David Mckee's Stiffs & Georges - Don Barden

Eight Vegas shows reviewed

Mon, 19 Oct 2009 18:10:00 -0700

As promised, Mike Shackleford's WizardOfVegas.com site has launched. It took a while to get the bugs worked out, hence my review of Scarlett & her Seductive Ladies of Magic didn't appear until after the show had closed. However, to the best of my knowledge, you can not only read about but still see all of the following ...

• Amazed

• Anthony Cools

• Gordie Brown

• Marriage Can Be Murder

• Matsuri

• Sin City Bad Girls

• V - The Ultimate Variety Show

Sample line: "Yes, Marriage can be murder ... and so is the food." Enjoy!

Masters of the Obvious II

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

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

Gee, ya think?

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

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

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

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

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

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

Gambling scandal ensares eight more

Mon, 21 Sep 2009 18:32:00 -0700

It's not quite on the global scale of the Ultimate Bet brouhaha, but the Tran Organization's conspiracy to fleece dozens of U.S., Canadian and tribal casinos is racking up an amazing head count. To date, federal prosecutors have already nailed 31 scalps to their wall, not counting three other individuals to who pled out to related charges (including one in Canada).

If you thought this was the end of the Tran Organization ... surprise! The feds unsealed another set of indictments this month. Eight more individuals were hit with various counts of "conspiracy to steal money and other property from Indian tribal casinos, and conspiracy to travel in interstate and foreign commerce in aid of racketeering."

At the core of the Tran Organization's scam was the execution of "false shuffles," whereby "slugs" of unshuffled cards were insinuated into blackjack and mini-baccarat decks. This required the cooperation of corrupt casino employees and, from the looks of the Department of Justice's announcement, the core Tran Organization members must be rolling on their casino-employed helpers.

The Tran gang managed to take no fewer than 26 casinos during the life of its scheme, which is a very black mark against the industry's standard of game protection. The dishonor roll is as follows:

1) Beau Rivage Casino, Biloxi, Miss.
2) Casino Rama, Orillia, Ontario, Canada
3) Foxwoods Resort Casino, Ledyard, Conn.
4) Gold Strike Casino, Tunica, Miss.
5) Horseshoe Casino, Bossier City, La.
6) Horseshoe Casino & Hotel, Tunica, Miss.
7) Isle of Capri Casino, Westlake, La.
8) Majestic Star Casino, Gary, Ind.
9) Mohegan Sun Resort Casino, Uncasville, Conn.
10) Palace Station Casino, Las Vegas, Nev.
11) Resorts East Chicago Hotel & Casino, East Chicago, Ind.
12) Sycuan Casino, El Cajon, Calif.
13) Cache Creek Indian Bingo & Casino, Brooks, Calif.
14) Emerald Queen Casino, Tacoma, Wash.
15) Imperial Palace Casino, Biloxi, Miss.
16) Argosy Casino, Baton Rouge, La.
17) Trump 29 Casino, Coachella, Calif.
18) Isle of Capri Casino, Bossier City, La.
19) Agua Caliente Casino, Rancho Mirage, Calif.
20) Spa Resort Casino, Palm Springs, Calif.
21) Pechanga Resort & Casino, Temecula, Calif.
22) L'Auberge du Lac Casino, Lake Charles, La.
23) Nooksack River Casino, Deming, Wash.
24) Barona Valley Ranch Casino & Resort, Lakeside, Calif.
25) Caesars Indiana Hotel & Casino, Elizabeth, Ind.
26) Monte Carlo Resort & Casino, Las Vegas, Nev.

Rivers Casino by the numbers

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

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

Pennies: 973

Two-cent: 320

Nickels: 348

Quarters: 673

50-cent: 38

$1: 351

$5: 85

$100: 4

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

Electronic roulette: 26

Electronic blackjack: 70

Three-card poker: 10

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

Case Bets: F'bleau, Adelson, Oscar

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

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

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

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

Sands Macao: Sheldon's best bet

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

Berzon: caped crusader

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

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

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

Competition forces sanity

Mon, 13 Jul 2009 18:50:00 -0700

While the Bible Belt may hold out until the bitter end, we may finally be seeing the demise of the "boats in moats" arrangement, a fig leaf that enabled Midwestern states to blushingly accept casino money. Illinois has started phasing it out. Ohio Gov. Ted Strickland's decree today that seven Buckeye State racetracks can go to racino status may be a real game-changer for neighboring Indiana.

