David Mckee's Stiffs & Georges - Kansas

MGM: CityCenter worth $4.88 billion

Tue, 20 Oct 2009 15:37:00 -0700

MGM Mirage has announced that it's writing off approximately $1.3 billion (i.e., taking an "impairment charge") against CityCenter, with $348 million of that chalked up to falling real estate values. (Some $174 million of that will apparently be fobbed off on MGM's partners, bringing MGM's writeoff down to $1.1 billion.) The value of MGM's half-share of the project has been restated at $2.44 billion (a 31% decline). No word yet from Dubai World as to what it thinks its half of CityCenter is worth.

Kirk Kerkorian's Tracinda Corp. shook a rhetorical fist at Wall Street, stating in a press release that there is "substantial unrecognized value in MGM and CityCenter that is not reflected in the market value of MGM’s stock." It's nice to know that even mega-corporations can feel underappreciated.

Bottoming out? Air traffic into and out of Las Vegas was almost flat, year over year, -1.2% in September, helped by passenger-load increases -- and I don't mean those hefty people who take up two seats -- on nearly every domestic carrier not named US Airways (-26%). Considering that international traffic was -21%, this is augurs well for a return of domestic consumer confidence in Sin City. And, yes, flat is the new "up."

Pennsylvania: Rendell intervenes. Never accuse the Keystone State Lege of acting in haste. The table games bill is still mired in conference committe, prompting Gov. Ed Rendell (D) to wade into the fray. Rendell's magic number for the amount of revenue table games must yield in fees and taxes is $200 million. To get there, the guv believes the tax rate must be 16%. But he's closer to the GOP position, warning that the higher levies favored by Dems would "kill the golden goose" and deprive Little Johnny's school of needed funding. Meanwhile, Rivers Casino continues to disappoint, with the lowest revenue-per-slot in the state.

Finally, a taker! Out of left field, a contender has emerged for the orphaned casino license in Cherokee and Crawford counties in Kansas. You'll recall that it was awarded to Penn National Gaming, seemingly ages ago, but Penn -- spooked by nearby tribal competition -- all but spat on the license before leaving in a huff.

Enter Ozark Trail Gaming, a consortium of Kansas businessmen, offering to build a $225 million, 900-slot, 30-table casino. After some bad experiences with carpetbagger casino developers trying to dictate terms to the Sunflower State, you have to think the Kansas Lottery Board will look kindly upon this native-son effort.

ColSux loses again. A $41.5 million summary judgment has been slapped on Columbia Sussex for abrogating its purchase of the President riverboat in St. Louis (now the property of ColSux arch-foe Pinnacle Entertainment). Regulators for Missouri didn't like the looks of ColSux and its CEO, William J. Yung III (above). The latter pulled his license application and used that as an excuse to void the President purchase, but a federal district judge wasn't buying it.

The former President owners were also suing ColSux for jacking up parking rates for casino patrons by 560% (no, that is not a typo), a truly Yungian move. If poetic justice were served in this case, the court would award the ship to ColSux. Since the President's days on the water are numbered and Yung will licensed in Missouri only in his wildest dreams, trying to dispose of that near-worthless asset might be the aptest punishment of all.

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

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

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

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

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

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

Fontainebleau Las Vegas from Running Bull Productions on Vimeo.

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

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

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

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

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

Case Bets: Corzine, Penn vs. MTR, Pinnacle, Manilow & strippers

Wed, 07 Oct 2009 15:06:00 -0700

Forbidden by New Jersey law from directly contributing to political campaigns, casino companies are making an end run through Virginia. Harrah's Entertainment, Boyd Gaming and IGT are among those funneling campaign cash into a reverse version on the Underground Railroad. No wonder Gov. Jon Corzine (D) is able to carpet-bomb his opponents with advertising, if he so chooses.

Hey, big spender. The New Jersey gubernatorial race may be chump change compared to the cash being expended in the battle over Issue 3, which would permit four Vegas-style casinos in the Buckeye State. This is boiling down to a proxy fight between Penn National Gaming (pro) and racino specialist MTR Gaming (con). You'll recall that the Ohio Supreme Court nixed Gov. Ted Strickland's plan to unilaterally add slots to the state's horse tracks, which might have given MTR a level playing field with Penn.

While I can understand why Penn or Harrah's would be willing to pay 23% in taxes in Iowa or 27% in Kansas, it's mind-boggling that Harrah's would be chomping at the bit in Rhode Island, where the rate is 73%. Oy vey!

A green shoot. The Baton Rouge Business Journal reports that Pinnacle Entertainment is inking contracts to begin driving piles for its Lake Charles project. Called "Sugarcane Bay" and budgeted at $407 million, this is the first positive movement we've seen out of Pinnacle in a while (unless you count its hijinks with the President license up in Missouri). Good on them.

Manilow on the move. The Las Vegas Hilton has confirmed what all suspected: Barry Manilow's contract expires Dec. 30 and will not be renewed. As we reported in Question of the Day, it's nearly a done deal that he will now set up shop at Paris-Las Vegas, whose main showroom has gone long unused.

Good luck trying to get the Vegas constabulary interested if your car is stolen or your home burglarized. They're too busy going undercover to get lap dances. As Richard Abowitz notes, rampant prostitution on the Strip goes unchecked in the meantime. It's an open secret around here, although many of the "working girls" look downright scary, so you have to wonder how they turn tricks, especially in this economy.

The sins of the father

Fri, 02 Oct 2009 13:06:00 -0700

For all the brouhaha about Mike Ensign funneling 96 grand to his son's mistress and three of her four family members, the smoking gun (in the form of a canceled check) has not surfaced. Until now:

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Things are getting so bad for Ensign fils that even his confessor and gynecologist, Sen. Tom Coburn (R-OK) is pushing him under the bus. But, more importantly, if there's any doubt as to why states like Kansas should not be granting casino licenses to Mike Ensign, now one need only flourish a PDF of the 96-dime check he wrote to the senatorial concubine and her pimp daddy.

The good news is that Ensign Junior is merely a U.S. senator and not -- as he once was -- a middle-tier executive in a major casino firm (with an enabling Dad sitting atop the company). The Senate can withstand negative PR far better than the casino industry.

If Johnny Casino can ride out this latest scandal (and it doesn't seem likely), then the fun really begins. Odds are the Gov. Jim Gibbons would appoint himself to Ensign's seat rather than be ignominiously voted out of office next year. He could just think of it as a long, taxpayer-subsidized vacation.

Berman draws to empty hand

Thu, 24 Sep 2009 15:54:00 -0700

When Lyle Berman leapt into the reopened bidding for Kansas casino licenses, S&G expressed some skepticism. Why? Because Berman's Lakes Entertainment got into the bidding before it had any financing underway. Now Berman is basically saying, "Trust me," to Kansas regulators. Seems that he's been able to round up the moolah to build the casino but not the desired hotel. (Funny how the amentities always get pushed over the side when a would-be casino developer thinks he's got some rurals between a rock and hard place.)

Construction of the hotel is contingent upon Berman's finding of an as-yet-undiscovered joint-venture partner. He also holds out the hope that, maybe, banks will be a little more forthcoming with loans once the casino is open and generating cash flow. The Lottery Gaming Facility Review Board has stated that it's not going into Casino Bid 2.0 with a beggars-can't-be-choosers attitude. Let's see how they read Berman's bluff.

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."

Optimism in Macao, euphoria at CityCenter

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

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

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

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

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

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

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

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

Pinnacle meets karma

Thu, 27 Aug 2009 13:30:00 -0700

Plans by Pinnacle Entertainment to move its President riverboat upriver just hit a big snag. Taking the view that the President's license is portable, Pinnacle hoped to use either the vessel itself or the license to jimmy open a new market niche along the Mississippi River.

Seems the Missouri Gaming Commission doesn't hold with Pinnacle's logic. Move the ship, they say, and it's open season on that 13th (and last) license in the Show-Me State. Right now, Pinnacle's keeping the President operational as a charity case -- thereby preserving the license -- but the Coast Guard is likely to shut her down in 10 months, so decrepit is the vessel.

Not that I wish ill for Pinnacle, one of the classier outfits in the industry, but this here is what's called "karma." Both Pinnacle and Ameristar Casinos pushed hard for legislation last year that uncapped the state's loss limits in return for capping the number of licensees. It was an anti-competitive move that was inveighed against in these pages.

Ameristar and Pinnacle tried to lock up what was an open territory. Now, with the President's license skittering about the field like a wet football, Pinnacle's going to find itself having to grapple with the very competitors it thought it had excluded from the game. Which is as it should be.

There can be only one. Two casino proposals from Cordish Gaming and Penn National have been forwarded to the Kansas Lottery Gaming Facility Review Board (Uff da!) for final arbitration, Remember that the last time we went through this, Penn got a whopping zero votes (probably due to a series of peevish public pronouncements), but then Cordish wanted to resubmit its project in smaller form.

This time around, Penn execs have been playing well with others, rather than trying to dictate the process. They're promising a three-phase, $564 million casino-resort (subject to certain economic conditions). Cordish is choosing to under-promise, committing only to a $390 million casino, at least until bluer skies return. Partnership with the Kansas Speedway still gives Cordish an edge (as does the Hard Rock brand) ... but the Kansas-casino process has been long, tortuous and filled with reversals of fortune. (Mike Ensign, anyone?)

Speaking of Kansas ... shoo-in Foxwoods has announced that it's restructuring its debt and enlisting outside assistance, yet another victim of ill-timed expansion. Small wonder Foxwoods and Lakes Entertainment decided to pool their pennies on Chisholm Creek Casino (above) rather than duke it out for the Wichita market.

Compromise is near. Down in Florida, that is. A formula too complicated to summarize here would bring the Seminole Tribe and the Sunshine State's Lege into agreement. (The Seminoles took one look at the compact fashioned by the Lege last spring and spat it out like bad food.) In return for accepting some restrictions on game offerings at some casinos, the Seminoles get a complete exemption from paying taxes to the state -- if private-sector gambling spreads beyond Broward and Miami-Dade counties. And if existing non-tribal casinos get, say, blackjack the Seminoles' obligation to the state is halved.

So tell me, why does Sheldon Adelson seriously think Florida is a potential growth market?

Mixed prospects for Foxwoods

Tue, 25 Aug 2009 14:20:00 -0700

First, the good news. Lyle Berman has folded his hand in Kansas. His Lakes Entertainment is scrapping its own casino bid and taking a partnership role in Foxwoods' Wichita-area bid. Apparently Lakes is no closer to finding financing than when it started ... but neither is Foxwoods. Both companies will be digging into their own pockets to pay for the $225 million casino.

With 1,300-1,500 slots and 30 tables, the Foxwoods/Lakes joint venture will be smaller than any of the previous casino proposals for the area. A J.P. Morgan report also implies that hotel facilities and other amenities will be sloughed off onto a third party to be named later. So Foxwoods emerges the de facto winner and Mike Ensign is left to wonder how different things might have been had hadn't bailed out his errant son ... and to come up with incredibly lame excuses for his withdrawal.

Remember Philadelphia? No, there is still no casino in the City of Brotherly Love, even as some outstate facilities are into their second iteration. Having failed to open -- or even build -- its casino within the time period alloted by statute, Foxwoods is going to petition the Pennsylvania Gaming Control Board for an extra two years.

It'd be a surprise if Foxwoods' request isn't granted. True, all Foxwoods has to show for itself is a much-criticized South Philadelphia site plan (which has been aptly likened to a big-box retail outlet) and a couple of possible fallback positions downtown. The way things look now, Foxwoods may be prodded back toward South Philly, though it's no likelier to find a friendly reception there than it's done anywhere else.

