David Mckee's Stiffs & Georges - Colorado

Want your ass kicked?

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

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

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

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

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

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

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

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

Atlantic City sucks ...

Tue, 22 Sep 2009 18:05:00 -0700

... says the Motley Fool, in essence. Even Borgata, which posted a higher operating profit year/year, is deemed merely to suck less than everybody else. I'm not sure I'm with the Fools on this one. For instance, shouldn't Sands Bethlehem be doing better than fifth among Pennsylvania casinos, especially when you consider its proximity to New York City?

Elsewhere on the Boardwalk, the UAW is fighting Trump Plaza, the Plaza is fighting the National Labor Relations Board and Trump dealers are fighting amongst themselves. Since 32% of dealers initially voted against UAW representation, it should be a cinch to round up 30% to sign a decertification petition. Kudos to Trump Entertainment Resorts CEO Mark Juliano for going out of his way to soothe potential animosity between labor and management.

MILF convention in A.C.: On Oct. 3, former Bunnies and other veterans of the short-lived Playboy Hotel & Casino will return to the shore to relive the good old days. A few might even wriggle into their old Bunny costumes. Maybe a re-infusion of the Playboy brand is what Atlantic City needs. It can only help. Are you listening, Carl Icahn? Revel? Pinnacle Entertainment? Anybody?

Finally, a reason to visit Orlando ...

... or maybe not. And that dude from Scotland is in serious need of subtitles.

Resort-style casinos come to Colorado and doesn't Ameristar's new hotel look lovely? Now, if only somebody would build a mid-market property like this on the Strip. Why must average Americans settle for older, second-tier properties if they're to afford a Vegas vacation?

Health care reform + Internet gambling? Is it just me or is Sen. Ron Wyden (D-OR) onto something here? This may be just the carrot to dangle in front of legislators who still balk at allowing Americans to wager on the Web.

Creditors screwed again. How much is Greektown Casino worth? Is it the $725 million its creditors claim? Or the $540 million that Greektown asserts? Or maybe the lowball $485 million that lead bidder Tom Celani is willing to pay? Greektown's recent -- and well-publicized -- inroads into the market share of its Detroit rivals lend merit to the higher-end valuations. If the place was in the doghouse, I might sympathize with Celani (who's likely to boot the very management team responsible for Greektown's turnaround), but Fine Point Group has definitely enhanced a once-seedy casino's value.

It's official. VIP-player commissions in Macao will be capped. Since the war over junketeer commissions was threatening to make Macao a negative-revenue proposition, the new ceiling will greatly improve cash flow for Macanese operators. Middle-of-the-pack Galaxy Entertainment is expected to benefit the most (+27% EBITDA), followed at some distance by Stanley Ho (16%), with Las Vegas Sands and MGM Mirage bringing up the rear. Although the elderly Ho may be on his deathbed, he's lived long enough to broker peace in a potentially destructive situation where the only sure winners were the sought-after junket operators.

Boyd, Ameristar stable; CityCenter schedule revised

Wed, 05 Aug 2009 11:10:00 -0700

Second-quarter results from Boyd Gaming and Ameristar Casinos gave continued reason to be sanguine about each company. Both reported profits (12 cents per share at Boyd, double that at Ameristar) and both missed their revenue targets by an aggregate of only $8 million. A whopping (27%) jump in Colorado revenues for Ameristar last month was additional reason for confidence, offsetting weakness in Kansas City.

Cost control was credited with helping Boyd's performance, as was much-better-than-expected cash flow at Borgata. The Las Vegas locals market also ran ahead of expectations in that regard, while downtown and the Midwest/South casinos lagged. Bankruptcy filing or no, Boyd maintains that it continues to be a suitor for Station Casinos. Oh, and keeping Echelon mothballed -- while the least expensive of alternatives -- isn't cheap, costing Boyd $3 million a month.

MGM Mirage has sent LVA a revised, official list of dates for the debut of the various bits and pieces of CityCenter. (Excepted, of course, is the Harmon[ini] which, as of last Wednesday, had no firmer opening date than "late 2010.") The openings are as follows:

Vdara (Dec. 1); Crystals (Dec. 3); Mandarin Oriental (Dec. 4); Aria (Dec. 16), while condo closings in Veer Towers are set to "begin in January." When MGM gave a CityCenter dog-and-pony show to the Nevada Hospitality & Lodging Association last week, the computer graphics still showed Baldwin's Bump at its original, 48-story height. Also, the bluish tint that denoted CityCenter's acreage, by quirk or design, extended to embrace the Cosmopolitan. A portent?

