David Mckee's Stiffs & Georges - James Packer

Good times ahead?

Mon, 12 Oct 2009 14:58:00 -0700

New Yorker economic columnist James Surowiecki puts current consumer-spending strends in perspective -- and what he finds should gladden the hearts of casino owners. Basically, he finds historical evidence the current tendency toward thriftiness will soon pass. Of course, when Americans' savings rate (now 6%) dipped below 0%, that should have been a canary-in-the-coal-mine moment for heedlessly expansionist gaming moguls. But they'd probably laid off the canary in order to "maximize shareholder value."

If wishing made it so ...

... Chicago would have had a casino a long time ago. Some city parents think they've found the perfect site, but it's still a long shot. Just keep it out of the Loop, OK? Seriously, downtown Chicago is looking livelier than it has in a while and doesn't need a big-ass casino plunked in its midst. The likelihood that it would be Windy City version of, say, a classy anomaly like MGM Grand Detroit is pretty remote.

So much for speculation that Australian casino magnate James Packer would get into the running for Fontainebleau. Seems that Packer is buying up Crown Ltd. stock instead. (Indeed, why would Packer write off his F'bleau investment, then double down on the failing development?) Packer has raised at least $772 million by disposing of non-gaming assets and appears on course to make a takeover bid for Crown, of which he owns 40% at present.

$300 mil for F'bleau?

Tue, 06 Oct 2009 13:10:00 -0700

That's the latest; namely, that Penn National Gaming will put down less than $300 million as a "stalking horse" bid on Fontainebleau. Penn would also be on the hook for the costs of the project's bankruptcy proceedings. Potentially getting a Strip resort for less than 10% of its cost sounds like a good deal for Penn ... until you think about the hundreds of millions of dollars (possibly as much as $2 billion) that stand between F'bleau and the finish line.

Sue Lowden evidently didn't get the memo that Mike Ensign is no longer writing fat campaign checks at Mandalay Resort Group. How else to explain the Archon Corp. treasurer's loud and frequent fealty to Ensign fils, the ethically challenged junior senator from Nevada? Lowden's proclamations provided an irresistible temptation for Democratic Senatorial Campaign Committee spokesman Ed Schultz, who sniped, "Sue Lowden's support of John Ensign may have fundraising value to her, but it is a reflection of her own character and fitness for office. She has shown more fidelity to him, than he has shown to his own wife." (Lowden is gunning for Sen. Harry Reid's seat.)

In her capacity at Archon, Lowden could line the younger Ensign up with a dandy post-senatorial job as a casino greeter at her Pioneer Gambling Hall in Laughlin. (As for Lowden, at least she's off Jon Ralston's "Chicken List," after gracing the Face to Face set. Your turn, Sheldon Adelson. Does Sue Lowden have more huevos than you?)

The perils of Packer. Reeling from a $1 billion loss on his overseas casino misadventures, James Packer and his Crown Ltd. are putting some of their Melbourne land on the block.

Not buying it. Although MGM Mirage CEO Jim Murren may have predicted that CityCenter's premiere would increase Vegas visitation by 10%, but gaming analysts aren't having any of it, especially when all the new room capacity is at the high end. Also, it's remembering that the 1998-2000 roll of megaresort openings and the 2005 debut of Wynn Las Vegas coincided with robust U.S. economies. Andrew Zarnett advises casino bosses to look at current numbers as the new baseline -- which sure beats pining for the vertiginous and unsustainable levels of two years ago.

Macanese machinations. Conventional wisdom on the advisability of floating IPOs in Hong Kong continues to seesaw. The Wall Street Journal runs the numbers and finds gaming stocks defying the market's downward trend. Which is good news for Steve Wynn and possibly even Las Vegas Sands' public offering, which is taking forever to reach the launch pad.

Macao's blockbuster month

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

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

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

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

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

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

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

... or the slightly more innocuous ...

"COME OUT and Celebrate at Luxor"

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

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

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

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

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.

Bounce-back for Macao?

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

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

Still: Wherefore this sudden resurgence?

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

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

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

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

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

Business as usual at Hotel Lisboa.

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

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

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

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

City of (better) Dreams

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

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

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

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

Senator Sue?

Wed, 12 Aug 2009 21:49:00 -0700

Why should Nevada have only one former casino executive in the U.S. Senate when it could have two? Sen. John Ensign (R-Nevada Landing) might soon be keeping company with Sen. Sue Lowden (R-Santa Fe Gaming Corp.), if a poll commissioned by Lowden supporters is in any way indicative. Lowden, an ex-legislator who was drop-kicked by her constituents in '96, was co-owner of the Santa Fe Hotel until it was sold to Station Casinos in 2000. Station then did to the pro-union workforce what the Lowdens could not: sacked every last one of them. Business suffered afterward (customers didn't appreciate the disappearance of familiar faces) but Station has always liked to live dangerously.

Lowden currently sits on the board of Archon Corp., proud owner of the Pioneer Hotel in Laughlin, as well as of the Wet 'n Wild remnants that almost became the site of James Packer's Crown Las Vegas. Archon has a habit of turning up in the newspapers every now and again, sometimes when investors get riled up about dubious, insider-friendly stock moves. Sen. Harry Reid (D-NV) may not even have to unpack his heavy artillery; the Culinary Union will be only too happy to unleash its attack dogs on Lowden ... again.

Casino wars in Macao

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

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

Packer steps in it again

Fri, 24 Jul 2009 12:02:00 -0700

After frequent demurrals, the Victoria government has 'fessed up that it was on the receiving end of ham-fisted lobbying by Crown Casino owner James Packer. A delicate quid pro quo (higher taxes in return for more table games) was being negotiated. But, not wanting to leave anything to chance, Packer personally besieged both Victoria's premier and treasurer in re Crown.

The state comes out of this looking worse than Packer, though, as witnessed by this weaselly attempt at damage control: "The Government is adamant that any expansion of Crown's gaming tables was under discussion for a long time and that poker was a less addictive form of gambling than poker machines." [Emphasis added] So I guess that makes it all copacetic, right?

Lawrence Ho & James Packer: less to smile about these days

Hammered in Macao. Packer's new City of Dreams is getting stomped by nearby Venetian Macao. VIP baccarat play for Melco Crown Entertainment properties was off 19% -- which is even worse than its sounds when you count on it for 60% of your total gambling revenues. Mass-market baccarat play was 12% up, so there's some consolidation. (Meanwhile, in some parallel universe, the Wall Street Journal is nattering on about a "brighter outlook" for Macao, even as revenue continues to decline and City of Dreams flops. Visitation was -16% in June and the Mainland China subset of that was -22%.)

A good thing for Sheldon Adelson that Venetian Macao's play is so strong. Bloomberg News reports that 85% of Las Vegas Sands' Macanese revenue is casino-derived ... which ought to raise serious questions about Adelson's hotel-, retail- and convention-premised Cotai Strip™ business model.

It's Gaughan

Thu, 16 Jul 2009 11:53:00 -0700

Congratulations to South Point owner Michael Gaughan, the 2009 inductee to the American Gaming Association Hall of Fame. An industry "lifer" who worked his way up from the Royal Inn to the CEO's chair at Coast Casinos, Gaughan has been one of the most consistently successful operators in the business. After 9/11, when other operators were slashing jobs, Gaughan actually added employees. That practically qualified him for on-the-spot sainthood.

He briefly succumbed to the siren song of consolidation and merged Coast with Boyd Gaming. It was a rocky marriage and Gaughan soon decided that the world of publicly traded casino corporations was not his bag. But the "divorce settlement" gave him South Point free and clear, and he maintains a lucrative ancillary revenue stream through 1,308 slots (give or take) at McCarran International Airport.