The alternative, however, looks far worse. Pennsylvania would have to restart the application process, select a winner and then pray it could open its slot house within the statutory 12 months. Which also means that Philadelphia has to go through site-review Hell all over again ... and casino opponents aren't going to be caught napping this time around. Could a new entrant accomplish more than Foxwoods by September 2011? It's highly improbable, given the rocky history of bringing casinos to Philly.

Can't imagine why

Thu, 20 Aug 2009 13:30:00 -0700

From the dispatch box of J.P. Morgan:

"Yesterday, the Wichita Eagle reported that South Central Gaming Partners (or Prairie Sky, which consists of former executives of Mandalay Resort Group [read: Mike Ensign, whose son's sex-payola scandal gives new meaning to the phrase "pay for play"]) would no longer partner with Chisholm Creek Casino Resorts (Foxwoods Development Company) for a casino in Sumner County (South Central Gaming Zone). The article noted that Foxwoods Development Company President Gary Armentrout indicated that he did not know why Prairie Sky withdrew and also stated that Foxwoods would go forward without Prairie Sky."

Two words, Gary: "background investigation."

Stupid Politician Tricks

Thu, 20 Aug 2009 11:43:00 -0700

Please meet our contestants:

Sen. John Ensign (R-NV). "I think it would be inappropriate to start any other way than to say I'm sorry. I've said I'm sorry. I can't say I'm sorry enough. I made a big mistake in my life and I apologize once again to all of you." Thus spake Johnny Casino to 100 supporters in Fernley, Nev. Perhaps he was rehearsing those remarks for when he has to deliver them to his dad, Mike Ensign, whose Prairie Sky casino proposal was (rather too) coincidentally and summarily dismissed in Kansas this week.

Sen. Max Baucus (D-MT), techno-whiz and renowned psychic. "There were a couple of people in the crowd 'with YouTubes, Mr. Baucus added (meaning cameras), and he posited that the agitators were paid and probably from out of state. ('I could just sense it,' he said.)" Yes, my fellow Americans, it is this clueless old fogey whom Sen. Harry Reid (D-NV) has made virtually the sole arbiter of the future of American health care. If you have reasons to vote for Reid next year, subtract one.

Gov. Bobby Jindal (R-LA), churchy casino opponent. The hypocrisy here is so rank that ... well, let's just go to the video (Jindal's up first, so you can skip the remainder if you like):

Ah yes, because the Baton Rouge-New Orleans corridor is so much more heavily traveled than I-15 between SoCal and Vegas. Besides, New Orleans is a renowned temple of virtue and Louisiana doesn't have any o' them vile casinos like Las Vegas. [/sarcasm]

Rep. Jim McDermott (D-WA). Included for party balance and on the presumption that he continues to employ, at taxpayer expense, a raging termagant who hates, hates, HATES being called "Liz." And boy, will she let you know it.

Mike Ensign's downfall

Tue, 18 Aug 2009 17:42:00 -0700

It's all over for Mike Ensign. The former COO of Circus Circus Enterprises has seen his Prairie Sky casino consortium drop-kicked from consideration for a Kansas casino. That's right; a Lakes Entertainment bid that is hedging its bets by vacillating between two sites and entered the running without having financing in hand is moving on to the semi-final round. (So is Foxwoods Development.) And Ensign? He gets a seat in the bleachers.

True, Kansas Lottery Executive Director Ed Van Petten said Ensign Sr.'s payment of 96 dimes' worth of hush money to his son's mistress "not an issue to us at all." He added, inaccurately, "There hasn't been any allegation of wrongdoing at all." So Van Petten either doesn't read the papers or ... say, did I ever tell you about this great bridge in Brooklyn I'm selling? No money down, adjustable-rate mortgage, the whole nine yards.

Even if Van Petten's on the level, the Kansas Racing & Gaming Commission had promised "a full background investigation" of the winner. (Translation: "We're going to be crawling up your sphincter.") So even if the Prairie Sky project had surmounted the next two hurdles, Mike Ensign would have eventually had to explain his generous subsidy of Sen. John Ensign's bedroom adventures.

It's going to be tough for Dad to spin this one. Either he lost out on merit to a comparative small-timer like Lyle Berman or his enabling of Johnny Casino's hide-the-salami antics got him kicked to the curb. Which is the less humiliating narrative?

When the chattering classes began predicting l'affaire Hampton would be the end of an Ensign's career, I'll wager they had a different Ensign in mind. Oh, and thanks for dragging the industry into the mud with you, sir. Let's hope there are no more $96,000 shoes still to fall.

Quote of the Day

Fri, 07 Aug 2009 13:34:00 -0700

"There was a time I greatly respected Mike Ensign for what he accomplished in the gaming industry. After his son John's affair broke the news I wondered how this would affect the reputation of his father. Then we find out that his father and mother paid off the Hampton's [sic] in what has become a monumental scandal. In the end this has greatly reduced the reputation of the Ensign name in Las Vegas. Actually so much so that Ensign has become synonymous with hypocrisy." -- "LVPaco," commenting in the Las Vegas Sun. The elder Ensign's "pattern of generosity" to Doug and Cynthia Hampton has complicated his attempts to obtain one of Kansas' four casino licenses. Also, GOP efforts to field a candidate against Sen. Harry Reid (D-NV) have been torpedoed by Ensign Junior's wayward penis.

The sins of the son ...

Tue, 04 Aug 2009 15:54:00 -0700

... are visited upon the father, it would seem. The Sen. John Ensign sex-and-payola scandal becomes more incestuous and nepotistic by the day, and even the Las Vegas Review-Journal has slowly realized that this is not A Good Thing for the new-casino ambitions of former Mandalay Resort Group chair Mike Ensign.

By buying the silence of ... I mean, continuing a "pattern of generosity" to senatorial mistress Cynthia Hampton and her money-grubbing husband, Ensign Senior gambled with his reputation. It was a bad bet, a busted hand that's already making casino proponents uneasy and playing right into the hands of the anti-gambling crowd.

Quite simply, the State of Kansas has to decide whether it wants to entrust one of four casino licenses to a man who's been caught paying hush money. Is that indicative of how he'll do business as a casino owner? Ditto the convoluted structuring of the payola so that it would fly below IRS radar. Or do you cross your fingers and hope that, as boss of Prairie Sky, Mike Ensign doesn't sail too close to the wind?

As for Johnny Casino's political sidekick, Mike Slanker, he probably thought hitching a ride to Washington on holier-than-everyone Sen. Ensign's coattails would be a ticket to national prominence. He just never figured this is how he'd become famous:

What many thought/hoped would be a 48-hour story has become nearly a two-month extended engagement that shows no signs of ending soon. Neither is there any telling how much farther down Mike Ensign will be dragged by his son's skirt chasing but for the sake of his reputation and that of the casino industry, this would be a good moment for him to quietly re-retire from the fray.

Back here in Nevada, where the Ensigns are still awash in "juice," regulators could probably be persuaded to take a forgiving view. But Toto, we're not in Nevada anymore.

McKee vs. Lerner

Mon, 03 Aug 2009 20:01:00 -0700

Actually, the headline misstates what was a very collegial -- if occasionally dissenting -- exchange of views between Union Gaming Group's Bill Lerner and Yr. Humble Blogger on Jon Ralston's Face to Face show. It was only my second-ever gig as a talking head -- and it shows. (Note to self: Consider Botox injections to paralyze overactive facial muscles.)

The ostensible subject of discussion was newly bankrupt Station Casinos, but it ranged as far afield as Singapore and Macao. Actually, we probably could have taped an entire week's worth of shows without exhausting the topic(s).

Lerner was a perfect gentleman, despite all the snarky things I've written about him in S&G (assuming he even reads it, which I doubt). I could certainly learn a thing or two from his poised on-air demeanor. I also found that, if you're in the middle seat on Face to Face, you need to "cheat" a little to your right and downstage or else you'll be masked in all the wide shots. And, as Ira David Sternberg taught me, don't ever look at the camera.

My ex cathedra pronouncements were, however, overshadowed by my alarmingly jowly appearance. When the video is posted, you will see that I look every one of my 200 lbs. -- and quite a few more! Since the episode isn't available on the Las Vegas Sun Web site yet, here's a preview:

Oh, my brain and mouth parted company on at least one occasion. I thought I said MGM Mirage would probably offload The Mirage for "one and a half billion to two billion dollars." What emerged, though, was "a half-billion to two billion dollars." So Jim Murren, wherever you are, I do not think you'd part with The Mirage for a (comparatively) measly $500 million ... just so we're good on that.

At least the high-angle shot at the end missed my bald spot. Thank God for small favors. The rebroadcast is starting; time to find out if I still know how to operate a VCR.

Strange happenings at Penn Nat'l, Harrah's

Wed, 29 Jul 2009 18:31:00 -0700

While everybody's been focusing on the implosion of Station Casinos, the analysts at J.P. Morgan snuck out one of the more unusual (and entertaining) reports I've ever come across. They pored over Penn's 2Q09 filing and had some tales to tell.

The lead was that Penn was falling short of its cash-flow targets for the quarter. That musn't have been a complete surprise, given the incapacitation of Empress Joliet and the swapping out of one Lawrenceburg riverboat for another. However, there was trouble in River City, with Morgan analysts noting "an unexpected spike in large employee medical catastrophic claims at that [Lawrenceburg] property (bizarre), and 4) a less than productive new marketing program at Charlestown (marketing at Charlestown?) that did not produce incremental revs, but increased costs." The medical claims alone were a $1 million black eye.

They counseled against heading for the lifeboats, though, and pointed out that Penn has $795 million in cash in the till. (Do I hear an offer for Beau Rivage?) Morgan is also bullish on Penn's expansion prospects in Kansas (really?), Ohio and Maryland.

There was even some good news for competitor Ameristar Casinos, thanks to continued troubles at Harrah's Entertainment. Wrote the Morgans team: "Harrah's has not increased its promotional activity (comps, spending, reinvestment)," boding well for everyone else.

As Morgan reported earlier this month, Harrah's was -18% in Louisiana in June, by far the worst decline of any operator in the market -- while Boyd Gaming notched a slight gain (but a major victory in that context). Just as I've expected from the start, Texas Pacific and Apollo (Mis)Management are nickel-and-diming Harrah's into the poorhouse.

Facts are stubborn things

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

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

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

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

From distinction to disgrace

Fri, 17 Jul 2009 15:33:00 -0700

Even as CEO of Mandalay Resort Group (before it was subsumed into MGM Mirage), Mike Ensign kept well out of the limelight, content to let sublatern Glenn Schaeffer be the company's face. Now, as he contemplates a return to the casino business with a $235 million Kansas project, "Big Mike" Ensign may no longer have the prerogative of obscurity. In fact, his subsidizing of his stepson's tawdry sex-and-cronyism scandal could be the act for which the co-architect of Mandalay Resort Group is ultimately remembered.

The elder Ensign has always been there to support the man Jon Ralston has dubbed "Little Lord Fauntleroy," even installing him in key positions at then-Circus Circus properties like Nevada Landing. Industry crticic Sally Denton, writing in The Daily Beast, voices a hithero-unasked question about Sen. John Ensign's larger political aspirations.

Namely, "Johnny Casino" has made a career of shamelessly pandering to the religious right, which abhors gambling. Yet he (literally) made his fortune in the gaming industry. If push had come to shove and were the White House still in his sights, who would have gone under the bus? Casino baron Mike Ensign or his stepson's Goody Two-Shoes constituency?

S&G couldn't find a picture of Mike Ensign, so you'll have to make do with his "rigidly coiffed" stepson.

A Kansas casino license seemingly within his grasp, Ensign Sr. will now have to answer questions about the 96 dimes he lavished upon Ensign's mistress and her morally flexible husband. (Note to Papa Ensign's lawyer: If you have to assert that it's not "hush money," it's hush money.)

