David Mckee's Stiffs & Georges - Detroit

Macao giveth, Macao taketh away

Tue, 13 Oct 2009 17:41:00 -0700

Casino operators in Macao better make the most of the recent relaxation of visa quotas into the enclave. What the government gives with one hand, it partly reclaims with the other. Casino expansion remains out of the question and the minimum age for gambling would go up to 21, from 18, under a bill draft soon to be put forward. (Steve Wynn can afford to be sanguine, as it's far more likely to impact his mass-market-oriented competitors. Investors didn't share his enthusiasm.)

If Wynn -- who continues to toe the Peking party line -- comes out a winner, facing negligible "obstacables," Lawrence Ho is the presumptive loser. As best S&G can ascertain, the curtailment of gambling in residential areas is aimed at his Mocha slot routes, one of the younger Ho's bread-and-butter enterprises.

Another proposal awaiting action by the Macanese Lege would cap table-game inventory. Writes J.P. Morgan analyst Joseph Greff, "we believe the Macau government believes the timing is right to implement these initiatives given the completion of the commission cap rule and the resumption of growth in the industry ... if the number of tables will be limited to 1,000 per operator, [Las Vegas Sands] may need to modify its future expansion plans, as it is already over the limit, while SJM will need to close down some of the older tables operated by the third parties, as it too is already over the limit."

None of this appears to bode especially well for Sands' long-in-coming IPO, although it remains to be seen whether this is a bonafide legislative agenda or simply a warning to inhibit growth. The news, however, managed to cast a pall over Sheldon Adelson's planned resumption of his Cotai Strip™. Also, it's not as though the Macanese government and its casino-owning subjects don't have to worry about an upsurge in gambling back on the Mainland.

Detroit, briefly. The depression continues to eat into Detroit's casino revenues, -2% last month. Despite a -6.5% drop, MGM Grand Detroit remains the big cat, grossing $42 million. Second place is up for grabs, though, as MotorCity continues to fall back (-7%) toward upstart Greektown (+12%), which is closing the gap, grossing $28.5 million against $33.5 million for MotorCity.

Leaving Las Vegas

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

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

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

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

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

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

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

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

Good times ahead?

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

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

If wishing made it so ...

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

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

Oh me of little faith

Sat, 10 Oct 2009 16:40:00 -0700

Pardon a smallish digression from the world of games to something truly important ... baseball. With painful memories of the '04 and '05 postseason meltdowns acid-etched into my mind, I've not been able to summon the intestinal fortitude to watch either of the first two Red Sox/Angels games. (And postseason Angels games really take a toll on one's stomach.)

Now, with the Halos up 2-0, I'm wondering if it's safe to peek between my fingers as the series repairs to Fenway Park. My gut-twisting gut-level feeling is that this series goes the full five games, which is my recipe for pure torture. But ... Angels pitchers seemed to have conquered their fear of BoSox hitters and shut them down.

Besides, I've been wrong before about this team -- 1,000% wrong about Bobby Abreu, who's been a tremendous influence for the better. His superb plate discipline has been worlds away from the bizarre flailing of Vladimir Guerrero (which you can only get away with if you're Vlad and can lift a far-outside pitch over the fence in straightaway center). Patient at-bats were the key to the Angels' '02 World Series run, which made up for less-than-dominant starting pitching. If there's an Angels/Yankees ALCS, it'll be a contest to see who can take more pitches: a real tortoise-and-hare match.

At least the Angels and BoSox share a common adversary: the umpires. "Country" Joe West and C.B. Bucknor are showing yet again why they are two of the worst in MLB ... although seemingly every American League playoff game this year (including the Metrodome miniseries that finished the Detroit Tigers) has been plagued by truly craptacular umpiring and amazingly poor calls. If this were the NFL, these clowns would be relegated to working late-season Rams/Raiders games or some purgatorial equivalent.

Speaking of the Yanks, I can't hold out much hope for my old home team, the Minnesota Twins. All the Homer Hankies in the world aren't going to do it for a pitching staff that can't hold a lead against the Bronx Bombers, and it pains me to type that.

Thanks for your indulgence. We now return to our irregularly scheduled blogging. As soon as I find my Rally Monkeys, that is.

P.S.: It's a damnable shame that our server won't load previously unused images into the blogs. 'Cuz I've got a great Philly Phanatic photo that would be perfect should they make it to the Fall Classic.

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.

Penn hearts F'bleau ... maybe

Thu, 17 Sep 2009 21:24:00 -0700

So the much-bruited suitor for stalled, bankrupt Fontainebleau has been "outed" and it's ... Penn National Gaming. Ace reporter Alexandra Berzon, late of the Las Vegas Sun, broke the story. However, she notes that Penn and F'bleau have been dickering for three months: "Talks could still fall apart at any moment."

Given the criteria that Penn CEO Peter Carlino has been citing for any major casino purchase, F'bleau is an illogical choice. It's expensive, it's unfinished, it's location-challenged, it's a high-end property in a depressed market, it has a problematic condo component (read: units that will never sell) and, most of all, it's a snakepit of litigation. Plus, the cost of completion seems to escalate by the hour and is currently pegged at $1.5 billion.

Remember, Penn balked at paying $1 billion-plus for The Mirage, a turnkey, trouble-free resort. Meanwhile, Harrah's Entertainment is snatching Planet Hollywood right out from under Penn's nose and the company whiffed on a chance to acquire newly ascendant Greektown Casino in Detroit. Go figure.

A Penn spokesman "could not confirm or deny" the Wall Street Journal story. We'll take that as a "yes."

Aubrey has landed. As in "O'Day." Webmistress Jessica has forwarded the following from Holly Madison's Twitter feed: "@hollymadison123 Damn! I can't take one day off work without everything going to hell in a handbasket! Back to spreading the positive energy!" Like I said, word from the wise is that Madison and new Hitler-lovin' co-star Aubrey O'Day are anything other than BFFs.

Worst Trend Yet

Thu, 17 Sep 2009 20:07:00 -0700

This is the sort of bottom-feeding move you'd expect from Columbia Sussex but not from Hyatt. Suffice it to say that if casino-hotels try this cheapjack number in Atlantic City, Detroit or Las Vegas, there will be holy hell to pay, especially the next time the collective-bargaining agreement is up for renewal. As it is, some hotels (*cough*Tropicana Las Vegas*cough*) have tried to operate with skeletal cleaning staffs and one shudders to imagine the consequences.

Can John Ensign disown his dad?

Wed, 16 Sep 2009 13:39:00 -0700

Sen. John Ensign (R-NV) finally has achieved distinction within the Senate -- albeit in a manner of which he's surely never dreamt. Citizens for Ethics & Responsibility in Government* has named Johnny Casino to its Most Corrupt Members of Congress list. It's an elite club in which he'll find six fellow Republicans and eight Democrats.

This calls for an awards-acceptance speech and, like so many before him, Sen. Ensign couldn't have done it without Dad. CREW's citation reprises the role played by recent Kansas casino aspirant Mike Ensign, who once upon a time ruled Mandalay Resort Group: "Sen. Ensign’s parents paid Ms. Hampton and her family $96,000 after they had learned of the affair. Mr. Coggins [the senator's attorney] insisted the payments were not made from campaign or official funds, nor were they related to any campaign or official duties. Rather, he explained, the April 2008 payments were 'gifts made out of concern for the well-being of long-time family friends during a difficult time.' Each of Sen. Ensign’s parents made out four checks in the amount of $12,000 to Cynthia Hampton, her husband and two of their children. [emphasis added] Sen. Ensign’s office claimed the alleged $25,000 severance payment was part of his parents’ $96,000 'gift.'"

So, in case your son doesn't show appropriate gratitude, let me say, thank you, thank you, thank you Mike Ensign for smearing feces all over the casino industry's image at the precise moment that new (and very conservative) jurisdictions are opening to it. And if you're MGM Mirage CEO Jim Murren, you might want to have your accountants vet the old Mandalay corporate books, just to be doubly sure there weren't any "patterns of generosity" back around 2002, when Sen. Ensign is widely believed to have had a prior affair. (The identity of his alleged mistress is no secret around Vegas, by the way.)

For all the senior Ensign's labors in the gaming industry, he's likelier to go into the history books as the bagman and enabler for his son's sexcapades.

Sen. John Ensign believes out-of-wedlock births should be "somewhat stigmatized." But out-of-wedlock sex? His position on that is more "nuanced," shall we say.

(* Yeah, yeah, I know: Ethics + responsibility + guvmint often seems oxymoronic, especially in Nevada, but we're working on it. And the senatorial Twitter feed actually springs from the satirically fecund mind of Andrew Kiraly.)

Speaking of Mike Ensign, what the heck was Kansas Lottery Executive Director Ed Van Petten doing playing the role of media-shy Ensign's personal spokesman? In a literally incredible statement, as paraphrased by The Associated Press, Van Petten said of Ensign and ex-Mandalay sidekick Peter Simon: "they didn't like the fact that the Lottery owns the new gambling under Kansas law — or the 27 percent share of revenues reserved for state and local governments."

Bullshit. Casino ownership by the Lottery has been part of the deal from Day One. As for the tax-rate malarkey, Mandalay Resort Group co-owned the Grand Victoria riverboat in Illinois, which -- in 2003 -- became eligible for a top-tier tax rate of 70%. In Detroit -- again on Ensign's watch -- MotorCity's tax rate went to 24%. In neither instance did Mandalay stalk out of town in a state of high dudgeon.

