an offer"

Thu, 08 Jan 2009 14:47:00 -0700

“We are certainly not looking to aggressively sell assets, but the point is that we do have assets that are attractive and we are going to be very responsive.”

That's MGM Mirage CEO Jim Murren's way of saying that he's not going to hold a fire sale ... but don't be shy with those purchase offers, either. He's identified drastic debt reduction as his top priority, which partly explains why the company is spinning its undoubtedly mortifying The Harmon fiasco as A Good Thing, Really, as it brings the moving target which is CityCenter's budget down to a svelte $8.6 billion ... assuming they don't have to refund those $88 million worth of Harmon deposits. (Murren may have conceived CityCenter but it is his perceived rival, CityCenter CEO Bobby Baldwin, whose resumé is much likelier to be blotched by the forced truncation of a planned 47-story tower into a 25-story stump.)

CityCenter: Now with 50% less Harmon!

Elsewhere, Murren contends that MGM could have gone back and finished The Harmon at its intended height. Well, yes ... but even if the bankers are reopening their checkbooks, as Murren says, it's difficult to imagine a scenario in which they happily agree to pile additional hundreds of millions in debt onto a project that still isn't fully funded. Unspecified Chinese banks are reportedly being supplicated for those elusive last few (millions of) dollars.

Perhaps Murren was being a mite tongue-in-cheek, as the odds of financiers underwriting a Harmon do-over are probably somewhere in the same realm of probability as flying pigs and Guy Laliberté admitting that Cirque du Soleil screwed the pooch with Believe. (Mais non, it's nothing that as much as six months of "fixations" can't cure, mes amis.)

The James Packer Jinx redux? This isn't reassuring: Soon-to-be Cannery Casino Resorts owner James Packer's Crown Ltd. is promising "a new Las Vegas-based senior management team and board" and that "many" current managers and employees will stay. Furthermore, the company will apply business models that have worked for it in Australia, Canada and Macao to improving the not-exactly-struggling Cannery performance.

Now, this is what's called fixing what isn't broken. Nor has the Vegas market been kind to operators who have come here from overseas and attempted to reinvent the wheel. One cautionary example Packer hopefully will heed is that of Swiss Casinos, whose somewhat pretentious Resort at Summerlin tanked unmercifully, to much glee within the industry. Swiss Casinos made it plain it didn't want to hear Word One about what worked in Las Vegas, they had it all figured out. Their pride went before a fall into Chapter 11. Ironically -- or prophetically, perhaps -- Packer will inherit the erstwhile Resort @ Summerlin, which Cannery manages in its current guise, the Rampart Casino.

Less the value of that management contract, Packer is paying $600 million apiece for two locals casinos and a Pennsylvania racino. That seems more than a bit steep, even in a good economy, but looked like a much better idea at the time it was hatched, before Wall Street did a face-plant and hindsight became 20/20.

Well, at least Packer was able to get a plane ticket to Las Vegas this time. (He missed his previous scheduled appearance.) That's a good start.

Bad prediction of the year

Mon, 29 Dec 2008 17:56:00 -0700

Here's a random, thoroughly mortifying comment I ran across in the course of unrelated research: "Going with [Las Vegas Sands in Bethlehem] was one of the relatively few decisions Pennsylvania's gaming commission got spectacularly right, selecting a developer who had the cattle to go with the hat."

And who delivered that completely off-the-mark pensée? Yours truly, that's who -- and, boy, is my face red. I'm sure I could find other instances where my crystal ball was not simply cloudy but downright cracked, but that August 6 mental fender-bender may be hard to surpass.

Black Friday at Sands

Fri, 12 Dec 2008 11:41:00 -0700

Most of today will have to be spent pulling together a potted history of Columbia Sussex's misadventures in Atlantic City, so I apologize in advance if the bloggery is parsimonius today ...

Las Vegas Sands fired by ad agency. Usually it's the other way around but "credit risk" is the alleged reason behind OMB dropping Venetian Macau's account. At least Sands was able to quickly find another taker for the account and its $1.4 million in commissions.

Sacked Sands sacks staff. It'll be a less-than-merry Christmas for 216 unfortunate Venetian and Palazzo employees who are being pink-slipped today. In addition, $6.5 million in managerial bonuses is off the table.

If you're a property-level executive that just plain sucks. But if you're part of the executive team whose decisions unwittingly engineered a 94% diminution of Sands' stock price and the decimation of its market cap, why should you have been getting a bonus in the first place? The architects of Sands' decline can now say they're "making sacrifices" when they should be getting a slap on the wrist from the company's board of directors. Either way, shareholders are unlikely to feel sympathetic, especially now that Sands stock is being touted as one of the great bargain plays in the market.

Trouble comes to PA. Even the burgeoning Pennsylvania market is starting to feel the economic pinch. Mount Airy Casino Resort is hard up for cash and the state's trustee is willing to look the other way if indicted owner Louis DeNaples ponies up the dough.

Sheltered local publisher (who evidently doesn't read his own newspaper) is shocked to discover affordable rooms at Bellagio and the Venetian.

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.

Sally Rand has left the building

Wed, 26 Nov 2008 11:50:00 -0700

That corpse you may have stumbled across while strolling the riverbanks of Pittsburgh is Pennsylvania's 'one and one-third' rule. It was a legislative fig leaf whose ostensible purpose was to prevent the prime casino/racino opportunities in the state from being gobbled up by a couple of operators. It's what helped doom Harrah's Entertainment's bid for a Pittsburgh casino, as few seemed willing to believe Harrah's was merely the minority investor/advisor it said it was. (Since Harrah's was already the owner of a racino in Chester, Pa., that scotched its chances for more than a 33% share of anything else.)

So Pittsburghers got Don Barden instead. Didn't work out too well. (Then again, who could have predicted Harrah's would be in the parlous financial health from which it currently suffers?)

Anyway, earlier this month, Pennsylvania's Gaming Control Board bowed to the inevitable and transferred the Pittsburgh license to developer Neil Bluhm, owner of the as-yet-unbuilt SugarHouse Casino in Philadelphia. Which means that the Pittsburgh project will actually get done now. But ...

Although Bluhm technically holds only a small stake in the soon-to-be Rivers Casino, the license is in his name. And a Bluhm-controlled entity, Walton Street Capital, is one of the major stakeholders. And the CEO of the project is Greg Carlin, who also just so happens to be CEO of SugarHouse. (Lest it be unclear, in my opinon -- not that it matters -- Bluhm has an admirable track record as a developer and is the sort of corporate citizen the casino industry needs.)

So let's call out the 1.33 rule for the fiction it has become. If the PGCB isn't going to enforce it in other than the most cosmetic fashion, the Pennsylvania Lege should repeal it. This fan dance isn't fooling anyone.

Speaking of Neil Bluhm, he and Greg Carlin have turned up in Illinois, where they're amongst the bidders for the state's 10th and final casino license. The deleterious financial effects of the Illinois smoking ban and the state's staggering tax rates on casinos have scared off all but a trio of no-name outfits: Bluhm's Midwest Gaming & Entertainment, Waukegan Gaming and Trilliant Gaming, steered by the Flying Dutchman of the casino industry, Alex Yemenidjian.

The former MGM Mirage and film-studio exec tried to jimmy his way back into Vegas this year, asking a federal bankruptcy court to force Tropicana Entertainment to accept a loan from a Canadian firm with which Yemenidjian had become affiliated. Bluhm, whose base of operations is Chicago, might have a "home field advantage," but he's crying foul over Yemenidjian's opening gambit. The erstwhile casino executive is plunking down a whopping $435 million to, in effect, buy that 10th license. Crass? Yes. Persuasive? Undoubtedly.

Bluhm, by contrast, is offering only $100 million upfront, followed by a series of conditional $10/year payments. Waukegan Gaming effectively splits the difference, bidding $225 million for the license. If Yemenidjian is going to throw $435 million at the license alone, that raises the question of whether he's robbing Peter to pay Paul: i.e., Will commensurate capital be available to build the casino? (Magic 8 Ball says, "In this economy?!?")

Help the Neon Museum. All it takes is two clicks of your mouse. Just go to Hampton Inns' Nevada Landmarks page and click on the "Vote for this Landmark" link for the Neon Museum (or the Nevada Northern Railway Museum or Carson City's Children's Museum of Northern Nevada, if you're so inclined). The winner of the plebiscite will receive a donation from Hampton Inns at year's end. Thank you, Hampton. You're a class act.

Casino Vote '08: Dan Lee's the big winner

Wed, 05 Nov 2008 16:36:00 -0700

JP Morgan has proclaimed Pinnacle Entertainment "the biggest winner this election day." By voting to both lift the cap on buy-ins and the close Missouri to additional casinos, Show-Me State voters delivered a gift to Pinnacle CEO Dan Lee, who has massively invested in the greater St. Louis market and can now reap the benefits of higher wagers and artificially limited competition. Anybody contemplating the investment risk that Pinnacle has been lately (with at least $2.85 billion in outstanding projects) can sleep a little more soundly tonight.

But, as Morgan analysts point out, the stomping of a pro-casino initiative in Ohio redounds to the benefit of Pinnacle's Belterra casino (and Penn National's Argosy Lawrenceburg riverboat). While the Ohio vote reflects a certain amount of anti-casino sentiment, this was one of those ballot measures where the devil was in the details. It polled well in the immediate region, which has been hard-hit with job losses (5,000 of which casino backers promised to replace) but it was "no sale" upstate. An otherwise leftward-trending electorate was unpersuaded.

Specifically, there was a "trap door" in the enabling language that might have let Lakes Entertainment slip its tax obligations if tribal casinos open in the Buckeye State (a long shot, but one voters weren't willing to hazard), not to mention that the casino was to be allowed to operate with scant oversight. Oh, and the license fee ($15 million) wasn't chicken feed, but it's considerably less than what casinos are ponying up elsewhere -- like Kansas -- where no monopolies are promised. The face-saving spin was that "misleading ads" were to blame -- like that's anything new in politics.

