David Mckee's Stiffs & Georges - Taxes

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.

Why does Steve Wynn hate America?

Tue, 13 Oct 2009 14:31:00 -0700

Or maybe the question should be, What was Steve Wynn smoking before he told CNBC "Money Honey" Maria Bartiromo that Wynn Macau was making more than all other 30 Macao casinos combined? Perhaps he meant his joint is the single-highest-grossing casino in the Chinese protectorate, but his phraseology is misleading:

Wynn's remarks on the importance of staffing and customer service are, as usual, on point. However, he starts sounding like a puppet of Peking ("One thing about the Chinese government, I think they get it right."), praising the steadiness and thoughtfulness of its policies. Here's an example of Peking's steady, thoughtful policymaking in action:

Wynn's comments that infrastructural improvements don't help at tourism-dependent (casino) industry make him sound naive -- doubly so if aforesaid projects put disposable income into consumers' pockets. Still and all, Wynn is far more reasonable on CNBC -- and immeasurably less obnoxious -- than during his obstreperous Fox News Sunday rants.

Although Wynn clearly fancies himself the new political pundit on the block, he's got but one string to his bow: bellowing "Tax policy" over and over. Which translates as "Tax cuts (for me)!" Yup, if Big Guvmint would just stop collecting taxes from Big Bidness, everything would be hunky-dory, economically speaking. We'd have new jobs coming out the ass.

Here's the problem with that line of argument: We're fresh off eight straight years of tax cuts, tax holidays and corporate loopholes big enough to encompass every square foot of CityCenter. How did that work out for us?

More to the point, given a tax-averse administration and Congress, how did Wynn's casino colleagues handle their newfound largesse? Did they invest it responsibly? Hell to the no! That "bundling of the Strip" which Wynn has decried is the poisoned fruit of companies that were awash in capital and easy credit, who then used it to try and eradicate the competition. (Similar phenomena occurred in the regional casino markets and in the slot industry.)

Having cannibalized their main rivals, casino companies then began to devour themselves, in the form of insupportable debt levels and insane LBOs. And if Wynn really believes that government spending has never improved anyone's lot in life (he must have forgotten the New Deal, for starters), then how many standards of living are raised by merger-and-acquisition orgies? For the average worker, it means jobs are "consolidated" out of existence. Heck, not even executives are immune. Just ask some of the Mandalay Resort Group or Park Place Entertainment higher-ups who are now enjoying involuntary retirement.

Should the current administration hand out the kind of tax vacation Wynn is demanding, would the casino industry A) buy new and shiny objects, B) retire debt or C) create jobs? B & C would probably finish a distant second and third to A.

Just look at Harrah's Entertainment: It can't repay its creditors dollar for dollar but thinks nothing of snapping up 16% of Planet Hollywood. If there's degenerate gambling going on in the casinos, the worst of it can be found in the executive suites. If these guys ever took to playing Russian roulette, they'd probably leave at least five bullets in the revolver.

Wynn is probably feeling his oats, given the bullish, odds-defying early performance of his Hong Kong IPO. The real story may be that gains realized in the Hang Seng will be used to prop up Wynn's Las Vegas operations rather than to expand in Macao.

This just in: The two-week run of A Bronx Tale at the Venetian has been extended to a third weekend. A spoken-word play in a Strip theater seemed like a dicey prospect so this is very good news indeed.

East Coast antics

Mon, 12 Oct 2009 13:55:00 -0700

Wrong again. There I was, thinking the proposed $10 million upfront fee for table games in Pennsylvania was a done deal when the GOP-controlled state Senate upped it to $15 million (and if you don't pay by June 1, it goes to $20 million). Chalk that up as a "loss" for casino owners.

The latter did, more or less, get what they wanted on taxes, where they'll pay an aggregate state/local rate of 14%. Despite publicly requesting a 34% tax rate, Dems in the lower house are muttering that one in the "high teens" might be acceptable. The question is: In return for what?

Casinos also banked a "win" when the state Senate ashcanned an amendment that would have tripled the slot base at "resort" casinos. Since this amounted to preferential treatment for a tiny percentage of the Keystone State casino industry, it's good to see it get the back of Lege's hand.

Power play in New York. In the competition for the racino contract at Aqueduct Race Track, those in the hunt include MGM Mirage, Penn National Gaming, Harrah's Entertainment and Seminole Tribe-owned Hard Rock Entertainment, along with numerous and sundry joint-venture partners.

But none of the seems to have the juice of Larry J. Woolf's Navegante Group. After the New York Lottery Division had deemed Aqueduct Entertainment Group (in which Navegante is a partner) unqualified, Gov. David Patterson's underlings put the word out that the five-member consortium is indeed qualified. Somebody in Aqueduct Entertainment's got pull, that's for sure.

A win for Adelson. While no casino company was remotely near the top of Newsweek's ranking of the 500 greenest companies, Las Vegas Sands can claim a victory of sorts. Sheldon Adelson's firm clocks in at #128, well ahead of MGM Mirage (#164) and Wynn Resorts (#176). Given the extent to which MGM has publicized its green-friendly initiatives, particularly with regard to CityCenter, finishing so far behind LV Sands is tantamount to a smackdown by proxy.

Several years after the publication of Beneath the Neon (now available in e-book format) publications are still shocked -- shocked! -- to learn of Las Vegas' large (and growing) subterranean community. Alas, we no longer have the Hooverville that had sprouted about a half-block north of LVA HQ. Those hobos were a tidy bunch and made our street seem halfway populated.

Marie Osmond pix. I'm just sayin'.

Stanley Ho: I'm not dead yet!

Fri, 09 Oct 2009 13:15:00 -0700

Either rumors of Stanley Ho's death, three weeks ago, were greatly exaggerated or the elderly casino magnate has made the most remarkable recovery since Jesus Christ. (I'm put in mind of a favorite bit of Babylon 5 dialogue in which Capt. Sheridan [Bruce Boxleitner] confirms that he indeed died, adding, "I'm better now.")

Today, Bloomberg News reports Lawrence Ho says dear old Dad is "looking better every day" and making a good recovery from -- as best we can conjecture via published reports -- a subdural hematoma brought on by a nasty fall. The younger Ho says his father's SJM has no plan of succession in place. Boy, when the Grim Reaper eventually comes for old Stan, the fight for control is going to make King Lear look like a tea party.

A compromise is shaping up in the Pennsylvania table-games wrangle and casinos won't like it one bit. According to J.P. Morgan summary, while the Dems in the lower house haven't budged off their preferred $20 million upfront fee/34% tax equation, the GOP-led state Senate has blinked.

The Senate's proposal would set the license fee at $15 million (a 50% increase) and the taxes at 14%, up from 12%. Casinos might be able to swallow that, on the presumption that the tax increase is small and the extra $5 million in fees can be quickly recouped. Even at $20 million, a bigger upfront hit can be regained by operators off the back end -- provided that the tax rate stays relatively low. Doubtless that's the lesser of two evils, from their perspective.

Bluhm: $45 million saved is $45 million earned.

On the money-saving front, the budget for the initial version of Neil Bluhm's SugarHouse casino is now announced at $310 million: a -$45 million shift. Considering that Bluhm's Rivers Casino and Sheldon Adelson's Sands Bethlehem came in at a staggering $1.5 billion-plus (combined), this new dollar figure suggests a welcome return to fiscal restraint. Your turn, Foxwoods.

What's a Trump casino worth?

Thu, 08 Oct 2009 15:07:00 -0700

Only $14 million in cash (plus a $100 million equity infusion), according to The Donald. Bondholders say, we'll see your $115 million and raise you $100 million. The latter would recoup at least some -- but not very much -- of their $1.25 billion debt under their plan, while Das Trump would send them away virtually empty-handed. (Moral: When Donald Trump asks you for a loan, take a page from Nancy Reagan and Just Say No.)

The bondholders' assignment of a $75 million valuation to Trump Marina seems awfully optimistic for what is, in essence, a corpse that can't be sold. In essence, the real value proposition is resurgent Trump Taj Mahal, with the other two casinos scarcely better than throw-ins. The Marina is, if anything, an albatross around the company's neck. Still, given that CEO Mark Juliano is going to exceptional lengths to champion the Trumpster's bid, which is a big "screw you" to the debtholders, here's hoping Judge Judith H. Wizmur holds firm for a more responsible solution.

Ho: No! "I don't see major resorts opening for the next couple of years now," says Lawrence Ho. thereby raining pessimism on the expansion plans of Las Vegas Sands, Wynn Resorts and Galaxy Entertainment. The younger Ho also speculates upon the Chinese government's motivation for throttling, then somewhat relenting upon travel to Macao. Interesting tidbit: Marketwatch.com reports that "Venetian Sands" [sic] has cut its number of table games by 25%.

Nevada revenues in. And yeah, they suck. They're much less sucky than usual (-9%), showing an upward trend in baccarat plus two locals-oriented bright spots in the form of Aliante Station and M Resort. It's unclear, though, how much of the growth generated by the last two is new business vs. redistribution of dollars from elsewhere in the valley. The Sun's analysis is far more informative than that found in the R-J.

Wait 'til next year. That's the timeline for casinos in Massachusetts. Even though western Mass looks like slim pickings, lawmakers will probably have to put a casino there just to get the bill onto the floor.

Penn bid falls. Lenders to bankrupt Fontainebleau won a small victory or two, as the judge overseeing the case seems determined to keep lead developer Jeffrey Soffer as far from the disposition of F'bleau as possible. (Soffer is both a debtor and creditor on the project.)

F'bleau, for its part, revealed that Penn National Gaming's offer is now "substantially less" than $300 million, but would include money to replace the windows that are reportedly falling off the building. (One more reason not to build a Strip megaresort tower flush against the "pedestrian realm.")