So the notion of Ensign Sr. falling into a gentlemanly swoon at the prospect of a 27% rate just doesn't wash. Either he and Simon knew this going in and are now prevaricating -- via messenger boy Van Petten -- or they're doofuses who failed to perform due diligence on the Kansas market. Which reputation would they prefer?

The truly inexcusable Van Petten further went on to apologize for his own state's oversight apparatus, saying, "Basically, [Simon and Ensign] just didn't like the regulatory makeup." Well too bad for them. It comes with the territory. What Van Petten should be saying is that if a couple of unemployed ex-Strip casino executives don't like the way Kansas does business, they never ought to have set their Gucci loafers in the Sunflower State to begin with. Or, in the immortal words of Law & Order's Jack McCoy:

"If you're gonna play stickball in Canarsie, learn Brooklyn rules."

Blimps on the radar

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

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

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

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

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

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

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

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

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

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

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

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

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

More Midwest notes

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

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

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

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

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

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.

MGM: Deal or no deal?

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

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

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

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

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

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

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

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

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

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

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

Gambling and hope

Thu, 04 Jun 2009 12:38:00 -0700

Andy Holtmann of Raving Consulting has a splendid essay on this very topic and the fine line that casinos must walk when playing to people's hopes. It carries particular weight as it's authored by someone who's taken a mighty wallop from the collapse of the housing market -- i.e., the sort of customer casinos need to understand when they get frustrated that people aren't spending more. Abrasive slogans like "Shut up and play" aren't going to cut it.

Speaking of excellent writing, Eugene Robinson of the Washington Post waxed eloquent recently on the subject of the nationalization of General Motors. Penned by an obvious car enthusiast (and longtime GM customer), Robinson's think piece is full of wonderful bon mots like, "The roster of Chevrolet, GMC, Buick and Cadillac may still leave GM with too many brands; I'd have axed Buick, too, and my opinion should count since I'm now one of the company's owners." (Well, at least we're rid of the Hummer.) My thanks to the reader who brought this to my attention -- where would I be without you guys?

The infamous Pontiac Aztek.

On the subject of GM, I hold no opinion. However, I did notice that scarcely was the ink dry on the bankruptcy filings than a very slick and expensive-looking commercial explaining the 'new, improved' GM was airing on network TV. It certainly wasn't the sort of thing one whips up on iMovie overnight. Your tax dollars -- and mine -- at work.

Case Bets: Packer & Ho, Sands Bethlehem, MGM Mirage, Ameristar, Penn, Harrah's, etc.

Wed, 03 Jun 2009 14:40:00 -0700

• Smashing guitars -- but not over each other's noggins -- James Packer and Lawrence Ho christened City of Dreams. The younger Ho downplayed expectations of foot traffic, saying his $2.4 billion megaresort could get by on far fewer visitors than the nearby (and comparably expensive) Venetian Macao, which draws 70K visitors daily.

• After a record-setting opening, Sands Bethlehem fell into fourth place during last week's casino action in Pennsylvania. Not surprisingly, Philadelphia Park and Harrah's Chester led the state.

• Beau Rivage is safe. Although MGM Mirage was peddling several of its regional casinos, J.P. Morgan reports that "we have heard from some bidders that this process is close to dead, so we don’t expect to hear asset sales chatter in the near to medium term."

• While yours truly was critical of staffing cuts at Ameristar Casinos, they appear to be paying off. The company projects flat revenue comparisons in 2009 but better cash-flow margins, pegging the savings as $40 million-$48 million, annualized.

• When in doubt, Penn National Gaming falls back on what it knows: racinos. It's angling for the Laurel Park concession left on the table when Magna Entertainment collapsed. Both Penn and rival David Cordish appear to be trying to chisel a loophole into Maryland's slot-parlor law, which limits companies to one slot house apiece. Penn is already committed to Cecil County but wants Laurel Park ... as does Cordish, who has a pre-standing commitment to the Arundel Mills area. The latter project has run into serious opposition. Expect a nip-and-tuck fight for Laurel Park.

• Penn is evidently getting cold feet in Ohio, however.

• Casino expansion in Iowa will have to wait until 2010, at the earliest. This delay is a disguised blessing. The Hawkeye State market has been holding its own during the recession but the timing for diluting the market with four new casinos could scarcely be worse.

• If wishes were horses, Harrah's Entertainment would be galloping along the shores of the Yangtze River this very minute. Seriously, would you lend Harrah's more money? Would you give an alcoholic the keys to your wine cellar? Well, you might get the empties back so you could redeem the deposit on the bottle.

Murren talks smack re: Wynn, Schaeffer

Fri, 01 May 2009 15:39:00 -0700

"No one has proven, by the way, that they can operate properties better than us, so ...uh ... and there's a mountain of information to show that we operate properties better than anybody. Everything that we've acquired is making more money under us than anyone else." -- MGM Mirage CEO Jim Murren. That's a mighty forceful statement when the operators you've superseded include ex-Mandalay Resort Group's Glenn Schaeffer and ex-Mirage Resorts' Steve Wynn. Murren goes on to say, "We have market leadership in every market in which we operate."

... but what about a little place by the name of Macao? The last anybody heard, MGM was sixth out of six operators over there (and, yes, it's lagging far behind a casino run by -- you guessed it -- Steve Wynn).

Almost as an aside, the Las Vegas Sun's Liz Benston reveals that one of the two chunks of Strip land that MGM used as collateral was not the "Project Z" site south of Mandalay Bay (as S&G erroneously deduced) but a smaller, less strategic site across the Boulevard from Luxor. So far, with the exception of MGM Grand Detroit, the company has been able to avoid pledging any of its flagship properties.

Though Murren is willing to peddle MGM's regional casinos, he balks at downsizing its already vast Strip presence. We'll see how that strategy pays off when the "CityCenter six pack" opens for business, starting in October.

CityCenter update

Thu, 30 Apr 2009 11:20:00 -0700

One not-so-small I detail that I omitted in my report on yesterday's declaration of detente between MGM Mirage and Dubai World: The latter is released from its completion guarantees. Which puts the onus for finishing the project squarely on MGM's shoulders. As we on the Vegas Gang collective (like the Borg, only nicer) predicted a good ways back, MGM's future is inextricably entwined with CityCenter.

From the glass half-full perspective, the mortgaging of MGM Grand Detroit and Gold Strike ensures at least a modicum of regional diversity in the lion's den. A week ago, it looked as though the company might very well circle its wagons around Las Vegas, while maintaining a small beachhead in Macao. But with the search for the last last, elusive $1.2 billion in bank loans having evidently been abandoned, asset sales are becoming imperative.

What a tragedy that, at the very moment the casino industry is ripe for "unbundling," reversing mega-consolidations that should never have been attempted, the banks are too afraid to part with their precious TARP money to help bring it about. Unless you can do a Phil Ruffin and basically pull $600 million in cash out of a drawer, it's no casino acquisition for you!

Dubai World wins, MGM doesn't lose

Wed, 29 Apr 2009 18:14:00 -0700

The "CityCenter six-pack" lives on, thanks to a late-breaking accord between MGM Mirage and bickering spouse Dubai World. It's a tactical victory for MGM, in that it -- among other things -- keeps the project moving forward and forestalls the prospect of bankruptcy. But it looks as though, when the points are tallied, Dubai World comes out ahead.

CityCenter: Is it too late to bring back the Boardwalk?

Dubai World's biggest concession is to drop its March 22 lawsuit against MGM, which was endangering completion of the metaresort. Lenders also yielded significant ground by agreeing to immediately release $1.8 billion in credit which had been heretofore contingent upon several hundred million dollars' worth of put-in by MGM and Dubai World. Both debtors agreed to a 2% interest-rate hike but MGM was able to gain a temporary waiver of certain debt covenants.

The days of getting $7 billion with no strings attached are over, though: Instead of selling its Gold Strike and MGM Grand Detroit casinos, the company is pledging them as collateral (along with unspecified raw land, probably the "Project Z" site south of Mandalay Bay) for its senior debt. Beau Rivage's fate remains unknown. Cost overruns at CityCenter will be collateralized by Circus Circus and "certain adjacent land" ... i.e., what was going to be the site of an MGM/Kerzner joint venture. MGM CEO Jim Murren had been maintaining that he wasn't going to tear down the clown castle -- and now he can't, even if he wished.

If condominium sales hit $250 million, that money can go toward construction costs. However, if they don't reach $243 million, then MGM is on the hook for the difference. It's also fully responsible for construction costs that push the price tag beyond $8.5 billion. As a consolation prize, it gets the $135 million that Dubai World should have paid toward the joint venture over the last five weeks -- a shortfall that MGM had to make good out of its own coffers.

As the Las Vegas Sun summarized the pact, "The bottom line is that the most important construction project in Las Vegas and the gaming industry will proceed and open as scheduled, with it likely boosting revenue for MGM Mirage but hurting competitors already suffering from an oversupply of hotel rooms in Las Vegas."

Everybody can now heave a giant, grateful sigh of relief and go back to business as usual, like ...

Look out below! Forty-seven stories of glass at CityCenter's Mandarin Oriental and not a one of them has been inspected. Sadly, that's become par for the course with this project: Another day, another graveyard-humor headline from the former site of the Boardwalk.

Said the MGM spokesman given the thankless task of handling this latest revelation: "In the end, we want to build a structure that's comfortable and enjoyable to the guests and beautiful to behold -- and also meets, to everyone's satisfaction, the highest safety criteria." Until then ... duck!