Gaughan is a man of few words -- but many deeds -- so we hope he's not forced to make a speech. But S&G applauds the AGA's excellent selection of its '09 inductee.

(And there we thought they were going to give it to James Packer.)

Moulin Rouge: Whoops!

Tue, 07 Jul 2009 14:27:00 -0700

The Moulin Rouge development that will never be.

Oh dear, oh dear. Seems like the City of Las Vegas unwittingly obstructed its own arson probe into the demise of the Moulin Rouge when it allowed the property to be immediately demolished. Sloppily, the actual tearing-down was farmed out to the property's former owners, who happened to have a demolition contractor on site during the blaze.

The fire's cause remains speculative and no finding of arson has been made -- and now perhaps never will. But the city's decision not only looks overhasty, it was (at the very least) cavalier to entrust it to dispossessed Moulin Rouge Development Corp. and not new owner Olympic Coast Development. The latter's prexy, John Hoss, told the Las Vegas Sun he found the chain of events "a little odd" and "a weird coincidence." Since Hoss is only trying to corral a $100,000 insurance claim, the city could get stuck with an asbestos-removal tab as high as $1.1 million.

Can they screw this up any further? Is the Pope Catholic?

F'bleau-minus. The bankrupt resort's developer, Jeffrey Soffer, proposes some unspecified corner-cutting to get the project back on budget. ("On budget" being a very relative term where Fontainebleau is concerned.) Combine this with the allegedly secret "Enhanced" costs for F'bleau's highly touted amenities and the moral of the story is that what you see on the Web site or in the design renderings has a tenuous relationship to what you'll actually get.

At least Soffer is offering to chip in some equity, unlike former investor James Packer, who scuttled away from F'bleau the moment the chips were down.

Gator on the loose. One of Las Vegas' larger parks got a lot more interesting yesterday when a 42-inch-long alligator turned up. Instead of entrusting the spunky fellow to a local zoo or perhaps one of our local casino-based wildlife habitats, the Wildlife Dept. killed him. Bastards. I hope they never get their mitts on our beloved Mojo ...

Mojo, the monarch of Huntington Press.

Speaking of James Packer ... griefs are arriving in battalions (thanks, Mr. Shakespeare) for City of Dreams. In terms of mass-market business, Venetian Macao is eating City of Dreams' lunch. "Despite 41,000 people walking through City of Dreams every day since it opened in the first week of June, most of the visitors were just admiring the decor instead of sitting down at its tables for a game of baccarat," reports The Age.

Not only is one analyst projecting a 15% earnings shortfall for Melco Crown Entertainment, another has tripled his loss-per-share projection. J.P. Morgan is also revising its 2010 cash-flow projections on the $2.1 billion megaresort to 13% ROI, down from 17%. (That's still a better return on investment than you can get on the Las Vegas Strip.)

Did Steve Wynn take Packer to the cleaners when sold him 37% of a casino concession for $1 billion? Wynn had a chance to size up Packer and deemed him not yet ready for the big leagues. Score another one for El Steve.

City of Nightmares?

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

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

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

Meanwhile ...

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

Stormy weather

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

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

City of Dreams: a flop

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

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

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

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

Sands Macao: Adelson's best-ever investment

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

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

MGM: Deal or no deal?

Wed, 17 Jun 2009 17:55:00 -0700

MGM Mirage CEO Jim Murren is re-mulling asset sales of MGM Grand Detroit, Gold Strike (Tunica, Miss.) and Beau Rivage. But all Strip assets are definitively off the market (yes, even Slots A Fun). Since the Detroit and Tunica casinos are already encumbered with CityCenter-related debt, presumably Murren would transfer those mortgages to some or all of the "Mandalay mile." As far as I know, those three casinos are still unencumbered. The Detroit resort would be a real "trophy asset" for any potential buyer ... presuming that banks are more inclined to lend than they were(n't) the last time Murren shopped this trio around.

The Las Vegas Review-Journal took a good look at MGM's Giza deal -- and it's even better than initially thought. Not only will the company collect management and franchise fees, it also gets a cut of any profits. If there's a downside here, I'm too myopic to see it.

MGM wouldn't sell Monte Carlo when Jack Binion came calling. One presumes this had more to do with potentially being able to extend CityCenter into Monte Carlo, rather than Jack's money not being good enough for MGM. However, if the company really cares about the property, why are they slowly letting it go to seed? The Brew Pub will close on July 12.

Also ... our LVA research team has discovered that no further Lance Burton performances are scheduled. This seemingly writes finis to his long relationship with Monte Carlo. Is it just an expedient way to save money or was Burton's unpardonable sin to get very good reviews from the local dailies right after Criss F. Angel laid an $85 million egg with Believe? Burton out and Angel in? That's just not right.

"IUER"? WTF? Don't call Melco Crown International's new City of Dreams a "casino." Melcospeak for the new pleasure place is "integrated urban entertainment resort." At least Steve Wynn's "casino-based destination resort" coinage rolled off the tongue a little more felicitously. On second thought, just call it "a casino."

Holy cow! The husk of the late, lamented Holy Cow Brew Pub & Casino (home of the best beer in Las Vegas) is proposed for redevelopment -- again. It was briefly the site-to-be of the phantom Ivana condo tower, one of the more egregious examples of condo "vaporware" during the recent bubble. Arizona- and New Mexico-based developers intend to tip the old Cow and replace her with a low-rise, low-cost (no hotel) casino.

The Strip needs some fresh mid-market casinos and this one could be it. But why make your anchor tenant a Walgreens when it's the flagship retailer ... of Palazzo. We sure could use the jobs, too, what with unemployment hitting record levels in Nevada. A good thing that Gov. Jim Gibbons was shamed into accepting federal funding for the jobless.

No Surprise Dept.: So the Moulin Rouge is (literally) toast and arson is suspected. The fire happened the day after a bankruptcy auction found no takers for the property.

Obama backpedals (sidepedals?) on gay rights. If he wants to give the country change it can believe in, how about revoking the profoundly un-American policy of throwing our LGBT brothers and sisters out of the military? If they've volunteered to lay down their lives for Old Glory, they're better people than me. And if Harry Truman is remembered for nothing else, he'll always be the president who integrated the military with a stroke of a pen. Does President Obama have Truman-like intenstinal fortitude?

One of the vilest of major-league baseball players back in the Eighties was slow-moving, philandering, showboating slugger Mel Hall. But we never knew just how loathsome he was. Good luck in the slammer, Mel.

Macao" rises again?

Wed, 17 Jun 2009 16:11:00 -0700

Block out the shopworn, mostly useless generalities coming from Las Vegas Sands and groove to Macao's scintillating casinos, recoil from its thick blanket of smog, and take some heart from Credit Suisse's prediction of an upturn in VIP play in the Chinese casino protectorate.

A contemporaneous Australian TV report -- which can't be embedded, alas -- was even more striking, especially in the stunning contrast between the sleek architectural beauty of Melco Crown International's new flagship, City of Dreams, and the fugliness of Sheldon Adelson's nearby monoliths. Cheers to Melco Crown for bringing a needed infusion of taste to the Cotai Strip™.

F'bleau: another triumph for Packer

Wed, 10 Jun 2009 14:06:00 -0700

James Packer sure knows how to pick 'em, doesn't he? He's just written off $250 million invested in (read: "wasted on") Fontainebleau. His Crown Ltd. also took the opportunity to kick F'bleau while it's down, stating it felt "no obligation and has no current intention to contribute any further equity or debt to Fontainebleau or participate in any restructuring under any bankruptcy arrangements." In other words, please excuse me whilst I push you under the nearest bus.

James Packer picked a peck of putrid portfolios.