Groundbreaking today for the long-awaited SugarHouse casino in Philadelphia, under the shadow of a stick-it-to-SugarHouse tax that's been proposed in the Lege. Table games, meanwhile, might be off the table in the face of a $200 million lawsuit. You see, non-racino casinos are allowed to have 5,000 slots (in return for a $50 million fee). Small "resort" casinos -- known as "Category 3" -- only have to $5 million and get 500 slots (accessible only to guests). That's proportional, obviously, and seems fair.

However ... lawmakers want to tilt the playing field by giving Category 3 casinos 30% as many slots as, say, Rivers Casino or SugarHouse, instead of 10% ... and open those games to the general public, not just guests. Of course, the state can't go to the one existing Category 3 casino and ask for another $10 million -- can it? Casino operators are also solidly behind the GOP position on table games: $10 million upfront plus a 12% tax. But, unless House Dems completely capitulate, the gaming bosses are unlikely to get what they want, at least where the tax rate is concerned.

Penn whiffs again. Although Penn Nat'l was supposed to be a bidder in the bankruptcy auction for the Lone Star Park racino, it evidently didn't get into the action and the track went to the Chickasaw Nation for $27 million. (A lot less than Harrah's Entertainment paid to get into Ohio.)

Which means that if/when gambling is legitimized in Texas, the Chickasaws will have a double advantage (parimutuel + tribal status), while Penn will be looking at yet another missed opportunity. Penn's corporate strategy is a baffling alternation of rashness and hyper-caution.

In other tribal news, much-criticized National Indian Gaming Commission Chairman Phil Hogen is gone, thank God, and with him his new, more-restrictive Class II rules. Hogen was justly pilloried for attempting a rollback of hard-won gains in what games tribes could offer. His new rules reflected Bush administration paternalism toward tribes and while they're officially postponed for a year, I think it's safe to say they're dead.* No wonder Rep. Dan Boren (D-OK) is smiling. Watch out for that doorknob, Mister (Ex-)Chairman.

(* It's probable the same thing would have happened under a President McCain, as either candidate would have brought a more enlightened attitude to D.C.-tribal relationships.)

Supporters of video gambling are starting to push back in Illinois, at least in rural, conservative McHenry County. So far it's been the urban areas where this expansion of gambling hasn't been gaining traction.

A repeal of UIGEA continues to gain ground in the House of Representatives, even if it got pulled off the floor in the Senate. (Thanks for nothing, Harry Reid.) The money quote, literally, is a reference to an amendment Rep. Jim McDermott (D-WA) which would would specify that "corporate taxes owed on regulated Internet gambling activities are collected, as they currently are from the land-based casino industry." [emphasis added]

If that means what it implies, it would remove the spectre of industry-wide federal gambling taxation from the discussion and leave taxation to the states. If not, then the nose of the federal casino-tax camel is still sticking through the legislative tent. And you know where that leads.

We've seen a nationwide gaming tax get shot down during the Clinton administration but there are desperate times, obviously. Republicans like Mike Huckabee and Rep. Steve King (R-IA) have been looking to sock it to casinos at the federal level for some years now, so I fear it could have bipartisan support, should such a debate come to pass.

It's playoff time. A tired, flat-footed Minnesota Twins squad looked positively dreaful last night, flailing at outside pitches from C.C. Sabathia (if you couldn't reach that slider in the first inning, your arms aren't going to be any longer in the seventh, son). Cliff Lee made short work of the Colorado Rockies (besides, Jim Tracy can't win in the postseason), the St. Louis Cardinals look set to continue their tradition of postseason underperformance and my Anaheim Angels are forever reduced to a quivering heap of Jello in playoff games against the Boston Red Sox. Why am I having visions of brooms?

Want your ass kicked?

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

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

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

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

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

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

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

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

Hell no, they won't; Penghu punk'd; Barbarians at the gates (again)

Mon, 28 Sep 2009 19:12:00 -0700

Pay taxes, that is. Two Indiana racinos are pushing back against a tax rate that averages 38%. Considering that the two tracks -- one run by Cordish Gaming -- are the newbies on the Hoosier State scene, one could fairly ask them, "Didn't you know what you were getting into?" As the article notes, neither Harrah's Entertainment and Boyd Gaming -- both which recently heavily reinvested in Indiana -- aren't whining about their tax rates.

But the racinos have a point. In states where the number of casinos is artificially capped by the Legislature, solons become the custodians of the industry's economic future, like it or not. And it only stands to reason that if the market is going be diluted, tax relief is in order. Considering that same-store revenues in Indiana have been nothing but down since the racinos opened, some push-back on the tax front was probably inevitable.

Hell no, they won't either. Allow casinos in Penghu, that is. Voters on the Taiwanese island voted against gambling expansion there, putting the issue off-limits for three years. The notion of planting mega-million-dollar casinos in remote, hard-to-reach parts of Taiwan never made that much sense to S&G, but big industry players like Sheldon Adelson and Gary Loveman have kicked Taiwanese tires in the recent past.

Did Adelson and Steve Wynn mistime their leap into the Hong Kong stock market? One Wall Street Journal columnist thinks so. Bad timing isn't the exclusive province of the public sector, though: A Washington State tribe borrowed $375 million on the strength [sic] of revenue forecasts that proved grossly over-optimistic. Percentage-wise, neither Harrah's nor Station Casinos missed the mark this badly.

Bob Stupak, R.I.P. The penultimate Vegas maverick is gone, having spent much of the last decade as a recluse. One especially thorough obit contains a quote by former Klondike owner John Woodrum that ought to be engraved on Stupak's gravestone (or at the base of that now-vanished Stupak statue): "If ever there was a guy beyond the rim of reality, there was Bob. But somehow he made reality happen."

Just what we don't need. They're baaaaack. Never mind the smoking wreckage they've made of Harrah's and Station, private-equity firms are rooting amidst the flotsam, looking to extend their morbid clamp on the casino industry. Leading the pack is Leon Black's inaptly named Apollo Management. Both indirectly (Planet Hollywood by way of Harrah's) and directly (Cosmopolitan, Fontainebleau), Black is reported to be scarfing up what few independent properties remain, raising the prospect of a Total Rewards oligopoly stretching from just above CityCenter to the southern frontier of the The Mirage.

There are also a few bottom-feeders in play. Hooters hardly seems worth buying unless Onex Corp. wants to do a tear-down and extend the Tropicana Las Vegas eastward. Current ownership of the Riviera is tapped out but the place still has prospects as a fixer-upper (not something that fits with Apollo's sack-and-pillage business model). If non-bottom-feeder Green Valley Ranch is really on the bubble of insolvency, then Penn National Gaming ought to quit chasing F'bleau, and try to drive a wedge betwixt Station and its Greenspun family partners. Penn would stand to inherit a beautiful property with far fewer problems than Big Bleau.

Robo-poker reprieved ...

Mon, 28 Sep 2009 18:08:00 -0700

... but maybe not long for long. A momentary uptick in the price of PokerTek stock temporarily rescued it from penny-stock status. But after decisive rejections of dealer-less poker in both Las Vegas and Atlantic City, the future of PokerTek as anything other than a marginal supplier looks bleak.

Vegas casino operators continue to learn that you can't export the Strip business model to Macao (our over-optimistic expectations to the contrary). Case in point: Wynn Macau, which is cannibalizing restaurants, kitchens and even a showroom to make room for more gambling positions. A sanguine-sounding Steve Wynn, meanwhile, yawns in the face of competition from Singapore and tries to spin his Macanese IPO as a philanthropic gesture.

Neil Bluhm's big break. Although $800 million Rivers Casino in Pittsburgh maybe up and running, the county assessor continues to tax the site as though it were empty land. As the bureaucrats let tens of millions of property-tax dollars slip through their fingers, casino owner Neil Bluhm has a chance to bank some serious coin here. That'll take a little of the sting out of Pennsylvania's 55% gross-revenues tax rate.

A Texas track that's now come into tribal hands may hold the key to the future (if any) of limited Vegas-style gambling in Texas. The Lone Star State's gubernatorial aspirants are all over the map. Sen. Kay Bailey Hutchison (R) has cozied up to the Stone Age anti-gambling crowd, making Gov. Rick Perry's (R) qualified pro-gambling position preferable ... even though Perry would still relegate Indian tribes to the back of the bus.

S&G likes candidate Kinky Friedman best on this issue (the Kinkster is pro-casino, period), while Tom Schieffer (D) is back in the Dark Ages somewhere with Hutchison. Hank Gilbert occupies a wussy, "let's take a poll" middle ground somewhere between Perry and his GOP rival.

Quote of the Day

Tue, 22 Sep 2009 14:21:00 -0700

"It's a good thing Paul Revere wasn't running for governor the night the British were coming. If that event had taken place in Nevada, he would have been shot by his fellow residents for having the audacity to suggest a large problem was on the horizon." -- Las Vegas Sun reader "brst" on the disinclination of Nevada gubernatorial candidates to address a cascading series of budget shortfalls.

Quote of the Day

Wed, 16 Sep 2009 15:03:00 -0700

S&G yields the floor to former President Jimmy Carter:

Runner up, among many choice quotes, goes to South Carolina Democratic Party Chairman Dick Harpootlian: "I think [Rep. Joe Wilson]'s conduct was asinine, but I think it would be asinine no matter what the color of the president. I don't think Joe's outburst was caused by President Obama being African-American. I think it was caused by no filter being between his brain and his mouth." (Harpootlian knows Wilson from way back.) And, as a former South Carolinian, let me say, please don't boycott the Palmetto State. (Even though they still have a hangup about casinos down there.)

Meanwhile, in its fruitless search for comity at all costs, the White House turns a blind eye to the whole mess. Which ought to remind us that all it takes for evil to triumph is for people of good will to do nothing.