Case Bets: Isle exits U.K.; no room at the Trop; Carlino channels Astaire, etc.

Fri, 24 Apr 2009 17:22:00 -0700

Isle of Capri Casinos is coming up for air, literally extricating itself from underneath Ricoh Stadium in Coventry, U.K. As part of CEO James Perry's attempt to refocus a company that spread itself too thin under his predecessor, he's walking away from an ill-starred British venture. Rank Group not only assumes Isle's lease, it gets the casino itself for pocket change, by industry standards: $940,000.

Perry may also be preparing to unload Isle's Pompano Park racino in the disappointing Florida market. At least one analyst is now picking Isle, so recently stuck in the mud, as one of the better bets to emerge intact from the gaming group's crisis.

A house divided cannot flush. Staggering from miscalculation to mishap, the Tropicana Las Vegas has sustained another self-inflicted wound. But don't blame current steward Tropicana Entertainment, predecessor Columbia Sussex or even Aztar Corp. The non-kosher plumbing that got the Paradise Tower shut down dates back to the 1990s, when the Trop was under divided ownership (one of the many obstacles to its redevelopment). The scary part is that it took at least 10 years for the code violations to be discovered.

The real victims, of course, are the hotel guests who are getting bumped from their Paradise Tower rooms. Since it's far and away the nicest part of the Trop, by definition they'll be moving to less-desirable rooms, some of them in truly decrepit parts of the hotel. Given the condition of the Trop's physical plant when I made a "secret shopper" visit, today's news comes as less than a surprise. The resort's advancing years were bound to catch it out sooner rather than later.

Penn's fancy footwork. While not out-and-out denying an attention-getting New York Post story about a possible 'credit bid' play for The Mirage, executives of Penn National Gaming were at some considerable pains to imply that it was all smoke, no fire. CFO William Clifford put it thusly: "... there were quotes and things said that have been pulled all the back to the last year’s Gaming Conference ... I’m not quite sure that the Post article is a very good reflection of anything we’ve ever said at any point in time."

CEO Peter Carlino followed with, "Some of the most interesting quotes were made at a time when none of the stuff that you are all currently thinking about was out there so it’s unfortunate. It’s just a hodgepodge of things pulled together to make a story. We would have preferred not to have seen it that way. Look, common sense says if there’s an opportunity we’re going to follow it but it’s no more exciting than that; enough said." [Emphasis added]

A Bloomberg News report that Penn was pursuing Greektown Casino went unaddressed in yesterday's earnings call. To the extent that Carlino was willing to commit himself on Las Vegas, he said Penn wanted no more than a single property "if we can find one." The consensus of Penn execs was that Vegas would be a "viable" market for the company ... in five years. (The company's strategy is partially predicated on an exodus of Californians relocating to Vegas and jump-starting the local economy.)

Sadly, Atlantic City seems to have slipped off Penn's radar screen altogether. On a happier note, the company promises a new and "exciting" replacement for the Empress Joliet pavilion that was destroyed by fire -- which makes it sound like the previous Ye Olde Egypt theme is now history, so to speak.

Schreckliche Idee! At a time when institutions like Goldman Sachs and Deutsche Bank control ever-larger chunks of the Strip, the Nevada Gaming Commission is seriously considering lowering the threshold of scrutiny even further. (Because if there are any two words that instill confidence nowadays, those words are "Wall Street.")

The man fronting this idea, veteran gaming attorney Frank Schreck, argues that his proposed rule change wouldn't result in casinos ceding managerial or operational control. However, that's already happened at the Las Vegas Hilton, where a Goldman-owned stalking horse holds a sizeable minority interest. What he's proposing would take a bad precedent and codify it.

By linguistic coincidence, schreck is the German word for "fright" and the root of schrecklich or "horrible." Which is what this idea is. But Nevada regulators are already overburdened and about to become more so, once the next budget is enacted. Given that grim future, Schreck's proposed lightening of their workload will be probably be embraced.

Carlino's Way: a brilliant Mirage gambit

Wed, 22 Apr 2009 13:14:00 -0700

Considering that Penn National CEO Peter Carlino would have paid far less for Treasure Island than the $775 million (bargain) price that Phil Ruffin ponied up, it's been looking like Hell might be hosting the Ice Capades before Carlino could secure a trophy property on the Strip at a dollar figure he deems affordable. Factor in the reported reluctance of both MGM Mirage and Harrah's Entertainment to part with Strip properties for less than 10X cash flow -- and maybe not even that -- and you figure Carlino and a first- or even second-tier Strip property are going to intersect sometime around the Twelfth of Never.

Carlino's criteria for buying into the Strip, as set forth in a March epistle, are exceptionally conditional: “We’re watching things very closely but will pounce only when the sun, moon and stars align. Penn National can wait as long as need be to make acquisitions that will be opportunistic and, more importantly, return-focused.” Run this month-old e-mail through the Wishful Thinking Machine at the Las Vegas Review-Journal and you get a headline like, "Penn National ready to 'pounce'."

But soft ... what light through yonder tabloid breaks? 'Tis the east and Peter Carlino is the sun. Arise, fair Carlino and buy The Mirage! Although Kirk Kerkorian, MGM Mirage and Penn National are doing their best impersonation of signifying monkeys, Post reporter Josh Kosman is onto a story that, if it pans out, will leave Strip observers gobsmacked. It would appear that Carlino has indeed found a means for bringing sun, moon and stars into alignment that gets a '10' for creativity.

In essence, banks holding some of the $7 billion in unsecured debt that comes due two years hence would make a 'credit bid' on The Mirage, trading debt for property. In turn, they'd hold it as collateral against an eventual repayment by Penn National, which would cross MGM's palm with a downpayment of unspecified size -- but probably small enough that Carlino could crow, "Victory is mine!"

(Interestingly, Penn is also reported by Bloomberg News to be sniffing around for a Detroit casino. It's not MGM Grand Detroit -- which may go wanting for prospective buyers, according to Kosman -- but bankrupt, red ink-ridden Greektown Casino. Given the hard bargains Carlino likes to drive, somebody's going to end up eating Michigan-sized debt if that deal should go through. No way Penn takes on the $777 million Greektown owes.)

It's a variant of an earlier ploy, rejected by MGM CEO James Murren, in which Boyd would have relieved MGM of some of its bonds in exchange for a Strip casino. “[Murren] fixated on the multiple we’d pay. I suspect that attitude may have some flexibility now," gloats Penn CFO William Clifford. Carlino says that Vegas holds "a dozen" casino-hotels that would fit the mid-market niche of Penn's customer base. He's openly ruled out Tropicana Las Vegas, so if a Mirage deal evaporates, what remaining resorts might comprise Carlino's Eleven?

Fickle cougars jilt Greektown

Tue, 21 Apr 2009 14:35:00 -0700

Every so often, there's a news story so weird all you can do is report the facts and scratch your head. Case in point, a Monday Detroit Free Press report on the impact of Final Four Weekend on Motown's gambling halls. Perennial also-ran Greektown Casino experienced a 5% decline in gambling revenue April 3-5, even though “We had twice as many people in the building as we did the same Saturday a year before. We had great hotel revenue … great food and beverage," according to CEO Randall Fine. So people are staying there -- they're just not playing there?

No. Evidently the prototypical Greektown gambler is a 55-year-old female slot player and Fine theorizes they fled en masse to MGM Grand Detroit and MotorCity to avoid Final Four fever. (It's a theory hardly without substance: Those casinos' revenues were up 12% and 6%, respectively.) It's a little difficult to imagine the "big game" crowd passing up those two casinos for grind joint Greektown, but there you have it. Remarkable.

Mr. Fine also finds himself in the situation of being a CEO whose own shareholders are trying to oust him -- and never mind that Greektown's market share has grown 2% since his appointment. "This is a major casino" proclaimed a presumably irony-free attorney for the Sault Ste. Marie Chippewa Tribe, owner of Greektown and whose umbrage reportedly came as a surprise to Fine. Considering how badly Greektown was faring under its previous management, perhaps the tribe should put a sock in it and give Fine the chance he's obviously earning.

March in Detroit was a mite frosty where casino revenues were concerned. While MGM may dominate the market, MotorCity (+1%) made tiny inroads, while both the lion house (-4%) and Greektown (-7%) coped with declines.

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.

Never a dull day in Nevada

Wed, 08 Apr 2009 16:56:00 -0700

At least one good thing happened today. In other news ...

"Infidelity is not relevant ... in Nevada": Faced with being all over the teevee and not in a good way, Gov. Jim Gibbons set off a series of distractions. First, he tried to score a photo op with the BMOC. (Midnight Jim's blustery public comments form a droll contrast to the obsequious tone of his letter to POTUS.) Then he managed to piss off the Armenian community. Whoops, there go those campaign contributions from MGM Mirage, governor.

Maybe those dollars will go to former casino owner and outgoing Reno Mayor Bob Cashell. He's the latest Nevada Republican to pass up the chance of taking on Sen. Harry Reid, preferring his odds against the decreasingly viable Gibbons. Cashell says he's got "well-connected" backers down here in Southern Nevada.

Ensign for President? Despite having been an ineffectual fundraiser and candidate-recruiter during his tenure at the RSCCC, Nevada's junior senator (and Circus Circus scion) appears to have his eye on the Oval Office. S&G encourages such presidential aspirations, if for no other reason than that all the other presumptive candidates for 2012 are from the anti-gambling subset of the GOP. Since Ensign's nickname on Capitol Hill used to be -- and perhaps still is -- "Johnny Casino," he can expect to hear a lot of that on the campaign trail.