The cherry atop this sundae of seaminess is that the Ensigns structured the 96 grand payoff in multiple increments in order to circumvent having to pay taxes. Oh, and the acceptance of the Mike Ensign largesse by money-grubbing cuckold Doug Hampton went unreported and is currently unsubstantiated. So are we talking "on the up and up" or "under the table"?

When Mike Ensign has to make his case to Kansas officialdom as to why he ought to be entrusted with one of the Sunflower State's precious few casino licenses, he's gonna have some 'splainin' to do. The rest of us can thank our lucky stars that the former CEO was out of the industry at the time of this sordid imbroglio. Had corporate money found its way into the Hamptons' Love Nest Chest the collateral damage to the casino industry as a whole would be incalculable.

Guess we dodged a bullet there. But as for Mike Ensign, thanks for nothing, sir.

The Trop heist that wasn't

Fri, 26 Jun 2009 14:49:00 -0700

"An improvident indictment." That's what New Jersey officials are calling a case that was quietly quashed in May. Sacked Borgata veep John Conklin and two other men had been charged with plundering the Tropicana Atlantic City's database when they were in the Trop's employ (and when the Trop was still owned by Aztar Corp.).

Closer examination revealed that nothing had been purloined and the data in question was not particularly sensitive, either. All three indictees have been exonerated ... but where does John Conklin go to get his career back?

Phantom redux: Defying the odds, the Venetian's production of Phantom of the Opera celebrated its third anniversary Wednesday night. I jotted down a few observations for CityLife. (Tina Walsh fans, take note.) Having seen the Broadway production -- albeit many years ago -- I'll be the first to allow that it actually improves on the original in a respect or two. Oh, and my CityBlog entry misspells choreographer Gillian Lynne's last name. My apologies.

Two titans of American popular music "played Vegas" last weekend. Actually, Loretta Lynn was in North Las Vegas and Aretha Franklin all the way out in Primm ... not remotely near the Strip. What's wrong with this picture? Or this one ...

Midnight Jim: taking down Big Oil

It's summer and gas prices are -- like, duh! -- on the increase. Gov. Jim Gibbons doth suspect that dark, foul, untoward schemes are afoot. But Midnight Jim assures us he is on the case. I feel safer already.

Gay cowboys. They're queer, they're here and they're at The Rio specifically. A straight-gay coalition turned out in force last night to celebrate its victory over Midnight Jim's benighted opposition to domestic partnerships. (Because that's not how he rolls, y'see.) Speakers included Harrah's Entertainment Vice President Jan Jones, who led the charge on Carson City.

For all the failings of CEO Gary Loveman's stewardship of Harrah's, on his watch the company has expanded its already-enlightened attitude on social issues. It's not just a question of being gay-friendly; it's good business.

Worth -$23 million?

Isle of Blight. Is the woebegone Greek Isles casino-hotel worth less than nothing? In a sense, yes, since it owes $67 million on a book value of $44 million. Even a resale price at book value seems wishful thinking, considering the Isles' chequered history.

Asserts the Las Vegas Sun, "With its strategic location near the Las Vegas Strip and the Las Vegas Convention Center, the Greek Isles and its associated real estate are seen as having long-term value after the recession ends."

Yeah, but it's had that "strategic location" for as long as it's been in existence and the Isles' progress has been a steady one from Bad to Worse. I wouldn't give a plug nickel for the place -- not with Strip land prices in freefall and vast acreage there lying fallow.

Miracles are possible. Work on Marina Bay Sands is, believe or night, a fortnight ahead of schedule. Next step: Hold the line on that (already swollen) $5.4 billion budget.

The waiting continues in the great state of Kansas. Its lottery commission wants another two months to review applications for the Wichita and Kansas City markets. Considering the recent flurry of dropouts (including Vegas' own Golden Gaming), you'd think this would expedite the process. Instead, the coronation is six months away.

Squeeze play. No time is being wasted as Pennsylvania rushes toward expanding into Class III casinos. Two rival proposals to add table games are presently on the table. Casino lobbyist Steve Rittvo is forwarding a plan that would tax new games at 12%. This is projected to generate $165 million for the Keystone State (assuming that slot play concurrently increases sufficiently to generate a $61 million impost).

House Whip William DeWeese (D) counters with a 21% tax, combined with a one-time $10 million/casino fee, for a potential Year One windfall in excess of $300 million. I wish Rittvo luck but fear that solons will -- as they so often do -- gravitate toward the bigger dollar sign. It's an institutional failing.

Neil Bluhm, Philadelphia's Sugar[House] daddy

On a happier note, Neil Bluhm's revised design for his Sugarhouse Casino, on the Philadelphia waterfront, has received the green light from the City of Brotherly Love. Barring further legal mischief by sore loser Donald Trump, this means the project can finally move ahead, with a temporary, 1,700-slot casino slated for a Spring 2010 opening. Hallelujah!

"Another one bites the dust"

Fri, 15 May 2009 11:15:00 -0700

That's how a reader informed me of Las Vegas-based Golden Gaming's decision to bail on Wyandotte County in Kansas. Considering that you've got Harrah's Entertainment, Ameristar Casinos, etc. firmly entrenched across the state line in Kansas City, Mo., and Isle of Capri making a comeback over there, I don't blame Golden for its hesitation.

Penn National remains in the Wyandotte running but it found no support for its last bid and previous winner Cordish Co. withdrew amicably from its Kansas Speedway project so that it could be downsized. Casino-enabling legislation in the Sunflower State didn't allow Cordish to revise its proposal once it had been accepted by the Lottery Board. But Cordish promised it would be back, and it was.

Lottery Executive Director Ed Van Petten told media Golden wanted to conserve its assets, adding, "They are being conservative and playing it smart. I hate to see it, but I fully understand." Golden executive veep Rod Atamain's diplomatically phrased withdrawal alluded to preserving liquidity, among other motives:

"While we believe in the long-term viability and appeal of our site and project, we are not confident in making such a commitment on our own in the current environment." That's tantamount to an admission that Golden couldn't find lenders, especially considering Atamain's previous reference to "ongoing turmoil in the financial markets."

It would have been a tough call for Kansas. The Cordish and Golden projects were comparable in budget ($700 million vs. $662 million). As appealing as a Tom Watson golf course might be, Cordish's promise of a 50% larger slot base than Golden's would have been sweet music to state officials weathering a deep recession and counting the gambling receipts before even one handle is pulled.

In the meantime, Golden still has that liquidity it wants to preserve -- and its cash flow will improve this summer as liberalized casino rules in Colorado (Golden's primary market) take effect. It could always spend some of that dough close to home: Golden CEO Blake Sartini is the brother-in-law of Frank & Lorenzo Fertitta. What are the odds the Fertitta clan might try to spin off assets to Golden? It would enable Station Casinos to sweeten the offer it's making to bondholders and keep Boyd Gaming at bay, all in one fell swoop.

Just a thought.

Upset in Kansas

Tue, 12 May 2009 17:00:00 -0700

I'm going to go broke trying to make book on who's going to get the three remaining casino licenses in Kansas. "Nobody" is a shoo-in for the Cherokee County vacany from which Penn National walked away last year.

But even the presence of former Mandalay Resort Group executives didn't help South Central Gaming Partners. Jilted by Harrah's Entertainment last year, this investment group just got passed over by the Sumner County Commission. Although Foxwoods Development's parent casino, back in Connecticut, has been struggling lately, it got a nod. So did Lakes Entertainment, which earlier had freely conceded it didn't have financing in place -- no small consideration when your proposal is the most expensive of the three.

Two S&G readers made headlines recently ... or rather, one of their St. Bernards did, thanks to his very vocal protestation of tornado-alarm testing. The sounding of the tornado claxon is one aspect of Midwestern life I find myself not missing in the slightest. So, Chaz, I feel your pain, son.

Kansas reduced to begging

Wed, 22 Apr 2009 15:32:00 -0700

So nobody wants a casino in either Cherokee County or Crawford County, Kan.? Let it not be said that Sunflower State officials were too proud to beg. Heck no, they're down on their knees groveling and pleading for somebody, anybody to bid on that woebegone fourth license. Oh sure, it's the third deadline they've proclaimed but we bet they really, really mean it this time ... just as they will the next time ... and the next.

Time was when casino companies went to desperate, sometimes foolish lengths to get any old development agreement anywhere. But with two decades of geographical expansion under its belt -- and a cinching of that belt thanks to the rise of tribal casinos and the fall of the global economy -- the industry has found the strength to just say "no" every so often.

First, some good news

Thu, 16 Apr 2009 18:19:00 -0700

In a refreshing change of pace comes news of a casino that's on schedule for its opening. OK, so it's in Dodge City, Kansas, but we'll take good news wherever we can get it these days. Whoever thought avionics firm Butler National would be the sole casino bidder to make good on its Sunflower State commitment?

How quickly we forget that the original plans for Red Rock Resort called for three condo-hotel towers. Station Casinos was feeling its oats back then, thinking big even as it projected only single-digit ROI at Red Rock as far out as 2011 or longer. Overconfident much?

They like us. They really, really like us. Casinos in Southern Nevada feeling the recession's pinch are suddenly overflowing with newfound lurve for area customers, long taken for granted. Here's what's on offer so far. Satellites like Primm and Mesquite weren't any great shakes during Vegas' halcyon years. Why you'd go out there now when oligopolists Herbst Gaming and Black Gaming have helped run their respective markets into the ground is difficult to fathom. (Primm, at least, has a good outlet mall. Mesquite ... not so much.) Oh, and what's wrong with this "Stay and Play Here" graphic?

Goodman one-ups Adelson. Although he's never exuded warm fuzzies toward the Culinary Union, neither has -- to my knowledge -- Sheldon Adelson called his longtime adversary "evil." So Mayor Oscar Goodman stepped into the breach -- or stepped in something. As for the Culinary, it's got much bigger problems to worry about.

Any company that planned an ultra-high-end Elvis Presley-themed resort (a conceptual disconnect if ever I heard one) doesn't have both oars in the water. This one doesn't have money in the bank, either, and may soon have its Strip parcel sold right out from under it.

Las Vegas' best low-cost attraction is on the move, down the road to 1610 E. Tropicana Ave. If there's a guest list for the grand reopening, Elton John isn't on it.

Case Bets: Kansas update, Cordish's push, Penn's prudence, taxing sex

Fri, 03 Apr 2009 18:32:00 -0700

Details of Lakes Entertainment's just-under-the-wire entry into the Kansas casino derby are beginning to emerge -- and it looks a bit half-assed. Particularly non-confidence-inspiring was the admission, "We're going to go find the cash." If somebody as flush as Phil Ruffin can't scare up $175 million, what makes Lakes confident it can score $260 million? Demote this bid from "contender" to "also-ran" status.

Another Kansas applicant also is moving aggressively elsewhere. Cordish Co. is looking to snap up three tracks owned by bankrupt Magna Entertainment. Racino conversion, though is not on the agenda, according to Cordish.

No fools. It looks as though Penn National has sworn off the Strip and small wonder. If execs at Harrah's Entertainment or MGM Mirage say they want to deal but insist on 10X-12X cash flow as their asking price, they're not going to find takers. I presume that their rationale -- and it's hardly without merit -- is that if business returns to the levels it enjoyed four years ago those multiples will go down.

Whether that argument will fall upon receptive ears seems unlikely. But look on the bright side: You could pay 12 times EBITDA for the Tropicana Las Vegas and it would still only cost you $54 million.

Five bucks a f**k? Sure prostitution is legal in 10 counties of Nevada, a state whose economy is built on the perception of an anything-goes atmosphere. But tax bordellos by the lay? Horrors!

