David Mckee's Stiffs & Georges - Racinos

Ohio slots slip sliding away?

Mon, 19 Oct 2009 17:21:00 -0700

A sample conducted by the tag team of TruthPac and Strategic Polling finds support for the Ohio casino initiative backed by Penn National Gaming polling below 50%. Casinos still have a slight edge (48%/43%, with 8% undecided) ... so in theory the ballot measure should squeak through, so long as the undecideds split down the middle.

If, however, "likely voters" means so-called "values voters," then Issue 3 could be in serious trouble. Only 30% of Democrats polled were against putting casinos in Toledo, Cincinnati, Columbus and Cleveland -- but 58% of Republicans gave it the thumbs-down. It should be noted, though, that a Dayton Daily News poll released three weeks ago had Issue 3 winning in a 59%/38% wipeout.

From the mailbag: An East Coast reader writes, "I live in Washington, D.C. Only a tiny 1%-2% of the D.C. television market is in West Virginia, yet I'm surprised to be seeing several TV ads to legalize table games in Charlestown, West Virginia -- home of a racino (I've never been there). I hadn't even known that was on the ballot. Anyway, if they are buying D.C. TV for a Jefferson County, W.V. issue, they sure are spending boatloads of money -- not too surprising, I guess."

Well, this did come as a bit of a surprise to me ... but it makes sense in retrospect. Not in terms of influencing votes: However, with table games an inevitability in Pennsylvania, a push for casinos in Ohio, slot parlors (slowly) ramping up in Maryland, etc., the advertising blitz is probably a means of preparing ground for after the election. Should table games be voted in, D.C.-area gamblers will know Charlestown has them and may think twice about driving to Pennsylvania and points northeast.

Is outsmarting a slot machine not a crime?

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

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

Case Bets: Net bets, Mohegan Sun & What's F'bleau worth?

Tue, 13 Oct 2009 12:46:00 -0700

You can't play poker for money on the Internet but you can now play the ponies in Illinois via the Web. This is yet another example of legally enshrined hypocrisy under UIGEA, the parting gift of "Slick Billy" Frist and Jim Leach to the American people. (Speaking of Dr. Frist, M.D., if we must, he just sat like a bump on a log when Bill Maher stupidly railed against the swine-flu vaccine last week. Thanks, doc.)

Setting Sun? The incoming chief of the Mohegan tribe is saying the right things about the imminent need for diversification. Specifics, however, are few on the ground. Mohegan Sun, meanwhile, finds itself between several rocks and hard places: potential competition from Massachusetts and Long Island, $1 billion in debt, falling revenues and the economic inability to finish planned improvements. Depending on how quickly Massachusetts gets its act together, Mohegan's moment in the sun could soon pass.

You've heard of "pocket pool," now the Review-Journal's intrepid Howard Stutz reaches deep into the demimonde of PocketCasino, the new, portable sports-betting technology in play at Venetian/Palazzo. No word yet on whether excessive play causes blindness or hair growth on one's palms.

(Seriously, as a longtime skeptic of Cantor Gaming's portable-gambling applications, I have to say it looks like the Cantor boys have come up aces this time. As for handheld substitutes for table games, the jury is still out on that, four years after their legalization.)

Fontainebleau Las Vegas from Running Bull Productions on Vimeo.

Pennies for F'bleau. What's Fontainebleau worth? Jack shit, according to Penn National Gaming (aka, 15 cents on the dollar). In return, Penn is willing to accept a 10% return on investment ... provided it can bring the project in a no more than $1.5 billion (not counting the billions already spent and written off).

This remains an iffy proposition, in part because it's predicated on increased profitability at Penn's patchwork assemblage of casino properties. Those have to be welded into a Harrah's Entertainment-like loyalty program that drives visitors to Las Vegas. This is a huge "if," as Penn currently has no casinos in major destination markets, unless you stretch that to include recently singed Empress Joliet. Bringing customers to Vegas or even Atlantic City is terra icongnita for Penn.

To put it bluntly, Penn was a third-tier operator -- mainly of racinos -- that "married up" by taking over Argosy Gaming, the classiest of the riverboat operators. However, the Vegas market is notoriously unforgiving of new-to-town operators and Penn will have a very steep learning curve. Also, Penn is not associated with upscale properties, so F'bleau will either have to be repriced downward to reflect the Penn customer base or may need to offer promotional allowances up the ying-yang (more likely both).

If that weren't sufficient cause for concern, Penn's oft-brandished $1.5 billion (the breakup fee from an ill-advised and abortive LBO) is covering multiple bets. Penn is the primary mover behind a pro-casino ballot initiative in Ohio -- partly to protect its Hollywood Lawrenceburg investment just across the border in Indiana. It also recently bought out Cordish Gaming in hopes of getting piggybacked onto the Kansas Speedway casino license, should the Sunflower State's lottery board approve.

At least Penn is working on ways to trim the completion price of F'bleau. Costs to date -- and projected ROI -- being what they are, it behooves Penn CEO Peter Carlino to get this rampaging beast under some semblance of control.

Leaving Las Vegas

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

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

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

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

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

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

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

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

East Coast antics

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

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

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

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

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

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

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

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

Marie Osmond pix. I'm just sayin'.