Health care "reform": It's out and it stinks, basically. It incorporates the one truly bad, deal-breaking idea of the '08 McCain campaign by making health benefits reportable as income. But don't worry: Sen. Harry "Hapless" Reid (D-NV) promises to make the bill even worse.

I have only five words remaining: You da man, Jay Rockefeller!

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."

No more "free" play?; Sahara sleaze; Donny & Tina; Criss F. Angel

Mon, 31 Aug 2009 17:29:00 -0700

In a decision that could have wide-ranging implications, Foxwoods Casino Resort and Mohegan Sun have been ordered to count (and pay taxes on) "free play" coupons as though they were revenue. This isn't a sock-it-to-the-players move like the one the Hawaii Legislature just pulled, taxing any money won at a casino (even if it's lost right back and then some). However, the ramifications for consumers if free-play coupons are targeted for taxation are discouraging. Play 'em while you've got 'em.

That stale "sleeping giant" analogy has been dusted off (and I use that verb advisedly) for some pimpery of the Sahara. On the glass half-full side, classy and romantic dinner spot House of Lords has been revived. It used to be a perfect place to take your Special Someone and hopefully will remain so. It's just off the main casino floor -- the most Moorish-themed part of the Sahara and the best "retro" experience to be had in town. (Almost everything else of newer vintage is bland grind-joint crud that needs to go.)

As for the empty half of the glass, that'd be the news that owner Sam Nazarian continues to go downmarket with a vengeance. Because nothing says "classic Vegas" like a tattoo parlor and a biker convention. Worse still, the tramp-stamp place will be in the otherwise elegant main lobby, with extended weekend tattoo-ing times ... since you never know when you want to do something you'll regret the rest of your life.

This "desert jewel rich with history and nostalgia" will continue that tradition with "a wet wife-beater contest, bikini tricycle races, a bourbon paired beef dinner with leatherwear fashion show, and an all-you-can-eat beer fest BBQ with one lucky rider winning a 2009 Harley Davidson Cross Bones bike." It's probably just a matter of time before Nazarian converts the big rear parking lot to a trailer park, too. That's Sam Nazarian for you: "class" with a capital "K."

"Tina Sparkle," flanked by Donny Osmond (evidently still in his pajamas) and Marie, who's looking damn fine from here.

It's old news that Donny Osmond is going to be on the next season of Dancing with the Stars, but I hadn't known he was going to be paired with Aussie Kym Johnson. The latter is known to my Better Half and I as "Tina Sparkle" (it's a Strictly Ballroom thing), which would make for great DWTS levity next season, except ...

... for the soul-crushing news that the gorgeous and talented Cheryl Burke has been twinned with the repulsive (and potentially prison-bound) Tom DeLay, one of "Casino Jack" Abramoff's band of Beltway scoundrels. (Was scum-tastic sleazemeister Rod Blagojevich not available?) Bad luck for Cheryl, good news for DeLay because Ms. Burke could be matched with a tree stump and get aforesaid stump into the final three. If she could carry a woodpile like Cristian de la Fuente to the finale, DeLay should be easy lifting. It looks like he's got the requisite arboreal quality.

Does Criss Angel have compromising photos of high-ranking MGM Mirage executives? The company's "branding" him now, evidently having convinced itself that Believe is beyond wonderful ... and never mind that 11-year-old O regularly outdistances Believe in ticket sales by several country miles. Having sunk $85 million into this Cirque du Soleil turkey, MGM is evidently going to stick with it until the last dancing rabbit is hung.

Good luck for Illinois casinos

Thu, 27 Aug 2009 15:49:00 -0700

Turns out that it's not so easy to shower the Land of Lincoln with 45,000 video poker machines ... especially when no money has been allocated to regulate the process:

Economic recovery in sight?

Wed, 19 Aug 2009 16:24:00 -0700

Vegas casino F&B directors seem to think so. From our trusty LVA research department comes word that The Orleans and Mandalay Bay are ending their one-price-all-day buffet specials. Better/worse still, Palace Station is hiking the price of its buffet -- by four bucks. One doesn't know whether to applaud this apparent harbinger of better times ahead or deplore the swift yanking of the "Welcome" mat out from under customers' feet.

Contract talks with magician Lance Burton, you'll recall, went right down to the wire. One possible sticking point? Burton has lost his 10 p.m. slot, which as of today belongs to Frank Caliendo, who'll be doing a 9:30 p.m. show four nights a week.

Good move. Burton's family-friendly act seems an odd fit with the late-show crowd. Besides, Caliendo is on network TV regularly, which Burton isn't. Between this, recruiting musical act Zowie Bowie and rolling out Hotel32, Monte Carlo is making a spirited attempt to stay in the limelight, even as CityCenter looms larger and larger next door.

Study Hall. Just what Nevada needs, another "study" of the tax structure. What's to study? At least 27% of the tax base comes from gaming revenues, which have been in decline for 18 months. A comparable portion comes from retail sales, which have been down two entire years and counting. The problem is obvious but the will to rethink it is rather less in evidence. Here's a hint: We need a plan which is not simply another variant of "Soak the tourists."

Reality check

Tue, 18 Aug 2009 20:10:00 -0700

It's sackcloth-and-ashes time at the Las Vegas Review-Journal, which ran another "The end is nigh" story about falling gambling revenues. (The Aliante Station Effect appears to have petered out in North Las Vegas.)

Yes, we're all the way down, down, down ... to 2004 levels. If we take the Wayback Machine five years into the past, we find the Nevada Gaming Control Board reporting a 6% increase in revenue from June 2003. And June '04 was an "off" month for a year that was distinguished by double-digit growth in casino revenue.

Aliante Station: played out?

That same August, the cost of the MGM Mirage takeover of Mandalay Resort Group inched past the $8 billion mark. "[B]ut Wall Street analysts ... said the merger still makes sense for investors and the combined company," wrote the R-J's Rod Smith. Weeks earlier, regulators signed off on the $1.3 billion Boyd Gaming/Coast Casinos merger; Station Casinos, Las Vegas Sands and MGM were all recording record-setting financial performances, and Harrah's Entertainment was girding itself for the conquest of Caesars Entertainment. Heck, the industry was feeling sufficiently bullish to absorb a 0.5% hike in the privilege tax. Read one headline, "State gaming revenue on a roll."

Had the industry lived within its means, today's narrative would be quite different. The Las Vegas Sun helpfully charts the inflation and collapse of the casino bubble, which lasted a good three years, peaking in October '07.

Unfortunately, when what went up eventually had to come down, some companies discovered themselves overexposed and with no margin for error. The likeliest victims, though, are the marginal, standalone properties which might find themselves squeezed out of existence as aggressive discounting by MGM and Harrah's brings quality Strip hotel rooms into the "affordable" realm (Or, as Phil Satre puts it, when the A-level product is priced below the B-level product.)

Valuable perspective is to be had by reading (or watching) this roundtable discussion with three men who dominated much of the gaming industry in the Nineties and early into the new century. Ex-Harrah's CEO Satre has earned the right to be a Monday morning QB. After all, he never did anything so stupid as strapping $30 billion in debt onto his company's back.

Former Station CFO Glenn Christenson seems deeply in denial at many points, though even he concedes, "It wasn’t so long ago that we hated conventions as an industry and now it’s critical to our operations. We’re severely damaged by that loss." But ex-Boyd prexy Don Snyder nails it when he describes "a false sense of security" pervading the industry, adding "I think we all got caught up in that."

2004, meet 2009, where "up" is the new "down."

'Show Me' no stinkin' IDs

Mon, 27 Jul 2009 18:46:00 -0700

"We don't want them in there," huffs Ameristar Casinos' Troy Stremming (left) with regard to pathological gamblers. Stremming's high dudgeon rings a mite hollow now that the Missouri ballot initiative he crafted and shepherded to victory last fall is providing a free pass for problem gamblers. Once boarding requirements were repealed, away went the mechanism for screening self-banned gamblers. Whoops.

It's not like they still can't be caught on-property, though. Woe betide the player who hits a sufficiently big jackpot for his slot machine to go into "IRS lockdown." His identity has to be verified -- which means he can kiss those winnings goodbye and prepare to be handcuffed. To quote Geena Davis in Thelma & Louise, "The law is some tricky shit."

But Missouri's got nothing on Illinois, where casino employees double as "bounty hunters." If you're a self-banned player who's shooting dice at Alton Belle or Casino Queen, there's literally a price on your head.

MGM booting Midnight Jim?

Fri, 17 Jul 2009 16:56:00 -0700

Whilst Gov. Jim Gibbons is overseas, engaged in top-secret derring-do, there's bad news on the home front. News outlets are starting to report that MGM Mirage is directing all of its 2010 gubernatorial donations to Clark County Commissioner Rory Reid. (The Sun had the story first but good luck trying to find it with Greenspun Media's FUBAR search engine.)

Why does this matter? Because MGM was a veritable cash register for Midnight Jim during his '06 race. Gibbons was then-CEO J. Terrence Lanni's parting gift to the state of Nevada. Lanni doubled down on his support of Gibbons after the then-congressman was accused of getting frisky with a cocktail waitress after a boozy night out with influence peddler Sig Rogich.

Even with a ski-lodge pitchman running his campaign, Gov. Jim Gibbons is going to learn that his re-election bid won't be a run on the bunny slopes.

Lanni's boosterism toward Gibbons never made sense: Nevada's leading proponent of widening a gross-receipts tax onto non-casino business supporting a candidate whose entire platform boiled down to "No New Taxes. Period"? Does.Not.Compute.

Once elected, Midnight Jim showed his true colors, jilting Lanni for the cozy embrace of Sheldon Adelson and basically taking his marching orders from Las Vegas Sands HQ.