Facts are stubborn things

Mon, 20 Jul 2009 17:14:00 -0700

A big thumbs-up to a casino company in Central City, Colo., for making its case to players not with vague claims but quantifiable facts. Famous Bonanza & Easy Street Casinos shared with its patrons Colorado Division of Gaming Statistics data that showed its dollar- and penny-slot holds were 3% and 7.3%, respectively.

The averages for Black Hawk, Colo., casinos in those denoms are 5.27% and 9.8%. Famous Bonanza is comfortably below the Central City averages of 3.8% and 9.5%, too. Anybody in Vegas or Atlantic City want to try this marketing gambit? It sounds like a winner to us. (Thank you to Raving Consulting for spreading the news about this splendid idea.)

Without referencing it directly CityLife Editor Steve Sebelius makes it clear why Mike Ensign's $96,000 hush-money payment to Doug Hampton and his two-timing wife could write finis to any further aspirations the elder Ensign has in the casino industry. Just try explaining this mess to the Kansas Lottery's casino commission and making it sound like a mere bagatelle.

Hooters vs. Riviera

Tue, 31 Mar 2009 18:17:00 -0700

It's a race to Chapter 11 now, with Riviera Holdings in the lead. Its glandular-themed rival down the street is opting out of an interest payment and drawing down the last of its credit, never a promising sign. However, Riviera is forcing a confrontation with Wachovia Bank. Given a choice between hoarding cash on hand and making a $4 million interest payment, Riviera execs chose Door #1. That comes atop some scarifying 4Q08 numbers that included a $13 million loss, plus cash-flow declines of 64% on the Strip and 42% in Black Hawk, Colo. (Those newly enacted rule relaxations in Colorado can't come soon enough.)

Downward pressure on ADRs (not to mention 84% occupancy) and diminished convention trade (-28%) were blamed for the decision to conserve dollars. While the Riv recorded almost as much entertainment revenue as the year before, 27% of that took the form of comps to high-value players and thus came right back off the ledger.

The Riviera's appeal is not likely to be enhanced by the announcement it is renting out space to that bane of Strip visitors -- a timeshare company. "We have implemented and will continue to implement promotions to attract competing hotel customers to our property to enjoy our amenities," Riviera adds. Just don't order the powdered eggs, OK?

Station Casinos, meanwhile, closes the book on a poor-to-awful 2008. Cash flow was below $100 million for the fourth quarter, further underlining how overvalued the company's LBO price was.

No more sports betting ... at least not until football season at Bally's. What the hell. You can't bet on a Boston Celtics game there anyway.

Colorado casinos: Four votes, four wins

Wed, 21 Jan 2009 18:47:00 -0700

After a statewide vote approved 'round-the-clock operation at Colorado's non-tribal casinos (along with a 20X increase in betting limits and a wider repertory of games), the measure wasn't home and dry. It had to be voted through in Cripple Creek, Black Hawk and Central City. I heard some skepticism voiced about whether the citizens of Central City were on board with a gambling expansion but they sure were. The proposed liberalization racked up an overwhelming victory yesterday.

Don't gas up for a drive to Colorado just now. The widened operating rules don't kick in until July 1. Although neither Ameristar Casinos nor Riviera Holdings is directly affected by the Central City vote, Wall Street finally got a clue as both stocks traded slightly upward today. Ditto Penn National but not Isle of Capri. Congratulations to all Colorado operators, who definitely could use the relief.

Quote of the Day

Thu, 15 Jan 2009 11:29:00 -0700

"For a casino worker, every day breathing second-hand smoke in the workplace is one too many. Everyone has the right to breathe smoke-free air -- regardless of the color of their collar." -- Americans for Nonsmokers Rights Executive Director Cynthia Hallett, reacting to a resolution passed by the National Council of Legislators from Gaming States. The NCLGS resolution urges constitutent states to make all gambling venues smoke-free workplaces and that smokeless gambling be a mandatory part of future tribal-state compacts. States that require smoke-free casinos are, at present, Illinois, Colorado and Delaware.