First, a word on the Strickland move. It anticipates legislative passage of a package deal that would require tracks to pay $65 million upfront and the usual usurious tax rate (48-50%). However ... slot machines would be purchased by the state (and run under the auspices of the Ohio Lottery), which softens some of the pain. Racino facilities would have to be periodically upgraded, too, at an average of $16 million/year.

All this has spurred (well, slowly prodded) Indiana's Lege to take a second look at the Hoosier State's riverboat regime. This could mean everything from on-land casinos to free drinks for players. There's also talk of "simplying" taxes and admission fees. How about simply eliminating the latter? It's a paternalistic anachronism that needs to go away.

Don Barden's two Majestic Star boats will likely prove an impediment. Some solons want any arrangement to include moving one of them out of Gary, Ind., to better the chances of both. Whatever the case, don't expect any action until next year.

The recession is catching up with regional casino markets. Even the loosening of operating rules in Missouri wasn't enough to stave off a slippage in revenues. Chrysler and Hummer plant shutdowns might explain a -1% shift in St. Louis, but what about a -2.5% June in Kansas City? A 2% drop in statewide slot win was almost countered by an 8% jump at the tables, where higher betting limits are now in force.

Ameristar Casinos took the hit in K.C., down 12%. All other three major boats posted growth, led by Isle of Capri, up 5%. With a $19 million June, the Ameristar boat still led the market in dollar volume but both Harrah's Entertainment and Penn National are closing the gap.

In the greater St. Louis area, both Harrah's and Ameristar fell by an average of 5%, while Pinnacle Entertainment's Lumiere Place gained almost 6%, really starting to give the two older casinos a battle. Even the snake-bitten President had a good month, chipping in nearly $2 million to Pinnacle's kitty.

Further good news came in the form of the bulletin that Isle of Capri had eked out a month in the "plus" column. So even an outwardly disappointing June in the Show-Me State cosseted some significant tidings of comfort and show.

Michael Jackson, casino baron?

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

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

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

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

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

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

(Slots A) Fun Fact

Fri, 15 May 2009 12:22:00 -0700

I've just read that the 2008 cash flow for Slots A Fun, the crown jewel of what used to be Circus Circus Enterprises, was $2.8 million. Which means that current owner MGM Mirage could justify a sale price of $22.5 million-$28 million. (Penn National CEO Peter Carlino, this is your chance!)

Then again, MGM could sell Slots A Fun four times over and probably still not recoup the cost of its Criss Angel vanity project, Believe.

Atlantic City gets a monorail. And other infrastructural-type stuff. That $3.6 billion would probably be better invested into building two or three new casinos, not to mention getting rid of those Colony C(r)apital grind joints.* New Jersey Gov. Jon Corzine (D) thinks Atlantic City's recovery is on the way. But as long as the market breaks down -- as its revenues do -- into Borgata and Everything Else, "recovery" will just be a euphemism for "much slower rate of decline."

* -- If banks won't underwrite new development there, why -- laws permitting -- shouldn't the state? I'm just askin'. The alternative is pretty bleak.

This just in: Yes, TV ads for impotence drugs (think of "Viva Las Vegas" debased to "Viva Viagra"), with their tacky innuendi, are embarrassing (albeit not as much as those for incontenince drugs). But Congress has slightly better things to do that adopt the proposal of Rep. Jim Moron, er, Moran (D-VA) to force them off the air ... least not untl it's amended to outlaw any TV programming featuring the bloated visage, voice and ego of failed casino boss Donald Trump. (Sorry; can't link to the Yahoo News video. I tried.)

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

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

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

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

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

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

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

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

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

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

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

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

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.

Wall Street swoons for Sands

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

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

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

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

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

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

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

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

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

Trump: The end

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

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

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

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

View the video at CNN.com

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

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

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

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

Going down in Illinois

Tue, 10 Feb 2009 17:56:00 -0700

When it comes to Upper Midwest casinos, there's Illinois and then there's Everyone Else. Except that, in this case, you want to be "Everyone Else." Being Illinois sucks.