Kansas heats up again

Thu, 02 Apr 2009 13:57:00 -0700

It's always either feast or famine for the casino industry's prospects in the Sunflower State. A week ago, there was one in-progress project, Butler National's low-cost Dodge City casino and almost nothing else. Now, with the window of opportunity slamming shut (again) for Wyandotte County, a slew of applicants has skittered over the sill.

First in was Cordish Co., making good on its promise to be back with a downsized proposal for the Kansas Speedway. A $390 million Hard Rock-branded casino will be the entirety of Phase One, with the hotel and all other amenities to emerge at an unspecified future point. Yesterday, Penn National Gaming got back into the act, pitching a $500 million iteration of its Hollywood Casino brand. It'd be a full-service product (hence the higher price tag) but Penn's noblesse oblige attitude and its abrogation of a casino development it had been awarded in Cherokee County may still rankle the Kansas Lottery Commission. It blanked Penn in the previous round of bidding.

Hard on Penn's heels comes Las Vegas-based Golden Gaming, which lost to Cordish by one vote last time around. Its proposal is Cordish-like in terms of proposing a $360 million casino (with restaurants and entertainment venues) to be eventually followed by another $300 million in augmentations. These would include an expansion of the casino from 2,000 slots to 2,500 and from 65 table games to 98. Also promised are "a 300-room hotel, spa, restaurants, retail shops, convention and meeting space, an 18-hole championship Tom Watson golf course, 60-lane bowling alley, entertainment venues and more."

(Boy, $660 million sure goes a lot farther in Kansas than it does in Vegas. Here, all it gets you is Aliante Station.)

Golden's would-be project, to be sited along I-70 near Edwardsville, is Cordish-like but arguably Cordish Lite, too. Allying itself with the speedway and sublicensing the Hard Rock brand gives Cordish two sharp arrows in its quiver. It'll take some pretty strong argumentation by Golden to persuade Lottery commissioners to reverse their earlier preference for the Baltimore-based developer, which can now also point to the early success of its Indiana Live! racino as further evidence of its suitability. In Round One, last year, the vote between Cordish, Golden and Penn went 4-3-0 in Cordish's favor. It's the latter's game to lose.

Over in Sumner County, previous applicant Equity Ventures has been pawing the ground for a while now. It's hedging its bet by optioning two sites but one of them is entangled in litigation due to the City of Mulvane's attempt to grab, er, annex it. (Way to improve that tax base, guys!) Jilted partner of Harrah's Entertainment, which retreated from Kansas last year, Equity's profile got higher this week when former Mandalay Resort Group CEO Mike Ensign turned up at the helm.

After a bit of hemming and hawing, Foxwoods Development is returning to the fray, too. It's making the argument that it can get a casino on line quickly and inexpensively, probably in the $225 million neighborhood. Squeaking in just under the wire is Lakes Entertainment, coming off a rebuff by Ohio voters last November. Like the Ensign group, Lakes is opting for a parlay of sites, one of them in Wellington.

The state ought to have fun sorting out what are, in effect, five proposals. Equity has the theoretical advantage of representing the core of the joint venture that won the bidding last year (presuming that Harrah's defection hasn't left a sour aftertaste). Foxwoods, despite recent economic misfortunes in Connecticut, still owns the longest and strongest track record. Promising an operational casino lickety-split is music to tax-starved bureaucrats' ears, too. Lakes has the site (Wellington) that's been bruited as the ~~Lottery's~~ Sumner County Commission's location of preference. This one's impossible to call.

That leaves orphaned Cherokee County, where bidding remains open for another three weeks. Anybody ... anybody at all? Don't everyone jump up at once, now ...

Inside the Harrah's filing:

Fri, 20 Mar 2009 12:28:00 -0700

Hare 1, Tortoise 0: After reading through the March 13 Harrah's Entertainment 4Q08 filing this earlier this week (one of the benefits of using mass transit), I set it aside for a few days, enabling the Las Vegas Review Journal's Arnold Knightly to beat me to the punch. What caught both his eyes (presumably) and mine (definitely) was a line of copy in which Harrah's acknowledged that its poor Las Vegas Strip performance was partly driven by "fewer hotel rooms availabe due to room remodeling and remediation projects at three Harrah's properties [including The Rio]."

You will recall that, whether to save time or money (or both), Harrah's made an end run around the Clark County permitting process when it wanted to make changes to several of its hotels. In some instances, these alterations not only didn't match the blueprints submitted to the county, they also compromised fire safety. (Lax inspection on the county's part allowed the problem to mushroom.)

Harrah's is presently under indictment for these cheeseparing measures, which were uncovered by dint of a forceful R-J investigation. It was a rare instance of the R-J speaking truth to power and the paper has suffered mightily for it, as Harrah's has retaliated in measures both great (an advertising boycott) and petty, like banning the R-J from Harrah's Las Vegas properties.

Whatever punishment the judicial system may or may not levy upon Harrah's will be nothing compared to the dent this misadventure put in Harrah's balance sheet. (By the way, I should acknowledge that Knightly read the Tolstoyian 160-page version of the quarterly report, while I settled for the 34-page "Cliff's Notes" version.) Harrah's may have thought it was saving money by going rogue but that false economy has now come back to bite it in the ass, to the tune of $60.5 million.

Gargantuan writedowns swung income from positive to negative in almost every jurisdiction. The international sector has bled red ink for two years, as London Clubs has proven to be a money-loser. The venture, like the company's hapless flip-flopping in Kansas, is typical of the spasmodic decisionmaking that has characterized CEO Gary Loveman's stewardship. Seemingly random projects (Slovenia, Singapore, the U.K.) were lunged at and toyed with briefly, then ditched. Having settled for one of the smaller fry of the British casino industry -- London Clubs -- and then unable to swap it for a piece of the big boy, Rank PLC, Harrah's must settle for selling off a little bit of LCI here or there.

Harrah's Atlantic City numbers would look much worse if the company didn't cleverly roll its Pennsylvania competitor, Harrah's Chester, into the A.C. portfolio for reporting purposes. If you had to assign Harrah's Chester to a region (as opposed to "Other"), the only one that fits is "Atlantic City Region," though that's a bit like rolling Laughlin numbers into "Las Vegas Region."

Debt service is murder, up 2.7X from 2007. 'Nuff said.

If asset sales are necessary, a non-Total Rewards property like Bill's Lake Tahoe would be already positioned for spinning off. However, Harrah's would have difficulty justifying more than a $160 million average sale price for any of its outlying Nevada properties, where cash flow is comparatively small. If significant relief is to be achieved from unloading casinos, some trophy properties will have to be sacrificed. After all, why should the bondholders be the only ones taking a bath?

Elsewhere in the 'sell block'

Mon, 02 Mar 2009 15:44:00 -0700

Note: Parts of this were published earlier but got devoured by our resident Comment-Eating Server.

The Motley Fool paid another visit to the sickroom and found Las Vegas Sands even sicklier than it when it was first pronounced a "deathbed stock," $61.95/share ago. But despite being down 'merely' 58%, Isle of Capri Casinos was pronounced "gravely ill," following the announcement that it would be temporarily suspending racing at Pompano Park. (Yikes!)

Add that harness track to the list of Goldstein Era show horses that have turned out to be broken-down nags for current CEO James Perry. While the sport of kings is a terminal patient, nobody -- yours truly included -- foresaw that Florida racinos and slot-enhanced parimutuels would be a duff proposition. Even if the Seminole compact is revised to put parimutuels and tribal casinos back on a level playing field, the Seminoles' lead on the private-sector casinos is several furlongs and growing.

Not in Kansas anymore: The messed-up casino-development process in Kansas won't be Gov. Kathleen Sebelius' problem for much longer. But governor, how does it feel to have to take sloppy seconds from D.C. retread Tom Daschle?

Nevada's overreliance on casino taxes has caused yet another leak to spring in the state's budget, a thing of shreds and patches even in the best of times.

Poker: The Musical. At last, the problem of the Tropicana Las Vegas showroom is solved! (Although it would be pretty damn funny in an unintentional way if you booked a tuner called Poker playing a casino that closed its poker room.) The official site can't be bothered to host sound clips, so head on over to Napster for a sample or 10.

Case Bets: CityCenter, Detroit, Boyd in Indiana

Mon, 19 Jan 2009 15:03:00 -0700

CityCenter: Cash cow or calf of gold?

It's received wisdom that, in its worship of the Golden Calf known as CityCenter, half-owner MGM Mirage is prepared to sacrifice some of its high-value properties, including MGM Grand Detroit, even in the face of numbers like these. Perhaps a history lesson is in order.

After the 9/11 attacks and the crippling blow they dealt to the Vegas economy, one of the ways companies like MGM stayed afloat (and, in MGM's case, profitable) was that their Vegas operations were backstopped by regional footholds in markets like Detroit and Biloxi. Now one keeps hearing that MGM is bent upon putting all its eggs in the Vegas basket, with even MGM Grand Macau possibly to be had.

(A moment of levity: A Dutch casino executive, speaking at G2E, suggested in all seriousness that MGM buy Station Casinos or Boyd Gaming and transplant their [locals] customer base to CityCenter. Which shows almost as little understanding of the Vegas market as I have of Holland's casino business.)

If this is an accurate reflection of the corporate thinking at MGM, shareholders should be alarmed, at the very least. A CityCenter-centric strategy concentrates risk, rather than spreading it across multiple markets. The kind of pullback that's being mooted in the blogosphere and podcast cosmos would be so irresponsible that it would call the judgment of MGM leadership into question. However, so long as said management is answerable only to Kirk Kerkorian, that question may never be called.

Don't look for rescue from Foxwoods or Mohegan Sun. Their slot revenues have been sucking wind this year. Also, salary cutbacks to 9,800 Mohegan Sun workers bode very poorly for further expansion by the casino, which was bullish on the Kansas market not so long ago.

Boyd fights back. The opening of nearby Four Winds Casino really did a number (as in approx. -40%) on revenues at Boyd's Blue Chip riverboat in northeastern Indiana. Watching double-digit revenue declines, month after month, might spur those of us with lesser intenstinal fortitude to cut and run.

Not Boyd. It's reinventing its business model for Blue Chip, in best "adapt or die" fashion. The three-pronged response of a new hotel, spa and concert venue is an aggressive pushback. It probably won't restore Blue Chip to former levels of glory, at least where gambling revenue is concerned (Four Winds still has the "convenience factor" going for it with Michigan punters). However, it does fling a strong challenge at its adversary. Four Winds, the ball is now your court.

The casino nobody wanted

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

A tip of the Panama hat to a reader in Kansas who brought my attention to this story ...

The Kansas Lottery Commission will push the deadline for applying for the Cherokee/Crawford county casino monopoly back three months because nobody wants it. Remember that Penn National was the only applicant the last time around and subsequently walked off in a snit. If the KLC were to hold its nose and sanction a quick-and-dirty casino in lieu of the mandated $225 million facility, at least one or two companies would have less trepidation about going where Penn once feared to tread.

Collapse in Kansas; Herbst is toast

Fri, 05 Dec 2008 11:20:00 -0700

And then there was one.

A Cordish Co./Kansas Speedway joint venture has pulled the chicken switch on a $400 million casino project. This leaves avionics firm Butler National Service Corp., with its Dodge City concession, as the only company with an ongoing casino project in Kansas -- Penn National, Harrah's Entertainment and now Cordish having walked away from the other three concessions. Project head Joseph Weinberg wants to build a casino-first, amenities-later version of what had been proposed. Of course, in order to do that, the bidding process will have to be re-started from scratch. Also, Weinberg's plan assumes that Cordish gets the nod a second time and, were I a member of the Kansas Lottery's board, I'd be getting pretty fed up with the diva-dom displayed by some of the casino applicants.