Elsewhere ...

The chicken is back! The tic-tac-toe-playing chicken is the new star attraction at Greektown. When you're $777 million in the hole, a bit of fowl play can't hurt. The chicken is only playing Detroit through June 9 but an extended engagement would be advisable: With MGM Grand Detroit openly on the market, Greektown's chances of finding an interested buyer just took a mighty wallop.

St. Stanley. The benediction of the American Gaming Association will be bestowed upon Stanley Ho during G2E Asia. Quoth AGA President Frank Fahrenkopf, "we are excited to hear his thoughts during his keynote address.” Yes, Frank, especially the part where Stanley starts ranting about the pernicious effects upon Macao of American capital, as he is so wont to do these days.

A delicate balance

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

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

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

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

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

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

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

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

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

MGM Mirage sells family jewels

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

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

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

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

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

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

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

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

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

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

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

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

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

Case Bets: MGM Mirage, Harrah's, Wynn, Shuffle Master, Taxes

Tue, 17 Mar 2009 15:05:00 -0700

As we wait for the MGM Mirage earnings report, signs of desperation mount. If the company is willing to cast away a pearl like new, costly and high-yielding MGM Grand Detroit, what isn't sacred? Not even the corporate jet, provided the buyer doesn't welsh on the deal. (Guess those high rollers won't have to fly commercial for a while yet.) Whoever made that offer for MGM Detroit, though ... (s)he's one smart cookie, methinks.

Dumping regional properties at a time when that's where the strength of the casino industry is just doesn't make sense -- although you could probably make a case for ditching the already written-down Gold Strike in Tunica or the Grand Victoria riverboat in casino-killing Illinois. Actually, getting the hell out of the hellacious Illinois market seems like the best idea since forever.

Congratulations, Gary Loveman! You took home $39.6 million last year, while your company was crashing and burning -- not to mention pink-slipping 8% of your workforce. Don't say Loveman isn't feeling Harrah's pain: He's forfeiting a whole $100K in salary for 2009. There goes the college fund!

The casino giant is one step from the bottom of the Moody's bond-rating ladder. In a memo to the SEC, Harrah's Entertainment announced that managers were taking a 5% pay cut and that "it might have to delay expansion, sell assets or restructure debt." Delay expansion? No! Really? That was off the table the minute the ink was dry on the LBO. Refurbishment is also a low priority, as capex costs will be trimmed by as much as 59%.

Meantime, the guessing game begins over which assets might be on the block. In one of the busier threads over at Hunter Hillegas' Two Way Hard Three, fellow blogger Chuck Monster synopsizes the reshuffling of Harrah's properties between various holding companies, which includes a possible abandonment of the volatile (read: shaky) Lake Tahoe market. Sometimes I think Harrah's does this jiggery-pokery just to amuse itself watching the blogosphere try to determine What It Really Means.

In a regional update, most Lousiana markets were slightly down last month -- except Lake Charles, which Harrah's pulled out of, leaving Pinnacle Entertainment in possession of the field. Oops.

Pssst! Don't tell anyone! It's stashed as the second item of "In Brief" but Wynn Resorts is floating a stock offering to the tune of over nine million shares. (Other sources say seven million.) Wall Street had an understandably adverse reaction -- at first blush -- to this 7% dilution of Wynn stock, which closed up $1.07 today. Given that it's a proactive move to retire debt, it's tough to quarrel with Wynn.

Update: Clarification of the Wynn stock float comes by way of Forbes.

As for the undying speculation that Steve Wynn might want to buy back Bellagio or golden oldie The Mirage, one analyst -- Goldman Sachs' Steven Kent -- says he "would be surprised to see Wynn pursue this," given that Wynn is a builder, not a buyer.

Parenthetically, in the above-mentioned blog thread, Brian Fey makes the following, extremely trenchant observation: "Its pretty bad, that here we are almost 10 years later [following Wynn's ouster from Mirage Resorts], and Steve's biggest competition is still Steve's old properties. Just shows you how far behind everyone else is when it comes to the game."

Shuffle Master wins? Rival company Elixir Gaming settled litigation by selling its Asian shuffler business. The Las Vegas Review-Journal sees it as a win for Shuffle Master, while the Las Vegas Sun takes the opposite take, implying that Shuffle Master got its pockets picked -- which could mean an ignominous curtain for just-departed CEO Mark Yoseloff, if that's indeed the case. They report, you decide.

More of the Same Dept.: Democratic leadership in the Nevada Lege is going to do exactly what (little) is expected of them -- jack up existing taxes to onerous levels as a cop-out solution to our budgetary crisis. Booze and cigarettes are the low-hanging fruit of taxation but Nevada casinos better get ready to bend over and grab their ankles, as they're probably the next target of opportunity. Oh, and brace yourself for a much bigger beer-and-wine tab at the casinos if this goes through ... as though casino booze wasn't costly enough already!

Never let it be said that S&G didn't at least once have a kind word for Columbia Sussex. The former Tropicana owner is reducing its carbon footprint. Amen to that.

Quote of the Day

Tue, 17 Mar 2009 14:54:00 -0700

"This is how Caesars is treating its employees, while our CEO made $15 million in compensation. I'm quite sure no one in [Gary Loveman's] household is cutting their pills in half to get by." -- Caesars Atlantic City dealer Sharon Masino, complaining about Harrah's Entertainment's foot-dragging approach to contract negotiations (a problem shared by employees of Tropicana Entertainment and Trump Entertainment Resorts -- but not MGM Grand Detroit). Harrah's inaction led to the cancellation of an AFL-CIO convention at Paris-Las Vegas.

Case Bets: Foxwoods, Greektown, Mesquite, iPhone follies

Sat, 21 Feb 2009 14:19:00 -0700

Foxwoods Casino Resort's Philadelphia beachhead is financially beleagured by problems on the home front. Says one economist of the Connecticut metaresort, "Their plan for growth was built on an economy that no longer exists and is not coming back."

A glimpse of Greektown:

Blackout? Casino oligopolist Randy Black is contemplating ditching his three Mesquite casinos (one of which is barely operational). Considering that the bottom has fallen out of the Mesquite market, it's difficult to imagine who'd buy.

Own-goal for Control Board: An overreaction by the Nevada Gaming Control Board to an iPhone card-counting program has sent the latter's sales to stratospheric levels. Silver State regulators have unwittingly made Travis Yates the entrepreneur of the year.

Another Motown casino in trouble

Tue, 27 Jan 2009 13:19:00 -0700

A blipvert from the wire services says that MotorCity Casino, in Detroit, is in danger of being out of debt-to-cash flow ratio on a $606 million loan. Luckily, unlike bankrupt Greektown, MotorCity has a deep-pocketed owner, Marian Illitch, who is offering to kick in $20 million of her own money, if necessary.

(Update: Bloomberg has detailed background on the brewing brouhaha.)

All of which leads one to re-pose the question: Who in their right mind would sell MGM Grand Detroit when its two stateside competitors are lumbered with financial problems and Harrah's Entertainment's Caesars Windsor, over in Ontario, is still trying to rebuild a greatly diminished market share? Bailing out of a market MGM Mirage practically owns would simply defy reason.

'Gang' at Encore

Thu, 15 Jan 2009 11:49:00 -0700

Yesterday saw an unusual -- but altogether pleasant -- change in the Vegas Gang routine, as we taped "on location" from a seventh-floor room in Encore, overlooking Echelon and the increasingly ominous Fontainebleau (so disproportionately massive it looms over its neighbors like Godzilla or Gammera over mere mortals). Both David G. Schwartz and Jeff Simpson joined us by speakerphone, giving the conversation a certain Charlie's Angels vibe.

It's Fontainebleau ... coming to stomp us all! Run for your lives!

Spoilers ahead ...

I'm clearly very much in the minority on the likelihood of a Mirage or Bellagio sale. Cash cows they may well be, but there seems to be a strong consensus that their tires are being kicked and serious talks are underway, as well as that The Mirage has become a stodgy property.

Also that MGM Mirage is a Vegas-Vegas-Vegas-obsessed company and would be willing to sacrifice the Gulf Coast and Detroit markets -- the latter of which it utterly dominates -- to keep the CityCenter bucks a-flowin'. (And why would MGM bail on Detroit and not on the sickly Illinois market instead? Or Tunica? Or ... ? If Alex Yemenidjian would pay $435 million for an Illinois license, what might he put down on actual, operational asset?)

Such a strategy would fly in the face, if not of sense, at least of recent casino industry thinking, whereby you try to maintain strong footholds in the second-tier markets and not put all your chips on Vegas (unless you're Steve Wynn and even he tried it once). It would be like Harrah's Entertainment evacuating Atlantic City to raise money for its stalled Octavius Tower.

And you could knock me over with a feather if MGM sells its Macao demi-concession to partner Pansy Ho or back to her father Stanley, especially after all the hoops MGM had to jump through to get into Macao. Bailing on the world's #1 casino town would be an indicator of extreme desperation bordering on insanity.

Unfortunately, we weren't able to get into the provenance of the urban legend that Phil Ruffin's Treasure Island purchase was just a big-ass/short-term loan to MGM, with "T.I." serving as collateral -- and at 55% interest, no less.

Lanni: The official story

Mon, 12 Jan 2009 17:27:00 -0700

My favorite exchange in one of my favorite current TV series, Mad Men, takes place when weasel-like junior exec Pete Campbell (Vincent Kartheiser) goes to rat out his boss, Donald Draper (Jon Hamm), to company owner Bertram Cooper (the cunningly cast Robert Morse). "Draper" is, Campbell has discovered, a Korean War deserter who has risen to the upper reaches of Madison Ave. circa 1960 under an assumed identity.