Quote of the Day

Thu, 18 Dec 2008 14:59:00 -0700

"[T]he fact that he's from a somewhat Western state is good." -- a congressional spokesman, reacting to the nomination of Sen. Ken Salazar to head the Interior Department. Salazar is from the "somewhat" (but apparently not very) Western state of ... Colorado.

McCain's destination revealed

Thu, 06 Nov 2008 14:29:00 -0700

Maybe you saw that B-roll of Sen. John McCain hitting the road in an emerald SUV yesterday, with Sen. Lindsey Graham riding shotgun, ostensibly en route to planning "legislative initiatives." (I couldn't find the footage in that "series of tubes" that Alaska's most famous felon otherwise knows as "the Internet"; sorry about that.)

Uh-huh.

An S&G listening device had been implanted in the aforesaid emerald-colored car. Now, since S&G is a no-frills operation, our bug quickly fritzed out. But the following fragments of conversation were salvaged via a painstaking process Wayne Brady would call "making #%it up." Here's what we were able to piece together:

"Craps ... legalized ... Colorado ... new casino in Cripple Creek ... where the [inaudible] is that? ... Move over, Stanley "Golden Arm" Fujitake: It's game on!"

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

On balance, a good day.

Winners & Losers

Wed, 05 Nov 2008 13:52:00 -0700

And now the obligatory post-Election, What's-it-all-about-Alfie roundup ...

Culinary Union 1, Casino CEOs O: True, the Culinary tripped all over its own feet in the early going, leading to Democratic caucuses that weren't so much "Barackular" as "debacular." But D. Taylor & Co. backed the winning horse and did it early, which earns some chits down the road, plus they have a new Capitol Hill friend in Rep.-elect Dina Titus. Messrs. Lanni, Loveman, Wynn, Adelson and Trump made a variety of presidential wagers, losing every one.

Ameristar Casinos/Pinnacle Entertainment: They wanted a protected oligarchy in Missouri and now they've got it -- and at relatively little additional tax burden to them.

Slot manufacturers: OK, so Ohio and Maine didn't come through and the Missouri market is frozen. But 15K new slots in Maryland ain't chicken feed. Plus a West Virginia casino expansion that flew under the radar got voted in. Inexplicably, slot stocks traded downward. Stupid Wall Street.

Colorado casinos: They didn't so much "win" as get a hefty lifeline thrown to them by Rocky Mountain State voters who approved 20X higher betting limits, 'round the clock operations, and roulette and craps. (No Sen. John McCain sightings in Cripple Creek yet, though.)

Freedom's Watch: So far F-Double-U is 6-9-1 (with Sen. Gordon Smith [R] of Oregon momentarily in the "tie" column) in its top-priority races. I'm feeling generous and crediting the Adelson front group with "wins" in the case of self-destructing Rep. Tim Mahoney (D-FL), who continued the scummy tradition of predecessor Mark Foley, and in that of Sen. Saxby Chambliss (R-GA), who faces a December do-over, thanks to Georgia law. And veering off at the last minute to spend money attacking not-up-for-reelection Sen. Chuck Schumer (D-N.Y.)? Adelsonian political acumen at its finest. Winner? Loser? Let's call it a draw.

Poker: Just when it looked like the poker phenomenon was about to jump the shark, we've got a poker-playing president-elect. I dunno if Ms. Pelosi and Messrs. Reid, McConnell and Boehner cotton to hashing out legislation over cigars, booze and a deck of cards, but they'd better get ready for a whole new kind of "smoke-filled room."

Online Poker: Chances for a repeal of the UIGEA suddenly look a lot better.

Karma: Bearing false witness and serial adultery remain very uncool. But multiple felony counts and assorted other financial malfeasances remain A-OK with voters of both parties. (Hint: If Ted Stevens has to be forcibly removed from office, start practicing the phrase "Senator Palin." Kinda trips off the tongue, don't it?)

Gays & Lesbians: Voters in California stuck it to one of Vegas' most loyal constituencies big-time, passing the hateful Proposition 8. Were Nevada not so socially conservative (although compassionate enough to have legalized medical marijuana a ways back), I'd say we should vote for gay nuptials here, then sit back and gloat as the bucks roll in.