On the other hand, if a company as well-regarded as Cordish can't get its Speedway casino financed, that makes it easier to excuse Harrah's exit from the Sunflower State. The Lottery says it is willing to"invite applicants to apply with proposals they feel fit the current economic climate." [read: "smaller budgets"]. That, combined with the sudden availability of Sumner County, opens the door wide for Penn National. If the Lottery's board wants to give Penn the Sumner/Cherokee County parlay it requested (and lower the budget for the latter), Penn is the one company that could execute the projects out of cash on hand. Or is it saving its pennies for a Vegas Strip property now?

Across the border, the clever chaps at Pinnacle Entertainment have found a loophole in Missouri law that might enable them to open yet another casino market. Revenues at the old President riverboat, on the St. Louis waterfront, are down somewhere in the bilge water. But Pinnacle has a discrete gaming license for the ship and an option on some land toward the northern end of St. Louis, near the Chain of Rocks Bridge. There, it proposes to essentially dry-dock the President.

Since Missouri law doesn't expressly forbid what Pinnacle is contemplating, the company could open a new market in the state, even though the number of licenses remains frozen at 13. Smooth move. But it's not one that's going to sit well with the backers of Sugar Creek and Cape Girardeau projects that were frozen out when Missourians voted for the license cap last month. And it underscores the perils of shutting the door to new competition, as Pinnacle and Ameristar Casinos are beginning to treat Missouri as their private fiefdom.

Already, Ameristar veep Troy Stremming -- the architect of the freeze -- is huffing that Missourians dare not let Sugar Creek get into the game: “We don’t want to get into a situation where we are over-saturating the market and cannibalizing existing destination facilities.” No, but it's hunky-dory to let Stremming's buddies at Pinnacle have three St. Louis-area locations instead of their current two. No oversaturation or cannibalization there, huh? At least Stremming won't have the casinos-in-Kanas bogeyman to brandish anymore, now that all but one of those projects has collapsed.

Hope for Harrah's. The Chinese government is experimenting with parimutuel wagering on horse races. If the ChiComms can be persuaded to extend the sport of kings to Macao, maybe Harrah's can make serious use of that golf course it purchased and which is now ineligible for casino development. Frank Fahrenkopf couldn't resist mentioning that white elephant during his joint appearance with Harrah's CEO Gary Loveman during G2E. Judging from some of Fahrenkopf's subtle rapier thrusts and Loveman's harrumphing response, there seems little love lost between the twosome.

Herbst Watch, Day Two. The Magic 8 Ball (in the guise of Liz Benston) says bankruptcy likely for Herbst Gaming, which is in default on $1.27 billion of debt. This has been in the cards for Herbst ever since it got taken to the cleaners by MGM Mirage for some Primm, Nev., casinos that had seen better days (like, maybe 10 years ago). Benston's description of the $394 million boondoggle is "ill-advised." Understatement doesn't get any better than that, my friends.

Atwood, updated; Smart Station?

Thu, 04 Dec 2008 11:35:00 -0700

Today's Review-Journal has a nice piece reprising the career of outgoing Harrah's Entertainment Vice Chairman Charles Atwood. It's quite a record of accomplishment. OK, the London Clubs purchase was a $570 million dice throw that didn't come up boxcars, but that was largely due to circumstances beyond Harrah's control: Namely, the Tony Blair administration's hapless and at times witless attempt to implement casino expansion in the U.K.

The story does drop one hint at what might have impelled Atwood's decision to leave: "His last big project was securing a contract in August to develop and manage a state-owned casino in south central Kansas." Contract duly secured, Harrah's pulled the plug on Kansas, so perhaps Atwood felt he'd lost face ... or just had one of those last-straw moments where your job ceases to be enjoyable. His Sunflower State efforts having gone for naught, maybe Atwood saw that, wherever his future lay, Harrah's wasn't it.

Charles Atwood's next project ... and it's not Harrah's Kansas.

Atwood's next priority is downtown Vegas's Smith Center for the Performing Arts. I've heard some grumbling about frivolous spending connected with that project (although the dollar figure cited by the R-J overestimates the cost by $160 million). If that's been the case, surely Atwood can bring that old-school Harrah's efficiency to bear.

Sherm Frederick is actually onto something when he opines that the Las Vegas Strip is ripe for deconsolidation. (And while we're on the subject, why was it ever a good idea to allow the Strip to devolve into a virtual duopoly?) One-offs Sahara and Riviera continue to eke out a bargain-niche existence a full decade after people were pronouncing them all but finished. I know: It was one of the first stories I wrote after I hit town, 10 years ago next month.

Unfortunately, Frederick sabotages his premise by indulging in uninformed speculation at its worst. Or by lauding Station Casinos for its "best management" practices. Once upon a time, yes. But was it smart to steer the company into a $5 $8.8 billion LBO? Or to spend an aggregate $1.5 billion-plus on two vanity-palace locals casinos? (You could build six Eastside Cannerys with that money and have spare change.) Or to announce -- and then pull back from -- Durango Station and the $10 billion Viva in the teeth of a recession? And "guaranteed play" machines? Those really took off, didn't they?

Maybe if Station hadn't been breaking the bank on "Jerusalem Gold stone, natural limestone and oxidized iron and copper" (as described in the R-J's 16-page panegyric to Aliante Station), it wouldn't have to outsource hotel reservationists' jobs overseas. Or welsh indefinitely on its contributions to employees' 401(k) plans. In defense of the latter, Trump Entertainment Resorts -- not necessarily a firm you want to emulate -- is also doing it and companies bigger than Station haven't ruled it out. As for the former, this customer has been outsourcing his discretionary dollars to other locals casinos since that news broke. If you're sitting a "DaVinci Diamonds" machine in a Station property, wondering where the heck your gin-and-tonic is, it's probably being mixed in Rawalpindi.

This just in: Station got a kick in the pants from its bondholders, who don't care for the terms of a proposed debt exchange. Sayeth Reuters, this "leaves the casino operator in a precarious position and could result in the company tripping terms in its bank loans, which could lead the company to file for bankruptcy protection, said Barbara Cappaert, analyst at KDP Investment Advisors."

Gee, what's not to like about getting 20 cents on the dollar for your Station Casinos debt, if you're a subordinate debtor? These are tough times, man. Just think about Frank III and Lorenzo Fertitta, laboring to make ends meet on an aggregate 2007 pay package of $292 million.

Kansas cools on casinos

Tue, 02 Dec 2008 11:12:00 -0700

Chalk up at least one state that's learning that, if you dig yourself into a budget deficit, it's foolishness to expect your citizens to gamble your way out of it for you. Solons in Kansas are quick to nix the notion of reopening the state's casino-enabling legislation for amendment. Which means no cut of slot $$ for the dog tracks (and good riddance to that "sport," by the way). And a minimum investment of $225 million in Cherokee County is still expected, no matter how many tribal casinos open just across the border.

“Everybody thinks they are going to hitch their star to this great revenue stream. It isn’t there and it’s not going to be there,” says a key lawmaker. With casino revenues looking to be initially but one-eighth of what was projected, he's got the numbers to back him up.

Harrah's abandons Kansas

Tue, 18 Nov 2008 11:14:00 -0700

His Harrah's Entertainment empire crumbling beneath his feet, CEO Gary Loveman has had to give up on Kansas. By aborting a 40/60 joint venture, Harrah's should get back $10 million of a $25 million deposit. (At the time Harrah's was awarded the concession, it looked as though it could be financed out of the company's revolving line of credit. Evidently I was wrong and lenders understandably got cold feet.)

Rick Alm has some particularly strong thoughts on the matter at www.LuckyNumbers.KansasCity.com (our blogging software is not MS Word friendly -- and guess what operating system the G2E press room employs). Meanwhile, Sumner County gets to push the "re-set to zero" button, as the whole process must be started over from Square One.

It looked nice on the drawing board: Harrah's Kansas, R.I.P.

Being required to spend $225 million-$535 million on a casino in Kansas seems awfully steep in the present economy. Then again, Station Casinos has lavished just shy of $1.6 billion on its last two locals casinos -- in a far, far more competitive market.

MGM Mirage, Las Vegas Sands and others ultimately deemed Kansas too rich for their blood. Barring a downward renegotiation of the cost of entry, Kansas is unlikely to lure any comparably big fish. But none of that excuses Harrah's cut-and-run strategy.

Harrah's knew what it was going to have to spend (and, in case it forgot, it received a letter from the Kansas Lottery with a stern reminder). It pursued the Sumner County concession through to the end. It could have bailed out, as others did, but decided to stay the course.

And now, having taken the ball the length of the field, Harrah's has coughed it up on the one-yard line. Meaning it may be another year before its replacement is OK'd. An apology is owed to the people of Kansas.

Update: An Associated Press story parses the language of Harrah's withdrawal and raises the prospect it may be a negotiating tactic. Of particular note is a phrase saying it was impossible "to proceed with the project as planned" (emphasis added). Which does sound like somebody's laying the groundwork for a downsized Harrah's Sumner 2.0.

However, this still restarts the clock on the application process and not only inconveniences the good people of Mulvane, KS, it also raises the prospect that the Kansas Lottery will go with one of the rival bids sited in nearby Wellington. Besides, few would fault the Lottery for approaching Harrah's with wariness a second time around.

Butera up to old tricks; Dog days for Ruffin; Fowl play

Mon, 17 Nov 2008 18:07:00 -0700

Grasping at straws in his attempt to wrest control of the Tropicana Casino & Resort back from the New Jersey Casino Control Commission, the CEO of Tropicana Entertainment, Scott Butera, has seized upon a letter from state Sen. Richard Codey. In his Nov. 14, 2007 missive, Codey requests that Unite-Here Local 54 be allowed to intervene in NJCCC hearings against TropEnt owner Columbia Sussex (which, back home, was the beneficiary of some rare -- but no doubt welcome -- good news).

Codey's letter, Butera's lawyers contend, smacks of "political interference" and tipped the scales of justice against ColSux.

But Local 54 was only allowed to make a statement toward the proceedings' end, not be an active participant, as Codey wished. ColSux lawyer Paul O'Gara was given the opportunity to object to this at the time -- and didn't. TropEnt also revives the old Bill Yung whine that it doesn't understand what New Jersey law means when it requires every casino to have an independent audit committee.

Let's see ... Independent. Audit. Committee. Not a difficult concept to grasp, save possibly for ColSux, which ultimately formed a committee of one, that one person being a lawyer it already had on retainer (which shoots the "independent" requirement right in the ass). Sounds like the New Jersey Supreme Court isn't buying it, either.

Those must have been some NJCCC hearings, too. According to The Associated Press, they "presented evidence of roach and bedbug infestation in hotel rooms, floors and appliances caked with mud and dust, and long waits for slot jackpot payouts following massive job cuts ..."

Is that what Bill Yung meant about his being "ahead of the curve"?

Phil Ruffin is back in the news. Like other dog track owners -- and the State of Kansas -- he's in a financial bind. He contends it's not a viable economic proposition to run races at this two Kansas tracks. Ergo, he'd like his cut of the dog-running revenues upped to 58% from the current 40%. But a cash-strapped Kansas Lege may not want to dicker -- or, worse yet, Topeka-bound lawmakers may see this as opportunity to repeal Kansas' casino law. That alarming prospect alone should make gambling advocates wary of Ruffin's proposition, even if you don't think dog racing should be abolished.