Details were the bane in Maine, too, where Olympia Gaming found itself on the losing end of a casino plebiscite. Maine voters have taken a go-slow approach to casino expansion in their state, also voting down a racino at Scarborough Downs. There also seems to have been some "payback" involved -- from Down Easters who had seen their own casino aspirations crushed five years ago. If they couldn't have a casino, those upstart resort communities were going to be SOL, too. So there!

Pat LaMarche expresses her considered opinion of Maine's electoral process.

Lowering the legal gambing age to 19 stuck in voters' craw, as did certain other special privileges which were to be extended to the Oxford County casino and to Gary Goett's Olympia. Project booster Pat LaMarche sniffed that folks in Maine were "very unfriendly" and says she's going to take her ball and LaMarche right next door to New Hampshire.

On the other hand, LaMarche is the bete noire of intolerant religious wack jobs, so that's something in her favor.

Having a win/win day, was also the good fortune of Ameristar Casinos, which will see some relief in Colorado, in addition to prevailing in Missouri. In return for helping the state's community-college system, Colorado casinos get some new goodies that -- we hope -- will ameliorate the effects of the state's smoking ban.

It's a mixed bag, albeit more positive than negative, for Penn National. It headed off the Ohio threat but finds its flagship property in West Virginia facing competitive pressure not only from Pennsylvania but soon from Maryland, even though the latter's ramp-up is roughly four years away. Penn astutely protected its flank by optioning strategically placed real estate near Baltimore, in its first move after its LBO imploded last summer.

(Amusingly, both sides in the Maryland fight used President-elect Obama as a "product placement" in their literature. They knew a good "branding opportunity" when they saw one.)

Hopefully the Maryland Lege will revisit (read: reduce) the confiscatory 67% tax rate. Otherwise, brace yourself for Ye Olde Shack O'Slots, as no sane businessman would invest heavily in a casino with such a narrow operating margin. By establishing a Maryland beachhead, Penn is probably thinking more in terms of capturing "leakage" from its other nearby properties, not having visions of $$$ dancing in its head.

Former governor, sometime racino proponent and "Casino Jack" Abramoff beneficiary Robert Leroy "Bob" Ehrlich Jr. (R) hoped to "see us kill this turkey," but that sounds like sour grapes from the one-term blunder, er, wonder. Gov. Martin O'Malley (D) moved the ball across the goal line with 59% support, whereas Ehrlich couldn't get it upfield in four tries -- even in the post-9/11 economy. It may nearly be Thanksgiving but the only turkey in sight is Ehrlich (or is that a thinly disguised Steve Carell?)

Speaking of "Casino Jack", add him to the "losers" column of our S&G "Winners & Losers" with a capital "L." From the jailhouse, convicted felon Abramoff tried to 'Swift Boat' his archnemesis, John McCain, but the effort sank without leaving the pier. What a schlemil.

Loose change: Voters also gave their assent to a lottery in Arkansas and expanded table games at Greenbrier Resort in West Virginia. So I'd score that as two lost battles (Ohio, Maine), one decisive victory (Maryland) and incremental wins in four other skirmishes.

On balance, a good day.

Wisdom from Wall Street

Thu, 30 Oct 2008 15:17:00 -0700

"Any gaming operator that postpones spending and preserves capital in this environment should be rewarded, in our view." -- Stifel Nicolaus & Co. analyst Steven Wieczynski, reacting to news that MGM Mirage had put its Atlantic City and north-Strip projects onto the back burner. Boyd Gaming has extended the hiatus of Echelon and Las Vegas Sands is curtailing its Sands Bethlehem project.

I.O.U.S.A. Making a movie on the subject of the national debt seems like exercise in masochism. Making an absorbing and readily comprehensible film on that abstruse subject is a signal achievement. For those of you who object to my pro-Obama leanings, I should point out that -- based on the facts and figures put forward by filmmaker Patrick Creadon (he did Wordplay, for you Will Shortz fans), the Democratic economic plan wouldn't do much more than nibble around the edges of the national debt burden.

Sands accelerates Penn casino

Thu, 30 Oct 2008 11:07:00 -0700

By shutting down construction of its retail mall and hotel in Bethlehem, Pa., Las Vegas Sands has been able to pour all of its workforce into finishing the casino. Which means that the facility could be ready to open by Memorial Day weekend (i.e., a month ahead of schedule), maybe even by May Day.

Or not. As The Morning Call reports, Sands' burst of activity could effect an infrastructural and regulatory traffic jam, especially with Meadows Racetrack & Casino, near Pittsburgh, already slotted for a late-May opening. Also, there's some question as to whether all the slots and other casino doohickeys could be loaded in at Sands' breakneck pace.

Looking on the bright side, construction workers whose meal tickets ran out last week will be needed again. And the city is sure to love it, because every day that Sands Bethelehem is open earlier than planned means $25K in "host fees" (yes, per day) that Mayor John Callahan hadn't expected to receive.

At some point, Sands will have to revisit and finish its retail and hotel* projects, which it's contractually bound to complete. It can, however, walk away from a planned event center, if it so chooses -- which might finally give its shareholders something about which to smile.

* -- or "300 hotels [sic] rooms," as the official site puts it

Shutdown at Sands

Fri, 24 Oct 2008 12:06:00 -0700

What was suspected Wednesday became official yesterday: Sands Casino Resort Bethlehem is in trouble. Work on everything except the casino (set for a late-June opening) has been halted. The construction director has defected to a gig managing the erection of a museum complex in Abu Dhabi. Officials at Las Vegas Sands say they won't miss a beat, but now there are far fewer beats to miss.

(Even as the workmen were putting their tools aside, the following morsel was being served up to the media: "[Sands] spokesman Ron Reese said the casino portion of the project, and the retail, dining and entertainment components were on schedule to open in June.")

According to The Morning Call, back in '06, "the mantra of the Sands pitchmen was that this project was much more than just a slots shack." Look on the bright side, Sands: You can now market the casino as Sheldon's Shack o' Slots. Kinda catchy, no?

Sands' Penn project slows

Thu, 23 Oct 2008 12:14:00 -0700

Sheldon Adelson's ailing fortunes are now evidently taking their toll on $800 million Sands Bethelehem. Not surprisingly, work on the main profit center -- the casino -- continues apace, but there are reports of a slowdown on the hotel and shopping-mall aspects of the complex. "The uncertainty surrounding the project stands in stark contrast to the swagger [Las Vegas Sands] officials carried into state gaming hearings two years ago, when they promised a luxury shopping complex," declares The Morning Call.

Sands remains confident it will open the 3,000-slot casino in June and Bethlehem's mayor, for his part, believes the company is big enough to weather current economic storms. Still, Ralph Lauren has pulled out of the mall, as has Eddie Bauer. I've found no indication that severely troubled General Growth Properties is the retail developer this time 'round, so that's one thing going in Sands' favor.

(Thank you to reader "theyroff" for the heads-up.)

Adelson's megaphone muted

Wed, 22 Oct 2008 15:29:00 -0700

If Sen. John McCain pulls off the Nov. 4 comeback he's predicting, it won't be any thanks to Sheldon Adelson, who puts his mouth where his money is. (Hence those queasy-making odes to Chinese totalitarianism: "People seem to be living a good life in China. Look at the incredible progress China has made. How can someone say they're doing the wrong thing?")

Politico reports that, stung by the hornet's nest that is present-day Wall Street, Adelson has "pulled the plug" on one of his pet projects, Freedom's Watch.* The latter's "neverending campaign" has downsized from an artillery barrage ($200 million in planned expenditures this election cycle) to the rattle of small-arms fire ($30 million).

Small wonder, then, that Las Vegas Sands spokesman Ron Reese airily informed the Washington Post that "Mr. Adelson does not comment on his political activity." Except when he does, of course.

I've long wondered if Adelson's high-profile GOP affiliation worked against him in Kentucky, where Sands found the door rudely slammed in its face. Mind you, the object of Gov. Steve Beshear's bromance, Columbia Sussex CEO William J. Yung III, has also been a lifetime Republican backer -- until he saw how the chips were falling, so to speak, in the Bluegrass State. Whereupon he strewed Beshear's path with greenbacks.

As politically polluted as Pennsylvania's casino-selection process has been (Give Democratic, get a casino!), at least one right call was made: Handed a choice between a Yung-backed Allentown project and Adelson's Sands Bethelehem, Pennsylvania regulators opted for the GOP-friendly mogul with a track record of impressive projects, not the one who would shortly become a synonym for insolvency.

* -- Back when Adelson's wallet was still open, conservative activists used to bitch extravagantly (but always anonymously) about how many strings he would attach to the use of what was, after all, his money.

Quote of the Day

Fri, 12 Sep 2008 17:20:00 -0700

"2 Years, 2 years, 2 years! They fought for 2 years instead of moving. That's 2 years without any income and nothing gained in popularity. I hope in the next 2 years they start to realize working together with groups is better than trying to sledgehammer to get their way." -- "Roy" from Plainfield, Conn., responding to a story in The Day (New London) about Foxwoods' proposed relocation of its Philadelphia casino. Foxwoods' original timeline envisioned a Fall 2008 opening.

Correction: The original post said "2009." I apologize for the error. Also, regarding "Train to Nowhere," the Las Vegas Monorail sells "locals" fares for $1 each (less than the CAT bus). Unfortunately, this has not produced the desired upturn in ridership.

The Barden bungle

Mon, 18 Aug 2008 18:33:00 -0700

What did the Pennsylvania Gaming Control Board say when it learned that Don Barden had lost millions of dollars gambling and had five years of negative personal income, thanks to bad investments? "No problem!", that's what. Or words to that effect, as is now belatedly emerging.

Presumably the fear of a lawsuit is the only thing that is keeping Pennsylvania regulators from taking back Barden's license, further imperiling the soon-to-be-ex-Majestic Star casino in Pittsburgh. And Barden would have a good point, too, seeing as the Control Board knew all this fairly embarrassing stuff about his finances and gave him a license just the same. It's gallant of Barden's new BFF, Neil Bluhm, to blame an 89% cost overrun on a "worldwide credit crunch," but Barden's inexperience at building brick-and-mortar casinos can hardly be discounted.