January numbers for Missouri aren't out yet but Iowa is up 3%, Indiana is seeing a 12% surge ... and Illinois is -9%. That's on top of the -18% hammering the Land of Lincoln took a year ago, when smoking in casinos became a no-no. Whatever impact the recession is having on neighboring states' casinos, refugee players from Illinois riverboats are more than compensating.

The news isn't quite as good as it could be for Indiana, where the gain is more than offset on a same-store basis by the dilutive effect of two new-ish racinos and Harrah's Entertainment's Horseshoe Hammond behemoth. These ill-timed (for their competitors, that is) expansions have left everybody else slicing the ham thinner, in Fred Harvey's dying words. (The restaurant mogul's last utterance was alleged to be, "Slice the ham thinner." And, no, he wasn't an F&B executive at Station Casinos.)

Some salient Indiana facts ...

• Expansion of Horseshoe Hammond is not only a positive (+16%) in itself, it's more than making up for softening at Horseshoe Southern Indiana (-3%). Was taking the Caesars brand off the latter a good idea? Just asking.

• French Lick is licked (-14%). Somebody has to be in last place and Indiana's only land-based casino is "It."

• Ameristar East Chicago is feeling the Hammond Effect (-4%) but surpasssed analyst expectations nonetheless.

• Grand Victoria is in freefall -- eight straight months of double-digit declines, including last month's -26%. Will it hit bottom before it passes French Lick on the way down? Speaking of the bottom ...

• Congratulations to Boyd Gaming's Blue Chip (-2%), which is finally pulling out of a protracted skid. If Boyd can live with 65-70% of Blue Chip's pre-2008 performance, the future -- thanks to a newly augmented casino-hotel -- inspires hope.

• Majestic Star II needs to be moved (an idea that's getting kicked around by various governmental bodies). While its sister ship is hanging in moderately well, Majestic II's year/year comparisons are almost as dreadful as Grand Victoria's.

• The turnaround of Casino Aztar (off but three-tenths of a point) remains 2008's #1 success story in the industry.

Racinos were less of a factor in Iowa, were they were flat while riverboats nudged their revenue up 4%. The three tracks, though, do generate roughly a third of the state's casino revenue, while 14 riverboats divvy up the rest, not counting tribal casinos (which don't report revenue).

• Harrah's Council Bluffs (+4%) stole market share from Ameristar's rival facility (-6%), but the latter still does nearly double the business ($13.4 million to $7.7 million).

• Positive comparisons at two of Isle of Capri's four Iowa casinos were more than offset by declines at the other two, for an aggregate of -2%.

• Two smallish riverboats, Diamond Jo and Mississippi Belle, enjoyed spectacular improvements in January, +104% and +51%, respectively.

All generalizations about Illinois are false in the sense that there are exceptions that prove the rule. For instance, while the smoking ban has quantifiably been death for Illinois casinos, the first one to open as a non-smoking casino -- Casino Rock Island's new facility -- has been up 118% and 112% in the last two months. Is there something about not being able to smoke in a casino that still smells of cigarettes that's worse for business than not being able to smoke in a nice, fresh facility?

Another paradox is that the casino one would think most likely to feel the brunt of St. Louis-area competition, East St. Louis-berthed Casino Queen, was the last to experience the downturn that was sweeping the rest of Illinois and is now almost back (-3%) to year-ago figures, which themselves were only -2% from January '07.

With Boyd's Par-A-Dice (-5%), Harrah's Metropolis (-9%) and Penn National's Hollywood Aurora (-7%) decelerating from last year's precipitous declivity -- when they were -10%, -19% and -16%, respectively -- one would like to believe that the bottom is near for Illinois, but the Penn boat is the only bright spot in Chicagoland and the same company's Alton Belle (-15%) is still taking it on the chin from Missouri.

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.

Bargain$ tonight in Vega$

Tue, 27 Jan 2009 11:37:00 -0700

Suppose that you got a sudden urge to visit Vegas on a Tuesday night ... tonight, to be specific. You'd find that the customer is king, at least as far as pricing goes. A few minutes spent browsing Travel.Ian.com yielded the following revelations.