Poultry in motion. In "I hate G2E," I sang the praises of the tic-tac-toe-playing rooster, late of Atlantic City. Seems he was furloughed a while back from the A.C. Trop (no, Bill Yung didn't fire the chicken). But Harrah's Entertainment was astute enough to snap up our feathered friend and install him at Tunica's Sheraton Casino Hotel. According to Raving Consulting, Harrah's staked $100K and sent out a "Chick Tac Dough" mailer, inviting all comers to try their luck against the mojo-bearing bird in the "Final Chicken Challenge."

No sightings of the rooster at G2E, though. I'll keep you posted.

Harrah's waffling on Kansas?

Fri, 14 Nov 2008 17:41:00 -0700

Kansas casino applicants have been dropping like flies and now the buzzards are starting to circle Harrah's Entertainment's $535 million Sumner County project. (Harrah's has already been warned once by the Kansas Lottery that it had better make good on its proposal, in full.) All Harrah's would tell AP is that it doesn't comment on rumors, which is less than a ringing reiteration of its commitment to the Sunflower State.

The folks in Topeka, though, weren't sounding any too confident, uttering things like, "I consider it a possibility, but I haven't heard anything definite." Or "We haven't gotten official notification of anything yet. I know there have been some conversations." Or perhaps the oh-so-reassuring, "When I've checked on the rumors, they have assured us that is not the case, at least not at this time ... but you never know about the future."

There are a couple of observations to be made here. One, which almost goes without saying, is that had Harrah's CEO Gary Loveman not gone a-courtin' to Texas Pacific Group and Apollo Management, we'd probably be talking this moment about a profitable company, not one that lost $130 million over the summer. It has until Jan. 21 to decide which it needs more: The Kansas market or its $25 million soon-to-be-nonrefundable deposit. If it opts to take the money and split, Harrah's will be doubly the loser, having opted out early from a tribal casino-management contract in Kansas in order to take a run at one of the Lottery's concessions instead.

The other thought is that Kansas' four-casino initiative is unraveling in dismaying fashion. Whatever stomach Las Vegas had for managing state-owned casinos in the heartland has been all but lost, especially given the high cost of entry. MGM Mirage, Las Vegas Sands, Pinnacle Entertainment and Olympia Gaming all bailed out late in the audition process.

As for Penn National, not only did it walk away from its Cherokee County concession, no one has stepped forward to replace it. What if they offered a casino license and nobody came? We're about to find out.

(Considering that Penn wanted a parlay of Sumner and Cherokee counties, if Harrah's falters then the Lottery could do worse than swallow its pride and have Penn CEO Peter Carlino on speed-dial.)

That leaves two concessionaires -- Butler National Service Corp. and Cordish Co. -- neither of whom is prominently associated with the casino industry. (In Butler's case, that translates as "completely inexperienced.") It's an inauspcious scenario and, faced with such a mess, Gov. Kathleen Sebelius may find the siren song of Washington, D.C., more appealing with each passing moment.

Speedy turnover in Kansas

Thu, 13 Nov 2008 11:46:00 -0700

Robert Krehbiel, the top gambling official in the Sunflower State, is stepping down after a bare five months on the job. Since his brief was "to help oversee the development of state-owned resort casinos and slot machines at racetracks," he's leaving well short of "Mission Accomplished" -- especially with one of the four casino concessions still hanging fire, thanks to Penn National taking its ball and going home.

With Gov. Kathleen Sebelius short-listed for a portfolio in the Obama cabinet, the timing could hardly be more awkward. BTW, Kansans tell me there are basically two news stories in Topeka on any given day: 1) Is Gov. Sebelius in town? 2) Is the lone downtown fire station sufficiently staffed in case the state capitol catches on fire?

P.E.S.T. Control. Who's bankrolling political operative Jim Ferrence's anti-"Prevent Employers from Stealing Tips" leafleting-and-surveillance campaign? And did Local 721 of the Transport Workers Union get the 58,000-plus signatures it required to force the issue upon the 2009 Nevada Legislature? For the moment, both questions have gone begging.

Obama considers casino allies

Fri, 07 Nov 2008 16:28:00 -0700

It'll be a while before we find out which of the many potential appointees to President-elect Barack Obama's cabinet will actually make the cut. But there are lot of gaming-friendly faces on the list. (And note the number of governors from states with tribal casinos, though none of them are on the short list for the Interior Dept., most unfortunately.)

But if Massachusetts Gov. Deval Patrick gets the nod to head the Justice Dept., the Bay State will lose its number-one casino advocate. Fortunately, the casino-development process is sufficiently far along in Kansas that, should Gov. Kathleen Sebelius accept a portfolio, it'll be but a hiccup. And, judging from the number of people on that list who have dealt firsthand with private-sector and/or tribal casinos, both industries can look forward to finding receptive ears in Washington, come next January.

S.O.S. Harrah's

Thu, 16 Oct 2008 13:01:00 -0700

Buried halfway down a Las Vegas Review-Journal story about the faltering fortunes of Harrah's Entertainment is this stop-the-presses revelation: "the company could sell some of its unused property in Las Vegas or Macau or even halt construction on the Caesars Palace project, which will cost the company $500 million in 2009 to complete." CFO Jonathan Halkyard also threatens to cut back on maintenance.

You read that right. Harrah's is publicly floating the prospect of selling some its 125 undeveloped acres in Las Vegas (many obtained at considerable cost) or its 175-acre golf course in Macao. Since Harrah's can't build a casino there -- and neither can anyone else now -- it's become a white elephant. Good luck getting your $578 million back, guys.

Still, this might explain why Harrah's highlighted its raw-land inventory in a Deutsche Bank presentation that was brought to my attention a few days ago. (And which has languished while I've worked on other projects.)

Suspending the Caesars expansion, slated to open next summer, would be blockbuster news, if it happens. While projects like the addition of a pedestrian bridge at Paris-Las Vegas have been put on hold, the Caesars augmentation has been one of the few to get green-lit. Halting it in mid-stream would send a powerful distress signal ... and leave the company with a prominent eyesore.

What the story doesn't mention is the most recent wave of economy measures at Harrah's Las Vegas properties. Paris closed its poker room on Oct. 10. One restaurant in The Rio (Antonio's) has shut down and another (Sao Paulo) has shortened its hours.

Halkyard also ticks off $2.5 billion in interest payments, expansions and maintenance costs that Harrah's can finance out of its $2.7 billion cash flow -- but neglects to include the company's Kansas casino. So it looks like that'll have to be bankrolled out of the $2 billion "rainy day fund."

The elephant in the middle of the room is a $2.8 billion (plus interest) unsatisfied court judgment against Harrah's. To be technical, it's against Harrah's precursor Park Place Entertainment, and CEO Gary Loveman inherited it when he orchestrated a Harrah's buyout of PPE/Caesars Entertainment. The ruling is on appeal but it's a contingency for which Harrah's must brace itself.

Did anybody think any of this through before Harrah's lumbered itself with almost $18 billion in LBO debt? And is it too soon to call for Gary Loveman's resignation?

Macao: Not so fast?

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

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

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

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

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

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

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

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

Mohegan Sun in Kansas: D'oh!

Mon, 22 Sep 2008 11:26:00 -0700

A reader in Oklahoma City points out an obvious reason -- one which I somehow managed to completely overlook -- why the Kansas Lottery's casino-selection panel didn't go with Mohegan Sun, which I foolishly thought to be a prohibitive favorite. To wit: Most casinos in the central U.S. are tribally owned, so why use the auspices of the state to establish yet another one? The 2007-08 edition of Casino City's Pocket Gaming Directory lists five tribal casinos in Kansas and, hindsight being 20/20, it now seems obvious that there was no enthusiasm for adding a sixth, at least when your projected revenue is the lowest of any of the proposals on the table. (Mohegan Sun is the only Kansas applicant to have received no votes for its proposal.)

In a rare visit to Planet Earth, the Las Vegas Review-Journal's editorial page weighs in on smoking bans in Atlantic City and Illinois, and their deleterious effects on revenue. Judging from the well-researched nature of the piece and its novel (for R-J editorials) employment of actual facts, it must have been written by somebody conversant with the issue, like Howard Stutz.

... at least until the final five paragraphs, where it devolves into stale invective, and even rails against Nevadans' decision to ban smoking in restaurants and supermarkets. (The effrontery of those voters!) The salient fact that Atlantic City banned casino smoking because the city's gambling halls did almost nothing to comply with a smoking restriction -- basically daring the city to take action -- is also conveniently omitted. It's as though the first 14 paragraphs were written by an adult, whereupon the pen was commandeered by a tantrum-prone infant.

Update: The owners of the El Cortez have declined to comment on the allegations made to S&G by minority owner Lonny Zarowitz. A query to the Nevada Gaming Control Board remains unanswered at this time.

Quote of the Day

Fri, 19 Sep 2008 16:26:00 -0700

"If this was three or four months ago, 'Trust me, I'm rich' might have worked." -- Kansas Lottery Gaming Facility Review Board member Jim Bergfalk, explaining the board's reservations about competing bids between Butler National Service Corp. (yes, it's really an avionics firm) and Dodge City Resort & Gaming. The board has postponed its decision until Sept. 26.

Kansas, Round 2: It's Cordish!

Fri, 19 Sep 2008 14:59:00 -0700

OK, I was wrong. Incredibly wrong. As you'll hear on the next Vegas Gang podcast, I stuck by my prediction that Kansas' largest casino contract, the one for the greater Kansas City area, would go to Mohegan Sun. Why? Biggest budget, most amenities, a track record of large-scale casino development. At least I covered my butt by saying that Cordish Cos.' piggybacking of their proposed casino onto the Kansas Speedway gave them "dark horse" status. Also, franchising the casino under the Hard Rock brand was not to be gainsaid.

A racino of a different stripe

So when the winner was announced today, Cordish was it. While Mohegan Sun was willing to put a bigger investment ($740 million vs. Cordish's $680 million) on the table, Cordish's synergy with the Speedway appears to have done the trick. They'll whip up a temporary casino (2K slots, 75 tables) sometime next year, to get the cash flowing while the full-scale project rolls toward a 2011 debut.

Here's the real shocker: Mohegan Sun got zero votes, primarily because state consultants projected its revenues as the lowest of the three proposals remaining on the table. (Pinnacle Entertainment and Las Vegas Sands has already withdrawn from the fray. With a major project underway outside St. Louis, plus others in holding patterns in Atlantic City and Baton Rouge, Pinnacle's chances seemed remote. It's difficult to imagine Kansas being willing to take a place at the back of that queue.)

Which means that three of the seven votes went to -- surprise! -- Golden Gaming, a company whose chances I will freely admit to having severely undersold. It says a lot for CEO Blake Sartini's reputation and for Golden's presentation that it came within an ace of winning, despite having a relatively modest track record -- at least nothing remotely approaching the $662 million casino it proposed to build. With Penn National having sulked its way clear out of Cherokee County and the Kansas lottery board starting to display skepticism toward the Ford County bidders, Golden has at least one, maybe two more opportunities it could pursue in the Sunflower State.

Ten months ago, at the time its casino empire was starting to collapse, Columbia Sussex announced that it had sold the Horizon Vicksburg to casino investor Nevada Gold for $35 million. Seems now that it's yet another William J. Yung III transaction that's (pardon the pun) gone south, following the cancellation of the sale of Casino Aztar to Eldorado Resorts.

Juding from the language that ColSux successor Tropicana Entertainment "have been in discussions regarding a possible alternative transaction" without avail, it appears as though new CEO Scott Butera wants to hang onto the riverboat property (whose on-shore facilities are leased, not owned, by the way -- a common ColSux practice). "(N)o alternatives exist that are suitable to both parties" sounds like a nice way of saying that if any other TropEnt properties were worth having, then they weren't on the table. Then again, given Nevada Gold's current financial situation, it might have been the one getting cold feet, but the formal language doesn't encourage that interpretation.