If MGM has crossed Gibbons off its Christmas list now, he might as well call it a day. This is the biggest footprint planted on his backside to date. True, Reid fils is no shoo-in, even for the Democratic nomination. Assembly Speaker Barbara Buckley is expected to put up a strong fight, although some of us wish she'd done the same in the '09 Lege, where she played the role of doormat to both the mining industry and the Las Vegas Chamber of Commerce.

As I said before of an Oscar Goodman "spoiler" candidacy, What's there to spoil? Run, Oscar, run!

Competition forces sanity

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

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

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

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

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

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

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

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

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

Harrah's goes to the dogs

Tue, 30 Jun 2009 13:49:00 -0700

A future Harrah's employee?

Harrah's Entertainment is poking its snout into the prospect of obtaining a management contract at bankrupt Twin River Casino, a dog track with VLTs in Rhode Island. The paraphrase of the explanation given by Harrah's senior veep Jan Jones seems fairly counterintuitive: "the state might be motivated now to give the company a shot because Massachusetts was on the brink of legalizing casinos."

OK, so Massachusetts is likely to legalize casinos, which makes this the perfect time to expand into ... Rhode Island? With its 60% tax rate? The part of Jones' explanation that makes more sense is that Harrah's would be able to tap into its New England base of Total Rewards players much closer to home (the nearest Harrah's outposts being Chester, Pa., and Atlantic City).

This could all be moot if the R.I. Lege scuppers a gubernatorial compromise that would can the dog racing and keep the casino open 'round the clock. Greyhound racing is a sport that really needs to be put out to pasture. Besides, it's only in place at Twin River because of a Byzantine legislative arrangement that Steve Friess rightly calls "a very weird deal," much of which involves propping up the dog-race union. (I never knew there was such a thing, but there is.)

So it's a win-win, right? A corporate savior for Twin Rivers and no more suffering doggies, yes? Well ... no, not if you're a nearby homeowner like Hal Perry, whose semi-rural lifestyle has been impinged upon by creeping incrementalism at Twin Rivers. Rather than lower the usurious tax rate, the state (which is seriously hooked on VLT revenue) simply keeps moving the goal posts -- longer hours, more machines.

Here comes Harrah's and, if you're a Twin Rivers neighbor worried about your property value, the noises are ominous indeed. As Jones tells Friess, "you couldn’t build a hotel right now ... So all of this is a process. But it's the beginning of the process and the point is that it's an excellent opportunity."

"Right now ... process ... beginning." In other words, Mr. Perry: Sell! Sell now! Get out before Harrah's drives you out.

Harrah's wins one. Sort of by default, but a win is a win. Dissident bondholders S. Blake Murchison and Willis Shaw had a shyster for an attorney. Case dismissed. Clearly, their due diligence with regard to lawyers was even worse than that they displayed as investors.

Gunshot? What gunshot? Although the Las Vegas Hilton was able to keep an on-property suicide out of the local papers, the news eventually surfaced via the Louisville Courier-Journal.

Quote of the Day

Tue, 30 Jun 2009 13:08:00 -0700

“If you want smaller government, you’re going to have to take a half-day off of work to register your car. You can’t cut government, advocate for lower taxes and expect to walk in and out of the DMV in half an hour. You can’t have your cake and eat it too.” -- local AFSCME chair Dennis Mallory on the impending consequences of Nevadans' unwillingness to pay for government services. In other news, Clark County is mulling closing fire stations on a rotating basis. It's a red-letter day for arsonists.

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!

Quote of the Day

Tue, 09 Jun 2009 12:01:00 -0700

“We’ve got to diversify the tax base. It’s painfully evident that you’ve got to make everybody pay, not just gaming. And if the Legislature won’t do it, you may find us doing it ... You can’t operate as the worst state in the nation and expect you’ll have economic diversification.” -- Nevada AFL-CIO Executive Secretary-Treasurer Danny Thompson, bruiting the possibility of a petition drive for a gross-receipts business tax.

2009 Lege in 18 minutes

Wed, 03 Jun 2009 13:41:00 -0700

You're used to my griping that the state of Nevada is, economically, a two-legged stool resting on a pair of unstable supports: gambling revenue and retail sales. The wretched excuse for a budget that just emerged would actually increase that reliance. Rather than review the incredibly depressing 2009 Legislature in anything resembling detail, I'll turn over the discussion to two real experts, bloggers Hugh Jackson and Chuck Muth.

In the Vegas One video, Muth opens an interesting line of argument for casinos to pursue in 2011, in hopes of obtaining tax relief -- or, at minimum, parity. He says that some over-taxed businesses (read: gaming) could call out the mining industry and others on grounds of simple fairness, saying: We'll pay our fair share but we want a level playing field.

Dunno if it'll work but it's worth running up the Carson City flagpole. The end result of the prolonged Jello wrestling match between Gov. Jim Gibbons and the Lege was a budget only slightly less penurious than what Midnight Jim originally proposed. (See sidebar.) So who really won?

But ... never again let it be said in re Nevada, "Growth pays for itself."

Rumble in Macao

Tue, 02 Jun 2009 17:34:00 -0700

Although an oft-promised loosening of visa restrictions by Peking stubborny refuses to materialize, an air of cautious hopefulness has crept back into Macao now that City of Dreams has opened on schedule -- and it looks dazzling. Aggressive revenue projections have literally reversed the fortunes of co-owner James Packer, whose disastrous venture into the U.S. casino industry is now seen by some as a blessing in disguise.

At $2.4 billion, City of Dreams rivals the cost of Venetian Macao and is hoped to equal or surpass the latter's 20% return on investment. One projection has it leapfrogging Wynn Macau into third place, with 20% of the Macanese market.

It also represents a double-edged sword for Sheldon Adelson's mammoth casino-resort. If it draws more punters to the Cotai Strip™, good. If it dilutes Adelson's customer base, not so good, obviously. In comments to the Wall Street Journal, Adelson seemed at pains to temper some headstrong pronouncements he'd offered to Steve Friess. As expected, an Adelson without the restraining influences of William Weidner and Brad Stone, is a pedal-to-the-metal Sheldon, saying Las Vegas Sands should have gone faster, faster, faster with its Cotai Strip™ projects, not slower. (The mind reels.)

"I just came back from Macau and we have five or six different options that we can pursue, each one of which would solve our liquidity problems," the Venetian's doge proclaimed ... which doesn't sound a lot different from what he's been saying for months. That is, until he contradicted himself by buying up a truckload of LVS stock -- something he wouldn't have done were a major deal in the offing.

Adelson predicts all his suspended Macao projects will be back in gear by year's end. He's on the curve in one respect, suggesting that his aborted St. Regis condo-hotel on the Strip could be revived by Sands' acting as lender to prospective unit buyers. Palms Place just started doing that very thing.

Sheldon's Commissariat for Optimism never closes, so one tends to grow skeptical of each new variant of "Victory is mine!" Anyway, Adelson was just off the plane from China, so perhaps jet-lag accounts for this reality-challenged assertion: "Our numbers have been going up and the [Macau peninsula] have been going down."

'Fraid not. Scarcely had that Adelsonian utterance made print than Lusa reported May's revenue numbers. If April had seen Wynn Macau falling back toward the pack, with 13% of market share, it returned with a vengeance in May. Steve Wynn's 18% market share -- with far less capacity than Adelson -- put him only three points behind LV Sands and came at the latter's expense. Stanley Ho still leads everybody with 30% -- as much as Galaxy Entertainment, Melco Crown Entertainment and MGM Grand Macau combined.

A few days earlier came news that visitation from Mainland China to Macao had been -43% in April ... hardly propitious conditions for flooring the Cotai Strip™ gas pedal. Ditto a 10% drop in May gambling revenues. Until that much-mooted visa liberalization actually happens, going apeshit with casino-hotel construction makes no sense whatsoever.

Nor did Adelson do his public image any favors with a gratuitous slam against jilted sidekick Weidner. (The latter, given the opportunity to respond, took the high road.) This 'hit 'em when they're down' move will accrue exactly zero sympathy for Adelson -- and it might have some nasty repercussions should it hamper Weidner's attempts to find another job. Then again, he's as rich as Croesus, so he can probably spend the next few decades on the golf course, should he so desire.

There's been no additional movement on the rumored Genting Berhad offer for MGM Grand Macau. However, even in a $13.8 billion/year casino market, the numbers don't look great for MGM. After it splits its 8% market share with partner Pansy Ho, it would have $55 million from which to pay an onerous tax bill, plus operating expenses. (The ROI must be dismal.)

Borgata, in Atlantic City, does $55 million a month -- in a bad month -- and MGM basically cashes a check from Boyd Gaming. So if MGM elects to stay in Macao and vacate Atlantic City, it won't be because the Chinese enclave is contributing more to the bottom line. Who ever thought MGM Grand Macau would function as a glorified "loss leader"?

Steve Wynn has a dragon ... and now Lawrence Ho does, too.

Back home, MGM is going downmarket at The Mirage. And they didn't even have to sell the place to Penn National in order to get there.

Strangely enough ... Penn's recent expression of interest in both Planet Hollywood and Station Casinos passed with scarcely a murmur of comment locally. You'd think that a well-capitalized company like Penn's hanging of a target on Robert Earl's or Frank Fertitta III's back would make headlines -- or maybe Vegas journos have tired of Penn's endless feints and tuned the company out. Well, almost all of them, anyway.

Planet Hollywood, at least, is acting far more aggressively than one would expect from a property that is contemplating a sale. So perhaps Earl is more pursued than pursuer. However, his conversion of Desert(ed) Passage into Miracle Mile appears to have run out of steam -- or money -- at the halfway point. Try as he might, Earl is never going to completely de-Aladdin-ize that place. A magic lantern and three wishes would come in real handy down there.