"There are people who would like us to make perfect predictions having to do with risk," huffed an understandably defensive board member re Gaming Control's recent series of misfires. No, but paying some heed to your own due diligence would be a nice start. Besides, the regulatory body's track record is so remarkably underwhelming that its members are in a poor position to get all shirty about the way they've been (deservedly) raked over the coals.

Anyway, compared to the total impasse in Philadelphia, the papering-over of the Pittsburgh crisis has been a breeze.

Quote of the Day

Mon, 18 Aug 2008 15:18:00 -0700

"We talk as if it's all gloom and doom and no one is buying [slot machines] ... The American Indian casinos are still buying. On the East Coast and in Pennsylvania, with all those expansions, people are buying. The new product is still going out and there's still a good demand for it." -- Bally Technologies COO Gavin Isaacs, on the economy.

Another little problem in Pittsburgh

Fri, 08 Aug 2008 16:49:00 -0700

Score one, relunctantly, for the Pennsylvania Gaming Control Board. Despite gentlemanly threats and scare tactics from Neil Bluhm, the board is not letting itself be rushed into signing off on a new ownership arrangement at immobilized Majestic Star. The bogeyman was that if the PGCB didn't act yesterday (last month, actually), contractors would flee, foreclosure would ensue and all manner of dire events would keep the project in limbo for years.

The Bluhm-imposed deadline came and went, and no calamity has befallen the Pittsburgh casino ... unless you the Don Barden bumbling that brought us to this pass. (For which the PGCB can take a large slice of the blame.) Unfortunately, the majestic progress of the ship of state has allowed the bluenoses to get into the act. Seeing an opportunity to curb the spread of gambling or, better yet, create mischief, they're using the Barden-to-Bluhm transfer as a pretext to demand that further casino development in the Keystone State be brought to a screeching halt. This has as much chance of happening as Sheldon Adelson joining the board of Wynn Resorts, but they're gonna try anyway.

More serious, however, is the discrepancy that's emerged between Bluhm's revenue projections and those of the control board. In year one, Bluhm estimates revenue 15% higher than the PGCB forecasts. That's not the worrisome thought. When those projections are extended five years out, Bluhm's projection is 17% lower than the state's: 16% growth over five years vs. 41%, according to the control board.

I'm inclined to favor Bluhm's numbers for a variety of reasons. Majestic Star (or whatever it's eventually named) will almost certainly tap all of its potential market, or come very close, in its first year. Besides, Pittsburgh isn't a destination market and -- with no disrespect to the city -- is unlikely to evolve into one.

But, most of all, the control board's penchant for Panglossian optimism and downright naiveté has spectacularly eroded its credibility. Besides, with so many state and civic entities already plugging IVs into their veins, just waiting for those revenue-sharing dollars to start flowing, the temptation to opt for blue-sky scenarios is all too understandable.

Don't tax me, bro!

Wed, 06 Aug 2008 18:19:00 -0700

Guess who's kvetching about his property tax bill? Why it's our old buddy, Columbia Sussex CEO William J. Yung III -- or at least his surrogates at Horizon Vicksburg. It's been the better part of a year since Yung announced the sale of this riverboat to Nevada Gold, yet the deal still hasn't closed. (Too bad, because the promise of that $35 million was being used to palliate angry debtholders last winter.)

Even though Olympia Gaming and Las Vegas Sands have bailed out of their respective pursuits of casino ownership in Kansas' Wyandotte County, two Vegas-based companies are still in the running. Pinnacle Entertainment has a lot of irons in the fire already and its wait-and-see attitude toward Atlantic City development may not be what the Kansas Lottery Gaming Facilities Review Board (now there's a mouthful!) wants to hear. Golden Gaming's experience, a brief stint at the Vegas Hard Rock Hotel & Casino aside, is of the small-scale variety, which may also provoke skepticism.

While tribal powerhouse Mohegan Sun is hurting on the Uncasville homefront lately, it's coming off a solid performance in Pennsylvania. I like its chances. Cordish Cos., whose pursuit of the Atlantic City Tropicana was recently rebuffed (for no good reason), is obviously itching to get into the casino industry in a big way. Perhaps its proven track record as a developer will outweigh its inexperience in the casinosphere.

Sands: More is sometimes less

Wed, 06 Aug 2008 15:39:00 -0700

One of the advantages of availing oneself of Las Vegas' public-transit system is that affords me plenty of time to read corporate filings. Such was the case this morning, when I spent some quality time belatedly curling up with Las Vegas Sands' 2Q08 report.

There's been some scattered evidence, here and there, that Palazzo and Venetian are leeching off one another instead of devouring others' market share. For instance, their combined operating income only slightly exceeded that of hard-hit Sands Macao during the first six months of 2008.

But LVS' decision to mulch together several categories of Palazzo/Venetian revenue clouds the picture of each megaresort's impact on the other. Instead of clear-cut comparisons between Venetian and Palazzo retail, entertainment and F&B revenues, LVS offers some cumed numbers for both properties, followed by two paragraphs of uninformative bombast.

The Venetian: older but (performing) better

The most interesting sentence in the entire filing was this disclosure: "The Venetian's occupancy of available guestrooms decreased to 90.6% [in 2Q08] ... as we chose to spread a portion of The Venetian's booked business over the 7,100 total suite inventory of the combined Venetian and Palazzo complex." If that means what I think it means, LVS was shifting bookings to Palazzo to bulk up the latter's occupancy rate, which clocked in at 93%. (Venetian occupancy was 101% a year ago.) Although Venetian ADRs were just smidgen higher than Palazzo ones, the latter produced 2% more revenue per room. Overall, a 51.7% increase in rooms brought a 52.6% uptick in room revenues. So far, so good.

Despite a comparable number of table games (131 to 128), Venetian absolutely clobbered Palazzo there, generating 37% more win per table. At the slots, the older property came out 22% ahead, largely by dint of having 300 more machines at its disposal.

The opening of Venetian Macao appears to have really kneecapped Sands Macao. Hotel occupancy actually rose but ADRs plummeted 32%. Slot win per machine was up 16%, perhaps because 305 machines had been yanked from the floor, but slot business was still competitive with Venetian Macao. Table play was better (+14% per table) at Venetian Macao, though, even with a significantly higher number of gambling positions.

Lesson: Sometimes more is more. (Does this make Sands Macao the de facto 'slot joint'?)

In a month Four Season Macao opens, whereupon things should get very interesting. The mid-sized (by LVS standards) Marina Bay project in Singapore is pegged for a 4Q09 debut, but management's official statements are vague about the opening date for Sands Casino Resort Bethlehem. Going with LVS there was one of the relatively few decisions Pennsylvania's gaming commission got spectacularly right, selecting a developer who had the cattle to go with the hat.

Remember: A rival bidder was cheapskate Columbia Sussex, parent of insolvent Tropicana Entertainment, and heaven only knows what a mess the Bethelehem project would be if the Keystone State had gone that route. It might make the Don Barden trainwreck in Pittsburgh look like a mere fender-bender.

It's a metaphysical certainty that, regardless of when it opens, Sands Bethlehem will be the poshest of the Pennsylvania casinos, setting the standard for any that follow. It not only extends the LVS brand (however you define it) into new markets, the cash flow will provide a reassuring hedge against growing (over?)exposure in Macao.

Also, with debt creeping upward -- but still well short of backbreaking Harrah's-like levels -- and early retirement of same down 62% in the first half of '08 (and practically nonexistent in 2Q08) LVS could definitely use the extra money.

Curtains for downtown arena? Bits and pieces of the acreage accumulated for the REI Neon arena/condo/casino/anything-else-you-can-think-of project are being peddled off. I have to agree with the Sun's editors here and add that I've suspected for a while that REI Neon was but a stalking horse for opening up what used to be (part of) the Arts District to casinos.

Then again, anybody foolhardy enough to build a casino out on that fringe of downtown Vegas would be so isolated from both the Strip and the downtown gaming district that he'd be unlikely to scare up the needed critical mass of traffic. Besides, I don't know if you fellows behind that stalking horse have noticed, but the casino-centric business model has already been tried downtown and found wanting. The word "diversification" mean anything?

Quote of the Day

Mon, 04 Aug 2008 18:00:00 -0700

"I think the people of Pittsburgh will really fall in love with this guy." -- Don Barden's straight man, Bob Oltmanns, speaking of Barden back in the Dec. 21, 2006 issue of the Pittsburgh Tribune-Review.

Quote of the Day

Thu, 24 Jul 2008 15:29:00 -0700

"Gamblers often talk about being -in the zone' -- a place where luck is good, the dice are hot and every chance they take pays off.
"Unfortunately, one group that has never been in the zone, and shows no sign of ever getting there, is the Pennsylvania Gaming Control Board." -- Editorial in the The Valley Independent deploring the board's "appalling string of decisions," culminating in the recent Don Barden fiasco.

Juice job in Pittsburgh

Fri, 18 Jul 2008 12:35:00 -0700

Seems that a variety of politicians -- up to and including Gov. Ed Rendell -- midwifed the deal whereby Don Barden stepped aside as developer of Pittsburgh's $780 million slot parlor in favor of Neil Bluhm. All of this footsie and phone-tag also involved ex parte communications by members of the Pennsylvania Gaming Control Board. Which isn't kosher because it's ... well, it's illegal for starters.

PBCB member Jeff Coy lived up to his name by saying that state Rep. Dwight Evans (D-Philadelphia) was just ringing him up to repeat things that Evans had said several times already and that Coy already knew. Oh, and the fact that Coy is the Democratic Party's man on the PGCB and Evans is an Democratic bigwig? Pure coincidence. Better still, board members received a warning this week about having just these types of conversations.

Whoops. You might say Coy didn't get the memo, metaphorically speaking. The two tampered regulators, Coy and Chairwoman Mary DiGiacomo Colins, will have to recuse themselves from next week's vote but that won't be sufficient to undo the damage.