The exception that proves the rule is Red Rock Resort, which is advertising rooms at $160/night. Better you should drive the extra couple of miles to Suncoast, where they're charging half as much.

• Downtown, believe it or not, is commanding a slightly higher price point that some well-regarded off-Strip and near-Strip locals casinos. Rooms at Boyd Gaming's California Hotel and Fremont are going for $40 while The Orleans is fetching but $34.67. The "Off-Strip Bargain" award has to go to Boyd, which can put you up at Sam's Town for $21. True, you can stay at Fitzgeralds for $22 ... but it's Fitzgeralds. 'Nuff said.

• Honorable mention goes to Palace Station, where $29.99 gets you a room, just a walk (admittedly a rather hazardous walk) from Rat Pack hangout The Golden Steer.

• Conversely, the "Don't They Know There's a Recession?" award goes to our old friends, Columbia Sussex, who obliviously charge $159* at the Westin Casuarina at a time when you might stay at adjacent Platinum or nearby Paris-Las Vegas for $129, Bill's Gamblin' Hall or Bally's for $69, or even the Flamingo for $50. Then there's the "On-Strip Bargain" winner ...

• Caesars Palace at $90. The Caesars price was hardly the lowest one found on the Strip, but if you were graphing room rate vs. quality of property, the two lines would intersect fortuitously at Caesars. It sure beats ...

• Staying at Circus Circus for $24.95 (assuming you're not going the Airstream trailer-in-the-RV park route; $45 a night in the depths of winter -- such a deal!). Though Harrah's Entertainment is, in our one-night snapshot, getting clobbered by MGM Mirage in terms of price points, it can at least take bragging rights in the "For the Truly Desperate" award category, offering Imperial Palace for $32.53/night. Clowns or bad karma: The choice is yours.

Without belaboring the exercise any further, there is one lesson to be drawn ...

Where Steve Wynn goes, the money follows. The rising tide that lifts all nearby boats is called "Encore." While Encore itself is a relative bargain at $169 tonight, Wynn Las Vegas is listing rooms at $299 (surpassed only by the Four Seasons, $319 at the other end of the Strip), Palazzo/Venetian is up to $199, as is Treasure Island, while even Trump International is able to eke out $109.33/night. And despite being the oldest of the Wynn-authored properties, The Mirage is kicking butt at $229 tonight. If it's true that MGM Mirage CEO Jim Murren is driving a hard bargain for that place, can you blame him?

* -- The local papers are constantly filled with rants about how much more affordable Vegas would be if got those damn unions out of here. Odd then that the Westin, a non-union shop, has some of the highest rates on or near the Strip, huh?

The red badge of comping

Wed, 14 Jan 2009 11:48:00 -0700

Once again, the Post-Eating Server (our technologically evolved version of Charlie Brown's nemesis, the Kite-Eating Tree) has devoured something intended for the "Comments" section, so I hope you'll indulge me while I respond to reader mike_ch lthusly ...

I used to slag you when you were on That Other Site [Las Vegas Business Press -- Ed.] and were calling Wynn childish names over his labour dispute, but now it's starting to float in the other direction. And you're not even the first person I've heard say that the best channel is the one where Steve talks all day long.

When you see the rest of the channel lineup, you'll realize that's not quite the compliment it seems (since I didn't notice any free HBO, Showtime or Cinemax in the repertory). However, the dance-competition show on Italian network RAI did give "Steve TV" (or maybe "sTeVe") a run for its money.

Also, I forgot to mention that the TV is set (deliberately?) to the incorrect scaling mode, so that non-HD channels display in that "stretched" setting that makes everybody look 50 pounds heavier. (Gotta use the whole screen, y'know.) Re-set "aspect ratio" to "native" and everything will be fine. However, since my apartment complex -- among its many other crimes against humanity -- balks at replacing a corroded cable-TV line, staying at Encore is as close to HD cable as I'm going to get for a while.