Packer is on the Mendoza Line, now batting 1-for-5 in U.S. casino investments, with only a minority interest in Cannery Casino Resorts providing any ongoing yield. In baseball, a .200 average gets you a ticket to the minor leagues. S&G humbly suggests that, the next time Packer gets the urge to invest in American gaming companies, he ought to have a lie-down until the fit passes. Failing that, he might simply proceed to the water closet and "invest" his money straight down the crapper. The ROI should be about the same.

As for F'bleau, the significant storyline emerging from its bankruptcy appears to be the revelation that ex-CEO Glenn Schaeffer and associates spent $2.1 billion, performed years of construction ... and were only 70% finished when lenders pulled the plug. Which is significant because F'bleau execs maintained, right up to the bitter end, that they'd open in October -- giving them less than six months to do 30% of the work. I'm starting to have a glimmer of sympathy for the banks' point of view.

Welcome to Albania: Otherwise known as Post-Gibbons Nevada. And good riddance to the 2009 Lege for aiding in this debacle.

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.

Rumble in Macao

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Pansy Ho: time for Plan C

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

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

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

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

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

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

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

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

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

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

Dream on!

Wed, 13 May 2009 11:08:00 -0700

We're less than three weeks away from the opening of City of Dreams, the megaresort that many hope will defibrillate Macao's economy. One of its must-see attractions is sure to be this variegated LED ceiling. You can probably get the idea without watching the entire video. On the other hand, it is very soothing and relief is a precious commodity these days.

Boy, was I wrong!

Wed, 06 May 2009 12:29:00 -0700

Given their tightly held scruples about gambling, period, I figured that there was no way on God's green earth that Florida's Republican-dominated House would agree to lowering the gambling age (at least for slots) to 18. That looked, at first blush, like a deliberately inflammatory proposal, a star atop the state Senate's Christmas tree of gaming-industry concession and the first thing to go during negotiations.

Ha! I repeat: HA! House members are still dead-set against letting people in Tampa play blackjack, but lowering the gambling age to 18 has passed without a murmur, reports the Orlando Sentinel. Even the House has come round to granting the Seminole Tribe some tables (but only blackjack), while the Senate counterproposes a two-tier system whereby half the Seminole casinos get the full monty and half get none, just slots. As with poker limits, it's not a question of "Will they or won't they (get tables)?" Now it's, "How much?" Class II machines for parimutuels are off the table but state senators have come back with something even more contrived. It's enough to make your head spin.

No longer a Dream: June 1 has been set as the date for City of Dreams, the first megaresort built by Melco Crown Entertainment. Despite having two (eventually four) hotel towers, it will open with but 600 hotel rooms, potentially maxing out at 2,200 units. Hopefully, the initial business will give CEO Lawrence Ho something to crow about when he addresses G2E Asia later that month.

A delicate balance

Tue, 07 Apr 2009 17:51:00 -0700

Another day, a little more movement in the CityCenter situation. Well, it's that or talk about tourism and gaming revenue numbers that are too depressing to contemplate for long.

Time was that the American banking industry was practically giving away money, not requiring MGM Mirage to pledge assets for collateral. Lucky for MGM, lucky for us, not so lucky for the banks. That's going to change and Liz Benston delineates the tightrope that MGM will have to navigate to keep both banks and bondholders happy -- a delicate balancing act indeed. The one casino MGM can neither unload nor borrow against is New York-New York, presently encumbered with three-quarters of a billion dollars' worth of junk bonds.

Meanwhile, James Packer continues his CityCenter softshoe routine. According to Bloomberg (see sidebar), while Crown Ltd. may not be talking to MGM or Dubai World directly, it's reported to be exchanging notes in study hall with Colony Capital ... hence the carefully couched denials Crown issued last weekend. Since Colony will be merely lending to MGM, not investing (assuming negotiations bear fruit), that'll spare the fund from having any uncomfortable chats with Station Casinos, which has near-Strip aspirations of its own. Besides, if MGM defaults, God forbid, Colony might find itself with a gem like Slots A Fun or maybe even Circus Circus, and could whistle Station in to run it.

The terms of the alleged deal -- $750 million toward debt structuring -- more than suggest that MGM has given up on any getting any more dinero out of Dubai World. If it can "clear waivers" with its lenders, it looks as though MGM's preparing to shoulder the next $800 million worth of CityCenter costs by its lonesome. Another bit of good news for Kirk Kerkorian's company is that Deutsche Bank analyst Bill Lerner has revised the EBITDA estimates of Beau Rivage and MGM Grand Detroit up a bit. Lerner's new numbers would bring the theoretical asking prices (using 7X cash flow as a baseline) to $715 million and $940 million, respectively. The question of how anybody not named Penn National is going to persuade lenders to underwrite such a deal is still begged, though.

I wonder if Barbara Cappaert of KDP Investments ever tires of having to be the one to point out the elephant in the middle of the room, namely that MGM is pawning tomorrow to pay for today. That $235 million-plus in annual Biloxi/Detroit cash flow is going to be sorely missed.

If anybody ever writes the history of the casino-hotel currently known as the Greek Isles, it'll only have one chapter ... Chapter 11. The Isles has known many incarnations but it always seems to find its way back to bankruptcy court sooner or later (usually sooner). It's eked out a marginal existence for such a long time that perhaps the casino evolutionary process needs to "select out" the Greek Isles, which occupies a forlorn backwater between the Convention Center and the Strip.

Anyway, if you enjoy bankruptcy filings, this one should keep you busy. Since the Isles is more of a slot-route outpost than a casino, the alphabet soup of ownership groups is of debatable relevance to its gambling operations, though. Will the last person to leave the Greek Isles please turn out the lights.

For Rent: One blimp, slightly used. Gets 2.1 MPG. Annual operating cost $1.1 million. Your logo here.

MGM Mirage sells family jewels

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

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

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

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

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

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

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

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

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

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

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

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

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

Leper Colony

Fri, 03 Apr 2009 17:05:00 -0700

Or, in lieu of "Atlantic City Death Watch VII," maybe "Colony Death Watch." Scarcely had S&G dubbed Colony Capital's East Coast casino portfolio "Colony Crapital" than came affirmation in the form of the latest set of numbers from the Boardwalk.

First, the good news. Everyone in Atlantic City reported a profitable operating margin last year as well as a gross operating profit. As the Press of Atlantic City explains, "Net income, however, is not considered as important as gross operating profit, which is seen as the best way to measure a casino’s financial strength."

For instance, Harrah's Entertainment had the two best operating margins in the city (at Caesars A.C. and Harrah's Marina) and four of the top five. In gross operating profit, the Harrah's-owned quartet held the #2-3 and #6 spots, bested only by Borgata (#1, of course) and Trump Taj Mahal. However, thanks to some accounting jiggery-pokery back at corporate HQ, all four posted year-end losses -- some of them gargantuan, like the -$355 million charged against Caesars. Only Boyd Gaming's Borgata reported a profitable 2008. In terms of revenue, it was so far ahead of everybody else -- by $280 million -- it's not even funny.

For Harrah's Marina, the good news was triplefold. Not only did it have the smallest diminution of gross operating profit (-1%), it was also the sole casino to record an increase -- 8.5% -- in revenue.

Harrah's operational skill aside, UNLV's David Schwartz found another silver lining. To wit, "I’m surprised that gross gaming revenues fell by only 7.1%. For all of the belly-aching about the partial smoking ban and competition from Pennsylvania, Atlantic City’s gaming win actually declined less than Nevada’s, which shrank by about 10%. People are still willing to come to Atlantic City; they are just gambling less." [Emphasis added.]

Now for the bad news. The two lepers in the A.C. colony are -- you guessed it -- Resorts Atlantic City and the Hilton. Those two Colony Capital casinos posted extraordinarily dismal numbers, even by last year's low standards. Their operating profit margins were less than 2%, against a market average of 21%, and their gross operating profit was $6.3 million ... combined. In a year when the average Atlantic City casino saw a gross operating profits fall 25%, Colony's duo crash-dove -88% and -89%, respectively.

