David Mckee's Stiffs & Georges - Bally Technologies

Blimps on the radar

Thu, 10 Sep 2009 14:03:00 -0700

Dipping into the dispatch box, S&G finds the following tidbits, courtesy of the nice people at J.P. Morgan:

Alex Yemenidjian is serious about revamping the Tropicana Las Vegas. He's just inked a contract with Bally Technologies for a player-tracking system and other BYI goodies ...

... fading interest in MGM Grand Detroit has caused MGM Mirage to take it off the market. Also, with the company looking at price concessions to its CityCenter condo buyers (i.e., forfeiting money it was counting on to finance CityCenter), it may need to borrow against its Detroit palace, one of the few MGM properties still unencumbered ...

... Atlantic City, like Macao, is and will probably always be essentially a daytripper market. So there's symmetry in the fact that China State Construction Engineering Corp. has been signed to finish the stalled Revel project on the Boardwalk, to the tune of $1.7 billion. A July 11 opening is predicted. This is the best news to emerge from Atlantic City in quite a long while.

Speaking of good news, gaming revenues for Nevada's July are in and, basically, they don't suck. Yes, the Silver State was down 8% and the Strip was 11%. But June's year/year comparisons were far suckier (-15% on the Strip), so there's some consolation to be had. In fact, compared to a series of truly craptacular year/year comparisons -- all in double digits, except for last May -- it's darn near cause for celebration.

Table game drop was down overall but the casinos played lucky, particularly at baccarat. (Watch the first-season Mission Impossible episode "Odds on Evil," if you need a quick primer on this game. You'll get scintillating performances by Martin Landau and Barbara Bain in the bargain.)

Slot play is way down (-17.5% win on -15% handle) and North Las Vegas, bouyed by Aliante Station, was the only part of Clark County to have a positive month. Laughlin got hammered pretty badly (-19%) and neither Reno (-21%) nor South Lake Tahoe (-33%) seems likely to ever fully recover from tribal competition across the border, Tahoe especially. If there was a moment for some "unbundling" by overexposed companies, this is it.

Didn't get the memo. Would somebody break into the R&R Partners biosphere and let oxygen into the office of Billy Vassiliadis? "Billy V" was the author of this boneheaded pensée, which he shared with the Los Angeles Times:

"You've got to drop your rates, but you don't want to create a sense that this is a discount experience or that the experience itself has been diminished."

What the ... ? Las Vegas' recent success was built on the perception (and actuality) of a "discount experience," and lower prices are unlikely to "diminish" a tourist destination that is now synonymous with exclusivity and unaffordability. Vassiliadis, like Sheldon Adelson and the Las Vegas Convention & Visitors Authority, seems convinced that the current doldrums are -- to use my favorite Internet-board gaffe -- "a blimp [sic] on the radar."

They need to wrap their heads around the reality that 2004-like levels of business were damned good at the time (superb, in fact) and that Vegas needs to get back to the value-based messages that fueled the preceding 15 years of growth. Or, as David G. Schwartz writes in a particularly trenchant DieIsCast.com entry: "Of course, unpredictable events can make a hash of any predictions, so it’s possible that five years from now the casino industry will be employing 100,000 more people than it does today. That would be after the federal government offers Americans a $10,000 annual tax credit against travel to Las Vegas, and Las Vegas alone."

Seems like some folks in the marketing bidness should be taking Dr. Schwartz's classes.

Optimism in Macao, euphoria at CityCenter

Tue, 08 Sep 2009 17:33:00 -0700

Relaxation of stringent visa restrictions from Guangdong Province came a full four months sooner than expected, starting Sept. 1. Now, residents will be able to visit Macao once a month instead of quarterly. While this has prompted J.P. Morgan to raise its price target on Las Vegas Sands stock, analysts also fret that Sands may overreact and go pedal to the metal on its unfinished Cotai Strip™ hotels.

Those same analysts are bullish on the manufacturing sector, though. They think casinos will be more willing to reinvest in the slot base as 2009 draws to a close. Also, the onward march of casino expansion means more jurisdictions and facilities to whom IGT, Bally and WMS can peddle their products. They're 'meh' on regional casino operators like Penn National, Ameristar Casinos and Pinnacle Entertainment, due to flattish performance. (Penn could catch a break in Kansas, though I still think Cordish Gaming has that sewn up.)