Either way, Butera's been making some expansionist noises of late and pining for the return of the Atlantic City Tropicana. While Butera has operational experience in that market, from his days at Trump Entertainment Resorts, it's exceedingly difficult to imagine New Jersey regulators letting TropEnt back onto the property so long as Yung has one thin dime of equity in the company.

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.

Trop to Eldorado: "Never mind"

Mon, 25 Aug 2008 11:26:00 -0700

In the strongest sign to date that company owner William J. Yung III has been banished to the doghouse, Tropicana Entertainment formally reneged on its sale of Casino Aztar to Reno-based Eldorado Resorts. The latter could walk away with as much as $7.1 million for its troubles, but appears determined to enforce the sale. Tropicana, meanwhile, already has its bankers out beating the bushes for prospective buyers.

“We are committed to obtaining maximum value for our assets and doing what is right for all of our constituents,” declared Trop CEO Scott Butera, sounding for all the world like ornery debtholders have him at knife point. If they're convinced they can get more for the asset than the $220 million that Eldorado offered, they may right. After a full year of mostly horrendous year/year comparisons (as much as -19.5% at one point), Casino Aztar has been the only Indiana casino to post three straight months of year/year growth ... an improvement that occurred not long after Yung's people were shown the door in favor of trustee Robert Dingman. Coincidence? I think not.

Eldorado's best hope probably lies in the Indiana Gaming Commission, which might still say "nyet" to Butera's proposed re-bidding, according to one report. It could also restart its own probe into the way Yung ran Casino Aztar, something that seems even more likely now that Butera is making noises about Tropicana hanging onto the boat (which appears to be the endgame). Butera's considerable skills of persuasion will get a good workout as he tries to steer Casino Aztar past that shoal.

Vote of (limited) confidence. In this morning's news roundup from JP Morgan, analyst Joseph Greff notes a hiccup from the Kansas Lottery Gaming Facility Review Board that connotes fears about belt-tightening at Harrah's Entertainment. The company "was informed by the attorney for the board that it would be in default of its contract if it did not build the $560 million contract in full, including a development of a retail shopping area with hotels/residences."

Hmmmm ... Harrah's and the State of Kansas have just gotten hitched and we're already hearing the rustle of divorce papers. As the saying goes, even a majority of one vote is a mandate of sorts, but this goes a long way toward explaining why Harrah's wasn't a prohibitive favorite, winning its bid by a margin of 4-3.

Kansas, Round 1: It's Harrah's, Penn

Fri, 22 Aug 2008 17:54:00 -0700

Score one victory each for Harrah's Entertainment and Penn National Gaming in the first round of casino concessions awarded in Kansas today (with Round 2 to follow in a month). But there's really only one winner ...

.... and it's Harrah's, which got the Sumner County contract and, with it, the Wichita market. Penn National must settle for the concession prize of Cherokee County.

Big deal. Penn had no competitors for that market and -- keeping that in mind -- two of the seven state arbiters voted against Penn. Perhaps that's because Penn had previously sulked that it might pull out of Cherokee County if it didn't get the Sumner concession as well. Announcing that it was going to scale back its Cherokee County investment and dribble it onto the market in piecemeal fashion (fearful of a nearby tribal casino) probably didn't endear Penn to the Lottery Gaming Facility Review Board, either.

Even today, Penn's spokesman was still threatening that the company might not go through with the casino Kansas just handed it. That's unbecoming conduct from one of the few cash-rich casino companies at the moment.

Small wonder Penn's Sumner proposal garnered only one vote of support. Which isn't to imply Harrah's gets the Wichita market out of spite or default. (There was, after all, a third contender.) Board members were impressed by the proposed amenities in Harrah's $535 million-560 million proposal and by the site's proximity to Wichita.

Probably the most attractive criterion was that the state's first-year revenue projections for Harrah's, while lower than the company's own, were the highest for any of the three proposals -- 48% more than those for Penn and 44% higher than for Marvel Gaming.

Marvel, which has local ties, particularly to the Binion family, says it's keeping its powder dry. No wonder: If Penn decides to take its ball and go home, Marvel (which got two votes to Harrah's four) appears to have made a good enough impression on the review board that it could make a strong run at Cherokee County, if the opportunity arose -- and the cost of entry would be a great deal lower there.

View the complete set of proposals here.

Recommendation for the weekend: The new suspense drama from Claude Lelouch, Roman de Gare.

Karaoke fans, rejoice! As reported here, earlier (and now official), a singalong version of Mamma Mia! opens on Aug. 29. Presumably smarting from hearing Dark Knight this and Dark Knight that, Universal Studios' press release gets in some passive-aggressive jabs on behalf of its $330 million-grossing musical, noting "is now the highest grossing film of 2008 in the U.K., Austria, Greece, Hungary, Norway and Sweden." And, just to get one more dig in: "The film still has more than 35 territories in which to open." Meow!!!

False alarm: If you got an e-mail alert about a Philadelphia-related S&G posting, but couldn't find it, it's temporarily on hold, pending some new wrinkles in the story. Then there are latest Illinois/Iowa/Missouri/Indiana revenue comparisons and ... and ... and ...

Sophistry in Kansas

Mon, 18 Aug 2008 11:14:00 -0700

JP Morgan analyst Joseph Greff, gleaning the wire services, reports that Pinnacle Entertainment has stubbed its toe by including endorsements from three Wyandotte County/Kansas City officials in its presentation to the Kansas Lottery Gaming Facility Review Board (whew!). Echoing state law, Pinnacle says the trio were acting not as elected officials but as private citizens.

Which would be like saying that George W. Bush gave his endorsement of Sen. John McCain in his capacity as a Texas-registered voter and not as President of the United States (and pay no attention to that White House in the background, please). In other words, it's a distinction without a difference -- and a silly law to boot, but I can't blame Pinnacle for exploiting the Sherman tank-sized loophole it opened.

Update: Upon further review ... it turns out that the three commissioners were identified as such when delivering their video pitch for Pinnacle. Which, from any common-sense standpoint, means they were acting in their official capacity and Pinnacle, after kicking the ball onto the fairway, is now trying to have it both ways. A finer case of hair-splitting I've not seen since Bill Clinton parsed the meaning of the word "is."

Harrah's: Cheap? Desperate? Of course the two options are not mutually exclusive (and don't forget that Harrah's Entertainment and its two LBO partners, according to the Wall Street Journal, appear to have written off 20% of their $3 billion equity contribution to the company's buyout). Whichever option you choose, this Las Vegas Review-Journal story speaks for itself.

What's particularly ominous for slot-makers is analysts' conclusion that this is a sort of shakedown whereby Harrah's pressures IGT for a bigger proportion of their shared slot revenue -- and that, if it succeeds, it could lead to tacit collusion up and down the Strip to wrest concessions from the slot companies.

It's worth remembering that, nine years ago, casino bigwigs were pressuring the Nevada Lege to outlaw revenue-sharing games altogether. It was a blatantly unconstitutional restraint of trade and eventually died the death it deserved ... but it had considerable juice behind at the outset. Which goes to show that history repeats itself: but in this case, first as farce and only later as tragedy.

Stiff drink, limp journalism; Kansas City conundrum

Tue, 12 Aug 2008 14:58:00 -0700

While the Las Vegas Review-Journal may think its drinking-at-CityCenter exposé is hot stuff, this report is pretty weak tea. (Assuming that one can follow the mumbling, sometimes incoherent voice-over.) Worst of all are its snide insinuations that six workers died at CityCenter because they -- or someone else -- was boozing it up. Talk about drawing a conclusion not supported by facts in evidence.

Let's review, shall we? The story involves "a handful of construction workers" (out of 7,700) and covers the period June 13-July 24. Over those six weeks, R-J staff made visits to bars near CityCenter on eight occasions, observing four incidents of drinking involving 10 workers, total. The cover-your-ass caption verbiage about "apparent construction workers" (emphasis added) doesn't inspire confidence, either.

Obviously, the thought of liquored-up ironworkers at CityCenter is disturbing in any number of ways (especially if, like me, you're ever found yourself the hood ornament on a drunk driver's car). But the rapidly anti-regulation R-J is a very poor messenger. As its own coverage has noted, this problem falls outside of Nevada OSHA's mandate. So much for the glories of deregulation.

Since R-J owner Stephens Media mandates drug testing without probable cause for all potential hires, maybe it's on some kind of temperance crusade to gin up (pardon the pun) legislation to enshrine that practice in law. (That's the central thrust of this story.)

In any case, whereas the paper's reportage of the renegade renovations at sundry Harrah's Entertainment hotels was admirably thorough, this is slapped-together stuff, trying mightily to imply a cause-effect relationship it can't factually support. The Harrah's series had eyewitness testimony, reams of supporting documents and on-site professional inspections to buttress its assertions. The CityCenter series, by contrast, is so heavily reliant on a small amount of anecdotal evidence that I still can't quite believe it made it into print.

Kansas City half-full or half-empty? Fewer people are going to Kansas City's casinos. So that's bad, right? But revenues are ever-so-slightly up. That's good, right? Well, it's good if you're Penn National or Ameristar, who are pulling business away from Harrah's and Isle of Capri in droves.

It's not surprising to see Isle bringing up the rear but I'd think a brand as strong as Harrah's wouldn't be in the same pickle (in fact, its decline is actually worse than Isle's). Then again, when it comes to riverboats, Ameristar has been one of the strongest brands around, second to few save Argosy (now owned by Penn National). Score one for the niche operators.

Trop turnaround?

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

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

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

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

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

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

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

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

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

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

Don't tax me, bro!

Wed, 06 Aug 2008 18:19:00 -0700

Guess who's kvetching about his property tax bill? Why it's our old buddy, Columbia Sussex CEO William J. Yung III -- or at least his surrogates at Horizon Vicksburg. It's been the better part of a year since Yung announced the sale of this riverboat to Nevada Gold, yet the deal still hasn't closed. (Too bad, because the promise of that $35 million was being used to palliate angry debtholders last winter.)

Even though Olympia Gaming and Las Vegas Sands have bailed out of their respective pursuits of casino ownership in Kansas' Wyandotte County, two Vegas-based companies are still in the running. Pinnacle Entertainment has a lot of irons in the fire already and its wait-and-see attitude toward Atlantic City development may not be what the Kansas Lottery Gaming Facilities Review Board (now there's a mouthful!) wants to hear. Golden Gaming's experience, a brief stint at the Vegas Hard Rock Hotel & Casino aside, is of the small-scale variety, which may also provoke skepticism.

While tribal powerhouse Mohegan Sun is hurting on the Uncasville homefront lately, it's coming off a solid performance in Pennsylvania. I like its chances. Cordish Cos., whose pursuit of the Atlantic City Tropicana was recently rebuffed (for no good reason), is obviously itching to get into the casino industry in a big way. Perhaps its proven track record as a developer will outweigh its inexperience in the casinosphere.

Isle reduces risk in Florida

Tue, 05 Aug 2008 15:37:00 -0700

As we're seeing, it's not always a bad idea to scrap or delay an expansion. Such is the case with Isle of Capri's decision to allow the expiration of an agreement with Florida Gaming Corp. to turn Miami Jai-Alai into a slot parlor. Isle couldn't even be bothered to announce the news. (Can't imagine why.)

With the various Seminole casinos ramping up their offerings something fierce, Isle has its hands full defending market share at Pompano Park. The non-tribal Florida market just hasn't been the bonanza anyone expected and Boyd Gaming's decision to hold off converting its own jai-alai fronton now appears prescient. Wall Street reacted favorably, with ISLE continuing to trend upward.