Tom Tancredo and ilk: Even if you abhor George W. Bush, you've got to give it up for his ability to rally Hispanic voters to the GOP standard. (I can't speak for Biloxi-Gulfport or Atlantic City, but Las Vegas can't function without its Latino labor base and casino CEOs know this; that's why immigration is their "third rail" of politics.) I always thought the immigration issue would be a non-starter in this election -- and it was. But the Tancredos of the GOP, by ginning it up in both '06 and early '08, antagonized Latinos, scored an own-goal and eradicated the gains Bush made with this voting bloc. So, in lieu of a prolonged post-mortem, maybe Republicans should just burn Tancredo in effigy and then turn the page.

Gaming's GOP influence: The annihilation of GOP moderates at the national level is largely complete, leaving an electoral map that looks a lot like the Confederacy, plus a horseshoe-shaped chunk of the West. Subtract Mississippi, Louisiana and tribal casinos and you've got slim pickings there. Gambling-friendly Republicans like Govs. Haley Barbour (MS) and Charlie Crist (FL) have made progress, but not easily and not without much expenditure of political capital. It's difficult to see where American Gaming Association boss Frank Fahrenkopf goes within his own party when he needs its support. The casino industry's investment in the GOP has yielded scant ROI.

Gov. Jim Gibbons: With state Sens. Joe Heck and Bob Beers, and Rep. Jon Porter all packed off to early retirement by their constituents, Gibbons suddenly has much less to fear from within his own party two years hence. (Ditto Porter's designs on Sen. Harry Reid's [D-NV] seat.)

Rep. Dean Heller (R-NV): If he opts to challenge Reid -- or Gibbons -- he's now the presumptive frontrunner. (I still think "Gov. Oscar Goodman" has a nice ring to it.)

North Las Vegas Mayor Michael Montandon (R): He's laying the groundwork for an intra-party challenge to Gibbons. Montandon's ably managed growth in NLV and would easily trump Gibbons on the "competence" front. The sudden political demise of Beers, Heck and Porter gives him a clear field of fire.

Tourists: Ever hospitable, Clark County voters gave them the finger, by endorsing a 2%-3% hike in the hotel tax. Thankfully, it's just an advisory vote.

Joe the Player: Winner. Clinton-era tax rates are coming back, which may hurt the "whales" but should be good for the rest of us. The Clinton administration coincided with halcyon years of casino growth, especially in Vegas and on the Gulf Coast. The succeeding eight years were dominated by M&A binges, condomania and a narrowing of the Strip's economic appeal toward the monied elite -- the latter being a very sore point among casino consumers. Vegas-wise, which eight years would you choose?

Jon Ozark: This cardboard dummy was wheeled into Nevada Assembly District 21 by local monied interests, to knock off Asm. Bob Beers -- not be confused with the less-hirsute state Sen. Bob Beers -- for having the audacity to stand up against Steve Wynn, he whose name dare not be pejoratively uttered in Carson City. That much having been accomplished, in the general election Ozark discovered once again that it takes more than a pretty face to win. Good luck in your next district, Mr. Ozark. They say the third one's the charm.

Smoke-filled room

Tue, 21 Oct 2008 14:30:00 -0700

Maybe all this fussin' and frettin' (some of it from yours truly) about casino smoking bans is masking the real issue: Casino expansion in the U.S. has finally hit the wall in the form of one big-ass recession. Five states are contemplating adding casinos this November and in all but one (Maine), it's expected to pass. If so, it'll take some brave souls to buck the headwinds that are pushing casino revenues down.

Gambling halls in Colorado just had another crummy month, with Central City down 26%, Black Hawk off 20% and Cripple Creek declining a "mere" 10%. Some of that is undoubtedly smoking-ban-related falloff, but the smoking issue is beclouding one's ability to see just how much of the decline is a recessionary side effect.

It's no easier to get a clear picture in Mississippi. There, you can still smoke 'em if you've got 'em, but casino revenues are also on the downward slope. The view here is fogged by Hurricane Gustav, which levied a double-digit whammy on the Biloxi-Gulfport market. But Biloxi Mayor A.J. Holloway -- who's been through good times and bad -- isn't going for the easy explanation. He tells the Clarion Ledger, "the real story here is the economy. It’s catching up on us. This is something I kind of anticipated. Las Vegas and Atlantic City have been seeing this for months, so it was just a matter of time before it reached us.” As a consequence, state and local officials are starting to talk in terms of diminished expectations.