Cooper takes all this in imperturably, bestows upon the youngster a pitying gaze and says, "Mr. Campell ... who cares? This country was built and run by men with worse stories than whatever you've imagined here. The Japanese have a saying: ‘A man is whatever room he is in' — and right now, Donald Draper is in this room."

Which was pretty much my reaction to the J. Terrence Lanni resumé-inflation flap (it came and went too quickly to qualify as a scandal). The casino industry was built by men who did far worse things than list a nonexistent MBA on their curriculum vitae. Heck, Harrah's Entertainment is operated by a Ph.D late of the Harvard University faculty and it's not exactly an advertisement for fiscal well-being these days ($415 million lost in 2008, and counting). For that matter, we've entrusted our country for the last eight years to men with MBAs who said they'd run it like a corporation. How'd that work out?

And even if Lanni deliberately padded his resumé to get ahead ... who cares, Mr. Campbell? At worst, the reins of MGM Mirage might have gone to somebody more obviously "qualified" ... like a Gary Loveman or a Frank Fertitta III. MBA or no, Lanni was good enough for owner Kirk Kerkorian, a man with a Ph.D from the School of Hard Knocks.

Simply put, at a time when Mob-tainted Clifford Perlman is in the American Gaming Association's Hall of Fame (presumably soon to be joined by the late Lefty Rosenthal) and when Columbia Sussex CEO William J. Yung III got run out of New Jersey for running a rogue outfit in Atlantic City, but retains casino licenses in Nevada, Louisiana and Mississippi, outrage is difficult to muster.

Which is not to excuse the whitewash (Steve Friess has an even harsher term for it) that ran in Sunday's Las Vegas Review-Journal. Basically, the story amounts to a regurgitation of MGM's company line, which boils down to, "We (sort of) planned it this way." Less charitably, the R-J lends its credibility to an attempt to sweep Lanni's speedy and inglorious exit under the nearest available rug.

"(T)here is never a perfect time" for MGM's CEO to step down, we are told. No, but ringing up Kerkorian on the evening of Nov. 12 and giving him two weeks' notice is something less than the "smooth transition" MGM and the R-J are trying to depict. CEO-in-waiting Jim Murren stepped gracefully into Lanni's shoes but the timing and alacrity of Lanni's departure leave many questions hanging.

Given the extreme proximity between the Wall Street Journal's exposé on Lanni's credentials and his resignation, the official stance that it was all just a big coinky-dink, while possible, is difficult to swallow. (After all, a plan for Lanni to remain on the MGM board was quietly withdrawn when casino-oversight three states, including Nevada, began to probe the academic-credential issue.)

But let's give everybody the benefit of the doubt on that one and consider what else might have propelled the CEO toward the exit:

Perhaps Lanni, a man well-served in Asian sensibilities, was falling on his sword for the good of the company. After all, Nov, 12 marked the first time in at least five years that MGM stock closed at $10/share. Maybe, as Jeff Simpson has suggested, Lanni placed a "sell" order on himself once the stock price hit that inauspicious threshold.

The massive Harmon screw-up was already known to him. Or perhaps the sale of Treasure Island and writedown of $1.2 billion related to the Lanni-supervised takeover of Mandalay Resort Group were already done deals, and Lanni foresaw himself presiding over the partial dismantling of an empire he'd helped build.

Or maybe he just woke up that morning and, channeling Danny Glover in the first Lethal Weapon movie, growled, "I'm getting too old for this shit." That, at any rate, is The Official Story (minus the scatology).

It appears we will never know what ultimately prompted Lanni's leap ... or at least not for a long time. I'm with those who say, "he will be judged on his leadership." He certainly did much more than any executive I can think of when it comes to making diversity a priority in a boy's-club industry. He extended the company's reach into new overseas markets. And if MGM's reach exceeded its grasp toward the end of the Lanni Era, it did not do so to the extent that has Harrah's, Station Casinos and several other companies presently skirting the edge of bankruptcy.

Heck, we only demand honesty from CEOs on a selective basis. On Oct. 29, Lanni said no asset sales were on the table at MGM. Two weeks after Lanni left, Phil Ruffn plunked down $775 million for Treasure Island. Perhaps that deal really did come together in a fortnight, although it's not been MGM's style to move so fast. If, for purposes of argument, Lanni had been in talks with Ruffin in late October and told the press that asset sales were being discussed, what would have happened? MGM stock might easily have dropped like a brick. So if Lanni did fib about the Ruffin talks, do we further discount his credibility or do we say that it was his fiduciary duty to fudge the truth every so often?

One could go further about Lanni's accomplishment (which also include the complete domination of the Detroit market and the development of a strong executive team), but let it suffice to say that J. Terrence Lanni was "in the room."

Nor did he deserve the non-person status he fell into upon his resignation. His name was scarcely even mentioned at the most recent G2E and, when it was, it was sort of muttered in the corners of the press room. Honestly, there was neither a death in the family nor anything about which to be embarrassed -- and casino regulatory bodies have matters more material with which to deal than with the occasional fudged resumé. The probity and financial solvency of the mergers and alliances they are asked to bless might be a good place to start.

Not-so-Great White North

Fri, 09 Jan 2009 15:51:00 -0700

OK, so casino revenues are down in Nevada and Atlantic City. That's unfortunate, to say the least. But look on the bright side: You could be operating in Ontario, where the leading casinos aren't simply making less, they're operating in the red.

There's not much of a profit motive for operators in Ontario as it is, since all net income goes to the state, according to the Windsor Star. But the current situation isn't just bad for the tax-happy province but also for ...

Harrah's Entertainment: What is now Caesars Windsor is now grossing over 50% less than in it did in '99-00, when it was (under different ownership) Casino Windsor. By all accounts, it's much more of a hassle to get from Detroit to Windsor since 9/11 and the Motown-side casinos -- well, two of them, anyway -- have upgraded beyond recognition during that time. Windsor veteran Holly Ward invokes the trifecta of Total Rewards, a new showroom and a rebaptism under the Caesars name to implicity contend that her casino can turn things around. It will be interesting to see where Caesars Windsor stands when the '09 numbers come in.

Neil Bluhm: The Chicago-based developer's companies manage two casinos in the Niagara Falls area and they're both bleeding red ink. This economy probably entitles Bluhm to a mulligan but these aren't the kind of performance numbers you like to post when you've been positioned as the casino-powered rescuer of Philadelphia, Pittsburgh and Des Plaines, Ill.

Tribes: Profits from tribally owned Casino Rama are distributed to Canada's First Nations peoples. But when there are no profits to go around, hard times become that much harder.

Treasure Island, updated

Tue, 16 Dec 2008 12:44:00 -0700

Never slow off the mark, Steve Friess has been digging into the Treasure Island deal and has found the following ...

Mystere stays. No surprise there, given Alan Feldman's comments about continued synergies between Phil Ruffin's newly acquired megaresort and MGM Mirage's other Strip properties.

17 acres. That, at most is what Treasure Island sits upon, but Ruffin won't be getting the whole enchilada. If we use Jake Fuller's $15 million/acre valuation from yesterday, we're looking at roughly $250 million for the land and $525 million for the hotel-casino, although I'm willing to bet it's closer to a 200/575 split.

What's next? On the auction block, that is. A strong and informed faction on the Internet argues that probably nothing more will be hawked, now that MGM Mirage is $775 million closer to putting the last few dollars into CityCenter -- the motivator that drove the deal. But we know that The Mirage was on the block and that Bellagio hasn't been.

Bill Lerner of Deutsche Bank suggests MGM Grand Detroit, which seems crazy to me, since MGM has absolutely owned that market since the place opened. (Only Penn National could afford to buy it, but Detroit hasn't been on Penn's radar.) As for the Elgin, Ill., casino being for sale, you'd have to be crazy to buy it, Gov. Rod Blagojevich (D-IL) having helped destroy the casino economy in the Land of Lincoln. But if Alex Yemenidjian is willing to pony up over $400 million just for a casino license alone, he could certainly scrape together the going price of MGM's Elgin riverboat.

Some of Lerner's other suggestions make sense, though. (He hints that the long-in-abeyance "Project Z," south of Mandalay Bay, may be toast.) I particularly latched onto his mention of MGM's 50% interest in Borgata. If MGM were shot of that, it would also not have to spend another minute worrying about how much longer the New Jersey Casino Control Commission was going to pore over the suitability of Pansy Ho. It looks like MGM has effectively given up on Atlantic City already and this would simply make it official. And if there's any casino in Atlantic City -- other than Harrah's Marina (or whatever they're calling it today) -- that has "curb appeal" in these straitened times, Borgata is It.

What'$ in a name?

Wed, 10 Dec 2008 14:59:00 -0700

A reader recently enquired as to what became of the plan to re-name Harrah's Entertainment as Caesars Entertainment. When I asked Harrah's as to whether that was still on, no response was forthcoming.

My questioner wanted to know, "Do you think Harrah's shelved the plan to rename the company to Caesars partly because they might like to sell Caesars if the price were high enough ... Does going up market with the company image become a hindrance in these tough times?"