Those of you who weren't around for the "childish names" not only didn't miss anything but need only know that they were pejorative references to some plastic surgery (or Botox-ing maybe) that had very unfortunate -- but temporary -- side effects on Steve Wynn's face. It was a lapse on my part that I'd like to think I've outgrown or am at least trying to (ditto Sheldon Adelson's coiffure).

Per the ongoing dispute over Wynn's tip-confiscation regime and his generally shameful treatment of his dealers (covered in detail at LVCityLife.com), I'd like to paraphrase something once uttered about composer Richard Strauss: To Steve Wynn the casino impresario, I take off my hat; to Steve Wynn the person, I put it back on. His tip grab was not only a giant blotch upon an otherwise industry-leading record in labor relations, it was petty, stubborn and -- unless he relents -- it will follow him to the grave.

Seriously? And I've been hearing about this "media day," but did they really shack said journos and bloggers up in complimentary rooms?

More like a week, actually. Four days of events. As for who was comped: Journos, yes. Bloggers, I dunno. Not me, though. My (red) badge relegates me to the anonymous status of "Media Guest." Which serves as a useful restraint upon one's ego.

And nobody wondered whether that would affect credibility? (Note I'm not singling out you here, I've heard about this event from others on Twitter and I figure if they're bringing bloggers along then the Medium-Large Media must be getting this, too.)

Some of Wynn's most favorable coverage comes from Greenspun-owned media outlets and those folks aren't allowed to accept anything worth more than a buck, so I question the efficacy of comping. It certainly doesn't make a substandard experience (names withheld to protect the guilty ... for now) any less irksome, especially since you're receiving something of dubious financial value in return for the surrender of that which is priceless and irreplaceable -- your time.

Also, if I've been comped to something, I try to include that caveat in my postings, so that readers can weigh my coverage accordingly. (Constantly mentioning that yours truly was the proverbial "plus one" does, however, have the bathetic side effect of seeming like a constant proclamation of, "Look! Look! I have a girlfriend!")

As for my opinions of Encore, the Dec. 22 media walk-through set them pretty much in stone, with slight amplifications and alterations during "Media Week." If/when I can afford it, I'll be back as a paying customer, as I've been at the Venetian (very good) and MGM Grand (not so good). Which reminds me that I have to book an anniversary dinner at Sinatra ...

Of course Steve Wynn knows how to run a company, but I'm not so convinced that I'll join his Official Fan Club, even if he does leave members a personal message on their birthdays.

If you're like me and think that, with a few exceptions, most other casino operators on the Strip wouldn't have a clue (or would be stuck 10-20 years in the past) without Wynn's example, it's easy to sound fan-clubby. But I don't harbor any illusions that I'm even a blip on Steve Wynn's mental radar, so I don't expect to receive any birthday greetings from him ... and would be mighty suspicious if I did.

(Actually, if I got a personal message from Steve Wynn, I'm extremely confident that it wouldn't be "happy birthday" but would be of a rather less pleasant nature.)

Anyway, since S&G is meant to be more of a conversation than a sermon, I hope that my impromptu dialogue with Mike has provided something of value (at least reaching the Greenspun-mandated $1 threshold).

Now I must be off to find out what the heck -- if anything -- ever happened to that "For Sale" notice Don Barden hung upon the downtown Vegas Fitzgeralds property.

21

Wed, 31 Dec 2008 11:39:00 -0700

That's the number of predictions for 2009 issued by Spectrum Gaming Group, an Atlantic City-based outfit. They are, in no particular order:

• Advancements in technology that impact revenues and cut costs will continue to be attractive to operators even in an economic downturn.

Continued ...

• ... conversion of racetracks to racinos, as well as non-gaming expansions to existing racinos.

• ... elimination of jobs, both through cuts and attrition.

• ... moratorium on development of big-box gaming resorts due to economic downturn.

• Convenience-based gaming continues to achieve better year-over-year results than destination-based gaming.

• Corporate and property debt restructuring in wake of declining revenues.

• Eastern European countries will increase their efforts to meet EU regulations, including smoking bans.

• Gaming companies increase efforts to export their brands globally.

• Gaming equipment manufacturers continue to invest in games that appeal to a younger demographic, including lotteries, bingo and server-based technology.

• Increased legislative acceptance of allowing the deduction of issued electronic promotional gaming credits from the gross revenue tax/fee calculation.