As for Louisiana (-23%), it got thwacked twice over, thanks to both Gustav and his bro, Hurricane Ike. Ergo, the entire month's numbers have to be tossed out as an aberration, even the relatively modest 9% decline in Shreveport-Bossier City. ("Relatively modest" only if your yardstick is the -34% declivity suffered by Lake Charles' riverboats.)

Too bad for Pinnacle Entertainment, though: Its L'Auberge du Lac was starting to give Harrah's New Orleans tough competition for the #1 revenue-earning spot in the Pelican State -- only $1 million behind Harrah's in July.

Two of the four lowest-earning properties in the state were Tropicana Entertainment riverboats. CEO Scott Butera's got his work cut out for him. At least Butera's finally driven a stake through the heart of that 10,000-room grotesquerie that predecessor William J. Yung III proposed to build on the site of the Las Vegas Tropicana. Trop Ent needs to maximize what it's got, not chase after pipe dreams.

Up in smoke

Tue, 14 Oct 2008 18:21:00 -0700

Few issues involving the casino industry cause such a conflict between intellect and emotion as that of second-hand smoke. Personally, I think even manure is less offensive to the nostrils than cigarette smoke -- and it has fewer carcinogenic side effects. Exposing one's employees to a steady barrage of tobacco and nicotine means shooting dice with their health. And if your employees aren't aware of the risk they're running, you'd better bring them up to speed.

But ... banning smoking on casino floors is practically a suicide vow for a casino. We don't know just how bad the effect of Illinois' smoking ban has been on the state's casinos, as it's been coupled with the crash dive of the U.S. economy. However, gambling revenues were down 26% in the Land of Lincoln last month, far more than in any neighboring state.

Atlantic City seemed to have arrived at an acceptable compromise: Ban smoking on all but 1/4 of the casino floor and provide enclosed lounges (in which employees would not have to set foot) for those players who absolutely, positively have to light up. Unfortunately, with the notable -- and laudable -- exception of Harrah's Entertainment -- compliance was virtually nil, with Colony "Smoke Gets in Your Eyes" Capital being the worst offender. The city council became so miffed it decided to escalate to a 100% ban.

Then the bottom fell out. Caught in the pincers of a recession and swooning casino revenues (plus the threat of mass layoffs), the city fathers decided to lift their ban. However, they waited so long to come to a decision that it can't be ratified until Oct. 22. The real-world consequence is that, starting Oct. 15, there will be an odd, one-week interregnum [Correction: 12-day] in which Atlantic City casinos will be smoke-free. It will also provide a seven-day laboratory in which to find out what happens to traffic when a destination casino nixes smoking. Too bad the New Jersey Casino Control Commission doesn't measure gambling win in one-week increments or else we might have some mighty interesting concrete data. Will the smokers really stay home or is it all a lot of huffing and puffing (more huff than puff, perhaps)?

All of which is a rather windy way of saying that these events make an inauspicious backdrop for an Oct. 15 media event announcing the formation of Gamblers Against Secondhand Smoke (that's right, GASS). Player and second-hand-smoke victim Tom McEvoy is co-chair of the campaign, which kicks off at the American Lung Association's North Las Vegas HQ (3553 W. Cheyenne Ave., Suite 140, at 1 p.m., if you're interested).

The other speaker, Stephanie Steinberg, is an activist who helped push the Illinois and Colorado smoking bans across the finish line. So I doubt she'll find herself mobbed by thankful casino execs. Local 721 of the Transport Workers Union appears to be the moving force behind this.

However, if there's one issue where the Vegas casinos are likely to fight until the last dog is hung, it's smoking. After all, a smoking ban in Nevada translates into a steady stream of cars heading for the nearest tribal casino. (It's already decimated the revenues of some slot routes.)

At least some of the casinos here are trying to minimize the noxious effects of smoke. But others' gestures are so ludicrous -- like the "smoke-free" aisles criss-crossing the Palazzo's casino floor -- that there's no question that room for improvement remains.

Macao: Not so fast?