Also flying under the radar was former Planet Ho boss Michael Mecca's enlistment with Galaxy. Mecca jumped -- or, more likely, was pushed -- from the Planet right when the Omar Siddiqui scandal was at its height. Informed speculation had it that Mecca was thisclose to being tapped to head up James Packer's projected North American gambling empire. Crown Ltd. CEO Rowen Craigie was noncomittal, though, and Crown's big Cannery Casino Resorts acquisition fell through soon thereafter, leaving Mecca hanging.

Success being the best revenge, Mecca not only landed a prestigious new gig -- it's with one of Packer's direct rivals in Macao. Mecca shoots, he scores!

Which brings us full circle to Macao. That worked out tidily, didn't it?

Pansy Ho: time for Plan C

Fri, 22 May 2009 18:12:00 -0700

In my usual cart-first, horse-later fashion, I elicited a legal opinion regarding the scenario I postulated the other night: MGM Mirage spinning off either its Atlantic City holdings or MGM Grand Macau into a quasi-autonomous entity, much as Sheldon Adelson proposes to do with his Macao properties.

Well, unless Pansy Ho can sit down with the New Jersey Casino Control Commission and charm them into turning a blind eye to the penumbra of unsavoriness that surrounds her father, Stanley Ho, MGM is up against a wall. It could put MGM Grand Macau into a limited partnership in which it would have equity but no power.

Did MGM spend so much time and money getting into Macao just so it could be a passive investor? Probably not. So either MGM has to scrape together the cash to buy out the Ho family or Pansy and her sister can exercise their right of first refusal on the property.

Likewise, Boyd Gaming holds the prerogative of acquiring MGM's Borgata share, but of all the possible scenarios on deck, that appears the most unlikely. Here's why:

Borgata represents no ongoing cost to MGM. It can sit back and collect 50% of the profits in perpetuity, while Boyd does the heavy lifting. In Macao, not only does MGM have to run the place, it's in a market with narrower profit margins, thanks to a confiscatory tax rate and the commissions charged by junket operators -- to say nothing of the draconian meddling of the Chinese government. And if it's relying solely on mass-market play, it's not enough to get MGM out of single-digit market share.

MGM took too long and spent too much getting into Macao to be happy with being stuck in sixth place among operators. If it's going to have to amputate a limb, losing Macao may be the less painful cut.

It could also be the more lucrative one because, even in a down market, Macao has two very price-boosting qualities: a finite number of casino concessions and a comparable limitation on casino-zoned land. Neither freeze is likely to thaw anytime soon.

Macao is still a seller's market. But if Boyd were to decline its option on MGM's half of Borgata, other suitors are going to be very hard to find. Nobody wants in on Revel or Bader Field and the Tropicana is essentially being given away. The accomplished Ms. Ho could still pull MGM's chestnuts out of the fire but if she can't, her family could wind up with 2.5 of the six casino concessions in Macao.*

* -- slightly more, actually, as James Packer's stake in Melco Crown Entertainment is exceeded by that of Lawrence Ho.

Boob job

Tue, 19 May 2009 17:34:00 -0700

You've have to enlist Tom Stoppard if you were trying to script something as incredibly, comedically non-responsive as the following exchange between Peepshow producer Scott Zeiger and the Los Angeles Times' Richard Abowitz, regarding The Great Pasty Controversy of 2009:

A: Who is replacing Mel B or is she staying on?

Z: That role is undecided. I think Holly Madison will be great.

A: Does she sing?

Z: She has other talents.

A: What are they[?] Please feel free to say what they are.

Z: You can say what they are.

A: I can't say. All I know is she dated Hugh Hefner and Criss Angel. What is the talent in that?

Z: She was also on Dancing with the Stars and she is quite beautiful.

Peepshow star Mel B ... because she's hot and Holly Madison is not.

It's wise of Zeiger to simply say Madison was "on" DWTS, because it would be a painful stretch to say that she "danced." Then again, I doubt the Peepshow choreography will be anywhere near as demanding.

Actually, the best Zeiger quote comes higher up, when he says that the show's producers "are in Vegas and we are watching the audiences and evaluating the competition and deciding what is appropriate for the market."

Pardon my impertinence, but isn't that what you do in pre-production or, at the very latest, during the preview process ... not one month after opening? The Peepshow braintrust gives the impression that it's been in a Planet Hollywood biosphere and needs to get out more.

Speaking of boobs ... the Nevada Lege has slapped together its budgeterial Band-Aid for 2010 -- and it's a disgrace. As widely predicted, it's a slapdash assortment of hikes on existing taxes -- almost all of them regressive -- plus some robbing of Peter to pay Paul. Probably the single more reprehensible stopgap is the pillaging of a county-level fund to help indigent victims of auto accidents.

Of course, the counties will have raise this and other plundered monies somewhere, so the tax-hike ball just keeps a-bouncin' along. Casinos were spared an increase in the privilege tax, so that's one bullet dodged, but upping taxes regressively -- especially in tandem with salary cuts for teachers and other guvmint-paid folk -- means less discretionary income for many bread-and-butter casino patrons. So the gaming industry will take it in the shorts, after all.

State Senate Majority Leader Steven Horsford (D) has been making some noble noises about revisting Nevada's volatile revenue structure ... two years hence, when everybody's safely reelected. Unlike Assembly Speaker Barbara Buckley (D), Horsford actually pushed for substantive changes this session.

But we've been hearing that arthritic "wait 'til next session" excuse for a long time now. If a recession of this magnitude -- one in which we learned that casinos, retail and tourism do not comprise a stable fiscal tripod -- doesn't bring us the long-promised re-examination of how Nevada pays for itself, nothing will. My money's on "nothing."

Poker > Gas mileage

Tue, 19 May 2009 14:22:00 -0700

Americans have voted with their mice and declared repeal of the odious UIGEA a top policy priority. Legalizing online poker outpolled increasing fuel-efficiency standards by nearly 2,000 mouse clicks ... but still finished way behind getting the U.S. out of the torture business. (Amen to that.)

In related news, an American Gaming Association study that's generating a flood of news stories all over "the Google" found that 81% of Americans surveyed thought gambling an acceptable form of entertainment. Seeing how AGA prez Frank J. Fahrenkopf was a soldier in the Reagan Revolution, he might want to share those numbers with some of his fellow Republicans. I doubt it will nudge them back into the mainstream on this issue (they're still too much in thrall to Dr. James Dobson) ... but there's always hope.

Wynn vs. Muth: Though he must have better things to do, Steve Wynn has lowered himself to siccing his legal beagles on conservative watchdog Chuck Muth. The latter assesses Wynn's threat as all bark, no bite.

S&G has no dog in this fight. But anything Muth does has to be read closely, since he doubles as Nevada GOP Chairwoman Sue Lowden's ghostwriter (despite having re-registered as an independent to great [self-generated] fanfare). Muth may be the one gnawing at Wynn's ankles but Lowden's probably still got a firm grip on the leash.

Bad news for the R-J: Despite its free-market posturing, the newspaper has long (and quietly) benefited from a state law that requires the publication of property-tax information at public expense. Well, that gravy train is about to run off the rails. Only a Gov. Jim Gibbons veto can keep it on the tracks.

Correction: No, he can't. The bill passed with veto-proof majorities. Other public subsidies of Nevada newspapers, however, remain in place.

In other news ...

A tax is a tax except when Midnight Jim says it isn't. On the other hand, Gibbons hid behind "the will of the people" when raising taxes on hotel rooms (i.e., on you, the tourist) but now decrees Nevada counties can't raise their own taxes -- no matter how much they may want it. So let me get this straight: Nevadans are competent to raise taxes on non-Nevadans who visit here but not on themselves? Yeah, got it.

Perp Show

Thu, 14 May 2009 12:38:00 -0700

If you're bald, weight 285 lbs. and have one arm in a cast, you're not exactly inconspicuous. So how was it that that such a hefty man was to infiltrate a VIP area of Planet Hollywood and bust into Peepshow headliner Kelly Monaco's suite? It gets weirder: Merrill Wetter was a long-term denizen of Planet Ho and had been 86'd last month for following a money cart around. And yet his reappearance on the 50th floor didn't raise any alarms, literally or otherwise. This new information suggests a serious lapse of security at Planet Ho, something that the Nevada Gaming Control Board might want to investigate.

April in Atlantic City. The numbers are out and they suck. Again. Unless you're Borgata, which was basically flat with April '08 -- a veritable triumph in this context. The Showboat didn't do too badly (-7%), pushing ahead of the larger Tropicana Atlantic City (-21%). However, another Harrah's Entertainment property, Bally's Atlantic City is way off last year's pace (-19% YTD) and risks joining the Dead Man Walking quartet of Trump Marina, Trump Plaza, the Hilton and Resorts.

The partial reinvention of Trump Taj Mahal continues to pay off, with gaming win down less than 1% through the first four months of the year. Don't you wish we had this kind of reporting transparency in Nevada?

Reid's smooth ride: Would-be GOP challengers to Sen. Harry Reid (D-NV) are not only thin on the ground they're probably hearing casino-industry check books slam shut after the Senate Majority Leader jawboned banks on behalf of CityCenter and Fontainebleau. (It was a futile effort but, at this particular moment, that says more about the lending-averse banking industry than Reid.)

Party leaders say a "highly motivated" "strong GOP challenger" is out there and will emerge ... in five months or so. The only person shaking the money tree so far is former state legislator Sharron Angle. She'd rough Reid up, to be sure, but has an Achilles heel or two. To date she's been a single-plank candidate -- property taxes; not what you'd call a senatorial issue. Also, state GOP chairwoman Sue Lowden doesn't want a divisive primary ... and Angle was very divisive when she ran against Dean Heller (R-NV) three years ago for the congressional seat Heller now holds. She even tried to have the primary results overturned in court. But for now she's the only game in town.