Compare this to Trump Marina. Even in a semi-orphaned state, as its sale dragged on (and on), the future Margaritaville garnered superior operating profit margin -- 7.5% -- and a far bigger operating profit on the smallest revenue base in the market. It reported gross operating profit of $15 million on revenues of $195 million. Somebody's doing something right and it's not Colony's Atlantic City braintrust.

Does Colony know how to pick 'em or what? And is MGM Mirage sure it wants to get into bed with these guys? They're starting to make James Packer look like a sagacious casino mogul. As for the Hilton, which used to be Steve Wynn's Atlantic City Golden Nugget, suffice to say it's seen better days.

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.

Casino apocalypse

Thu, 19 Mar 2009 13:08:00 -0700

I'm deeply imbedded in other projects today. In the meantime, by way of In Business Las Vegas and GamingFloor.com (source of yesterday's Harrah's Entertainment time warp, too) here's the answer to the question, "How many casino failures can you pack into nine minutes?" Watch it and weep.

Packer gets a discount; solving the I-15 problem

Mon, 16 Mar 2009 15:50:00 -0700

Though it can't seem to settle on a dollar figure for James Packer's renegotiated Cannery Casino Resorts purchase, this story makes one salient point: A $1.7 billion-plus acquisition could be converted into a 25% stake for $370 million-$390 million. That effectively reprices 100% of Cannery at $1.48 billion-$1.56 billion. Which enables Packer to save face on what is described as an "increasingly onerous deal." Or it could be a graceful way of bowing out of further U.S. casino adventures in favor of a renewed Down Under focus.

A reader writes ...

I know that you are a big fan of a high-speed rail system to Vegas, and I do see the need to increase the traffic flow from SoCal to Vegas.

But I wonder if anyone has run the numbers to compare adding an additional highway lane or two (and even expanding any bridges) from the north edge of the LA area to Vegas? And how that figure compares to the cost of a high-speed rail.

Again, I'm not an opponent of rail lines (in fact, my wife comes from a long-line of train-employed relatives), but I wonder where the best "bang for the buck" would come from.

From some VERY basic numbers on the web, I'm getting estimates of about $1 million per mile per lane for highway building in the desert. Even with adding a lane in each direction, that's about $2 million per mile, or around $400 million for the approx. 200 miles from the north edge of metro LA to Vegas. Even if you more than double that figure for bridge expansions, etc., you still only end up with a cost of $1 billion. Compare that to the $8 billion in the stimulus package for high-speed rail (although I'm not sure how much of that $8 billion goes to the Vegas rail, or what the total cost of that project would be).

As you can tell, I am NO expert on this, but it might be interesting to hear from some experts (and who don't have a dog in the hunt).

You make good points, Kemosabe.

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.

Harrah's enjoys bailout

Tue, 03 Mar 2009 13:27:00 -0700

"Critics argue that the tax-law change rewards companies that took on too much leverage during the credit bubble, such as those that were bought by private-equity firms."

Sound like anybody we know? How about Harrah's Entertainment, which played Russian roulette with the bond market and got its brains spattered all over the wall. Lucky for them, Senate Majority Leader Harry Reid (D-NV) was there with a "Get Out of Jail Free" card -- or at least a tax break that, in effect, rewards morally hazardous borrowing. Thanks to Harry's largesse, it'll be a full decade before Harrah's pays off the gains it's about to realize from buying back part of its $23 billion (!) debt at a discount.

That is, assuming that the crafty Reid hasn't carved out yet another tax exemption for improvident borrowers like Harrah's, Station Casinos and Colony Capital by 2019. And between that gift-wrapped tax deferment and last week's endorsement by Nevada GOP kingmaker Sig Rogich, Reid is as good as re-elected through 2016. (Which must come as a terrible disappointment to Las Vegas Review-Journal Publisher Sherman Frederick, who has been conducting a blushing-maiden campaign for the GOP nod via his blog and Sunday column, trying to draft himself as Nevada's Only Hope of Salvation.) One prospective Reid rival has seen the handwriting on the wall and given up.

As the Wall Street Journal story points out, there are far worse outcomes for Harrah's management, its employees -- innocent bystanders to this debacle -- and its debtors, who'll realize some tax forgiveness themselves. Besides, it's clearly preferable that super-leveraged companies pay back some of their debt rather than walk away from the whole kit 'n kaboodle. That goes without saying.

But what lesson is likeliest to be drawn in the boardroom? Will it be, "Damn, but we dodged a bullet there! Let's not pull an LBO stunt like that again"? Or will executives reach the conclusion, "Hey, that was easy! As soon as we're clear of this mess, let's run up another whopping tab. We won't have to pay off the whole thing and we'll probably get another big-ass tax break from Harry in the bargain. Party on, dudes"?

Recent history does inspire confidence that the former option will hold sway over the latter.

Small victory for Sands: There's a silver lining in the (relatively) dismal February revenue numbers from Macao, which are down 16% from last year, to $1 billion. "Dismal," that is, by Macao standards, which are higher than anybody else's.

While Stanley Ho continues to command the plurality of the market (29%), Las Vegas Sands has clawed back. Its January market share (22%) has risen to nearly 26%. These gains came mainly at the expense of Melco Crown Entertainment (down to 9%) and MGM Mirage/Pansy Ho (bringing up the rear with 6%).

Given the worrisome financial straits MGM finds itself in elsewhere, it's time to think the once-unthinkable: That CEO Jim Murren could decide that $30 million/month in revenue isn't worth maintaining a Macanese beachhead and sells the company's subconcession back to Stanley Ho. Then the elder Ho's tactless references to MGM Grand Macau as "my casino" would achieve the status of prophecy.

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.

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: 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.

Stanley Ho's comeback

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

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

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

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

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

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

Quote of the Day

Fri, 23 Jan 2009 13:17:00 -0700

"Here in Germany the number one box office hit is presently a remake of Thomas Mann's Buddenbrooks. [According to Wikipedia,] "It portrays the downfall (already announced in the subtitle, Decline of a family) of a wealthy mercantile family of Lübeck over four generations.' It's quite conceivable (but unlikely) that the same thing may happen to the Packers in one." -- reader response to the financial adversity currently being experienced by publishing heir and would-be gambling magnate James Packer.

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.

Rogues' gallery

Thu, 15 Jan 2009 13:08:00 -0700

After a fitful start, blogorrhea is sweeping the business desk of the Las Vegas Review-Journal, resulting a veritable flood of news nuggets today ...

Planet Hollywood prexy Michael Mecca has resigned to pursue the proverbial "other opportunities" at a time when revenues have been up. On the next Vegas Gang, Jeff Simpson predicts -- with unassailable logic -- that Mecca is going over to Crown Ltd. to head up James Packer's North American gambling operations (in which case Mecca will have his work cut out for him, but congratulations all the same).

A less-charitable alternative theory would be that Mecca has been scapegoated by Planet Ho for having been in charge when it got dragged into the Omar Siddiqui scandal. (The indicted ex-Fry's Electronics exec lost $9 million there in one gambling session alone.) Planet Ho's lawsuit against Siddiqui got tossed last month.

"No more wire hangers!" Whatever the case, somebody leaked Siddiqui's player profile to the San José Mercury News and, geez, this "whale" sure is a whiny little bitch. (Sorry, I meant that to read, "a high-value, loyal customer and a good friend of our casino staff, who look forward to his every visit.")

Good news for visitors: The Nevada Department of Transportation is at least talking about widening I-15 south of Tropicana Ave. Whether NDOT can get the money from Gov. Jim "Scissorhands" Gibbons is another matter, but it can at least remind Midnight Jim that he himself identified California as Nevada's Numero Uno tourism priority in the course of disparaging Asian marketing as "a waste of taxpayer money."