Evans' ham-handed intervention was rationalized by the lawmaker to the Pittsburgh Post-Gazette in the following terms: "it was important that select state officials referee the conference calls partly because it was important to Mr. Evans, who also is black, to preserve Mr. Barden's role as a minority owner." Whether or not that qualifies as tokenism, it certainly explains the contrivance whereby Barden gets 25% ownership without even a penny of equity. Damn! Where can I get a deal like that?

There's been so much ass-clownery involved in bringing casinos to Pennsylvania (it's like a "How Not to ... " primer) that this latest pratfall comes as little surprise. Still, when -- and not "if" -- Keystone State regulators vote through the Barden/Bluhm arrangement, it will be accompanied by an ineradicable taint that The Fix Was In.

The Ameristar war begins

Thu, 17 Jul 2008 18:49:00 -0700

Just a quick hit on my way out the door to spend an evening prepping for The Dark Knight by watching Batman Begins ...

Ameristar's in play. No news flash there and, for the life of me, I can't figure out why the Motley Fool thinks MGM Mirage will be the ultimate acquirer. The company doesn't seem particularly interested in regional markets these days and has been pulling back from some of them -- the same outstate-Nevada kinds in which Ameristar currently operates.

On the other hand, as the article points out Crown Ltd. has $5 billion burning a hole in its pocket after the Las Vegas Tower deal went limp. I don't know offhand what the seven-times-cash flow number for Ameristar is, but $5 billion should cover it with room to spare. The Fool lays out a compelling case for how Crown could use Ameristar's properties to funnel customers to Fontainebleau -- much as Harrah's Entertainment did with The Rio, back in the Phil Satre era.

Then again, there's Penn National, which has about $500 million in mad money (after stock buybacks) right now, thanks to the breakup fee from its busted IPO. With another $775 million promised to Penn, it ought to be able to ante up the acquisition fee without breaking a sweat. Ameristar's Missouri properties have been money-spinners and, as the Fool points out, the acquisition of the Ameristar brand would enhance Penn's persistent second-tier image. A combined Penn-Ameristar would give Pinnacle Entertainment a run for its money in St. Louis, and could regain ground being lost to MGM and Harrah's in the greater Chicago market.

Whoever loses needn't feel too bad. The Atlantic City Tropicana is still out there and debtors will probably force a sale of the rag-tag remnants of Columbia Sussex's casino 'empire.' With its market cap languishing around $837 million, Boyd Gaming looks vulnerable and if you're in a thrift-store mood, Isle of Capri's fallen to near-micro-cap status, at $157 million. Then again, you have to figure out how to turn around 'Pile of Debris.' So maybe it's not such a bargain after all.

Speaking of Pennsylvania ...

Thu, 17 Jul 2008 16:19:00 -0700

Tonight is the scheduled opening of Phase II of Mohegan Sun at Pocono Downs. It's a $208 million fast-track expansion. So fast, in fact, that nobody had time to take pictures of the new amenities but sent us these lame-ass renderings instead.

The Pearl, the upscale hangout, brings sushi to the Poconos.

The Breakers is a Country-oriented hangout, "inspired by the historical importance of the coal industry and the coal breaker, indigenous to the eastern Pennsylvania coal fields ... Other design elements include thick natural wood tabletops with bronze metal edges and rustic chain-sawn table bases with wood tops milled from local forests. Seating booths are upholstered in ostrich leather and the floor is a multi-toned Cherry wood. A reclaimed redwood corral fence and entry gate completes Breakers' authentic 'Country' feel."

And to think that some people find Mamma Mia! too gay for comfort ...

Which gives me an excuse to plug the verdict of my favorite local film critic.

Trump International gets a visit from Steve Friess, who dubs it "by a large measure, the very last place most Las Vegas tourists should ever feel comfortable visiting," summing it up as "the best-executed version of the worst-considered idea in Vegas today." Unless, that is, you come to Vegas for a little peace and quiet.

Still more $$ in Pittsburgh?

Thu, 17 Jul 2008 15:56:00 -0700

Pennsylvania casino regulators (a term that's quickly become oxymoronic) will be looking into whether a transfer of ownership at the momentarily defunct Majestic Star project enables the state to collect an additional $50 million license fee. Meanwhile, local legislators are understandably fuming over the fact that the casino has passed from Don Barden to Neil Bluhm as though the state's regulatory framework didn't even exist.

Barden, for sure, is getting a sweet deal out of this. He's able to convert his casino license into a 25% share of the completed casino: an (at least) $195 million value for a fourth of the price. And if he ever does find a buyer for the downtown Vegas Fitzgeralds, he could rack up as much as another 19%, presumably at discount rates, too. For a guy who looked like a laughingstock a week ago, Barden's about to make out like a bandit.

Pittsburgh's savior?

The elephant in the middle of the room is that the deal would turn de facto control both Majestic Star and one of Philadelphia's slot parlors over to a single investor. While this deal has been structured to comply with the letter of Pennsylvania law, it doesn't comport well with its spirit.

While Bluhm would only directly own 1% of Majestic Star, he's the co-founder of the fund that will hold the remaining 74%. Anyone not born yesterday is going to know who'll be calling the shots at Majestic Star ... unless regulators demand the erection of a so-called "Chinese wall" whereby Bluhm could own a piece of the casino but would have no input into its operation.

Or, with his Philadelphia casino project (SugarHouse) intractably stuck in the mud -- through no fault of his own -- perhaps Bluhm could make a counterproposal. If he sells down his share of SugarHouse to 33.3%, he can own as much of Majestic Star as he likes. And, considering that Majestic Star is at least partly built while not so much as one shovel has gone into the ground on SugarHouse, Bluhm is a lot closer to seeing a return on his investment if he switches his primary allegiance to Pittsburgh.

For all its back-room coziness, the Barden-to-Bluhm swap offers several advantages. Bluhm is already on the scene, he's licensed, he's got casino experience and access to capital, and he's somebody who can get big projects done. Unless a first-rank casino operator wants to help themselves to Barden's leftovers, Bluhm looks like Pittsburgh's best bet.

Barden continues

Wed, 16 Jul 2008 18:48:00 -0700

... to piss people off, that is. Now he's got two state legislators calling for a re-bid of the casino contract. Saying that Barden's deal with Neil Bluhm is a "bait and switch" is a mite strong. But it does put one (politically juiced-in) investor in a position to control two casinos in Pennsylvania's two biggest markets -- and without having to go through the licensing process vis-a-vis Pittsburgh. Allowing Don Barden to remain the nominal licensee without having any equity in the casino does rather smack of a sham, which is why the indignant solons want his license pulled.

As for the still-stalled Majestic Star casino, it sort of fits with Pittsburgh history. After all, this was the home to the original bridge to nowhere, 28 years in the making. Come to think of it, since the Fort Duquesne Bridge empties out near Heinz Field, it's probably the route you'd take to Don Barden's "casino to nowhere." Nor would this be the first Pittsburgh project that had trouble making the numbers pencil out.

Ameristar spurned, Wynn rewarded

Fri, 11 Jul 2008 13:17:00 -0700

What's worse than being jilted? Being told you're too ugly to to even date. That's about what happened to Ameristar Casinos, which just got blown off by Crown Ltd. Then again, look at James Packer's American holdings and pending acquisitions (and don't forget the Vegas Tower, aka Crown Las Vegas), and if's got an overarching strategy -- as opposed to speculative stabs here and there -- it's not easy to discern.

Packer's about to tap into a nice revenue stream with that Pennsylvania racino. But not only do the two Cannerys look a bit down-market in his portfolio, it's the worst possible moment to be entering the Las Vegas locals market, what with Boulder Strip and North Las Vegas down 30% in May. Ameristar is a steady performer with solid fundamentals and no Vegas exposure (an asset in this topsy-turvy market). Packer could do a lot worse and, in the case of the Vegas Tower, already has.

A nearly 100% increase in Macao operating income sent Wynn Resorts stock through the roof in after-hours trading, up 15%. That stock buyback program isn't going to get Wynn as much bang for its 1.7 billion bucks, but if the price keeps ascending like this, management won't mind, I'm sure. Analysts Larry Klatzkin and David Katz take opposing stances on just how much upside Wynn has at the moment. Whatever the case, the Street has punished Steve Wynn in the past for not sugarcoating the truth. Yesterday he told it what it didn't what to hear -- and was rewarded for doing so. That's more like it.

Gaming stocks got you down? (Robin Farley confirms what I feared -- that we're in the worst market in over a decade.) And while those of on the "Vegas Gang" were thinking that the diversification of the Strip's income stream was its bulwark, analyst Nick Danna says otherwise: "Their reliance on nongaming revenue is really hurting them," as consumer purse strings tighten. He also adds his voice to the chorus of analysts who warn buyers off Vegas-centric stocks.

Take comfort in the fact that "the feel-good movie of the credit crunch" (adapted from the best show in Vegas) in less than a week away.

Quote of the Day

Fri, 11 Jul 2008 12:32:00 -0700

"This project is ... sorely in need of credibility." -- Pennsylvania Gaming Control Board member Jeffrey Coy, coming to a belated realization about Pittsburgh's stalled Majestic Star casino.

Oh, and ... promised, casino-derived property tax relief for Pennsylvanians may prove elusive, what with unfunded pension obligations and suchlike.

Barden defaults

Fri, 11 Jul 2008 11:09:00 -0700

Pittsburgh has quite a pickle on its hands, doesn't it? Credit Suisse has informed Majestic Star CEO Don Barden that he's in default on a $200 million loan. It's yet another reminder (as though we needed more) that, as the Pittsburgh Tribune-Review puts it, the Pennsylvania Gaming Control Board "failed horribly in vetting Barden's financial wherewithal."

A string of promised (but undelivered) capital improvements at other Majestic Star properties? Irrelevant. Only an $80 million revolving credit line for Majestic Star? No reason for concern. Three money-losing years between 2003-06 (with worse to follow)? Details, details.

Barden, for his part, finally admitted that the needed $780 million won't come together, at least not with him at the helm. Despite still having made no equity contribution, Barden gets to keep 25% of the casino, while would-be rescuer Neil Bluhm's share goes up to 75%.