Double duty: For the unforeseen future, I'll be spelling the estimable Dave Surratt as CityLife's theatre critic. First up is a show directed by Zumanity emcee Christopher Kenney. Called The Facts of Life: The Lost Episode it's ... it's ... well, it's different.

Sunshine State stalemate

Tue, 05 May 2009 13:45:00 -0700

With the Lege drawing to a close, Florida lawmakers will procrastinate on the tribal-gambling-compact issue in one of two ways: Leave it until the very end or handle it in a special session. (Your tax dollars at work, Floridians.)

Although uncoupling the compact from education funding has slowed negotiations to a crawl, there are hints of movement toward compromise. Stick-in-the-mud Republicans in the lower house, who essentially don't want to concede diddly, may be open to permitting blackjack at one Seminole casino. What the state Senate is prepared to yield is less clear (its pet proposal would spread Class II gaming statewide), although a lowering of the gambling age to 18 is certain to go over the side, if it hasn't already.

The initial Senate proposal was a "Christmas tree" of goodies for every stripe of the gambling industry, presumably with the intention of bartering away this or that bauble once negotiations got serious. And every business with a vested interest in the outcome of House/Senate negotiations seems to have a special exemption or amendment of its own to peddle.

Then again, don't put it past Florida lawmakers to just walk away from $280 million. Gov. Charlie Crist (R) may be in step with the national zeitgeist but he's far in advance of many in his own state party who pine for the days when gambling was unsafe, rare and illegal. At least the GOP's historical preference for lower corporate taxes has been put to good use in the current debate, with Class III private-sector casinos in Miami-Dade and Broward counties granted a 30% reduction in taxes levied. While that's not enough to level the playing field vis-a-vis their Seminole competitors, it gets them back in the game. Here's hoping it brings back some of the companies that have soured on the low-yield South Florida market.

Quote of the Day

Mon, 04 May 2009 13:08:00 -0700

"Taxes do one thing: They suppress an economy."-- economic theory propounded by Gov. Jim Gibbons (R-NV).

Wynn, unplugged

Thu, 30 Apr 2009 18:27:00 -0700

"Wynncore"'s boss has been all over that series of vacuums and tubes which some call "the Internet" this week. He did Kirk Kerkorian a favor by suggesting that he, Steve Wynn, would be tractable to buying anything the aging aviator had to sell ... even Circus Circus.

While Wynn may have been merely being playful, enjoying how much the worm has turned since then-MGM Grand forced him out of then-Mirage Resorts, his expression of interest helped goose MGM Mirage stock by 5%. Holders of Wynn Resorts shares, however, may have emitted a collective "Eek!" at the thought of Wynn buying yet another clown-themed casino (don't forget that he once owned the Boardwalk). WYNN shares slipped 3%.

If Steve Wynn on 60 Minutes is good, then 69 minutes with Steve Wynn must be better, right? Either way, here he is at the Milken Institute's Global Conference 2009. What's inarguable is that there is no other CEO in the gaming group -- no, not even Sheldon Adelson -- to whom people would listen for anywhere near that amount of time. True, many Americans do watch an hour-long TV show starring ex-casino mogul Donald Trump, playing a parody of CEO (or could it really be a cunningly disguised Alec Baldwin in the role of Old Fish Lips?) ... much as they do When Animals Attack! or World's Scariest Police Chases.

Bloomberg News cornered Wynn for a few minutes and the unscripted result was better than any televised fender-bender. [Warning: The audio is subject to frequent dropouts.] Wynn began by acknowledging that, times being what they are, Americans are scarcely obligated to visit Las Vegas.

One wishes certain umbrageous local figures would get that memo.

He also notes that Wynncore is cheek-by-jowl with "all the convention centers." So I take it that proposed Wynn Las Vegas/Encore convention center is now off the drawing board. Strip land acquisitions are flatly ruled out -- no doubt causing some long faces at Elad Properties, Triple Five and other companies that bought acreage at the top of the market (i.e., $33 million-$36 million/acre) and can't do squat with it now. Uncle Steve is not coming to their rescue, I'm afraid ... and why should he? As Wynn obliquely acknowledges, he's got plenty of land of his own, fully amortized but not developable in these tight-credit days.

But it's when the conversation turns to politics that things get well and truly interesting. Starting with an observation that the government is too fixated on infrastructure improvements, Wynn gradually works himself up into an fine rage. His description of President Obama's policies runs the gamut of "naive ... doesn't have much credibility ... unimpressed ... ridiculous shopping list ... the right ideas at the wrong time ... shotgun approach." He faults the current administration for lacking "experience and priorities" and -- in a somewhat ironic choice of analogy -- says that when a patient is undergoing major surgery, "you don't give 'em advice on a nose job."

You want must-see TV? This is it!

Unfortunately, Wynn is somewhat hamstrung when pressed for constructive alternatives. His one substantive answer is a proposal that Uncle Sam subsidize new hires if the employer provides health benefits. Beyond that, he falls back on a broad-brush invocation of tax policy (which "incentivizes people to do what the government wants them to do"). Wynn thumps the "tax policy" tub so relentlessly that he starts to sound like a personality-implanted version of Rep. John Boehner, pining for the return of the previous administration's economic policies as fiscal Viagra.

Give the man credit. He's got strong opinions and no fear about voicing them. He's a cheerfully impolitic figure in word-parsing times and the casino industry might be unbearably dull without him.

Grab your ankles, casinos

Wed, 15 Apr 2009 18:05:00 -0700

Nevada lawmakers' revenue model.

There's one industry that does far and away more than any other to pay the bar tab for the State of Nevada and it's probably about to be mandated to pay even more. That's because even though we're suffering through, proportionally speaking, the worst budget deficit in the U.S. and the methodology underlying Nevada's general fund is incredibly flawed, other industries will be allowed to continue shirk their share of the load.

How do we know this? Because invertebrate gubernatorial wannabe Barbara Buckley (D-[Your logo here]) flat-out won't support a corporate income tax. Which might be all right if she had a viable alternative, other than a pie-in-the-sky suggestion that Nevada diversify its economy.

Heck, people more serious than Buckley have been calling for such diversification for years and it still hasn't happened (in part because the wretched state of Nevada education -- about to get worse -- scares companies away). And it's sure as shooting not going to magically happen in the scant few weeks the Lege has to cobble together something resembling a budget.

Sales taxes and gaming taxes each represent roughly a third of the state's revenue base. The former is regressive both by definition and in practice, while the latter discriminates heavily against one industry, while letting all others pretty much off the hook. For instance, the state's two most lucrative mines paid $13.3 million in taxes to Nevada in all of 2007 -- on $436 million in taxable revenues. Casinos, however, paid $65 million in taxes on $840 million in revenue last February alone.

Were Nevada's gaming industry not in freefall, that disparity would be more glaring still. But Silver State solons would rather jam hot needles into their eyes than ask the sacrosanct extractive industries for one thin dime more. (Boy, they'll be sorry when those mines are tapped out.)

Heck, our legal brothels have actually offered to be taxed but our maidenly lawmakers demurely proclaimed, "No, no, a thousand times, no! You cannot buy my caress." How come? It would create -- get this -- image problems for a state that got on the map as the divorce capitol of America. Prostitutes are showing themselves more civic-minded that our ostensible "leadership" ... but the profession known as prostitution has always been considerably more honest than the prostitution known as politics.

Given the ramshackle history of Nevada's tax structure and some hints dropped by Buckley and crony Morse "Moose" Arberry, we've got a pretty good idea of what to expect from their Secret Budget Plan (under wraps until next month): More of the same. As in higher sales taxes, state fees ... and, yes, gaming taxes. Steve Wynn's warning about the catastrophic effect of the latter is apparently going to fall upon deaf legislative ears. Wynn's said he's "the most powerful man in Nevada." Now would be a good time to prove it.

On another note ...

God forbid, you need to answer the call of nature during the playing of a mediocre Irving Berlin song, at least when you're at Yankee Stadium. Support freedom -- or else! That good old George Steinbrenner spirit remains alive and well, I see.

James Dobson admits he's a loser

Wed, 15 Apr 2009 14:51:00 -0700

Whiny anti-gambling obssessive (and sometime pediatrician) Dr. James Dobson exited his Focus on the Family with an admission that he's on the losing side of the culture war. He blames it on the Nineties, Bill Clinton and that damned Internet. (A bit behind the times, isn't he?) At least Dobson needn't worry about "made fools for Christ." He's been doing a splendid job of making a fool of himself without any assistance whatsoever -- and shows every indication of continuing to do so.

Don't let the doorknob hit you on the way out, Jimbo.

Ader returns. Once the most-read (and arguably the most-feared) gaming analyst on Wall Street, Jason Ader is back in the picture as the newest board member of Las Vegas Sands. Here's hoping he'll have better luck than his predecessor at exercising a modicum of restraint upon CEO Sheldon Adelson, who's been in a pedal-to-the-metal frame of mind lately. Unlike the appointment of Michael Leven as Sands' new prez, this is one Adelson hire whose resumé won't be open to second-guessing.

Fun with numbers. Nevadans, apparently angry about having the day off or maybe irked from shouldering the second-lowest tax burden in the nation (Wyoming is #50) rallied in Carson City today. A Southern Nevada anti-tax newsletter estimates the crowd at 2,000. Local constabulary spotted only half as many, tops. (Subseqently revised to "more than 1,000.") I hope Stephens Media is better at bean-counting than head-counting.

Gibbons Follies. Having lain low for a few days, Gov. Jim Gibbons is back in the news with a vengeance. After saying he simply wouldn't sign a domestic-benefits law making its way through the Nevada Lege (about the only solid accomplishment emerging from that frivolous convocation), all it took was a quick chat with untiring homophobe Richard Ziser to make Midnight Jim wimp out completely. Now he says he'll veto the bill, thereby continuing to consign many Nevadans to second-class citizenship. (Supporters of the bill are trying to get Gibbons' ear but are more likely to receive the back of his hand.)