And who knew that the Circus Circus RV park was the new "in" place to stay?

Randy Black, aka Mr. Thrift. Many of his employees are out of work, the former Si Redd's Oasis may be a hollow sepulchre these days and his Black Gaming has defaulted on debt. But we don't need to pass the hat for the self-aggrandizing Black Sr. quite yet.

Seeing financial havoc all around him, Black decided that austerity measures are for other people (like his employees) and awarded himself a nearly 4% raise for this year, escalating to 5% for each year afterwards. Whatever meagre EBITDA Black's Mesquite casinos achieve, 5% of that will be redirected into Black's pockets as a "management fee," on top of $21,200 in other goodies.

At a time when Nevadans from all walks are being asked, or sometimes told, to accept wage freezes and outright reductions, Black's greed is a disgrace to the state. R-J reporter Arnold Knightly is to be commended for keeping tabs on SEC filings and ferreting out not-so-niceties like this.

In other news ...

Folies Bergere: 49 is the new 50.

From showgirls to no-girls: What's Ron Thacker's first official act as president of the Tropicana Las Vegas? What else but shut down Folies Bergere well shy of its 50th anniversary? The no-frills spirit of Columbia Sussex remains, protestations to the contrary, clearly alive and well [sic] at the Trop.

Thacker's press release made noises implying that the Trop had a replacement for Folies waiting in the wings but, when pressed by Norm(!) Clarke, a Trop flack could only weakly respond that it was "exploring options" and was "definitely not closing up shop." (The Trop gave the Las Vegas Sun a different, more definitive story, saying it does have a new show en route.) Unspecified property improvements are also promised. Pardon my skepticism, but we've heard that before -- and are still waiting.

Geez, first Titanic and Bodies take a hike over to Luxor (where they're doing even bigger business). Now this. Since it's a just a wee bit too cold for swimming right now, is there any reason left to visit the Tropicana? Bueller ... Bueller?

Harmon blame game: It looks as though the truncation of The Harmon into a 25-story stump is ultimately the fault of the same people who overlooked scofflaw remodeling jobs at sundry Harrah's Entertainment properties: Clark County's ever-(not)-vigilant building inspectors. "What? Fifteen floors of deficient rebar you say? Gosh, I guess I missed it. My bad. When's lunch?"

The Las Vegas Sun's story comes with a helpful graphic that shows how Perini Building Co. and its subcontractors ineptly installed and then further compromised the rebar that ultimately turned the (would-have-been) 49-story Harmon into what we might call The Half Harmon. In the accompanying video, Clark County's Ron Lynn threatens the culprits with a "potential disciplinary hearing." Oh, they must be quaking in their boots.

Peppermill exec in line for state job. No, not the beloved Peppermill restaurant on the Strip but rather Reno's Peppermill Resort Casino. Director of Marketing Kim Stoll is one of six finalists for the job of Nevada's tourism czar. Not making the cut was underqualified Gibbons crony Kirk Montero. Then again, Gibbons wants to eliminate the selfsame job that he tried to gift-wrap for Montero, so maybe the also-rans in this competition are its real winners.

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.

Quote of the Day

Tue, 06 Jan 2009 16:39:00 -0700

"Remember when everyone was quoting Baron Rothschild, saying, 'Buy when blood is in the streets'? Well, this is it. We're in the Wall Street equivalent of Kill Bill meets Jurassic Park. It looks like it's all over but the spurting." -- Richard Gibbons, columnist for The Motley Fool, on "Why You Should Fear the Future."

All hat, 90% less cattle

Wed, 31 Dec 2008 14:51:00 -0700

Although I expected that media heir James Packer would blow through his patrimony from high-rolling Kerry Packer in short order, I had no idea just how little time it would take. The younger Packer is putting nine-tenths of the family's Australian cattle stations on the market. So I guess the former jackeroo can forget about being called simply "The Drover" for a while now.

Not James Packer (nor his sheila).

Packer shows perspicacity in the timing of the sale, which comes as Ozzie cattle stations are at a premium on the market. Still, it's a move that's been forced by his reverse-Midas Touch in the casino industry, in which Packer has made a number of duff investments. The rumor that he's going to liquidate the last of his media holdings is scarcely cause for optimism.

At least he hasn't sold the pastoral site where Dear Old Dad is buried ... yet.

Pinnacle's Bahamas debacle

Fri, 19 Dec 2008 18:22:00 -0700

It wasn't so long ago that Pinnacle Entertainment was the fair-haired boy of the casino industry, especially after it hit a home run in the Lake Charles, La., market with tony L'Auberge du Lac. Then it nearly followed Columbia Sussex over the precipice in the crazy Aztar Corp. bidding war. Its much-anticipated Lumiere Place in St. Louis is now regarded as a succes d'estime, a budgetary overindulgence. (It's certainly failed to make any significant dent in proximate Ameristar Casinos and Harrah's Entertainment operations.)

Pinnacle paid a bundle to agglomerate land on Atlantic City's Boardwalk that it now can't afford to develop -- and may be regretting the precipitate fashion with which it shut down and demolished the Sands, which could have been generating a modest revenue stream all this time. A Baton Rouge riverboat project is behind schedule, and now ...

Isle of Capri Casinos and Harrah's now can welcome Pinnacle to the club of U.S. casino owners who have found nothing but a dead end in the Bahamas. (In fairness to Harrah's, it never got a chance to operate there, its Baha Mar project having fallen victim to internecine plotting and counterplotting that still haven't been sorted out.) The torrent of red ink from Exuma has done a number on Pinnacle's bottom line, which really doesn't need any more bloodletting right now.

It seems that Pinnacle decided last summer to either sell or outright close its casino on Exuma and will draw the blinds on Jan. 2 (which tells you just how bad business must be). Given that the Bahamas also turned out to be a fiscal graveyard for "Pile of Debris" (one of the bad decisions that ushered out the Goldstein Era), no wonder Pinnacle's Exuma casino is wanting for takers. Yes, they couldn't even get James Packer to take this turkey, so things must be very dire indeed. The ill-starred property has even been purged from Pinnacle's corporate Web site. "Bahamas casino? What Bahamas casino? No, we never had one of those. Where did you read that?"

I'm tempted to say this is the end of U.S. casino operators trying to reinvent the Bahamas as a market for Vegas-style gambling. But this is an industry with no shortage of persistence and optimism, mostly justified but sometimes not.

Last-minute reminder: The final episode, "Vegas" of Stargate Atlantis -- partly shot on the Strip -- airs tonight at 9 p.m. Eastern and Pacific. I'm just sayin'.

Case Bets: Harrah's, Pinnacle, New Frontier, Treasure Island, misery in Macao

Fri, 19 Dec 2008 15:32:00 -0700

Harrah's Entertainment picked a heckuva time to put its Memphis campus on the market.

Robo-poker invades Bossier City and at a Pinnacle Entertainment property, no less. I expected better of Pinnacle. PNK'd again!

No answers from El Ad. I ran into a representative of El Ad Properties last night at Eastside Cannery. As much as I badgered the poor man, I could get little information on what's happening with the New Frontier site (or where $615 million of the advertised $1.24 billion purchase price went). El Ad's position is that it's content to sit upon its 18.4 acres until the market grows more propitious or Hell freezes over, whichever comes first. (OK, I made the second half of that statement up.) And why not when you've got Steve Wynn doing your landscaping for you.

Treasure Island employees had better snap to it when Phil Ruffin takes over. Other gems gleaned from this story: Jack Binion had been sniffing around certain MGM Mirage properties but was rebuffed. (Bad call -- Jack's pretty flush these days.) And if you think the El Ad/New Frontier situation is bad, it could have been far worse. Ruffin had James Packer, the single unluckiest investor in the casino industry, on the hook before El Ad brandished its billions.