• Increased use of electronic games, including the emergence of scalable electronic table games in which players at different locations on the floor wager on a single outcome.

• Increasing alliances between commercial gaming operators and outside investors, as well as between commercial and tribal operators.

• Internet gambling in U.S. will be a hot federal issue for the new administration and Congress; gaming companies will fund lobbying efforts on both sides.

• Major gaming operators commence deleveraging by selling off properties to emerging operators.

• More pronounced shift in market share among suppliers as operators attempt to shift away from IGT participation games.

• Native American tribal gaming revenue estimates remain on track to surpass U.S. commercial gaming totals.

• Prices for hotel rooms, shows and food and beverage will return to lower levels at large gaming resorts as operators need to fill their properties.

• Slow but continual advancement toward server-based gaming, as operators remain skeptical as to the potential financial returns on investment.

• States consider expanding or legalizing casino-style gaming to help fill state budget gaps.

• Support from China to ease visa restrictions, increasing flow of visitors into Macau.

• Uncertainty in various European countries concerning regulation, thus increasing cases being referred to the European Court of Justice.

We'll have to check back in a year, God willing, and see how clear Spectrum's crystal ball proved to be. There's nothing on that list that strikes me as off the beam and much of its seems dead on target. The only "WTF?" comes courtesy of a Spectrum exec who told a reporter, "In times like this, it's not like these are company-specific problems that can be attributed to some glaringly bad decision by the company."

I respectfully beg to differ. Choosing unreliable and/or overcommitted business partners (Boyd Gaming) was a decision. Opening in far-flung markets while your core properties were losing market share (Isle of Capri) was a decision. Taking on preposterous amounts of debt (Harrah's Entertainment) or simply assuming more debt than your cash flow and lavish spending tendencies can support (Station Casinos) were decisions. Trying to build metaresorts all at once (Boyd, MGM Mirage) was a decision. Rashly demolishing the Atlantic City Sands and thereby leaving yourself with empty, non-revenue-producing land (Pinnacle Entertainment), that's a decision.

Launching major projects that aren't fully capitalized (Las Vegas Sands, Cosmopolitan, Majestic Star) is a decision. Stubbdornly jeopardizing the license of the property that generates 40% of your cash flow (Columbia Sussex) is a decision. Making not one, but two major acquisitions at a time when your cash cow -- slot routes -- is giving less milk and then overpaying for some of the new assets (Herbst Gaming) is a decision.

Opening a $2.3 billion, years-in-the-making megaresort at the nadir-to-date of the economy (Wynn Las Vegas)? Now that, that was not a decision. That's playing the hand you were dealt.

Sally Rand has left the building

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

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

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

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

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

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

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

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

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

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

Indiana: It's all relative

Tue, 11 Nov 2008 13:07:00 -0700

Sifting through my massive pile of unwritten Questions of the Day and unstudied analyst reports, we come to Indiana's October revenues. Ultimately, whether any particular metric is good or bad depends on context and perspective.

To start with the big number, revenue was up 14% from October '07. But that turned into a 1% decline once new racinos Hoosier Park and Indiana Park were sifted out, and goes even lower if you minimize the numbers from the recently augmented Horseshoe Hammond. So, whatever "bounce" Indiana is getting from the smoking ban in Illinois, it's being diluted by gambling expansion within the Hoosier State. So it's good for tax coffers, not so good for individual operators.

Harrah's killed with Horseshoe Hammond, which is more like an aircraft carrier with slots than a casino. But it proved a potent "one-ship task force" (a sometimes sacrcastic nickname given the U.S.S. Boise after it claimed to have sunk six Japanese ships at the Battle of Cape Esperance), more than making up for declines at Horseshoe Southern Indiana. Hammond revenues went up 52% and Harrah's overall take rose 20%.

Despite the panicky attitudes manifested of late at Ameristar Casinos, its East Chicago property was off but 3.5%, despite the Horseshoe Hammond factor, which ate far worse into Don Barden's Gary, Ind., flotilla.