Well, not exactly.

Through some legalistic sleight of hand, Walton Street Capital Fund 6, of which Bluhm is a co-founder, gets 74% and Bluhm himself holds 1%. And Barden stays on as "principal licensee" (a privilege for which he paid $50 million) despite having surrendered control of the project. Because Bluhm is the principal investor on Philadelphia's litigated-to-death SugarHouse, he can't be the principal shareholder on Majestic Star.

But this is a guy who, unlike Don Barden, has an outstanding resumé in the development of commercial real estate. So no prizes for guessing who's going to be calling the shots from this point -- you can even argue that it would be derelict of someone with Bluhm's experience not to act as boss of getting this train wreck back on track.

At least Bluhm already has some experience in the casino business, operating in Ontario and Mississippi. But he's now got footholds in Pennsylvania's two biggest markets, an oligopolistic situation that runs counter to what the state clearly intended when the licenses were doled out.

And would-be $10 million investor Ira Lubert (still being vetted) is trying to get a casino of his own, elsewhere in the state. If Lubert receives both his wishes, casino ownership in Pennsylvania will start to get quite incestuous. (Cannery Resorts could buy into Barden/Bluhm's or Lubert's casino, which could also sell a share to Foxwoods and/or Harrah's, which could ... you get the picture.)

Also, Barden's 25% ownership stake escalates if he kicks in an "unspecified amount of money." Why unspecified? And how much? A dollar? The $35 million he was supposed to raise by selling the Las Vegas Fitzgeralds? For someone without one thin dime of equity in the project, Barden is enjoying mighty deferential treatment here. If Bluhm has the $770 million-$780 million in commitments he says he has, Barden's only remaining toehold in the project, from an asset standpoint, is that $50 million license -- which the PGCB could repossess, were it so inclined.

As long as this "Who's on first?" scenario continues to play out, the PGCB has finally lost patience (as have various Pittsburgh political players) and told Barden & Co. not to come back until they've got it fully sorted out. And: "Don't waste our time."

To the credit of the Control Board, it refused to cave to emotional blackmail from Centaur, which was trying to get an expedited slot license at Valley View Downs. Pleading financial hardship, Centaur wanted the PCGB to take a shortcut around its background-investigation process and hand out a license by Tuesday. Considering the ongoing fallout from the Louis DeNaples imbroglio, regulators wisely told Centaur to wait its turn.

Keystone State, Keystone Crassness

Wed, 09 Jul 2008 14:06:00 -0700

"Pimp my casino" That's the attention-grabbing headline on an op-ed piece decrying -- sometimes disingenuously -- the Don Barden debacle in Pittsburgh. The writer, Pittsburgh Post-Gazette columnist Sally Kalson, is clearly as anti-gambling as you can get, and probably wouldn't be placated even if Steve Wynn was building Encore East out there.

However, it's worth skipping down to paragraphs 13-15, where Kalson does a nicely concise job of enumerating the various public and private entitites who have hooked themselves up to Barden's promised IV drip of dollars. They're on the hook all right, and now they can't do much more than cheerlead for the struggling project, even as Barden proposes a shriveled version of what he promised, thanks to having underbudgeted the project by as much as 42%. (There's no gambling addict quite like a govermental agency, jonesing for cash.)

Heck, Barden's even got Gov. Ed Rendell carrying water for him now, as the nebulous cast of investors continues to change. And somehow every one turns out to have a finger in a pie in another Keystone State casino. Is Apollo Management (co-owner, Harrah's Chester) out of the picture? Not to worry, here comes Neil Bluhm (lead investor in SugarHouse) and defintely maybe perhaps even Lubert-Adler Partners (who've got a piece of a racino in King of Prussia, Pa.) will get into this circus.

So while Pennsylvania's casino-ownership laws were set up in a such a way that you could control one casino and own a minority share of another, here you could potentially have three casinos -- maybe even more, as the Barden clown car disgorges yet more surprises -- with interlocking ownership, dominated by a couple of "george" donors to the Democratic Party.

Rendell's right about one thing: Don Barden's kept his house of cards erect long past the point where any number of things (not least his manifest contempt for the Pittsburgh city-planning process) should have blown it over long ago. Unless you count a riverboat in Gary, Ind., Barden's never built a casino from the ground up and his inexperience is showing. But through a mix of sheer gall and good old American persistence, he looks certain to keep muddling along.

As for Rendell's closing remarks: "I'm not concerned about whether there's an amphitheater there the day the casino opens. Long term, it would be nice to have it, but I'm more interested in getting the casino up and running." Crass? No question. Refreshingly honest? That, too.

Correction re: Penn National

Tue, 08 Jul 2008 20:15:00 -0700

In my pell-mell rush to read everything available about the aborted Penn National LBO, I somehow got it into my skull that Penn was getting $1.25 billion in equity from its would-be buyers, Fortress Investment Group and Centerbridge Partners.

How wrong I was! Sitting down with the official announcement, I soon saw the error of my ways: The agreement obligates Fortress et. al. to purchase $1.25 billion in preferred Penn stock. The sweet part is that Penn gets to keep the $700 million downpayment, even if the stock sale goes south. Nor does the stock carry voting privileges, although it can be swapped out for common stock in 2015 (or bought out by Penn).

As we now know, Penn wasted no time in exercising its newfound wealth. Even with a public commitment to a $200 million stock buyback, Penn still has plenty of cash with which to go asset-hunting (or to buy up other companies' discounted debt).

Speaking of mistakes, somebody at Business Wire was getting a little creative when they wrote that Penn's optioned land in Cecil County, Maryland, "borders Pennsylvania and Delaware along the Chesapeake Bay" -- a geographic impossibility.

Other interesting details in the announcement include a projection of 4% revenue growth in 2008 -- hardly unreasonable and maybe even conservative when new racino facilities in Pennsylvania and Maine are factored into the equation.

Also, when one looks at the roster of Penn's new and expanded facilities, it's obvious that this is a company that keeps costs firmly under control. A mere 1% overrun on Hollywood Casino at Penn National is awfully impressive ... Are you taking notes, Don Barden?

Looking on the bright side

Tue, 08 Jul 2008 15:12:00 -0700

"The growth is so phenomenal that they want to cool it down a little."
-- Crown Macau co-owner Lawrence Ho, putting an upbeat spin on further visa restrictions to Macao by the Chinese government.

Barden Watch: Regulators in Pennsylvania say they want to hear more about Don Barden's nebulous financing for his stalled Pittsburgh casino and they really, really mean it -- just like they did last month (before they adjourned without learning anything of substance). How much you wanna bet a finalized finance package is still "two weeks away"? To call Pennsylvania's gambling-regulatory system a paper tiger would be an insult to paper.

MTR in retreat

Mon, 07 Jul 2008 12:48:00 -0700

If MTR Gaming is still afloat today, it's almost certainly thanks to the fact that its two remaining casinos -- racinos in Chester, W.V., and Erie, Penn., enjoy oligopolistic market conditions where competitors are few and far between. A long piece outlines the dilemma faced by MTR. Hunker down and pay off debt, as outgoing CEO Edson "Ted" Arneault puts it, or try to aggressively fight back against a pincer movement from Pennsylvania.

Not only is nearby The Meadows racino (soon to be owned by James Packer) looming as an ever-greater threat, so too might Pittsburgh's slot parlor ... if Don Barden can ever get it finished, which looks doubtful. And MTR's flagship racino in Chester is little more than a slot barn -- if you don't believe me, check out the pictures. Even second-tier Las Vegas locals casinos have evolved beyond that point, which may explain why MTR was a dud in the Vegas market (well, that and the fact that competition isn't limited by statute), especially its failed tenure at Binion's. These guys just don't seem geared for intense, Vegas-style competition nor for casino-centric products.

Beyond the racinos, MTR's holdings have dwindled to a few small-staffed harness-racing tracks, which might be hard to unload. Since they're unprofitable, says a Moody's analyst, how much gain lies in selling them? A source tells me that promised infrastructure upgrades in Chester never materialized (even as revenue grew 33%) and that access to Mountaineer wasn't much more than a two-lane blacktop. Hard to compete with Pennsylvania, given those conditions. No wonder cash flow is off 34% in Chester.

Like Atlantic City, Mountaineer has an ace up its sleeve in the form of poker and other table games. Blackjack, craps and roulette are all played there (unlike Pennsylvania) and, without them, Mountaineer would probably very soon be toast. If MTR can hang onto that West Virginia table game oligopoly -- and maybe scrap the harness tracks -- it looks like it's got a good chance to survive, though not thrive.

Trop still taking. The Culinary Union informs me it chatted up Las Vegas Tropicana management back in May and "certainly haven't thrown in the towel ... As you know, there are major ownership/management changes going on there which is a transition that makes scheduling negotiations challenging." Management changes we knew about, but ownership ... now this is intriguing.

Jerry's Nugget, up in North Las Vegas, is still hanging tough with the Culinary, too, over a year after its contract elapsed. Small wonder the Culinary doesn't want to take on the case of the overworked Imperial Palace maids: It's having trouble closing all the deals already on its plate.

The incredible shrinking casino

Mon, 07 Jul 2008 11:53:00 -0700

Pittsburghers are getting even less casino for more money, thanks to a series of insidious changes made by Don Barden. He's proposed a 30% reduction in the building's height, even as he plans to tack another two stories onto the eight-story parking garage. The resultant grotesquerie should be self-evident.

Barden's comedic sidekick, Bob Oltmanns, was ready as ever with a thigh-slapper. Such drastic changes of scale, he told the Pittsburgh Post Gazette, were par of the course in casino construction. What a laugh-riot that Oltmanns! But seriously, folks ... when was the last time you can recall a casino being downsized so dramatically in mid-stream?

Casinos in the picture may be 20%-30% smaller than they appear.

As for Oltmanns' explanation that the shrinkage was forced by "air-handling loads," a source gives that short shrift, musing, "so now you size a building to fit an HVAC system, not the other way around." As for the water-table issue, "You would have thought building on the river (that really big wet thing for the boat docks that they want to pass on ... for now) would have given them a clue." Pittsburgh city planners found Barden's plans to be vague in the extreme and now it's obvious why: Barden & Co. evidently hadn't performed due diligence worth squat.