This is just plain wrong and a slap to a lot of hard-working, taxpaying citizens whose committed relationships might as well not exist, as far as the current law is concerned. "I just don't believe in it," sayeth Midnight Jim in re domestic-partner benefits for gay and lesbian citizens. Judging by his two divorces, Gibbons doesn't put great store in conventional marriage, either.

Jim Gibbons finds something he can believe in.

But alas, his latest strategem for meeting chicks laid an egg. Or did it? You be the judge. More seriously, Nevada can't afford to fill open Nevada Gaming Control Board positions but it can afford 5,000 gubernatorial eggs? Something's cracked here and it's not an eggshell.

Quote of the Day

Fri, 10 Apr 2009 18:50:00 -0700

“I know that if they go after the gaming industry we will have massive, unbelievable cutbacks. The unemployment rate will go to 15 percent." -- Steve Wynn, stating his opposition to another increase in the Nevada privilege tax, as opposed to instituting taxes on other businesses which, he says, are “as selfish people who have refused to take up one speck of their fair share.”

Texas afterthoughts

Fri, 10 Apr 2009 14:52:00 -0700

My apologies for leaving regular readers high and dry on Thursday. I was KO'd by a viral infection of some sort. Between that and a couple of doses of Zicam, I spent most of the day drifting in and out of sleep. Amazingly, I managed to stay awake through the early part of a Dodgers/Padres game in which neither starting pitcher could find the strike zone with two hands and a flashlight (the first two innings took an hour to play), only to doze off as things became -- moderately -- interesting and each team overcame its aversion to scoring runs.

Wednesday's report on Sheldon Adelson's surprise appearance in Austin, prompted this reader reaction, posted here because it was devoured by LVA's Comment-Eating Server: Regarding Texas and Casino Gaming: IMO the reason North Texas and Oklahoma are so closely linked is because Texas has strong beer and strong porn, and Oklahoma has Casino Gaming, and both sides are more OK with it than they want to admit.

Having taken note of Adelson's Texas peregrination, the Las Vegas Review-Journal said to Las Vegas Sands, in effect, "Show me the money!" (Adelson is promising to spend $2 billion-plus on a Dallas-area casino.) The company's response was that its current troubles "wouldn't impair its ability to invest in Texas, in large part because even if gambling is legalized there licenses wouldn't be up for grabs until at least March 2011."

So is Sands promising to have its financial house in order 23 months from now? We'll take that as a "Yes." (Don't forget that Adelson is also courting Massachusetts legislators in hopes of landing a casino deal in his native state.)

The Dallas Morning News, to its credit, did a little number crunching and -- at the end of its story -- poked a big hole in the revenue projections being made by Texas casino proponents. In essence, they're promising 3X-4.5X the amount of casino-tax lucre that Nevada pulls in, with only double the tax rate and a tiny fraction as many casinos. Uh-huh.

Then again, the poster boy for a Lone Star casino industry is the man who once crowed, "We could build 10 Las Vegas Strips over here [in Asia], there’s so much demand!" How's that working out?

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!

Thank god for Gibbons

Mon, 30 Mar 2009 17:59:00 -0700

Update: It looks as though Gibbons has muffed two new appointments to the Nevada Gaming Commission, replacing outgoing commissioners who include a banker with two additional lawyers ... who now comprise 80% of the commission. Nevada law specifies that "preferably" no more than two members of the same profession sit on the NGC simultaneously.

Maybe we can't take any more bad news. Or we're collectively strung out from all the CityCenter Sturm und Drang. For whatever reason, the news wires have been relatively (blessedly?) quiet today.

"I'm J. Terrence Lanni and I approved this governor."

Fortunately, God's gift to gadflies just keeps on giving. I'm talking, of course, about Nevada's utterly unique Gov. Jim Gibbons, another of J. Terrence Lanni's parting gifts to the people of the Silver State. Whenever you think his latest pronouncement has taken the cake, he goes it one better.

In descending order of importance, Midnight Jim's baffling proposal to basically scotch the Nevada Tourism Commission is getting backhanded by the Lege. 'Cause if there's one thing Nevada doesn't need right now it's tourists, but those darned lawmakers just don't get it.

Sarcasm aside, I was happy to see the RV park at Circus Circus packed like a sardine tin this weekend. No matter how difficult we make it for them sometimes, people keep on coming, bless their hearts ... or wallets, as the case may be.

(The Nevada Film Commission, from which Gibbons was going to pull the plug, also got a legislative reprieve. S&G was with the guv on that one.)

Case in point, the room-tax hike that kicks in -- with "kick" being the operative word -- this July. Midnight Jim has been going out of way to let people know that, even if he didn't lift a pinky to oppose it, that tax increase is no fault of his. Nope, it was "the people of Nevada" who done it. He didn't want to put that tax money into his budget (which he did) but we forced it upon the helpless man. Well, not me personally -- I voted against the tax hike -- but you heartless, tax-loving, Gibbons-burdening bastards know who you are. Midnight Jim has been reduced to wailing, "I used those revenues to my benefit, but I did not propose any tax increase." Damn that vox populi!

It got even funnier last week, when Gibbons was asked about oncoming primary challenges from fellow GOP-ers North Las Vegas Mayor Michael Montandon and Dr. Joe Heck. Suffice it to say, this came as news to the current occupant of the governor's mansion. Confronted with the information, Midnight Jim huffed, "I think you've mischaracterized their interest in running for governor."

The next governor of Nevada will by definition be more competent ... but we're sure going to miss the regular episodes of Theatre of the Absurd that are acted out in Carson City.

Case Bets: Florida standoff; No Goa; "Good news"?

Wed, 25 Mar 2009 16:39:00 -0700

Legislators in Florida are occupying different sides of the planet when it comes to crafting a new casino compact with the Seminole Tribe. At the risk of being accused of giving the store away, the state Senate favors granting full Class III gambling to the Seminoles, in return for $400 million a year. The lower house, meanwhile, would roll the tribe back to slots-only parity with southern Florida parimutuels and charge tribes $100 million ... for games they're to which already entitled under federal law. In the unlikely event the Seminoles assent to Plan B, it will probably get a constitutional body-slam in court.

The upper house's proposal is also more "george" for private-sector casinos, as the Miami-Dade and Broward county parimutuels would get limited table games and all parimutuels statewide would be allowed Class II gambling. The stingier House bill is the Line of Death for anti-gambling forces, who'd prefer to cut off a $100 million-plus nose to spite their collective face. Even if it prevails, it's too late to do more than protract the agony of existing non-tribal casinos in Florida. This war is over and the Seminoles have won.

Oh, and revocation of the existing compact would deprive the state not just of money of hard-to-get (if limited) judicial purview over disputes that occur on tribal land. These sorts of exemptions to tribal sovereignty are rare as hen's teeth, so solons might want to ponder whether it's something they're willing to forfeit for the sake of striking a pious stance.

Slumdog customer relations: What do you do when one of your players wins big at the tables? Beat the living crap out of him, of course. Let's see if this innovative form of customer-relationship marketing catches on ... not!

Unclear on the concept: "Good news No. 3: As of January 2009, Las Vegas’ hotel room inventory was 140,729, and this number is expected to increase by 9.9% to 155,562 by the end of 2009. In comparison, Orlando, Florida has 111,700 hotel rooms and San Francisco a little over 33,300."

Uh, this guy obviously wasn't CC'd on the memo that an onrush of new hotel rooms at a time when visitation is in decline is not "good news."

(Quoth Andrew Zarnett of Deutsche Bank, "We view a CityCenter postponement as a net positive for the overall Strip demand and supply dynamics, which is currently lopsided towards oversupply.")

Taking a page from Red China, lawmakers in New Jersey propose "stopping payments to state prisoners who make license plates and do other work." I hold no brief for convicted felons but, the last time I checked, slave labor was illegal in this great land of ours.

Quote of the Day

Wed, 25 Mar 2009 13:32:00 -0700

"I'm not a supporter of legalizing prostitution in Nevada. So by taxing it, there's a recognition of the legality of it. And that's all I want to say." -- Gov. Jim Gibbons, apparently unaware that prostitution is legal in 10 counties in Nevada.

Quote of the Day

Fri, 20 Mar 2009 11:04:00 -0700

"Let's be clear, the banks are not picking up the pieces, the American public is picking up the pieces. My constituents are picking up the pieces on this. I don't think they are in the mood to say, 'Oh, gosh, any banks are being treated unfairly.'" -- Assemblywoman Peggy Pierce (D-Las Vegas), responding to the Nevada banking industry's request for a massive tax reduction.

Death, taxes and Station Casinos

Wed, 18 Mar 2009 14:39:00 -0700

It's all but certain that the unenviable steeplechase to be the first major gaming company to declare bankruptcy in 2009 will be won by ... Station Casinos!* (On Tax Day, no less.) None of the company's three rescue scenarios does not involve some form of bankruptcy.

(* -- Unless Trump Entertainment Resorts still counts as "major" operator, but I strongly doubt it.)

Potential runner-up MGM Mirage is at least a month behind. Coincidentally or otherwise, mid-May would also mark the point at which the maw of CityCenter devours the $500 million realized in the Treasure Island sale (leaving approximately $600 million in the kitty), should that close on schedule.

Which might be A Good Thing: Another razor-sharp analytical piece from the Las Vegas Sun efficiently lays out the reasons why Chapter 11 is the worst option -- except for all the others. Not only does it keep the companies in one piece, it reduces the incentive to cannibalize capex dollars for debt servicing. Also, the prospect of facing regulatory scrutiny is daunting enough to bankers that they're inclined to keep the status reasonably quo.