Perhaps we should have foreseen this. The Seminoles had a track record, a customer base, a brand name (Hard Rock) -- and now they have table games. Newcomers to the market had a tough row to hoe before and now it looks darn near impossible, unless the Seminoles have to revert to Class II gaming (and that's unlikely to happen anytime soon). Florida Gaming Corp., meanwhile, will try to find other takers for its faded fronton. Good luck with that.

Bury this in Boot Hill. It looks like yet another Kansas casino proposal may be about to bite the dust. Butler National Corp., a manufacturing concern that's trying to take a flier into casino ownership (shades of Galaxy Entertainment, right to down to renting the Navegante Group braintrust) is pitching a low-budget, smallish (800 slot) casino. Trouble is, Butler's a wee bit short on cash and needs an equity partner who will rescue the project but agree to take a back seat.

From Rick Alm's description, this is a Hail Mary play by a penny-stock company -- a big red flag. However, the Boot Hill Casino that Butler is proposing for Dodge City sounds far more aesthetically appealing that the tacky-looking, theme-park-ish competing proposal. But the latter has the not-inconsiderable advantages of a larger upfront investment and previous in-house casino experience.

If would-be casino operators keep dropping out at the present rate of attrition, the lottery commission's selection process will become downright Darwinian.

Trump sez, "Don't worry, be happy"

Fri, 25 Jul 2008 12:22:00 -0700

Have you lost a job recently? Do you find yourself suddenly without a paycheck. Well, you can feel better because you're not "unemployed." No, according to Donald J. Trump, you're merely experiencing a "change of schedule." To hear the old blowhard tell it, the 73 pink-slipped employees at Trump International are orbiting the gold-glassed tower in a holding pattern, living on nectar and ambrosia whilst they wait for The Donald to snap his fingers and "bring them back on" when "more sales close." (At present, Trump Int'l is only 31% occupied.)

Trump: Be of good cheer -- or else!

And in the meantime? I guess we're to believe that the unlucky 73 will forego paychecks and food, biding their time until Trump recalls them.

Or not. Someone identifying themselves as a Trump employee writes to the Las Vegas Review-Journal that "We received severance pay and signed an agreement severing our ties to the property ... It was the elimination of about 25% of the staff (including entire departments) at what is currently an extremely troubled property."

But look at the bright side: When Donald Trump eventually shuffles off this mortal coil like the rest of us, he won't be dead -- just having "a change of respiration."

Penn National, having thrown a snit and made its Cherokee County, Kansas casino contingent upon also getting a Sumner County license, is trying to walk its threat back. Penn has been making a hash of this. It effectively ran up the white flag when the Quapaw Tribe opened a casino across the state line, in Oklahoma.

Now Penn wants to dribble its $225 million infrastructure commitment across a 12-year period, in a kind of protracted (very protracted) "soft opening." If they're not going to agressively compete in Cherokee County, why bother at all?

As for Sumner County, Penn finished a distant third in independent revenue projections, which means that the company has some apple-polishing to do in order to remain in the running. Penn's threatening to take its ball and go home could hardly have been more badly timed.

Moulin Rouge project puts cart before horse

Thu, 06 Mar 2008 17:00:00 -0700

A group hoping to revive the long-faded glories of the Moulin Rouge hasn't found construction financing. But no matter: They've signed a casino-management team; Epic Gaming, a company whose only other ongoing concern is a tribal casino in Oklahoma, with 550 slots. This is not a choice of operator that leaves one brimming with confidence.

Epic used to go by the handle of Ellis Gaming. Although founder Shawn Ellis is long gone, his team of heavy hitters is still in place. With the likes of former Caesars exec John Groom on board, theoretically Epic has the sort of braintrust that could reimagine the Moulin Rouge as someplace hip and sexy ... although its Bonanza Road neighborhood is anything but. Even someone who works there keeps drawing attention to its "vacant and burned buildings, repair shops, a United Parcel Service distribution center and a homeless shelter."

Epic recently pursued one of the casino licenses up for grabs in Kansas but its application was unceremoniously swatted away. As for the developers, they expect that a hoped-for rezoning (skedded for April 2) will lure construction money out of the woodwork. Under the newly unveiled arrangement, Epic will get to keep all the gambling revenue -- unless or until Moulin Rouge Development Corp. or Republic Urban Properties obtains a gaming license.

It's a business model that's quickly becoming, if not prevalent, very popular along the Strip (as at the Sahara) ... although you'd have to have an MGM Mirage-like revenue stream (60% non-gaming) to make it pencil out, and Harrah's Entertainment just reported softness in precisely that segment of its Vegas business.

Ameristar scraps project: "Et tu, Missouri?"

Fri, 22 Feb 2008 13:44:00 -0700

Ameristar Casinos has pulled the plug on $100 million or more in renovations and expansion of its Kansas City riverboat complex, including the addition of a hotel tower, taking a $4.5 million write-down in the process. It cited a combination of factors in its decision, which came during a quarter which saw profits come in 30% below Wall Street expectations.

One factor, of course, the specter of casinos across the state line in Kansas. The other is blow from closer to home. Earlier this week, the Missouri Gaming Commission gave unanimous approval to a 14th casino license. The casino would be in nearby Sugar Creek and so far the only applicant is a Des Moines company, Wild Rose Entertainment.

Ameristar must now pin its hopes on a bill by Missouri House Rules Committee Chairman Shannon Cooper that would cap the number of Missouri casino licenses at 13. In return, loss limits would be repealed. It's a foot race to March 19, when the 14th license will be awarded.

Ameristar execs evinced a sense of betrayal, with CEO John Boushy saying they were "really scratching our heads trying to understand the decision-making criterion being used by the Missouri Gaming Commission." The company fears losing $60 million a year in business to Sugar Creek alone.

With a nod to Wild Rose's plan for a casino costing one-third as much as Ameristar's, company co-chairman Gordon Kanofsky railed at the commissioners: "After requiring and encouraging operators to invest in their properties as they have and then destroy their ability to make a return on that investment by allowing a bare-bones facility in the marketplace, it just doesn’t seem fair."

End of an era? Former Gov. Evan Mecham (R-AZ), impeached 20 years ago, died yesterday. His signal accomplishment was to unilaterally revoke the Martin Luther King Jr. holiday, a move that brought opprobrium and boycotts upon the state of Arizona (and did Mecham's use of racially offensive language). Today an African American is the Democratic frontrunner for president and Mecham is virtually forgotten outside Arizona. We've come a long way.

Case Bets: Macao, California

Mon, 04 Feb 2008 12:11:00 -0700

According to Bear Stearns, higher VIP play and increased tourism pushed Macao's December gambling revenues above the $1 billion mark for the month -- a 38% increase from last December.

California may be too close to call for Super Tuesday but the polls are trending favorably for a quartet of initiatives that would expand the slot base by 17,000 machines for select tribal casinos. Field Poll results show Initiatives 94-97 ahead 47% to 34%. Anti-initiative forces would have win over virtually all of the undecided voters, an unlikely occurrence given that the initiatives have consistently picked up steam in the polls.

A favorable vote tomorrow renders the accidental federal approval of these compacts moot (the compacts went missing for such a long time that they automatically went into effect). Even so, it would be pleasantly surprising if this matter still didn't somehow wind up in the courts.

In other news, Shawnee District Court has given the thumbs-up to Kansas' casino-expansion law. However, the state Supreme Court has yet to weigh in on the matter.

Case Bets: So long, HET ... and plenty more

Mon, 28 Jan 2008 13:18:00 -0700

According to Bear Stearns, the privatization of Harrah's Entertainment closed on schedule. HET stock finished trading just three cents shy of the $90/share buyout price.

Florida showdown: While Mitt Romney and John McCain are battling to the death in the Sunshine State, and Hillary Clinton is pursuing a purely symbolic victory (no delegates are at stake in the Dems' primary), a significant ballot question has flown right beneath the radar.

Voters in Miami-Dade County will be asked whether to allow 6,000 slots, divided between three parimutuel locations. Miami-Dade residents voted this down two years ago but, now that three racinos are running in Broward County and the Seminole Tribe has been approved for Class III gambling, look for Miami-Dade voters to experience a change of heart tomorrow.

Chip skullduggery: Ian Sutton, having survived the ICE expo, is back at work on GamingFloor.com (the best gambling-related Web site ... except maybe for ours ... but maybe not ... but maybe). Nobody but Ian can aggregate stories like this one about casino-chip forgery in Korea. Hey, if they can pull it off in Korea, somebody's bound to try it here.

God help us: Ever try to imagine what the casino industry would be like under a theocracy? Wonder no longer; just go to Guyana.

If at first you don't succeed ... With typical determination, Las Vegas Sands has returned with a new plan for its proposed Kansas casino. Area residents complained about the scale of the previous Sands proposal but the new one, statistically, appears to be just as grand, if not grander. A pity about the rendering: It makes the Sands project look like an airport terminal, and not in a good way. I know Sands can do better -- and has.

Speaking of LV Sands, it looks like Sheldon Adelson has found a way to drive a wedge between local politicians and the Culinary Union. Does this mean will start seeing the Dems holding political events at The Venetian or Palazzo, previously a big no-no?

A lovers' quarrel results in a $780K jackpot at Borgata. No, really.

Vindicated: Las Vegas Sun columnist Jeff Simpson was the canary in the coal mine regarding Columbia Sussex. Now he's turning up potential insolvency at the Las Vegas Tropicana. If you think I'm rough on C.S., just read Simpson. (Be sure and also read the lengthy comment regarding the situation down at the C.S.-run River Palms, in Laughlin.)

Hey, how did that Viva Laughlin! show work out? Not so good, eh?

$81 million

Tue, 15 Jan 2008 18:16:00 -0700

That's the magic number that Kansas Gov. Kathleen Sebelius foresees from casino licenses and racinos. Note, however, that the enabling legislation is still being vetted by the courts. Nevada officials, besieged by less-than-expected gambling revenues and a gubernatorial demand for at least 4.5% budget cuts, can only gaze in despair at Kansas' $935 million rainy-day fund, the biggest in the U.S.

Sticking with states that begin with 'K,' Las Vegas Sands COO William Weidner is singing a siren song to Kentucky legislators. Although his revenue projections look just a mite rosy, Weidner needs to make a strong case, as he (and Gov. Steve Beshear) will have to win over a supermajority in both houses of the Kentucky Lege, not to mention a majority of Bluegrass State voters. Riverboat owners in the southern Illinois and Indiana markets must be watching this with apprehension.

Oh, that recession: But don't worry; Deutsche Bank reports that casinos -- and the slot business in particular -- are especially recession-resistant. That, and casinos are everybody's favorite quick-fix when the economy goes south.

Go figure. Both Mohegan Sun and Foxwoods Resort Casino had pretty bad months at the slots (neither casino reports table game revenues). In the case of Foxwoods, it's particularly baffling, in light of greatly increased coin-in from players -- $123 million more. The Day implies a cause-and-effect relationship between the revenue plunge at Foxwoods and the abrupt resignation of its president, John O'Brien.

Boy, is my face red. No sooner had I deemed the Culinary Union's belated endorsement of Sen. Barack Obama a quasi-irrelevance than the Nevada teachers' union made it very relevant by getting het up and trying to shutter the "at large" caucuses being held on the Strip. (This story has been all over "the Internets," so I'll spare you any links.)

While this solicitude for the (D)emocratic process is touching, its timing is suspect. And it enabled the Culinary's D. Taylor to claim, in a neat bit of rhetorical jujitsu on MSNBC's Hardball, that his adversaries were trying to hold down minority voting on the eve of Martin Luther King Day. So now the Culinary is looking very relevant indeed.

Mixed results for the second night of The Sarah Connor Chronicles. Because, frankly, there's nothing more important. Well, maybe a war or two, the economy, education, terrorism and global warming, etc. But other than that, nothing.