As you've heard, Barden wants to opt out of his promised amphitheater for now. Oltmanns sayeth it shall be, paid for out of evenutal casino revenues. Assuming, of course, that those revenues materialize in sufficient scope. And one Pittsburgh TV station has already run the numbers and found that Barden's $780 million pleasure palace is actually projected to lose money. Small problem, what?

Pennsylvania gaming regulators are stuck with a skeleton of a casino at the North Shore site. So even if they kick Barden off the project and re-bid it (with appropriately diminished expectations), his ghost will forever haunt whatever bastardized version of Majestic Star is eventually finished upon the foundations of Barden's Folly. It can't be said enough: Pennsylvania and Pittsburgh officialdom has no one but itself to blame for overlooking sundry red flags and approving this debacle.

Barden: The comedy continues

Thu, 03 Jul 2008 15:53:00 -0700

Financing for Don Barden's stalled Pittsburgh casino remains, as ever, two weeks away. Barden's people say they'll have it by mid-July (conveniently, after the next meeting of Pennsylvania's gaming commission), they're "continuing to close" with Credit Suisse, and contractors are "very anxious to get back to work." I'll bet -- though not half as anxious as to get paid for work already done.

The Pittsburgh Courier also reports that Barden has already sold the Las Vegas Fitzgeralds for $35 million -- but there's mention of it either in online Clark County property records or in SEC filings by Barden's Majestic Star company. Hmmmmm.

Sold on the QT? Who knows?

As the farce along the riverfront continues to play out, Barden's proposal to drastically downsize the size and quality of Majestic Star Pittsburgh is playing to less-than-rave reviews. Mayor Luke Ravenstahl won't quite call it a bait-and-switch but others are not so reserved, with one saying, "We want what was approved."

Never at a loss for excuses, Barden's mouthpiece, Bob Oltmanns, contends that the 'slot parlor' would be up and running were it not for pesky litigation. The putative villains, the Pittsburgh Steelers and Pirates, will have even greater reason to be vexed if Barden cuts back on riverfront access to Majestic Star, because that will mean that much more vehicular traffic tangling with motorists trying to get into or out of Heinz Field and/or PNC Park.

Then again, city and state officials were warned that access to Majestic Star could be very problematic indeed -- warnings they chose to ignore. If they don't like the barrel Don Barden's got them over, they've no one to blame but themselves.

Barden downsizes Pittsburgh

Tue, 01 Jul 2008 17:51:00 -0700

Remember that nice casino that Don Barden promised Pittsburghers? Well, it just got a little less nice. Even at a near-astronomical $780 million, customers will have to make do with "light-colored concrete." And that outdoor amphitheater? That won't happen until 2012.

Through it all, Barden's spokesman maintains his sense of humor: "Mr. Oltmanns said the changes were unrelated to Mr. Barden's struggles to secure financing for the project." Yeah and I'm Santa Claus.

Let's face it: Barden has never built a casino of this scope, and both the scale and the cost of the project clearly got away from him. But, having made a bad bargain, the City of Pittsburgh now has little choice but swallow its pride, along with whatever indignities Barden flings its way.

Who says there's no humor in casino regulation?

Barden in Pittsburgh: Harrah's out, SugarHouse in

Tue, 01 Jul 2008 12:20:00 -0700

That "juice job" that is Don Barden's Majestic Star casino project in Pittsburgh still has a pulse, even though contractors walked off the job yesterday as threatened. Chicago real estate developer Neil Bluhm is willing to chip in $120 million. Since Bluhm is the top dog on the SugarHouse casino project in Philadelphia, he can only be a minority investor in Majestic Star -- but what a minority! For $120 million, Bluhm gets 33% of a $780 million casino ... no small index of Barden's desperation.

Bluhm also hip-checks Apollo Management, co-owner of Harrah's Entertainment. Apollo had contemplated loaning $150 million which, presumably, could have been rolled into an equity stake. (As with Bluhm, Apollo is precluded from majority ownership in a second Pennsylvania casino.) However, Barden is still $30 million shy of his target number -- and no buyers have emerged for the Fitzgeralds casino in downtown Vegas, which represents the equity Barden was obligated to commit to Majestic Star.

This whole thing looks more and more like a colossal boondoggle by the day (Majestic Star's proximity to Heinz Field and PNC Park is a traffic nightmare in waiting, and Barden's plan scored a 274 out of a possible 600 from the Pittsburgh Department of City Planning). However, various local- and state-level commissars for optimism -- including the state's gaming commission -- are so nakedly desperate for additional tax revenue that they're willing to overlook the elephant in the middle of the room.

If Bluhm's name sounds familiar, he was part of a consortium that included Barry Sternlicht and which made several unsuccessful runs at Riviera Holdings. (Considering that RIV hit a 52-week low earlier today, perhaps they'd like to try again.) While he and Barden iron out the details, Majestic Star will sit half-finished and idle for as much as a fortnight. There's even a Web cam where you can view the work that is not taking place.

Displaying a rich sense of humor, Barden's spokesman "said the suspension of work should not affect the timetable for the North Shore casino's completion, scheduled for May 2009." What a card!

Elsewhere in Pennsylvania, the state's higglety-pigglety rush to embrace casino gambling continues to unravel (much to the relief of Atlantic City, I'm sure). Even though the state Supreme Court has said he can't relocate Philadelphia's two slot parlors, Mayor David Nutter wants to appoint a commission to study doing that very thing. He could also throw so many bureaucratic obstacles in the paths of SugarHouse and Foxwoods that they either give in and move voluntarily -- or perhaps they take their balls and go home. If Nutter's objections were merely aesthetic, that might be negotiable, but they appear to run much deeper than that.

Just for fun, check out this botched implosion in Florida. Las Vegas may not be tops in every desirable category, but we sure do know how to blow up buildings.

From the mailbag

Wed, 11 Jun 2008 16:16:00 -0700

A trusty source writes in with some tidbits ...

Porno @ Hard Rock? From my messages, porno queen Tera Patrick has a new gig @ Hard Rock. A new 10 table pit will bear her name, with 10 sultry dealers called the Hell's Belles, and a 3 pole stage. When she's not there to perform, some go-go's will fill in.

That sounds almost as classy as the Hustler Club [sic?] that Larry Flynt is advertising, next to a pile of rubble on I-15.

"Pennsylvania Jim" Packer: Packer may have done alright with his Cannery purchase. Their Meadows Racino has the top spot in [Pennsylvania] gaming, with their 1,800 machines in the temp building turning a $417 average a day per machine. Not the greatest with the rake of the state gaming and other taxes, but much better than expected. That's also in spite of nearby W. VA adding table games ... but it may change once [Don] Barden gets his mega-slot parlor going up the road in the city.

At the rate Barden is taking to scrape his $780 million budget together, Packer may have time to buy and sell Cannery three times over.

CityCenter fills up. City Center/Aria, whatever is doing OK. $1.7 billion in residences sold when they expected to do $2.1 B, and just over halfway to what they have available to sell. Interesting note, a LOT are from Canada, and especially from Calgary.

So would we call that a "Calgary Stampede"?

Good news for the Boardwalk

Wed, 11 Jun 2008 15:06:00 -0700

May 2008 was only the fourth-best May in Atlantic City’s 30-year history of casino gambling, but it was good enough to qualify as cause for celebration. The New Jersey Casino Control Commission has the full breakout, from which a few highlights may be extrapolated.

Table games were once again the Boardwalk’s savior, propelling a 1.6% year/year revenue increase. Let’s hope Pennsylvania solons don’t get it into their heads to add craps, 21 and baccarat to their ‘slot parlors.’

Slot winnings were a mixed bag, with the notable exception of Caesars Atlantic City, which either got its clock cleaned or has driven slot players away, down -10.4%. Still, even with slot win down -1.5% overall, more casinos were in the “plus” column than the “minus” one, 6-5.

Positive slot results at Tropicana and, particularly, Resorts Atlantic City was negated by unlucky table play, down -8% and 16%, respectively. While Trump Marina remains the market laggard, it had a bonny May at the tables, +22.7%, overshadowed only by Trump Taj Mahal (+31%) and Harrah’s Marina (+37.5%). Both the Atlantic City Hilton and Borgata posted double-digit gains, too.

Although six casinos posted decreased wins, exceptional months at the Taj (+11.4%) and Harrah’s (+9.8%), plus a good month at Borgata (+4.9%) were enough to drag the Boardwalk into the “plus” column overall. As far as sheer volume of win was concerned, tops was Borgata (who else?), at $64 million, trailed by Bally’s Atlantic City ($53 million). Harrah’s, Caesars and the Taj were bunched together to form a kind of “second tier.” At $35 million and $33.7 million, respectively, the Showboat and Tropicana formed the third echelon. Bringing up the rear were the Hilton, Trump Plaza, Resorts and the Margaritaville-to-be, Trump Marina.

The Press of Atlantic City has the "why" of the good numbers. It's amazing what a little sunny weather will accomplish.

Colony Capital, Resorts’ owner has finally confirmed that it did put in a formal bid for the Tropicana. That’s a relief, as a rerun of Colony’s ‘phantom’ bid for Aztar Corp. (announced, never submitted), would have given Colony a reputation for a weak trigger finger.

But if Trop trustee Justice Gary Stein wants to draw the sale process out any further, he’d better be darn sure he’s going to get bids comfortably above the $850 million-$950 million range currently on the table. Colony, Cordish Cos. and those publicity-averse New York bidders – all of whom appear to have bargained in good faith – have reason to feel skeeved at the moment.

'Winging it' at Klondike

Mon, 02 Jun 2008 14:06:00 -0700

This might not seem like the ideal moment to put the concrete pad that once was the Klondike Inn onto the market at a substantial markup, but there you have it. Colliers International Las Vegas is peddling the concept of a fly-up casino-resort, which inspired this measured response from VegasTripping.com.