Second question first: This is actually a great time to be a casino patron, provided you've got a modicum of discretionary income. I was working on next year's iteration of the Pocketbook of Values today and the offers for 2009 are much better, IMO. Also, we've been seeing a barrage of bargain-oriented marketing messages from MGM Mirage, "freecations" at Herbst Gaming's Primm Valley trio of casino-hotels, plus a Harrah's Las Vegas promo for its comedy club that -- after you factored in the value of Improv tickets and buffet admission -- actually paid customers to stay there, to the tune of $1.50/person. (Some will argue that Harrah's should pay people to stay at its titular Las Vegas property.)

So, yeah, unless you're Steve Wynn, a "snob appeal" message doesn't have much traction these days. The people who can afford a high-end Vegas experience are already here; it's the other demographics we have to worry about. Even Las Vegas Sands -- hardly the image of a consumer-oriented company -- is expanding its loyalty program (Club Grazie) beyond a casino-only proposition. Expenses charged to your Palazzo or Venetian room will now earn points as well.

As to the greater fungibility of the Caesars name if it's only attached to single properties and not the whole company ... absolutely. Who'd want to buy a spun-off Caesars Atlantic City, say, if you had to forfeit or sub-license the Caesars brand? Putting any Harrah's-to-Caesars plan on hold avoids all manner of red tape and legal rigamarole, as well as keeping the option open of unloading those lucratively branded Caesars properties.

Of course, given that a strategy at Harrah's these days has the lifespan of a soap bubble, who knows if that just another of CEO Gary Loveman's will o' the wisp ideas, flung out for public consumption, then quickly forgotten. Indeed, to speak of "strategy" in the same sentence as "Harrah's" is oxymoronic, as the company doesn't evince any -- unless flailing about in every direction like a spastic octopus constitutes "strategy."

Which brought to mind another Loveman idea, mooted and apparently discarded, that of concentrating Harrah's around three brands (Caesars, Harrah's and Horseshoe), which would be designated as its "core" brands. It currently carries 11 on its masthead and has several others. Re-branding Bally's Las Vegas as a Horsehoe was floated -- though mostly razzed -- and Harrah's squandered a capital opportunity to bring the Horseshoe name back to Vegas when it redubbed the Barbary Coast with the generic "Bill's" brand.

An effort to maximize the Caesars brand moved but in fits and starts. So far it's consisted of taking it off the Glory of Rome riverboat casino in Indiana and putting it onto the former Casino Windsor, in Ontario. Harrah's Jacqueline Peterson says, "I can't put a price tag on how much it costs because so much more went into these properties than just marquee and business card changes ... there were new spaces created and upgrades made throughout."

Asked about the "core brand" concept, she was understandably flummoxed. "We have no intention of becoming three brands and we need look no further than Las Vegas to understand why that wouldn't work[:] we have eight distinctive properties here and renaming those into just three names would be silly and really confusing for customers." Of course, during the five minutes that the Harrah's/Caesars/Horseshoe-centric strategy lasted, it was thought that Imperial Palace wasn't long for this world (this was back in 2005, remember) and the Barbary Coast was still firmly within the Boyd Gaming orbit.

If Loveman has more brands than his company can exploit, he's neither alone nor the first. What used to be Caesars Entertainment (née Park Place Entertainment) went through three CEOs without ever cracking that particular nut.

So, is the Caesars brand up for grabs? I'd be very much surprised if it weren't, although that would be one of the most extreme measures Harrah's could take in order to lighten its colossal debt burden.

Happy anniversary, you're fired

Mon, 06 Oct 2008 15:48:00 -0700

That was essentially the message conveyed to several dozen workers at MGM Grand Detroit as the hotel-casino passed its first anniversary. Such cutbacks are usually routine in the industry and this one affected but a fraction of a percentage of the casino's workforce. But it's a heckuva way to say, "Happy anniversary!"

It's also an indicator of how much our economy has soured that MGM Grand Detroit is having to curb staffing even though it's by far the dominant player in the Motown market. Still, its workforce reduction is microscopic compared to the cuts coming up at Harrah's Entertainment (whistleblower Fred Frazzetta, who knows a thing or two that Harrah's management wishes he didn't, says 20% of Harrah's Vegas-based workforce will be decimated). Then there's Mill Casino, in Oregon, which opened a new hotel tower in the teeth of a recession. The result? A 7% workforce diminution, the first in the casino's 13-year history. Small wonder that Atlantic City is preparing to backpedal on its Oct. 15 smoking ban.

Wall Street has been no help. Liz Benston explains why several gaming companies' market-cap value is a fraction of that of their asset base. The casino industry's debt loads and ambitious construction plans are giving investors jitters, Benston reports. Ironically, the same Wall Street that has loudly pined for a never-ending stream of megaresort openings would now be happier if those same companies were doing nothing. Worse still, the gaming group is one of the few sectors that can be shorted with impunity. So if gaming stocks continue to plummet, it's partly because it's in some investors' interest that they do so.

Boyd's Michigan nemesis, Four Winds Casino is profiled by the Columbus Dispatch. It's a close-up view of the tribal casino that's taken a whopping big bite out of revenues from Boyd Gaming's Indiana riverboat, Blue Chip, basically by pre-empting the latter's Michigan-customer base.

Second wind in Maine. While developer Gary Goett's Olympia Gaming may have found the Las Vegas and Kansas markets too rich for its blood, at least for now, Maine is a whole 'nother story. Since Olympia threw in its lot with a pro-casino initiative, momentum has shifted in the project's favor.

Speaking of taxes ...

Thu, 04 Sep 2008 12:44:00 -0700

Atlantic City's high pajandrums are contemplating permitting as many as six new casinos (not counting Revel or the on-hold Pinnacle Entertainment project), further diluting a challenged market. Does this mean the existing casinos will get a commensurate reduction in their tax rate?

Why do I get the feeling the answer to that question is a scornful, "No"? Serves me right for applying logic to the situation.

Casino companies' best argument for keeping Nevada's privilege tax rate the lowest in the nation is that, theoretically, there's no limit to the number of casinos that can be built in the Silver State. Conversely, a market where casinos are limited by statute -- let's use Detroit as an example -- can justify a higher impost, especially since the government is providing a protected oligarchy for a handful of operators.

But were Detroit, say, to lessen the oligarchy by allowing in a fourth or fifth operator, it's only reasonable that everyone involved gets a tax break. After all, they're going to be divvying the same customer pie into smaller slices. Governments, unfortunately, tend to think that More = More, so that's never gonna happen. But it should.

While we're on the subject of Detroit, it required a vaudeville hook the size of a construction crane, but America's biggest political embarrassment is finally being dragged from the stage. Back when I was covering the awarding of Detroit's three casino licenses, the surrounding intrigue took such bizarre turns that, were it a novel, it would be deemed too lurid for credibility. Now, thanks to the stranger-than-fiction antics of Kwame M. Kilpatrick, Las Vegans have something new about which to feel smug, as the bumpy mayoralty of Oscar Goodman looks quaint and wholesome by comparison. (I like Oscar but he has his, uh, moments.)

"we need to get some $ from those Monkeys!!!!" Yes, everbody's favorite scumbag and slime bucket, "Casino Jack" Abramoff is back in the news today (in which Sen. John McCain makes a cameo appearance as one of the good guys). The quote above is from one of Abramoff's many infamous e-mails -- which McCain helped bring to light -- and the "Monkeys" are Native Americans, in case you were wondering.

Casino Jack is scheduled to be sentenced today on more of his seemingly endless litany of crimes. "I am not a bad man," Abramoff writes to the judge. No, Jack, you are a bad man and I hope the judge throws the book at you.

Alaska nixes gambling; Politics here, Harrah's there

Tue, 02 Sep 2008 20:41:00 -0700

With Alaska and its governor all over the news of late, I got to wondering what had become of that ballot initiative, backed by bar owners, to expand gambling in Alaska.

As it happens, the initiative was voted down, the most lopsided defeat for the casino industry in a year of setbacks, following legislative rebuffs in Kentucky and Massachusetts. It did, however, prevent discomfiture for one opponent -- Gov. Sarah Palin, who would have been required to appoint the members of the proposed Alaska Gaming Commission, had it been voted in.

If you're scoring at home, that's: Palin 1, Slot makers 0.

Politics Makes Strange Bedfellows Dept. Although the largesse of MGM Mirage tends to flow towards the GOP, one of its prime beneficiaries this year is Rep. Carolyn Cheeks Kilpatrick (D-MI). Meanwhile, the war chest of unopposed Rep. John Conyers (D-MI) has been swelled by donations from Phil Ivey and Doyle Brunson.

Conyers is seen as a critical ally in the move to overturn the UIGEA, that midnight raspberry blown to online poker players by then-Senate Majority Leader Bill Frist (R-TN) and Rep. Jim Leach (R-IA). Frist retired soon afterwards and voters -- probably including some pissed-off poker players -- sent Leach packing.

Swift Harrah's verdict? We may not have to wait long for a ruling on Harrah's Entertainment's legitimacy to build and run a casino in Kansas. There's the little matter of a disputed non-compete clause with the Prairie Band of Potawatomi Indians, who formerly made use of Harrah's managerial experience before the latter severed ties. However it comes out, a speedy resolution is to be hoped for. It's going to take the Sumner County casino two years to get up and running anyway, even without being ensnared in litigation.

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.

Ewwwwwwwwww!

Wed, 16 Jul 2008 13:42:00 -0700

That was my spontaneous, uncensored and incredibly articulate reaction to the lead of this Detroit Free Press story on casino cheating. It begins with a Greektown Casino employee blowing her nose, then using the same hanky to snatch up $480 in nearby cash. Brain bleach! I need brain bleach!