Fri, 03 Oct 2008 11:29:00 -0700

Here's a how-de-do, to paraphrase Gilbert & Sullivan. The head of the Travel Industry Council of Macau appears to confirm a report that many Chinese citizens will now be restricted to visiting the former Portugese colony on a quarterly basis. But ... Blogmacau got in touch with the authorized agency that handles visiting permits to Macao, Guangdong Post. The latter told Blogmacau that no such instructions had been received. This may explain why the selloff of MGM Mirage, Las Vegas Sands and Wynn Resorts stock has slowed today.

Meanwhile, visitation to Macao during the Golden Week holiday is up 9% this year. Oh, and the city has a housing-bubble crisis of its very own. It's becoming more and more like Vegas every day.

Cherokee back on the block. The magic date for submitting new bids on the Cherokee County, Kan. casino concession (whew!) is Jan. 21, 2009. That means you've got 90 days, folks, to get your $225 million casino proposal (plus a modest $25 million application fee) in order.

The price of entry may come down a bit -- like 80% -- if Phil Ruffin can convince the Kansas Lege to reduced the mandated level of investment to $50 million. If so, he plans to pitch a racino for a defunct dog track near Frontenac, Kan. Does this mean gambling in Kansas is already going to the dogs? <rimshot> I'll be here all weekend, folks.

P.S. Ruffin is swimming in $1.2 billion, after he took Elad Properties to the cleaners on that New Frontier sale. He might not be the best person to carry the message that casino development in southeastern Kansas is currently unaffordable.

That'll teach 'em! Cripple Creek, Colo.'s Midnight Rose Hotel & Casino was found to have violated Colorado's smoking ban by allowing players to smoke them if they've got them. The penalty was a whopping $100. Plus court costs. (The maximum penalty is $200.) Ouch! The Midnight Rose must be just reeling in pain. Let that be a lesson to all you scofflaws out there.

Dr. Hammergren's House of Horrors. Even in a city that is currently home to the likes of Michael Jackson and Siegfried & Roy, there is no more colorful character like Dr. Lonnie Hammergren, brain surgeon and former lieutenant governor. If he didn't exist, a novelist would have to invent him. If you're not familiar with this only-in-Vegas phenomenon, here's a quick video primer, although nothing compares to the in-person experience and words will never provide an adequate description.

Letter from Colorado

Wed, 17 Sep 2008 11:10:00 -0700

Every so often, it's my pleasure to turn over this space to readers who offer informed takes on the issues or insight into subjects with which we (I, certainly) might be unfamiliar. Today's letter comes from a Colorado player who disputes conventional wisdom about what ails the state's casinos ...

"I live in Colorado and have heard a lot of talk about why the casinos in Black Hawk and Central City (the ones I am most familiar with) are having so much trouble. Many people have suggested that the smoking regulations are to blame. However, I have another take on the problem -- transportation!

"For years, there were companies which would take me to the casinos on a bus. At one time, there were at least two (and sometimes three, depending on where I wanted to be dropped off when I got up to the mountains) places within a few miles of my house to catch a bus at a reasonable price with a rebate from the casino. The buses were usually quite full because casino employees also took them rather than drive and find parking. My mother and I would go at least once a week and when there were promotions, even more often. Some people went every day.

"My mother passed away and I got a new job which left me with less free time so I hadn't gone up for a couple of years. Recently, I tried to find where I could catch a bus for a day of R & R but I had an incredibly difficult time of it! First, all the links for transportation on casino/gaming/Colorado sites were incredibly outdated or non-operational. One listed a bus picking up at a shopping center that I know for a fact is now a giant hole in the ground, awaiting re-construction.

"There didn't seem to be anything on my side of town (I live in an eastern suburb). I can still take the bus but I have to drive across town, halfway to Black Hawk to catch it, which is what I wanted to avoid. One of the pick-up points is a K-Mart shopping center in a less-than-savory part of town, with no kind of security for cars left there.

"What I am wondering is if all the people who used to take the same buses that I did are making the effort to drive either to the existing stops or on up the mountain? I don't think so. I think they are just not going and, therefore, the casino towns are not thriving.

"I know this isn't a particularly important issue in the grand scheme of things, but it illustrates that there are a lot of factors involved in successful casino management and profitability, including getting your customers from their homes to your place of business.