"Asia's Las Vegas"™ is starting to sound like real, present-day Vegas in all the wrong ways.

Analyst: Station, Harrah's "worthless"

Tue, 16 Dec 2008 13:22:00 -0700

James Packer can kiss $414 million goodbye, according to a Citigroup analyst who writes that Crown Ltd.'s ownership stakes in Station Casinos and Harrah's Entertainment are now "worthless." That's according to a Sydney Morning Herald story picked up by the Las Vegas Review-Journal. (The R-J needs to retitle its "Business Matter" blog "Gaming & Tourism," because the rest of its business desk isn't doing squat, blog-wise.)

Harrah's, Station, Isle of Capri Casinos and a few others are in the situation faced by the submariners of Das Boot. Their U-boats are stuck in a crash drive, headed for the bottom of the Straits of Gibraltar and nearing "crush depth." Those three have got some time but Herbst Gaming is probably hearing the hull plates crumpling right about now. Whoever believed that three mostly rundown Primm Valley casinos were worth $131 million apiece (on top of an undigested $119 million Sands Regent acquisition, to boot) certainly ought to be shot out the nearest torpedo tube.

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

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

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

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

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

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

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

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

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

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

Fear of flying

Fri, 05 Dec 2008 18:26:00 -0700

There may have been more to James Packer's inability to attend his scheduled Nevada Gaming Control Board appearance than not having a plane ticket (which was more or less the official excuse). Today's Sydney Morning Herald reports that Packer's Crown Ltd. can't close on its purchase of Cannery Casino Resorts until early '09. So, being unable to arrange a flight from Australia to Las Vegas works out rather conveniently, no?

Not coming soon to a theater near you: Macau Studio City.

Even so, Crown assures the investment community that, once some i's are dotted and t's crossed, it'll have $900 million for additional casino purchases. And if ever there was a buyer's market for casinos, we're entering it. Then again, Packer has a history of rolling snake eyes on casino investments (Station Casinos, Harrah's Entertainment, Crown Las Vegas, and the all-but-dead Macau Studio City. City of Dreams isn't looking too hale, either. Oh, and even employees at volatile Crown Macau are being furloughed; but management says they're really happy about it).

Meanwhile, let's hope that the next time Mr. Packer has an appointment with Nevada regulators the dog doesn't eat his homework the night before.

Server-based gambling takes off. See, you skeptics! You said it would never happen, didn't ya? The joke's on you!

Oh ... hold on ... what's that? The "high-potential gaming market of Cambodia," you say? To be followed by the cleaner-than-a-hound's-tooth Philippines?

On second thought, forget I said anything.

The Triads are back

Fri, 05 Dec 2008 17:30:00 -0700

Or rather, they never left, according to a lurid Daily Mail article, which casts Stanley Ho in the unlikely role of statesmanlike peacemaker. The story begins with the description of a suicide at Sands Macao and makes this prediction: "Next year we can expect the trials, executions and killings that will decide Macau’s future."

Other contentions include the prospect of a Triad war for control of the VIP rooms if and when Stanley Ho dies, as well as the allegation that his STDM corporation is under Peking's scrutiny for possible involvement in money-laundering. Also, Edmund Ho's provincial government is described as sitting atop a $6 billion budget surplus, thanks to casino taxes. If so, small wonder that the Chinese government feels no particular urgency to ramp up Macanese visitation and casino development at the speed Occidental moguls would prefer. (Melco Crown CFO Simon Dewhurst provided even better clarity in remarks given at G2E and reported by the Motley Fool.)

At best, the Daily Mail exposé provides insight into how Macao's Communist overlords look upon the situation there -- and why they're inclined to micromanage its economy. At worst, it raises the spectre of a Triad-related scandal having seriously regulatory blowback for U.S.-based casino companies. Several current Macao concession holders have also been kicking the tires of possible expansion into the Philippines, compared to which Macao is as squeaky clean as Singapore.

On the lighter side, if you're interested in decadent monarchs -- and have a generous amount of spare time -- at hand, Luchino Visconti's Ludwig is like a History Channel marathon with nudity. Or, if you're experiencing Jersey Boys withdrawal, Robert Davi's The Dukes might provide some succor ... provided you're feeling indulgent.

Packer's reverse Midas Touch

Tue, 25 Nov 2008 18:52:00 -0700

Remember what I wrote yesterday about James Packer being bad luck for everything with which he gets involved? Now Station Casinos is the latest victim of his reverse Midas Touch (and he owns a portion of Harrah's Entertainment, too). Maybe we should be hoping his purchase of Cannery Casino Resorts doesn't go through, because Dame Fortune is not smiling upon the heir to Packer billions these days.

G2E scuttlebutt

Mon, 24 Nov 2008 15:56:00 -0700

Could Herbst Gaming President Ferenc Szony be headed to the Cosmopolitan? That was one of the rumors bruited about at G2E last week. It would make sense. Szony, one of S&G's favorite gaming executives, is no stranger to operating in difficult markets. Right now he's got the unenviable task of pulling the Herbst Gaming jalopy out of the deep ditch into which the Herbst brothers piled it.

Also, the Cosmo still has no gambling expertise on board, a glaring omission for a casino-based property that's already got more than a couple of strikes against it. In Reno, Szony's had to keep the Sands Regent afloat in an out-of-the-corridor location and a declining market ... and by all accounts, he's succeeded. He's got the right stuff, casino-wise, and should have been running a Strip property years ago. If the Szony-to-Cosmo rumor isn't true, it should be.

Fontaine-blown? While over at the Convention Center, I heard a dire forecast regarding the future of Fontainebleau Las Vegas. Namely, its splendid isolation, surrounded by various 'failsinos' like Crown Las Vegas and Echelon, may result in very attenuated business. One greatly hopes otherwise, but don't discount the James Packer Factor: The Aussie heir has displayed a reverse Midas Touch of late and he's a key Fontainebleau investor.

Not a Harrah's property.

The 11% Solution. More grim news from G2E -- Harrah's Entertainment is contemplating cutting its maintenance budget by as much as 89%. Considering the disgustingly filthy condition of the Harrah's Las Vegas parking garage last Thursday night, I believe it. That place looked like it hadn't been swept up in weeks, if not months (though the casino itself was quite spic-n-span). The hobo encampment near LVA HQ is quite tidy and well-policed by comparison.

So Frank P. in Negaunee, if you're reading this ... beware!

Macao: It's OK to panic now

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

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

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

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

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

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

Bad news for Galaxy

Tue, 16 Sep 2008 18:55:00 -0700

Macanese casino operator Galaxy Entertainment Group is taking a writedown on the value of its gambling license. Despite being early and often into the Macao casino fray, Galaxy has only about 10% of market share in the enclave, and it has seen other entrants do comparably well (MGM Mirage) or better (Melco Crown, Las Vegas Sands, Wynn Resorts) with fewer properties.

The least experienced (by far) of the Macao operators, Galaxy never seemed to find its footing. Is it time to start floating Galaxy-buyout talk again? If so, they've chosen a devil of a time to sell.

JP Morgan visits Macao

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Cotai Strip™: too much, too soon?

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

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

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

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

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

Pinnacle bigfoots John Q. Public

Fri, 05 Sep 2008 15:22:00 -0700

While I might be somewhere to the left of Dennis Kucinich, I'm not at all comfortable with the concept of eminent domain, even for public-works projects. Now Pinnacle Entertainment is making headlines as far away as Biloxi with its bludgeoning effort to expand its Boardwalk foothold deep into Atlantic City. David G. Schwartz, over at UNLV, has some powerful thoughts on the subject.