The two salient points of the story are the brazenness (read: stupidity) of Detroit's would-be casino cheats, and the hanging-judge justice meted out by the state's casino regulators. It doesn't surprise me that Greektown seems to suffer the plurality of pilferage, if only because it impressed me as a third-tier operation when I went there last December.

Stanley Ho insists he's still relevant to Macao

Stanley's little boo-boo. All sorts of interesting information has emerged in the course of Stanley Ho's IPO. Like how the roster of Sociedade de Jogos de Macau shareholders somehow went missing. If it were any other company, you'd chalk it up to simple (if inexplicable) incompetence. But, given the seamy nature of Stanley Ho's casinos and some of his businesss associations, it's difficult to give the crafty old dinosaur the benefit of the doubt.

Even Ho's much-praised business savvy now has to be questioned. In 2006-07, when the rest of the Macao market was booming, SJM's gambling revenues fell 6%. While I once said that the rising tide in Macao was lifting all boats, it looks like Stanley Ho's caravel has sprung a leak.

Update: The SJM IPO had a "lacklustre" debut, as both institutional investors and SJM insiders couldn't give back the stuff fast enough. If you've got a little spare time, the Cotai & Macau blog has the juicy parts of the Ho IPO. Reuters calls the document "a lengthy health warning." (For instance, 2% SJM earnings growth projected for 2009-10, against 13%-22% for everybody else.)

Well, if it makes old Stanley feel better, both Galaxy Entertainment and Melco International are having crummy runs on the Hong Kong stock exchange. No surprise there, China having recently further curtailed visitaton to Macao, part of its ongoing effort to micromanage the Macanese economy, much as you or I might constantly fiddle with the burners on a stove -- now hotter, now cooler.

Junketeer A-Max, meanwhile, took a massive bath on its purchase of a half-interest in the Greek Mythology Casino. Last year's $12.5 million profit becomes this year's $154 million loss. A-Max says Greek Mythology has $295 million in "intangible assets" (a reference to those "massage services" in the basement?) that will be amortized over the next 13 years, but I'm skeptical. Thirteen years is a helluva long time and the Macanese market will, at its current pace, have long since left places like Greek Mythology in the dust.

"Casino Bonds Crush Harrah's"

Tue, 03 Jun 2008 17:13:00 -0700

That's Bloomberg, bearing the dire news that casino junk-bond debt is "generating the worst return for investors as companies from ... Harrah's Entertainment Inc. to Herbst Gaming Inc. risk bankruptcy under the weight of their debt." With a return of 10%, casino junk bonds "are the biggest losers this year."

Who knew? "It was viewed very much as a safe haven," says one portfolio manager, referring to an industry long perceived as recession-proof -- a bubble that has burst this year. Aforesaid manager has seen his company take a bath on Donald Trump's casino debt, and is foreswearing taking on any Harrah's or Station Casinos bonds, given the size of their respective debt loads.

Other clunkers are identified as Columbia Sussex (whose debtholders want CEO William J. Yung III's head on a platter), Greektown Casino (scrambling to keep its license) and Herbst Gaming, which has received a "going concern" notice from Deloitte & Touche, and whose debt is plunging in value.

In the cases of Harrah's and Station, one of the rationales for privatization was that it would enable the companies to pursue new development at their own discretion, without having to answer to Wall Street. Instead, each is handcuffed. Given the evidence of market glut on Las Vegas' locals scene, maybe it's best for Station that there will be a four-year lull after Aliante Station opens. But it's a shame that the company's push into the Reno market -- one that could use new product of Station-level quality -- is now on indefinite hold.

$1 billion for the Trop? Although that nice, round number was floated by Larry Klatzkin recently, there's no evidence (yet) that the New Jersey Casino Control Commission has cracked the "B" mark in its attempts to re-sell the once-lucrative resort. And while Tropicana Entertainment co-President Scott Butera may scapegoat Garden State regulators for not getting a higher price point for the Trop, one analysis places the blame for the mammoth hotel-casino's reduced curb appeal on Columbia Sussex's reign of error, which cratered revenues at the property. That erratic interregnum certainly infuriated a veteran regulator, who takes a few swings at 'ColSux' on his way out the door, saying "They flunked Casino Management 101, as far as I'm concerned."

Third time's the charm. Two general managers fled Casino Aztar during Columbia Sussex's first year of ownership. Now a third has jumped ship ... but merely to another ColSux operation. Considering that Mike Jones was back in Lake Tahoe by the time the news broke, and that he used to be Bill Yung's GM of the MontBleu and Horizon casinos there, one's best guess would have to be that he's been putting in charge of turning those two around (especially the embattled Horizon), but I'll let you know for certain as soon as I do.

No official announcement has yet been made. (But you can find the settlement of the Columbia Sussex/Park Cattle litigation, posted under a rather odd link.)

Steve Friess continues to poll his readers on the coolest names in Vegas. Interestingly, nobody has yet voted for Ka, the narrative-driven Cirque du Soleil show directed by Robert LePage that even Cirque-skeptics like myself can enjoy. But apparently there is no "Ka" in "cool."

It reminds me of one of the most famous lines from Stargate SG-1 (in the episode, "The First Ones"), where we learn that the primitive race of Unas express their displeasure with vehement utterances of "Ka!", prompting the ever-patient Dr. Daniel Jackson to reply, "Now don't say 'ka!' until you've tried it."

This just in ...

Fri, 30 May 2008 15:49:00 -0700

So Tropicana Atlantic City trustee Justice Gary Stein wants to toss the existing bids for the property ... possibly because better ones are being dangled before him. As a consequence, he wants to restart the clock, which would push the deadline for a Trop sale into October. With Columbia Sussex's appeal of its New Jersey license denial still hanging fire, a longer timeline for the sale is a fait accompli anyway.

While a New York investment group ($950 million), Colony Capital ($850 million) and Cordish Cos. ($???) are believed to have bid on the Trop, it remains unknown whether there are more -- or fewer -- bids on the table. After all, Colony's 2006 bid for Aztar Corp. turned out to be just hot air, so there's no assurance its trigger finger has proven stronger this time 'round.

If Stein is hearing offers in the neighborhood of $1 billion or more, that'd run a cart and horses through Tropicana Entertainment co-President Scott Butera's contention that, by selling the Trop in the present economy and in within a set timeframe, the New Jersey Casino Control Commission is driving down the price of the asset. Actually, yesterday's sale of Trump Marina put paid to that argument, as the highest known bid for the Trop ($950 million) is more than three times the amount being paid for the Marina.

Turning to Trump Marina, while it's hard to think its fortunes could get much lower, it's worth noting that Trump Entertainment Resorts was reduced to selling it to a company (Coastal Development) whose main claim to casino cred is that it's the plurality shareholder in the Suffolk Downs racetrack.

These aren't the days to be learning on the job in Atlantic City. Even Columbia Sussex had a modicum of casino experience and look how badly it screwed the pooch. (Coastal's "Margaritaville" deal is a first step in the right direction, though.)

As for Coastal buying the Marina at an 11X EBIDTA multiple, instead of the standard 7X ($200 million), at least analyst Justin Sebastiano says what I only dared think: The high multiple is a way of 'stashing' a litigation settlement within the sale price. Ironic that Trump and Coastal fell out over a Hard Rock franchising deal. Many years back, Donald Trump had a deal in place with the Rank Organisation to re-brand the then-Trump Castle as a Hard Rock hotel -- an accord that fell apart the night before it was to be formally announced.

Greektown joins Columbia Sussex ... in Chapter 11, that is. Seems the tribally owned Detroit casino has gotten quite a bit overextended in its borrowing. The giant sucking sound that is MGM Grand Detroit vacuuming up customers can't be helping, either. Greektown is profitable but just barely.

On a more practical level, Greektown's current facility is cut-rate, and overcrowded with tables and slots. Despite a few gestures at Gilded Age plush and the convenience of being right on the People Mover, Greektown exudes "second tier" and is in danger of being selected out by escalating competition -- making it all the more imperative that the half-billion-dollar permanent casino-hotel get finished.

Overseas, University of Macao economics professor Fong Ka Chio predicts that Guangdong Province's cutback on visa applications to Macao may boomerang. The Chinese government has made no secret of its desire to have a Macanese economy that's less casino-centric (60% of GDP). However, Fong says this latest market intervention may be counterproductive, resulting in a 7.5% casino-revenue drop that could drive casino operators to scrap future projects.

A Windsor by any other name ...

Fri, 25 Apr 2008 18:46:00 -0700

Here, to get the weekend off to a flying start, is some fun time-lapse video of Casino Windsor being re-crowned Caesars Windsor. The best part is the balls-y music cue. Where'd they get it?

Hooters sagging bonds: Deep in today's paper was a squib about the Hooters casino-hotel's bond rating sagging further into junk status (down to Caa3). The still-in-progress sale also left Moody's unimpressed. "Given the prolonged turbulence in the credit markets, the rating agency expresses skepticism regarding the materialization of the transaction in its current terms," it said. That seems to be bond-speak for, "It's been a year and this transaction still hasn't closed, and -- given that the credit market had dried up like a year-old prune -- we doubt that it ever will."

Seriously, if the lyrically named Hedwigs Las Vegas Top Tier LLC can't pull the trigger on that purchase already, it's time to shop this bosomy casino (whose new theme has been an unqualified bust) around somewhere else.

Need casino furniture, cheap?