The Penn National buyout keeps inching forward. Pennsylvania's assent means that six states still have to give the deal their OK. Elsewhere, the company says it's doing turnaway business at Argosy Casino & Resort, so it's raising its bet on the greater Cincinnati market.

Harrah's: Digging to China

Fri, 23 May 2008 17:59:00 -0700

Given the recent freeze-out on new casino operators in Macao, executives at Harrah’s Entertainment might as well be sporting T-shirts that read, “I spent $577.7 million in Macao and all I got was this lousy golf course.” And, in light of Harrah’s considerable debt load, CEO Gary Loveman will have the unenviable task of advising tight-fisted co-owners TPG and Apollo Management what to do next with their expensive piece of Chinese real estate.

They could gamble on hunkering down for a few years, taking a low near-term return while waiting for Macao supremo Edmund Ho’s successor to possibly liberalize the enclave’s gaming regime, admitting new corporate players. Or Loveman could try to peddle it around -- probably at a loss, seeing as the land can’t be rezoned for gambling and he’s dealing from a position of weakness.

(A third option, whereby Harrah’s acts as a passive hotel operator as part of a joint venture in which Wynn Resorts or MGM Mirage owns the casino just seems too transparent and disingenuous to get past the current regime, IMO. It’d be obvious a subversion of the “three-plus-three” arrangement, turning it into 3 + 3.5.)

The fate of the golf course is a pressing question only because Harrah’s latest “Consolidated Summary of Operations” contains some scary-looking numbers. When 1Q08 is compared to 1Q07, interest expense has increased threefold (from $185.8 million to $557.6 million). Pile on $211.3 million in early retirement of debt – to reduce those interest payments – and an 11% decline in income from operations and it’s quite a jolt to the balance sheet. In the 1/28/08-3/31/08 period, combined income of $445.5 million was negated (and them some) by $679.2 million in interest expense and early debt retirement.

Then there’s the matter of the shuffling of properties between Harrah’s Entertainment and Harrah’s Operating Co. According to one analyst, it works like this ...

Harrah's Las Vegas, The Rio, the Flamingo, the A.C. Harrah's and Showboat Atlantic City, Harrah's Lake Tahoe, Harvey's and Bill's Lake Tahoe are going into the Entertainment portfolio, to be followed by Harrah’s Laughlin and Paris-Las Vegas. But then Bill’s, Harvey’s and Harrah’s Lake Tahoe, and Showboat are re-shuffled into the operating company.

(What? No mention of Bally's Las Vegas? Hmmmmmmmm. Why does the word "implosion" keep bouncing through my brain?)

In an excellent analysis, Amy Calistri writes, “Reducing interest expense, through the reduction of debt, has to be at the heart of this accounting tangle.” In other words, Harrah’s is positioning itself for a big sell-off, fleeing the Tahoe market and reducing its high Atlantic City exposure, already worsened by good business at Harrah's Chester. Trouble is, Calistri goes on, casino valuations aren’t what they used to be and potential buyers might still find credit scarce.

(The problem with operator consolidation is that it’s taken a lot of potential buyers off the table – no more Argosys out there -- although Ameristar Casinos needs to rack up some debt to reduce its profile as a takeover candidate. Penn National is in a buying mood but, with its private-equity buyout threatening to unravel, it’s got hassles of its own.)

As for the cheese-paring moves that customers are reporting at Harrah’s Strip properties, Calistri warns that “cost cutting and efficiency will only help [Harrah’s] at the margins ... Indeed, Harrah's biggest hurdle toward profitability over the near term is likely to be undoing the debt associated with their acquisition.”

Galaxy Entertainment's Starworld project, Macao

Which is why when analysts float the idea of Harrah’s buying Galaxy Entertainment as a quick means of entry into Macao, I’m tempted to employ one of my Mom’s favorite retorts: “Using what for money?” Galaxy has its problems (like basically learning the casino business on the job) but with no new gaming concessions on the Macanese horizon, its value just shot up considerably.

And then there’s the little detail of a $2.8 billion (with a ‘B’) tribal court judgment against Harrah’s that, if it continues to stand up (much data here), will lumber the company with even more debt and interest. The verdict isn’t really Harrah’s fault: The case dates back to when Arthur Goldberg was alive and running Park Place Entertainment, which became Caesars Entertainment, which was bought by Harrah’s Entertainment, which is contemplating changing its name to … Caesars Entertainment.

It’s a good thing Apollo and TPG hung onto Loveman, just in case their casino acumen is on par with Apollo’s retail acuity. Earlier this month, Apollo vassal Linens ‘n Things filed for bankruptcy in what Bloomberg called “the biggest leveraged buyout failure since credit-market disruptions began last summer,” and what one analyst characterized as “an utter and complete disaster.” The company will close 20% of its stores, leaving 2,500 people unemployed.

Apollo’s exposure is only (“only”) $260 million, meaning that others, primarily General Electric, are holding most of the bag on this debacle. And maybe the timing wasn’t so good for taking real estate franchisor Realogy Corp. private for $8.5 billion, either. (Bloomberg says $6.6 billion.)

And don't forget about Harrah’s unraveling international strategy, which was ill-timed at best and possibly a total bust. But that’s a topic for another time ...

Cliché of the Year

Tue, 20 May 2008 15:38:00 -0700

"It's hard to pinpoint which one it is, but it's like the perfect storm -- they all hit you at the same time." -- Harrah's Entertainment Eastern Division President J. Carlos Tolosa.

Nothing against Mr. Tolosa but this is becoming the most overused phrase in business. Rub two or more vaguely coincidental economic factors together and, all of a sudden -- it's "the perfect storm"! Eeek! Run for the cellar!

Seems we're hearing this wheeze a lot lately ... to excuse the collapse of Columbia Sussex, for starters. In Tolosa's case, he's conflating Pennsylvania slot parlors, the recession and a largely ignored smoking ban. There won't be a true smoking ban until mid-October, the impact of the slot parlors should have been seen coming a long way off, and the recession ... well, that sort of did take us by surprise. I'll give him that one.

But really, let's shelve "perfect storm" cliché until we have economic conditions that truly befit such cataclysmic terminology.

By the way ... Harrah's recently reported diminished profitability in its Atlantic sector, citing the impact of Harrah's Chester: "The new casino and the partial opening of a new hotel tower at Harrah's in Atlantic City led to profit gains in the company's northeast region, though profit was lower than it might have been as revenue shifted from Atlantic City properties to Pennsylvania, where gaming is taxed at a higher rate, Harrah's Chief Executive Gary Loveman said Friday."

Ummmmm, you guys at Harrah's are supposed to be the math geniuses of the industry, right? The fellows who built an empire through number crunching par excellence? So didn't you run any, like, economic models on how going into eastern Pennsylvania might sap your Atlantic City market, where you're heavily exposed? Or that there were more cents to the dollar to be extracted from New Jersey, where the tax rate is but a modest fraction of Pennsylvania's? It just seems like you should have seen this Peter-robs-Paul scenario a good ways up the road, so to speak.

Hindsight being 20-20, Harrah's would surely have been better off putting all its marbles on Pittsburgh. Instead, it lurked behind a local stalking-horse group and put its primary effort into (literally) shoring up a racing oval in Chester.

Oh well, if Don Barden's finances continue to quiver like Jell-O, the Harrah's-Backed Group That Isn't Harrah's may get a do-over in Pittsburgh, where it looks more and more like the city fathers backed the wrong horse (and chose an awful site into the bargain).

An Isle too far?

Wed, 16 Apr 2008 15:32:00 -0700

Whatever Isle of Capri Casinos thought would be accomplished by buying into overseas markets, it hasn't worked out, and new Morgan Joseph & Co. analyst Justin Sebastiano's advice amounts to "Yankee, come home."

Isle stock bottomed out around $6.50/share before rebounding. Isle's overseas investments are simply sucking money out of the balance sheet, at a time when the Iowa and Louisiana markets have flattened, and Florida isn't living up to expectations. (To say nothing of spring floodwaters that are probably going to swamp the next quarter's financials.) New CEO James Perry's main task appears to be the unenviable one of retrenchment -- and perhaps devising a way to breathe new life into a brand that hasn't aged well.

Somebody gives you a statue of Julius Caesar. Where do you put it? In the barn, apparently.

Score one for Mohegan Sun. It increased its slot handle in March and narrowed its year-over-year decline (-1.4%) in revenues. No such luck for Foxwoods Resort Casino, which was 12% off on both fronts. Did MGM Mirage back the right horse? We'll find out next month, when MGM Grand at Foxwoods opens.

Scant comfort for smokers. When Atlantic City players threaten to take their business to other states that let them light up on the casino floor, they may be ... blowing smoke. It's illegal in Delaware and at non-tribal casinos in New York, and it might be outlawed in Pennsylvania soon.

Whatever the Keystone State does, it's already a moot point in Philadelphia: No public puffing allowed there. Were I a betting man, I'd say the Lege will compromise go with a version of the 25/75 ratio that was tried in Atlantic City -- and, if that happens, that there will be a more urgent attempt at compliance this time around.

Atlantic City might be holding a stronger hand than we thought.

Looking on the bright side

Thu, 06 Mar 2008 14:34:00 -0700

"Generally, we are pleased that our initiatives aimed at attracting new cash business, targeting our marketing dollars, controlling costs and delivering a high-quality experience through facility innovation and service enhancement led us to increase our overall market share and deliver consistent margins at two of our three properties." -- Trump Entertainment Resorts CEO Mark Juliano, announcing a $5.89/share 4Q07 loss.

Whistling Past the Graveyard Dept.: Although Philadelphia's two slot parlors have yet to be built, let alone opened, Juliano said -- presumably with a straight face -- that "the worst of the impact of Pennsylvania is now behind us ... "

Perhaps in the sense of "Objects in the mirror are closer than they appear."

Pinnacle remains sanguine

Mon, 03 Mar 2008 16:46:00 -0700

... despite pulling back somewhat from its commitment to redevelop the site on which once stood the Atlantic City Sands. Does Pinnacle's hesitation regarding the Boardwalk portend ill for riverboat projects in East Baton Rouge or St . Louis County (below)?