What to make of Blue Chip? To see the glass as half-full, the double-digit revenue declines that began in August '07 are slowly starting to narrow. Business has been off as much as $10 million year/year, and October's 18% decline comes atop a 22% declivity the year before. But it looks like Blue Chip is going to bottom out at 60%-65% of its former market share. And it was Indiana's seventh-winningest casino in October, keeping Boyd Gaming out of the bottom tier.

Down south, only Casino Aztar showed revenue growth (5%), which continues to validate current management's aggressive mindset -- but business still hasn't returned to pre-Columbia Sussex levels. As for French Lick, so long hyped as a casino destination, so greatly anticipated, it has proven Indiana's most disappointing market. It's the least-lucrative in the state and continues to give indications of having peaked.

Slots are tight at Belterra. How else to explain a 10% win increase on -14% handle? The last time somebody managed a feat like that He fed a large crowd with but a few loaves and fishes.

On the other hand ...

Mon, 25 Aug 2008 18:01:00 -0700

... if Illinois casinos are sucking wind (which they are), why hasn't this redounded more to the benefit of neighboring states? For instance, it looks like Indiana had a good July, but once you back out two new racinos, a 2% gain turns into an -11% retreat from last year's numbers.

And the northern Indiana boats ought to be doing better, even if Horseshoe Hammond's revenues (-18%) were depressed by a temporary closure and Boyd Gaming's beleagured Blue Chip (-40%) is a drag anchor on the regional average. Still, a -15.5% year/year comparison -- even with those two factors taken into consideration -- doesn't suggest floods of nicotene-deprived gamblers storming the gangways.

Only Majestic Star, of all unlikely vessels, had a revenue-positive July. Year to date, Ameristar Casinos is doing the best of any single company, which makes its recent decision to run up the white flag and sack 244 employees, fretful over a newly expanded Horseshoe Hammond, look doubly defeatist. Current Ameristar management just doesn't look like they're in it for the long haul (read "not cut out for it" or "lack the stomach for it").

A change of brand, to Horseshoe, isn't doing the trick -- yet -- for Harrah's Entertainment's Glory of Rome. The glamorously named Horseshoe Southern Indiana (formerly Caesars Indiana) is the only casino in the Hoosier State's southern reaches to post negative revenue comparisons for every month of 2008. The others either swing like weathervanes or, in the case of Casino Aztar, improved dramatically with a change in management.

If French Lick isn't licked, it appears to have crested. The turnaround at Casino Aztar (currently under state trusteeship) blunted its revenue growth, as did the debut of the Indiana Live and Hoosier Park racinos. Until the economy improves, it looks like it's maxed-out at $8.5 million-$9 million per month.

Missouri is another puzzle, down 3% once the effects of Pinnacle Entertainment's nascent Lumiere Place are subtracted. The St. Louis market, closest to Illinois, was -8%, while Kansas City -- the market with the least to gain from Illinois' troubles -- was up 2%. Go figure.

All companies except Harrah's had a revenue-positive July, even Isle of Capri Casinos. Harrah's lost market share in St. Louis and Kansas City, and Ameristar gained in both markets. (See previous comments about unwarrantedly panicky Ameristar execs.)

And see them again once we note that Ameristar had the best July of any publicly traded company in Iowa, +3%. (Harrah's and Penn were flat, Isle down almost 6%.) Ameristar had the third-highest performing casino in the market, trailing Harrah's Horseshoe-branded racino and the Prairie Meadows track. A good month at the tracks offset a flat one on the riverboat, making Iowa revenue-positive for the month.

This was the first full month of year-over-year comparisons for Isle's newest casino, in Waterloo, which was down over 13%. Wow. The bloom went off that rose fast. The previous Isle regime's business model of growing revenues by opening more and more casinos is well and truly out of gas.

Isle's Bettendorf casino, however, was the only one of the company's quartet of Hawkeye State riverboats to increase revenue in July. Could it be ... the Illinois smoking ban coming into play? I'm going to opt for Occam's Razor and say, "Yes."

The Barden bungle

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

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

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

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

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

Another little problem in Pittsburgh

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

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

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

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

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

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

Sands: More is sometimes less

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

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

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

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

The Venetian: older but (performing) better

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

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

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

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

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

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

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

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

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

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

Quote of the Day

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

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