Thu, 13 Mar 2008 13:37:00 -0700

When I visited Detroit, the official position of MGM Grand Detroit was that its vacated temporary casino (formerly an IRS building) could be re-activated as a casino, if MGM so chose. I guess they chose otherwise. Yes, this roulette table could yours for a mere thousand clams. Come on down!

Bankruptcy in Bossier City. There's been a malaise in that Louisiana market ever since Class III gaming started to make inroads in Oklahoma, threatening Bossier City's key feeder markets, like Dallas-Fort Worth. Now an ex-Isle of Capri riverboat casino has hit a financial shoal.

Blackballed on the Strip? Or maybe you're just having a hard time breaking in? No matter. The Seminoles need a few good dealers (3,650, to be precise) and they're going at least as far as Atlantic City to find them, maybe even to Las Vegas, they say. (I mean, we've only got, what, six Columbia Sussex properties here? The Seminoles will have those 3,650 dealers in nothing flat.)

But if you're really hard up for comedians (and maybe too cheap to buy an ad), you can always put your phone number in a Las Vegas Review-Journal and risk being inundated by every bad standup comedian with an Internet connection, a mouse and a telephone. Heck, Fitzgerald's did. That's 702/388-2400 and ask for Gene Sagas. I'll be expecting S&G's usual 10% commission if you get the gig, OK?

Winter in New England

Wed, 12 Mar 2008 17:16:00 -0700

Although it enjoys consistently higher slot revenues than competitor Foxwoods, Connecticut's Mohegan Sun casino resort has been consistently down in terms of slot revenue. A five-month tracking period analyzed by the Boston Globe finds Mohegan Sun declining both in terms of actual dollars and year-over-year comparisons. By contrast, Foxwoods' slot revenues are more spasmodic, ahead of prior-year figures some months, behind in others. (Neither casino is required to report table game revenue to the state.)

Beyond Connecticut, the Twin River VLT facility in neighboring Rhode Island imposed an economy regimen after per-machine revenues fell 6% in the last quarter. Both UNR's William Eadington and the University of Connecticut's Arthur Wright say the New England market has either reached its saturation point or soon will. Not to mention that people are gambling less nationwide. (But if you say the word "recession" the terrorists have won.)

This grim data, however, does not deter Massachusetts Gov. Deval Patrick from plowing forward with a possibly foolhardy plan for three Bay State casinos. Why foolhardy? Well, Patrick's reliant on outdated revenue projections that -- in order to work -- would now require Massachusetts slots to outperform their Connecticut counterparts with fewer machines. And even a Las Vegas Sands consultant says Patrick's construction-jobs projection is way off the mark (by about 9,000 jobs).

On t'other hand, both Sands and Harrah's Entertainment seem willing to entertain a 27% taxation rate to get in on that Massachusetts action. That's worth keeping in mind if Sheldon Adelson or Gary Loveman start to inveigh against the disastrous impact of a 9.75% privilege tax rate in Nevada.

MGM Grand Detroit a smash. Okay, so I went there (for Northwest Airlines' in-flight magazine), loved what I saw and got treated like a king. So discount that.

But there's no discounting a 28% jolt to Detroit's casino economy, thanks to the swanky new place down the road from Tiger Stadium. It also took a small bite out of Motor City (whose upgrade still isn't fully online) and smoke-ridden Greektown.

MGM also saved a bundle ... not from switching its car insurance to Geico but by building a permanent casino-hotel, earning it a substantial tax break (Motor City can expect a similarly large 'thank you').

Greektown, meanwhile, is in a bind. To build a new casino it would have to move away from the very neighborhood -- with its lively restaurant row -- it was built to save. Then again, so long as it stays in its idiosyncratic, Stanley Ho-worthy "temporary," it can expect to keep losing market share. It's an unenviable dilemma.

Case Bets for St. Valentine's Day

Thu, 14 Feb 2008 15:19:00 -0700

Liz Benston crunches the numbers on the much-touted "40,000 new rooms" and finds only two-thirds that many. I mean, 26.6K hotel rooms isn't shabby but, if you threw the numbers together the way civic boosters do (mixing completed projects with chimerical ones), you could arrive at double that number.

Speaking of chimeras, the giant arena-cum-casino project that REI Neon hopes to build where much of the downtown Arts District used to be has received yet another extension from Oscar Goodman. At $10.5 billion, REI Neon's project makes CityCenter look almost thrifty. REI has never executed anything remotely on this scale, hence the penumbra of skepticism that dogs the project.

Steve Wynn's tipping policies are earning a second look from Nevada Labor Commissioner Michael Tanchek. Mind you, it's a narrow look, but it could be the wedge that pries open the door for additional legal challenges. Or not.

Equal time for Sheldon Adelson. In case you missed it, Two Way Hard Three (home of the best critiques of Palazzo) has the entire Power Point presentation from Las Vegas Sands' Investors Day, last Monday. Oh, and a complete Webcast, too. I feel so 20th century.

Fasten your seatbelts, it's going to be a bumpy year. Not only is the local prospect disturbing, but some of Vegas' and Reno's prime feeder markets are getting hit very hard, too.

More bad news for the thousands (from maids to casino managers) displaced by Hurricane Katrina. FEMA trailers may be contaminated. When are these people going to catch a break?

John McCain picks up the support of his most bitter rival. I don't think the Romney supporters are going to take this very well. They're a passionate bunch.

Darn it! We're not in first place anymore.

More Case Bets: Mostly politics, plus food

Mon, 21 Jan 2008 14:31:00 -0700

Nevada's caucuses are over and it looks like we -- what's the parliamentary term? -- screwed the pooch, procedurally speaking. One angered caucus-goer reports:

"Share your caucus experience: Simply awful! I have a lot of civic pride and was looking forward to being a part of this process, but felt like I was cast aside. Even the temporary caucus chairs seemed to have no idea what was going on, and when I tried to ask one a question, she turned away from me! I felt like my dignity was taken away. No wonder people abandon being part of the political process."

I've seen some in-print grousing that the Culinary Union frittered away its clout by waiting so long to weigh in with an endorsement. It certainly lost the perception war, as Sen. Hillary Clinton's six-point win in the popular vote will get more headlines than Sen. Barack Obama's tactical victory in the delegate count. But since the delegates are ultimately what counts, maybe the Culinary didn't completely blow it, after all.

Give Sen. Harry Reid props: He predicted 100K Nevadans would turn out and endured a great deal of scoffing (particularly from the blogosphere) for his prognostication. He got his 100,000 and 16,000 more, so he wins the Nostradamus Award this week.

Carrying water for Clinton: In a move of true desperation, the Clinton campaign is making an issue of the fact that Barack Obama -- gasp! -- plays poker. OK, it's more complicated than that but, as far as both candidates are concerned, I haven't seen this much waffling since the last time I ate at Blueberry Hill (a delicious habit that swelled my weight to 206 lbs., setting off an ongoing Battle of the Bulge).

The whole brouhaha raises an existential question for me: When gaming executives -- who also just happen to be prospective donors -- pipe up for their preferred candidate, who returns the favor by giving (not undeserved) props to the casino industry ... well, I think the term for that is "logrolling." So, who's the sock puppet and who's the puppeteer?

For the record, I don't support either candidate (or Ron Paul; see below). But it does give me warm fuzzies to know that Obama draws to the occasional inside straight. How can you not like the guy now? (Your mileage may vary.)

Ron Paul placed (an admittedly distant) second in the Nevada GOP caucuses. He's now cleaned the clocks of Rudy Giuliani and Fred Thompson more times than I can count. Is this translating into media coverage of Paul as a serious candidate? Hahahahahah! Don't make me laugh like that!

Can the MSM deal with anything that doesn't accord with the beloved Conventional Wisdom? Does the Pope live in Florida?

If you go to Detroit, you absolutely must eat (at least once, preferably twice) at Lafayette Coney Island. The hot dogs are justifiably celebrated but the custard pie almost made me weep with joy. It's delicate, flavorful and the crust alone is a work of art. I've not tasted custard so good since my Mom stopped making it. Even two meals at Wolfgang Puck Grille and a heavenly filet mignon at Michael Mina's Bourbon Steak couldn't overshadow this culinary epiphany.

Motown's best month yet

Tue, 15 Jan 2008 16:23:00 -0700

... at least for the casino biz. A variety of construction-related hurdles didn't deter gamblers. Greektown Casino is losing some market share to MGM Grand Detroit and Motor City, but not much. I'll be getting a chance to scope out the competitive landscape this weekend and find out what "Cutting Edge [sic] Gaming" means. (Sounds painful.)

Another setback for Stanley Ho: The onetime emperor of Macao's casino scene hits a speed bump in his IPO. While the article estimates that Ho still clings to 42% of a Macao market that was once entirely his, Deutsche Bank is quoting as saying he could retain "at least 20 percent," which isn't exactly comforting news if you're Stanley Ho.

Glass half-empty: That'll be spread pretty thin over Sociedade de Jogos de Macau's plethora of casinos. Glass half-full: It will be 20% of a much larger market than existed when Ho had it all to himself. So while SJM's decline is an inevitable by-blow of a competitive Macanese market, it's not like the durable Ho isn't seeing some benefit along the way.

Given Melco PBL's troubles in Macao, how did its stock get to a 142X earnings multiple (mega-lucrative Las Vegas Sands trades for a quarter of that)? Does the phrase "irrational exuberance" spring to mind? But it does look like a market correction is in progress.

Station goes mobile: The locals giant is hopping aboard the mobile-gambling bandwagon, at least to the extent of sports wagering.