"In a word, no," says a Pinnacle representative. The costs of these projects are but a fraction of the Atlantic City one ($250 million for Riviere, in Lousiana) and it's really a matter of returns, the company says. The expected returns on Riviere, for example, would make it worth financing, even in a softening economy. A multi-billion-dollar property in a market that isn't license-limited (read: Atlantic City) is a different story, though.

There's no deadline, Pinnacle maintains, no gun to their heads. Financing doesn't need to be raised until late 2009 or even 2010, by which time the credit markets could still be quite a different story.

Still, hindsight being 20/20, you have to wonder if Pinnacle would have been in such a rush to demolish the Sands had it known last July what it knows now?

And Oswald acted alone, too. Local newspaper finds man who takes sole credit for two ballot initiatives that would cap Las Vegas Convention & Visitors Authority funding at 2006-07 levels (even though they couldn't go into effect until 2011), adjusted for inflation. I guess the fact that these initiatives would accomplish a prime objective of Sheldon Adelson is just a big coinky-dink, after all. Whew! There I was, all worried about nothing.

Same paper, different day. "The sky is falling!" Why? Because most Nevadans, polls show, want to raise the privilege tax on gaming from the lowest to the second-lowest. That ink might have been better spent lobbying for a gross-receipts tax that would spread the (relatively modest) pain across a broad spectrum of businesses. But to decry a 9.75% privilege tax rate as The End of the World As We Know It when companies like Las Vegas Sands are jostling to pay 50% in Kentucky doesn't pass the laugh test.

Quote of the Day: "Lets see? Four guns, deadly poison and books on anarchy. I don't think we have anything to worry about. " -- Keith Hulbert, in the Las Vegas Review-Journal, commenting on Las Vegas Metro's response to last week's ricin scare.

Those snooty Brits; A.C. smoke wars

Mon, 03 Mar 2008 13:40:00 -0700

London's Times has sent a correspondent to Vegas. He succeeds in getting Sheldon Adelson, Steve Wynn and Alan Feldman to snark at each other and (secondarily) each other's new casino-resort projects. What reporter John Arlidge singularly fails to do is get basic facts right.

For instance, the Kerzner International/Dubai World project at the north end of the Strip is not a rival to MGM Mirage (as implied), seeing as how MGM is the lead investor and creative driving force on that mega-development. Nor does Arlidge blush from flogging the old myth that "Bugsy Siegel and his henchmen drove ... to a dusty railroad stop in Nevada 60 years ago and announced plans to build the Flamingo."

First off, the Flamingo was the brainchild of Billy Wilkerson (John L. Smith has the straight dope). Second, it would have been a meat trick for Bugsy to drive out here "60 years ago" (i.e., 1948), seeing as he'd died the previous year -- not to mention that his mythic road trip had taken place several years before that.

Las Vegas leads America in many categories and, alas, "take the money and run" journalism is one of them.

Where there's smoke ... there's no construction, at least as far as the "smoking lounges" mandated for Atlantic City's casinos are concerned. Critics may call them "gas chambers" or "choking boxes" but nobody's built one yet. Some of the blame appears to fall upon a tortoise-powered review process by the New Jersey Department of Community Affairs and some upon the casinos themselves -- Trump Taj Mahal, Trump Marina, Atlantic City Hilton and Borgata are reported to be the biggest laggards.

I suppose if you're an inveterate smoker, Jersey's '75/25' rule, which banishes cigarettes, cigars, etc. to one-fourth of the gambling floor, is that much less reason to bypass New York racinos and Pennsylvania slot parlors in favor of the Boardwalk. By the very same token, if the smell of smoke offends your nostrils, it's strong motivation to snub Atlantic City in favor of newer, inherently less smoke-embedded gambling halls elsewhere.

Luxury condos in A.C.? I know, I know ... it didn't work out quite as planned in Las Vegas, but one plucky developer has his sights set on a 50-story condo-hotel project for the Boardwalk (above). The "hotel" half of the equation is the key element, especially since Atlantic City has long been caught in a Scylla/Charybdis predicament: It needs more hotel rooms to drive the critical mass of visitors needed to make it a "destination" market and yet it also needs the multi-night visitors necessary to justify building those extra hotel rooms. At a mere (!) $300 million and with only one imminent competitor, developer Christopher DiGeorge's initiative looks like a risk worth taking.

Adelson? Controversy? Who knew?

Fri, 29 Feb 2008 16:02:00 -0700

Another day, another lawsuit against Sheldon Adelson. Ho-hum. This one, however, is playing out on a relatively obscure battlefront in Adelson's multi-national courtroom wars: Tel Aviv. According to Haaretz, this is the fifth lawsuit related to Adelson's capture of a casino concession in Macao. Sadly, it strikes an all-too-familiar chord for Adelson watchers.

Specifically, ex-Adelson rep Moshe Hananel claims he brought the Macanese opportunity to the Las Vegas Sands CEO's attention and that Adelson welshed on a promised payment, plus commissions. One of the other four lawsuits alleges that Adelson used his influence with then-Rep. Tom Delay to block human rights legislation that might have complicated his Chinese bid. At least one of the other litigants also claims he was shortchanged.

Las Vegans well remember the years of ugly litigation (and even legislation) that occurred when Adelson refused to pay his general contractor on The Venetian. According to Jeff Burbank's history of Nevada gambling regulation, License to Steal, when Adelson came before the Nevada Gaming Control Board in 1989, its investigators "found his name attached to about 100 civil suits, mainly dating back to the 1960s and 1970s. Many of the lawsuits came from companies or people to whom Adelson owed money," prompting NGCB member Gerald Cunningham to to exclaim, "It just goes on and on. It is like you never paid a bill." (pp. 137-8)

Nineteen years later, Adelson is still fighting that perception.

Wall Street, meanwhile, is reported to be looking askance at spending $800 million on a Pennsylvania slot parlor. (Time was, you could get a nice Vegas megaresort for that kind of dough. Not anymore.) Sands Bethworks is costing almost three times as much as Penn National's Harrisburg racino and has already experienced a 52% cost overrun over a three-year period.

On the flip side, $800 million is practically pocket change compared to Sands' $12 billion, ever-expanding commitment in China. Also, as Oppenheimer & Co.'s David Katz acknowledges, the Street can be "a little too short-sighted and narrow for a company like Las Vegas Sands."

Besides, Adelson has already managed to rewrite history, so far as the Street is concerned. Morning Call's article faultily reminiscences that, "It was Adelson who turned upside down the Las Vegas formula of cheap rooms and cheap food, instead building expensive, luxurious rooms and extravagant casinos ... "

Uhhhhhh, no. That'd be a fellow by the name of Steve Wynn. He built a few places 'round here that are worth checking out.

Those wacky Clintons

Tue, 12 Feb 2008 17:23:00 -0700

They're playing the race card again, this time via a surrogate, Pennsylvania Gov. Ed Rendell. (Whose casino-regulatory system is crashing and burning, but never mind that.) Honestly, it's at times like this that I'm ashamed to be a Democrat.

Think green: Because the good times in Vegas may only last one decade more, climate study says.

Local Cro-Magnons plan to gather at Harrah's Las Vegas to rally against all things Mexican, especially President Calderon. It's certainly a new twist on rolling out the red carpet for a visiting head of state.

@#*& hits the Columbia Sussex fan

Wed, 30 Jan 2008 13:26:00 -0700

Those intimations of insolvency at the Las Vegas Tropicana are now swelling into full-blown accusations [second item] leveled at Columbia Sussex HQ in a $960 million lawsuit. And not just any old insolvent but "deeply insolvent." Whatever detente CEO William Yung III negotiated with lenders to stave off bankruptcy late last year has proven short-lived. What's more additional payroll troubles are being alleged at the Trop.*

The Delaware lawsuit would, among other things, enjoin Yung from selling Casino Aztar, its Belle of Baton Rouge and the Vegas Trop. It also seeks to hold up the already announced sale of Horizon Vicksburg to Nevada Gold.

Being cut off from its prime casino cash show, the Atlantic City Tropicana, appears to have dealt a severe blow to Columbia Sussex. (Some argue that Yung killed the cow for its meat, rather than milking it, but that's another discussion.) It also means that debtholders, who have seen C.S. bonds lose 18% of their value, could lose their shirts -- or at least get a haircut.

If that's not enough, Bays Investment Corp. is backing off its planned purchase of Columbia Sussex's Charleston House Holiday Inn, after discovering that the property was already encumbered. Whoops.

Oh, and a lawsuit between Columbia Sussex and landlord Park Cattle Co., which has tried to evict C.S. from the Lake Tahoe Horizon, is slated to go to trial Feb. 11.

*-- Of course D. Taylor is not exactly a disinterested party in this matter, seeing as he's been trying (without success) to pry a reasonable contract offer from Columbia Sussex. No doubt he fervently wishes the current regime would get booted in favor of newer, more tractable ownership.

In related news ... The Baton Rouge Business Report opines in favor of bringing Pinnacle Entertainment to Red Stick. And annonymous poster "bontemps" needs to do a smidgen of research. Say what you like about Pinnacle, a piker it is not.

Betraying signs of unease about trends in Atlantic City, Colony Capital is putting an expansion of its A.C. Hilton in abeyance and is peddling an interest in the property, much as it previously did with the Las Vegas Hilton.

A Pennsylvania casino owner has been hit with four counts of perjury, indicted for allegedly lying about his closeness to Mob members. If you're a member of the Glass Half-Full Club, it's good news for Atlantic City -- and New York racinos.

In unrelated news, the business world makes progress.

What did we do to deserve this? OTOH, gratitude in politics sure runs shallow. It kinda makes you feel sorry for old Shrub.

Rambo (which premiered at the Aladd ... er, Planet Hollywood Resort & Casino) is deemed the worst move ever. I still think that dubous honorific is up for grabs between Bloodrayne and The Pirates of Tortuga. But wait: Bloodrayne has The Lokenator, Pirates does not. Pirates of Tortuga wins/loses! To the plank!