"Thanks for letting me get this off my chest!"

Penn impresses analysts

Fri, 12 Sep 2008 18:09:00 -0700

Penn National threw open its doors to Wall Street and JP Morgan, for one, came away impressed by what it heard. Basically, management is charting a fiscally conservative course, even though it could eventually reap $1.2 billion from its busted LBO. For instance, whereas Penn was formerly willing to plunk down $800 million for Bader Field in Atlantic City, now it's halved its valuation of the site.

Now Penn has turned its focus to some abandoned land west of the city (which would give it a "choke point" for traffic headed into A.C.) and Morgan seems to agree. It advises against buying an existing casino (read: Tropicana). It also found Penn bosses unconcerned with the narrow prospects for casino approval in Maryland and Ohio, writing: "our sense is that management would be content to see both [initiatives] fail." (If that were the case, it would be five rebuffs of casino legalization in one year; is the U.S. industry at or near a saturation point?)

Largely, this stems from concern about how both markets would sap traffic to Penn's flagship property in Charles Town, W.V. The proposed 67% (!) tax rate in Maryland is no small disincentive, either, although Penn has covered its butt -- should the pro-casino measure be passed -- by obtaining a site east of Baltimore. It's also moving to protect its Charles Town business by pushing for table games, something else that requires voter approval.

Looking down the road, Penn's capital projects appear to proceeding on or under budget, its debt is projected to decline by 44% over the next two years, while its cash flow increases 16%. And while Penn says it "can't get the returns or free cash flow" that would justify building in Las Vegas, it continues to contemplate scarfing up other companies' downgraded debt. Morgan thins Penn will either pursue a pure Vegas play or "another regional operator with LV exposure."

I'm thinking "Boyd" but remember that Penn has made one run at Harrah's Entertainment already and might well turn the latter's debt-strapped situation to its advantage. In any event, Morgan reports, Penn will bide its time, "as it feels asset values may get cheaper, and will take its time to evaluate opportunities given other casino operators' leverage. Just visualize a buzzard sitting on a tree branch in the desert, waiting for some poor, dehydrated soul to collapse.

By the way, Penn is proud owner of Bullwhackers Casino, a property whose name suggests nothing so much as the performance of unnatural acts upon livestock. But, if you want to know whatever became of Erin Moran, it's the place to go.

Trop turnaround?

Tue, 12 Aug 2008 13:14:00 -0700

While the New Jersey Casino Control Commission continues to bobble the sale of the Atlantic City Tropicana, at least its stewardship has arrested and perhaps finally the property's decline. While a 5.5% decline in business is nothing to crow over, only Caesars Atlantic City lost less ground, down 4%.

Of course, nobody did remotely as well in dollar volume as the newly augmented Borgata. Whatever struggles Boyd Gaming has experienced in cracking the top, er, echelon on the Las Vegas Strip, it's had the rest of the Atlantic City market playing catch-up, mostly without success, for five years now.

As for the Trop, its gambling revenues are still just keeping pace with Showboat Atlantic City, a property with 7% fewer slots and half the poker/table game capacity. So, while the NJCCC has largely stanched the bleeding, the problem of an attenuated market share remains. Thanks, Columbia Sussex. Don't let that doorknob hit you on the way out.

But the Trop's doing way better than Trump Marina, whose owners -- coming off a wretched quarter and not yet having booked the $316 million they're getting for Trump Marina -- are merely considering using the money to pay down debt. After all they could "look elsewhere for growth opportunities" -- like Panama. (I kid you not.) That's quintessential Donald Trump: Don't address your problems; just run away.

(Presumably the new "Chairman" tower at Trump Taj Mahal is supposed to evoke the glowering, orange-haired Trump himself. But, if you grew up in the Sixties, "the Chairman" was Mao Tse-tung or maybe -- if you were just a few years older -- the Chairman of the Board himself, one Francis Albert Sinatra. I guarantee that no one will ever call Trump "the Chairman." Ever.)

Golden Heartland: Coming soon-ish to a Kansas near you?