But that's a rave notice compared to the long face Morgan analysts pull when pondering Boyd Gaming's prospects. They cite the slow-to-recover, promo-driven locals-casino market in Las Vegas ("trickle-down" economics of the worst sort); Atlantic City's critical condition -- "the best-case scenario here is that [Borgata] would do less bad" than most of A.C. -- those blah regional metrics and new competition for the Blue Chip riverboat in Indiana, which had been looking like 2009's feel-good story.

Intriguingly, the prospect of a Strip acquistion is floated in lieu of a 'stalking horse' bid for floundering Station Casinos. Boyd's still got enough unused borrowing capacity it could even swing an acquisition of The Mirage (with money to spare), not to mention some of the lower-hanging fruit, which now includes Planet Hollywood. But if the J.P. Morgan guys are gun-shy concerning Boyd ...

They're over the moon about MGM Mirage's CityCenter: "we are increasingly under the belief that City Center will be a new must-see property for both domestic and international gamers/travelers that should drive solid visitation volumes to the Strip in 2010. We were impressed with the massive 18m-square-foot complex ... a new type of high-end product for the Strip that should garner increased trips. It has a very contemporary feel that is different than anything else on the Strip, with lots of natural light and high ceilings, interesting room product and, for a massive property, ease of getting around from one 'neighborhood' to the next."

More good news comes in the form of a press release from Commerce Casino (in Commerce, Calif.), which rolled out the welcome mat for a group of undoubtedly weary firefighters. A strike force of 30 Bay Area-based firemen is being housed in the casino's hotel, with the casino comping all meals and picking up most of the hotel tab. Let's hope that such civic-mindedness spreads through the industry like -- if you'll forgive the analogy -- wildfire.

In case it matters, "super-starlet" (yes, that's the official term) Holly Madison has been given a 12-month contract extension at Peepshow, so she's obviously earning her pay. Also, I've heard through the grapevine that she and incoming Aubrey O'Day do not get along, so the timing of the Madison announcement should make clear who's got the upper implant in this situation.

More Midwest notes

Tue, 14 Jul 2009 10:46:00 -0700

Continuing a trend of lower-than-projected returns across the Midwest, Iowa's riverboats were flat last month and racinos saw a 5% decline. All major operators lost ground but something is very wrong at Ameristar Casinos, whose Council Bluffs boat was way outside the margin, reporting a 15% decline from last year.

Over in Detroit, in the hardest-hit state in America, general economic collapse is finally eating into the casino bidness. With MGM Grand Detroit off 10% and Motor City down 3%, it took a 24% upward leap in revenues at recently expanded Greektown Casino (above) to keep the market on an even keel. With an 0.4% overall decline in dollars won, Detroit stays within the "flat" classification.

Good time to own IGT. Sitting upon Illinois Gov. Pat Quinn's desk is a bill that could swamp the state with as many as 77,000 video slot machines. As J.P. Morgan breaks down the particulars: "video gaming terminals may be placed in 1) licensed establishments (“any licensed retail establishment where alcoholic liquor is drawn, poured, mixed, or otherwise served for consumption on the premises”), 2) licensed truck stop establishments (“facility that is at least a 3-acre facility with a convenience store and with separate diesel islands and parking spaces for commercial motor vehicles”), 3) licensed fraternal establishments (“location where a qualified fraternal organization regularly meets”), and 4) licensed veterans establishments (“location where a qualified veterans organization regularly meets”)."

Morgan analysts take a less-alarmist position on this change, projecting that no more than 40,000 devices will be installed, over a two-year period starting next year. Still, they like the prospects of International Game Technology, which is predicted to snare 60% of the market, with another 30% equally divided between WMS Industries and Bally Technologies -- a bit of a snub to favorite son WMS, no?

Bally does something really cool

Thu, 12 Feb 2009 12:02:00 -0700

While I'm not much of one for flagging press releases, here's one that's much too noteworthy not to mention. Bally Technologies is making a dollar-for-dollar match of employee contributions to the Nevada Cancer Institute. In return, Bally staffers get early detection and cancer-prevention assistance from NVCI.

Philanthropy has been taking it on the chin during the recession, which makes Bally's initiative doubly important. On a personal note, having had a loved one go through breast cancer (including multiple surgeries), I cannot stress heavily enough the importance of early vigilance, nor that of having a good support system in place if you're unfortunate enough to be a cancer sufferer.

Bravo, Bally.