(Shades of the Wallace Barr/Curtis Bashaw attempt to push out a mosque to make room for gambling. What better way to stir up opposition? At least nobody's tried to eminent-domain the Muslims out yet.)

Pinnacle, for its part, complains that one landowner wanted $30 million for property valued at $16 million. Oh, the effrontery! Damn those free-market principles! (When they don't work in your favor, that is.) Tax assessments aside, land has only one value: what you can get for it on the open market.

Which is why Phil Ruffin was able to command just shy of $43 million an acre for the New Frontier and why Oscar Nuñez apparently couldn't get Harrah's Entertainment to meet his terms for some sad-sack apartment blocks: Elad Properties wanted to get onto the Strip badly enough to meet Ruffin's price, while Harrah's obviously decided it wasn't worth it would cost to buy Nuñez out rather than just build around him.

Is Pinnacle willing to accept price caps on its hotel rooms or a windfall-profits tax? Do elephants fly? In so many words, it wants property owners to accept profit constraints it wouldn't tolerate being imposed upon itself. Pinnacle's got a right to make whatever it can at its megaresort-to-be. But so do the businessmen it intends to displace.

Blast from the past. Way back on April 30, 2007, I wrote the following, complete with mortifying typo: "Are capital markets tighening [sic] up?" This was prompted by James Packer's and MGM Mirage's ability to buy into Fontainebleau and M Resort, respectively, for relatively little money down. Gee, I feel all Nostradamus-like and stuff.

You can't believe everything you read in the newspaper, I guess. Mike Weatherford has Donny & Marie Osmond at the Flamingo for a one-year gig (starting Sept. 9), while Norm! says it's a six-month deal (sixth item, aptly enough). Two hundred and sixty five shows at six shows a week? Sounds like a one-year run to me.

Anyway, while I don't "get" the Donny & Marie vibe, I'm perplexed by the whiff of skepticism surrounding their forthcoming show. If it isn't a money-spinner for all concerned, I'll be very, very surprised indeed. And if you haven't seen the colossal head shots of the twosome which now blanket the Flamingo's façade, you're really missing something. I just worry that if Marie's teeth were to break off and fall to the sidewalk below, somebody will be on the radio, exclaiming "Oh, the humanity!"

Macao makes observers fret

Wed, 03 Sep 2008 18:19:00 -0700

You'd never think that year/year casino revenue for August in Macao just grew 44%, at least not from stories like this one, well-researched and informative though it is. Macao is "a risky high-wire act," it opines. In some respects I agree with that (see below) but am neither of the opinion that it was always a lead-pipe cinch -- MGM Mirage is finding that out the hard way, as did Melco Crown Entertainment -- nor that it's time to man the lifeboats.

Casino concessionaires are definitely "squabbling with each other over their shares of the golden goose," as author Muhammad Cohen puts it. But the foot on the neck of said goose is that of the Chinese government, which fiddles with the Macanese economy like the burners on a gas stove: hotter, colder, hotter, colder, ad infinitum.

Cohen nails the issue in passing, when he remarks that the speedy profitability of Sands Macao "may have set expectatios unrealistically high." Exactly. Pre-Sands Macao wasn't a slot market, and it wasn't a luxury market or an overnight market either. And it's not going to get there in four short years -- at least not at the rate necessary to justify the formerly breakneck pace of development.

Flush with early success, some operators (well, Las Vegas Sands mainly) flooded Macao with new gambling capacity. Exponential increases in business that fueled the boom years were bound to slacken eventually. It was inevitable, even if Peking sharpened the deceleration once it decided too many Chinese were gambling too much money in Macao, and stomped on the brakes this year.

Thanks to micromanagement from ChiComm HQ, a once-frenzied Macao market is artificially constrained, but hardly depressed. Even so, a degree of caution was always in order -- especially since both the Macanese government and its Peking overseers seem to pride themselves on being unpredictable and keeping casino developers upon tenterhooks.

As Jonathan Galaviz points out, we're seeing a cyclical phenomenon that plays out constantly in Las Vegas. Like I always say, Wall Street is euphoric when business is good, then overreacts and over-corrects at every speed bump.

The truly ominous note is struck when Cohen reports that the current detente involving VIP commissions may not hold. The current commission rate is reported as consuming between 40%-45% of casino revenue. Tack on a 35%-plus tax rate and operators literally cannot afford a bidding war over the commissions they pay to junketeers like A-Max. Sands was ginning up for just such a fight recently.

If that sort of battle were to break out, it would be a game of Russian roulette, with the participants vying to see who could sustain the thinnest operating profit or sustain the most losses before crying uncle. The Chinese government isn't making anyone's life easy, but if casino operators want to drive the Macao car straight off the cliff, more bluffing and raising would be a very efficient way of doing it.

E-Can debuts

Fri, 29 Aug 2008 17:27:00 -0700

We got out of the way of the front doors of Eastside Cannery last night just in the nick of time. For all the apprehension about opening new casinos in the current economy (especially when locals' gambling budgets have taken a big hit), patrons were out in force for the opening, literally charging the casino floor when the doors swung wide. Whether by car or by foot, it was impressive turnout -- not the mob scene that greeted The Palms in 2001 -- but quite a heartening sight nonetheless.

E-Can is yet another nail in the coffin of the old "entrapment" theory of casino design. The entryways are airy and easily visible throughout the casino floor. Aisles are wide and, even with 2,100-plus slots, one gets that sense that Cannery Casino Resorts could have jammed in quite a few more but elected not to. Good on them.

Ceilings aren't so low as to be oppressive, but not so high as to engender the "slot barn" feeling of Palazzo or South Point. The various eateries are distributed in a "restaurant row" along the east wall. The sports book is very open and spacious, and wouldn't look out of place at a Strip casino -- and is far superior to some Strip books I could name, but won't.

We gorged a little too much early in our go-around, so we didn't do justice to each restaurant's offerings. (Though, for the record, oysters on the half shell and covered with chives and melted cheese tastes a helluva lot better than it probably reads. Kudos on the sausage-stuffed mushrooms, too.) If what was on display -- and in our stomachs -- last night was a representative sample of the everyday fare, my biggest concern will be whether such a high standard can be maintained over the long haul.

If you grew up in the Sixties, as I did, the prevalent color and décor schemes will have a comforting familiarity. The overall aesthetic could be called 'Light Industrial,' and I don't mean that in a cute or pejorative way. Exposed pipework appears to be part of the statement, although I'm not so sure about the lack of drop ceiling. I couldn't tell whether the acoustical tiling has simply been omitted or is going to be installed later.

There's not a lot of fine detailing; strong colors, acute angles and long, undulating curves all typify a casino where the design elements are writ large. Sometimes form takes precedence over functionality: Stools in the sports book and one of the restaurants may be pleasing to the eye but they're distinctly unforgiving to the ass. On the other hand, the keno lounge is as classy and comfortable as any I've seen in Vegas.

Given the unbelievable thrift with which "the dollar Bills," Messrs. Paulos and Wortman* pulled E-Can off, one does feel the compulsion to scan the place for obvious economies, trying to figure out how they did it. The exterior is pretty Spartan; big, sharp and sweeping lines (and a wraparound neon display after dark) endeavor to divert one's attention from an otherwise utilitarian look.

Inside, certain of the wall coverings and materials screamed "Cheap!", especially around the proscenium in Marilyn's, the live-entertainment lounge. Some upfront savings will probably mean frequent-replacement costs on the back end. Then again, I heard similar criticisms of The Palms when it opened (and George Maloof arguably overcrowded his slot floor in the early going -- a mistake not repeated here), but keeping construction costs low was one of the cornerstones of that place's success.

Paulos and Wortman's heir, James Packer, will be in profit on E-Can a lot more quickly than will any recent or forthcoming Station casino, given the latter company's current tendency to spend lavishly and then scrimp down the road. Assuming that maintenance is proactive and frequent, I don't see any downside for E-Can.