Golden Gaming's PR peeps contacted me to very politely dispute my characterization of Golden as a probable also-ran in the Kansas casino sweepstakes (see "Don't tax me, bro!"). They pointed to CEO Blake Sartini's 15 years in the upper ranks of Station Casinos, his 40-tavern operation in Nevada, the Pahrump Nugget and a trio of Black Hawk, Colo., casinos (with an aggregate of 778 slots and no table games).

I would respond that Golden's most imposing rival in Kansas, Mohegan Sun, probably has a larger installed slot base in its Connecticut casino alone (a mind-boggling 6,199 one-armed bandits) than Golden probably has in all its 40-plus properties rolled together. That Colorado is the minor leagues, casino-wise. That all those taverns, nice as they are (and they're some of the very poshest in Nevada), amount to one big-ass slot route -- no disrespect intended. And that we're talking about a $600 million casino-resort contract -- far, far bigger than anything Golden has attempted.

Bottom line: I still think Golden is very much the underdog in Kansas. In fact, I'm even more convinced of it. Which isn't to say it won't pull off a stunning upset. But, given the scale of operation that the State of Kansas wants to see, Mohegan Sun's resumé makes the most logical fit.

Case Bets: MGM Mirage, Ameristar, Penn Nat'l

Tue, 05 Aug 2008 11:20:00 -0700

It almost goes without saying right now that any earnings report is going to come in slightly below Wall Street's consensus. That's just the way the dice are bouncing these days. Such is the case with MGM Mirage, where Strip revenues are down 6% year/year, but JP Morgan finds some pleasant surprises in the Beau Rivage and MGM Grand Detroit numbers.

The Strip results also bear out what Majestic Research has been diligently reporting all along -- a separation between MGM's highest-tier properties, Bellagio and Mandalay Bay, which continue to ascend to the top (+14.4% at M'Bay) while the others lag, "especially the lower end." MGM's buyout of Mandalay Resort Group looked better on paper than the Harrah's Entertainment/Caesars Entertainment one because MGM's risk was spread between all price categories, including the bargain niche. Who could have foreseen this turn of events?

But there are glimmers of light at the end of the tunnel, particularly with regard to convention bookings. Also, CityCenter looks to be $1.65 billion closer to closing that $3 billion gap in its financing.

Ameristar cutting comps. It's hardly "death spiral marketing," but Ameristar Casinos' response to a below-expectations earnings report is to start whacking away at comps, "as they now believe incremental revenue growth via promotional expenses is no longer prudent." Expect to start feeling it this summer and even more so in Oct.-Dec., eventually returning to '07 levels. A big springtime promotional push (+30%) didn't produce significantly improved results, hence the rollback.

Still, with Harrah's rolling out a gargantuan new, $550 million riverboat in the Hammond, Ind., market this hardly seems the time for Ameristar to be playing possum, raising again the question of whether the fellows at the top are in it for the long haul. Also, Ameristar is holding the line (in terms of revenue, less so in cash flow) pretty well in all its markets except Black Hawk, Colo. (-10%), so why the apparent defeatism? The company was sufficiently aggressive to make capital improvements to several of its flagship properties. Ergo, the sudden volte-face comes as a surprise.

Management also says that $20 million in payroll, in the form of 394 jobs, has walked the plank. The brunt of the cuts fell upon Ameristar's East Chicago boat, yet another move that seems to wave the white flag. Heck, if you went by the Ameristar Web site, you'd be forgiven for thinking that property doesn't even exist.

A hotel tower in Black Hawk has also been moved to the back burner, but the Colorado market's future is so clouded that Ameristar's decision is prudence, pure and simple. While revenue and profit expectations have been revised downwards, increases of 3% and 11% respectively are expected next year.

JP Morgan analysts are also bullish on the stock because, as they note, Penn National has "dry powder" in the form of as much as $1.475 billion in breakup fees from its aborted LBO. The expectation that Penn has Ameristar in its sights "will likely drive ASCA higher as investors speculate on a potential transaction."

Speaking of Penn ...

Less room at the top. With former Harrah's COO Tim Wilmott aboard as president/COO of Penn, that left Leonard De Angelo, the company's executive VP of ops, on the outside looking in. Wilmott was quite a catch for Penn after he left Harrah's as part of an executive exodus. But it seems that, in order to give Wilmott a portfolio commensurate with his stature, De Angelo was rendered rendundant. Been there, done that. Mr. De Angelo, you have my sincere sympathies.