Despite my longstanding fondness for Sam's Town, the pioneering Boyd Gaming property will seem that much more like a crowded and badly laid-out warren of gambling rooms -- definitely Old School, if that's what you dig. Given the two casinos' proximity, I can see Sam's Town evolving into a "dormitory" where people stay or park their RVs, take advantage of the movie theaters, etc., but do their playing at E-Can. Plus, the cheerful, retro Cannery "brand" has struck quite a chord with Las Vegans. Aggressive counter-marketing will have to be the order of the day.

* -- "The dollar Bills" was Hollywood's nickname for producer William Pine and his business partner, William Thomas, so named for their budget-conscious tendencies. It seems affectionately apt for the Paulos/Wortman duo, who balance fiscal conservatism with quality.

Case Bets: Luxor, Excalibur, Cannery East

Fri, 08 Aug 2008 11:32:00 -0700

MGM Mirage has provided a little more insight into just how much it's doing in terms of spending on renovations to Luxor and Excalibur. "We are spending around $100M in improvements on each of these properties this year, and we have invested millions more since the 2005 merger," writes a company representative (emphasis added).

You could argue that Excalibur needs a lot more than that -- or maybe just some well-placed dynamite -- but it's good to see something being done. It's an open secret that Mandalay Resort Group let things slide at its Strip properties while MGM's buyout was in progress, leaving the new owners with a lot of remedial work to do.

Out-of-towners who haven't seen Eastside Cannery arising along the Boulder Strip may enjoy this funky montage of its nightly light show. The building is an extremely striking addition to the eastside, dominating the landscape for miles around much as Sam's Town used to do. Poor Sam's Town: It used to look so monumental and now it's dwarfed by the upstart down the street. (For the record, Cannery Casino Resorts only manages Rampart Casino and it's [CCR] being bought out by Crown Ltd., not Melco PBL.)

The vocal stylings of Stanley Ho

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

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

Ameristar: What makes sense?

Fri, 01 Aug 2008 14:45:00 -0700

Perhaps this is what happens when you outsource your business coverage to India, but Reuters had a story yesterday positing MGM Mirage and Harrah's Entertainment as two of the likeliest buyers for Ameristar Casinos.

Uhhh, I hate to break this to Reuters, but MGM just came up $3 billion and change short on CityCenter and Harrah's is debt-strapped. So I'd say they've got their hands full. How either one would be able to swing an Ameristar acquisition is an open question. Harrah's also faces redundancy issues, as it already owns riverboats in three of Ameristar's key markets -- Council Bluffs, Iowa, and St. Charles and Kansas City, Mo. Why MGM would feel a sudden hankering for Black Hawk, Colo., plus a brace of casinos in Jackpot, Nev., is even more of a poser.

Reuters' third suggestion, Boyd Gaming, seems a lot closer to the mark. With Echelon temporarily in the deep freeze and Boyd's Blue Chip riverboat leaking market share, a passel of regional casinos in markets where Boyd doesn't currently operate could provide welcome cash flow, shore up the company against its current non-presence on the Strip, and expand the web of properties from which Boyd could funnel players into its downtown Vegas cluster or (eventually) Echelon. Of course, Boyd may still be smarting from a failed Kansas City venture a decade ago, but Ameristar's assets are proven performers.

Besides, it's a company that could use some helmsmanship, having seemed to drift since the demise of CEO Craig H. Neilsen. Although paralyzed from the neck down and often bed-bound (which I've heard resulted in some very unconventional corporate meetings), Neilsen achieved more from the neck up than most able-bodied people do in their entire lifetimes. His successor, ex-Harrah's exec John Boushy, tried to sell the Ameristar people on a change of corporate culture but they didn't want to hear about it. So, given an evident leadership vacuum, a change of ownership makes sense.

Unless Penn National wants to take its $1 billion-plus in "mad money" and go after Ameristar, there aren't too other many potential acquirers abroad in the land. James Packer has already sworn off. Pinnacle Entertainment would rather build than buy. Tribal giant Mohegan Sun has been flexing its financial muscle of late and rates as a longshot candidate (but just came off a wretched second quarter). Beyond that ... who knows?

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.

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.

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.

Turnaround for Lady Luck?

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

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

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

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

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

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

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

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

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

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"?

Paging Harrah's

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

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

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

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

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

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

Trouble in paradise

Fri, 23 May 2008 15:55:00 -0700

Macao isn't such a slam-dunk after all, according to the Wall Street Journal (no link; subscription req'd). Yesterday, reporters Tamara Audi and Bruce Stanley charted some of the financial narrows American operators have to navigate over there. Obviously, the tightest scrape is the "rake" taken by junket operators. Some take as much of 40% of the gambling revenue they bring in (leaving the casino operator with 21% after taxes).

This meant that Wynn Macau pulled in $444 million in VIP play in 1Q08 but was left with $88 million (hardly chump change, of course) once the junketeers and the government had gotten their share of the take. MGM Mirage tried another, more conservative formula, according to Audi and Stanley, but is now reworking its commission policy. The company has also conceded that it's underperforming in Macao, where its "fair share" (i.e., proportion) of the market would 9% but is running at 8%. In other words, it's getting only 88% of the play it ought to, were the action distributed proportionally to gaming positions.

Between a consolidation among the junket operators* that has left them wielding increased power and the fact that Peking takes its 39% of gambling revenue even on dishonored markers (forcing the casino to pony up money they don't have in hand), the WSJ finds that companies like Wynn Resorts, MGM and Las Vegas Sands are contending with market forces they didn't quite expect. (*--A-Max Holdings Ltd., Crown Macau's exclusive junketeer, folded eight junket operations into one late last year.)

Sheldon Adelson is rumored to be dangling a 45% revenue share before junket operators, shaving his margins even narrower. Steve Wynn says he's not going to raise his commission rate, so that's one guaranteed ally for Macau CEO Edmund Ho's commission freeze, which Adelson's emissary is loudly opposing.

Adelson vs. Wynn -- what a novel scenario.

Signs of panic were evident three weeks ago, when Sands sent a self-described "SWAT team" to Macao to whack costs and cultivate VIP play. You know it's crunch time when William "All Chinese Look Alike" Weidner, Venetian prexy Rob Goldstein and Sands exec VP Brad Stone converge at once upon Macao -- and do a 180 on junket commissions.

And not without reason, seeing as Crown Macau had eaten Sands' lunch, thanks to its A-Max deal. Also, between the not-inconsiderable additions of Palazzo in Las Vegas and Venetian Macao, Adelson is getting his first taste of cannibalization (especially if Majestic Research's Vegas numbers are to be believed).

Steve Wynn could tell Adelson a little something about that, Bellagio's opening having devoured play that would have otherwise gone to The Mirage or Treasure Island (thus setting in motion a sequence of events that would culminate with MGM's Mirage Resorts buyout). In this case, Adelson dropped the world's largest casino onto the Macao market, which evidently was unready for the resultant "supply shock." Obviously it's a long-term play, particularly in terms of luring the MICE market to the Macanese cheese.

The big question is, How long will it take Macao to mature sufficiently to support colossal megaresorts? Also, can a Vegas-style product be grafted onto another culture? It's great, fascinating fun to watch the experiment unfold ... so long as you're not the executive whose job is riding on it.

Changing gears ...

All-time low. Can the Clinton campaign get any more tasteless than this? On second thought, every time it seems the Clintons have scraped the bottom of the barrel they find new depths to plumb. Where's the vaudeville hook when you need it?

What's in a name?

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

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

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

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

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

Business booming in Macao

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

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

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

Double whammy in Atlantic City

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

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

Bad idea.

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

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

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

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

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

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

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

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

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

Congratulations

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

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

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

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

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