Although MGM Mirage has one of the best debt-to-earnings ratios on what I'll call the Benston-Velotta Scale, short-term debt has pushed it far closer to the brink that Wynn Resorts or Boyd Gaming, both of whose ratios look slightly worse on paper ...

But not nearly as bad as the nearly 15:1 debt-to-earnings imbalance under which Las Vegas Sands is crumbling. It really makes you wonder what the Sands-loving analysts at Sanford Bernstein have been putting in their coffee. Running a close second at 13:1 is bankruptcy-bound Station, the victim of cash-flow projections that were extraordinarily far from the mark.

Taxing problems: More numbers are available on the proposed cigarette and liquor tax hikes. They're ugly but I did get a chuckle from the R.J. Reynolds lobbyist who floated the solicitous argument that tobacco taxes are bad because they're regressive. Nice try. (Altruism is not Big Tobacco's strong suit.)

I've also shamelessly swiped these market-cap comparisons, which Hugh Jackson posted today:

Barrick Gold: $27.5 billion

Newmont Mining: $18.72 billion

Wynn Resorts: $2.37 billion

Las Vegas Sands: $1.46 billion

MGM Mirage: $959 million

That's $46.2 billion for just two mining firms vs. less than $5 billion for three of the most significant casino companies. Which of these industries is in the cross hairs for an imminent Nevada tax increase? I'll give you a hint: The answer does not contain the word "mining."

Wynn(ing) Scenario: No matter what he says, people love to speculate that Steve Wynn's going to use his new stock offering to buy another casino. I'm not saying he won't ... but $175 million won't get him far, even in this market. Unless he's got a sudden hankering for the Tropicana or Riviera, that is.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

A taxing question

Mon, 16 Mar 2009 16:17:00 -0700

Q. “What part of our economy is doing so well that you can afford to tax it and depend upon it?” -- Gov. Jim Gibbons, during a recent radio appearance.

A. Judging by Gibbons' own budget, the answer is threefold: casinos, casinos, casinos. As to whether the gaming sector is "doing so well," I'll let you decide.

Case Bets: Sands' future; Gibbons' lack of same; Hard Rock woes

Mon, 16 Mar 2009 12:00:00 -0700

An "Adelson dictatorship" no solution: With Las Vegas Sands brought to the precipice of utter ruin, this post-mortem on the William Weidner ouster hits a series of nails square on the head. Only the accompanying poll seems daffy: Given Weidner's mammoth self-regard, it's impossible to conceive of him being taken onboard at any gaming company except one that's otherwise bereft of casino expertise (like the Cosmopolitan, say) or one whose CEO suddenly gets the chop.

Weidner fallout continues: The palace coup that toppled Weidner was conducted by a rump faction of the LVS board. This minority-led putsch has prompted yet another board member to tender his resignation. In the meantime, I want some of that top-flight crack the analysts at Sanford Bernstein must be smoking, as they continue to give Sands rave reviews.

Bad Day at Hard Rock: Even without the help of one-time charges, the Hard Rock Hotel & Casino lost $101 million last year. Not only did the HRH choose a fiendishly bad time to expand (if a 130% increase in your room base can euphemistically be called "expansion"), the construction disruption has driven customers away. Having marched itself and banker/hostage DLJ Merchant Partners into this quagmire, Morgans Hotel Group really needs a 4Q09 economic turnaround or it's screwed.

The jacked-up hotel tax that Gov. Jim Gibbons alternately did and didn't support has motivated yet another challenger for the GOP nod in 2010. Former state Sen. Joe Heck, M.D., cleared his guns last year -- from the front lines in Iraq, no less (Dr. Heck was doing a brief tour of duty) -- when he called out Midnight Jim for his catastrophic lack of leadership during the hepatitis C crisis. So his announcement comes as a less-than-complete surprise.

This is good news for Sen. Harry Reid (one more potential challenger removed from a thinly populated chessboard), not so good for son Rory Reid, who's thought to be the Democratic frontrunner for Gibbons' seat. As for that room tax, not only would Gibbons not sign that tax increase whose revenues he covets, he actually went into hiding. Really.

If this doesn't end the political career of Midnight Jim, nothing will. Never mind the lost productivity that will be entailed if all DMV visits have to be made during the normal work week. For a Nevadan, a visit to the DMV is more dreaded than root canal without anesthetic. And a DMV with fewer hours and fewer workers? You do the math.

WTF?!?!? "Local media has speculated that the world's casino giants would pour money into Penghu [Taiwan] having suffered a hammering elsewhere in the global financial crisis." Local media needs to get a grip.

Case Bets: Trop, AZ Charlie's, Midnight Jim

Fri, 13 Mar 2009 14:52:00 -0700

When I picked up the latest LVA and read that Xtreme Magic was getting ashcanned by the Tropicana Las Vegas, effective April 2, I began to wonder if CEO Scott Butera's promised new-look Trop was ever going to manifest itself. Because, whether the place was run by Columbia Sussex or Tropicana Entertainment, management had evinced three basic strategies: 1) subtract, 2) subtract again and 3) subtract some more.

However, the Great Amenity Massacre has finally come to a halt. The former Comedy Stop will become the new den of "Pitbull of Comedy" Bobby Slayton, making a step up for Hooters Casino Hotel. I've not seen Slayton in action but people whose opinion I trust say he's very good. He should give the Trop a much-needed infusion of personality. Welcome to the Strip, sir.

A colleague also informs me that the much-traveled Soprano's Last Supper will alight at the Trop, too. Surely this isn't the long-hinted-at successor to Folies Bergere? Say it ain't so, Scott!

In a break with tradition, neither of the two Arizona Charlie's hotels is taking bookings past May. Goldman Sachs' third wholly-owned Vegas casino, the Stratosphere, is continuing to accept reservations into the summer months, however.

Mehtinks the hotel-closings virus is spreading from Primm and Mesquite. Besides, with so much downward pressure on hotel rates even at the top-notch off-Strip hotels, the customers who'd normally gravitate to AZ Charlie's can afford to "trade up."

Liar, liar, pants afire: Remember the hotel room-tax increase, Nevada's "fuck you" to its tourism base? Seems that Gov. Jim Gibbons was for it on at least 10 occasions before he was against it. (Or maybe he was against it, then for it, then against it again).

Of course, Midnight Jim can always wriggle out of this on the technicality that he never said he'd actually, physically sign the bill. Also, his staff issued a bizarre locution that the guv was against "putting new taxes directly on the people." So does that mean he's in favor of indirectly instituting new taxes? And how, precisely? (Well, actually we know, at least as it concerns gaming: Accelerate tax collections on bad markers and tax comped meals.)

Considering that reality and Jim Gibbons normally intersect to form a null set, it's probably just another sample of the meaningless verbiage Nevadans have come to know and love. It'd go right down there with "stirring up the bottom of the bathtub," of which no one was ever able to make sense.

Update: At least Gibbons has the virtue of providing amusement, unlike the disgraceful and equally spineless Lege, whose fiddling while Nevada burns is too depressing to contemplate more than briefly.

Nevada Lege sticks it to you

Tue, 10 Mar 2009 16:52:00 -0700

Although a few Democrats in the state Senate toyed with the idea of growing a spine and opposing raising the hotel-room tax, all of them -- plus several Republicans -- did the easy thing and opted for Plan A: Soak the tourists. Again. So the new top rate in Las Vegas will be 13%. Pardon us while we put this cigar butt out in your face, too.

All the rationale you need can be found in the final line of Ed Vogel's story, where he's told this "may be more palatable than other tax increases because the tax would be paid by tourists." The disdainful tone expressed toward tourists by KVVU-TV talking heads on this morning's 7 a.m. newscast simply drove the point home: Tax that schmuck behind the tree.

Of course, the tax increase was popular with two-thirds of Clark County voters. Wouldn't you love any tax that somebody else has to pay? Despite having booked the revenue already, Gov. Jim Gibbons will take the coward's way out and let the new impost become law sans signature. That hardly befits a decorated military veteran. (Proving yet again that irony is dead, Gibbons reiterated his now-is-not-the-time-to-raise-taxes mantra the very same day.)

The solons' fecklessness is pithily summarized by an understandably exasperated Jon Ralston:

The session is nearly a third over and a pervasive sense of deja vu is settling in. Governor presents controversial idea(s). Legislature declares them DOA. Partisan sniping ensues between lawmakers and governor and among legislators. Final budget/revenue plans are an abomination, some kind of Frankensteinian creation that has no policy underpinnings but fills a budget hole with cobbled together revenue Band-Aids.

While Gibbons' budgetary 'solution' might be dubbed the Nevada Chainsaw Massacre, the Dems' non-response is equally deplorable, consisting as it does of socking it (among others) to the casino industry even more than ever. This approach would simply amplify existing inequities in Nevada's structure, as Hugh Jackson tried to explain to the Lege, throwing in some charts that even a legislator could understand. They neatly highlight the disparity between the enormous revenue contribution made by casinos -- hundreds of millions of bucks -- and the measly input from the mining industry.

Silver Lining Dept.: Amid all those beyond-horrid numbers from the Nevada Gaming Control Board, note that slot hold is down almost a full percentage point. Hopefully the example of M Resort, trading off loose slots for longer play (the old Cactus Jack's philosophy) will find more adherents. Oh, and Washoe County was up. We'll take any good news we can get and this was pretty unexpected.

A reader enlightens me. Among the possible reasons for the increased smoke infestation at formerly respectable joints like Sunset Station (and Eastside Cannery), a California visitor suggests another: The ban on smoking in Nevada restaurants has driven the cigarette-and-cigar crowd to the casinos more than ever, since the latter represent one of the few safe havens remaining. He's noticed a gradual increase in the smokiness of Red Rock Resort and comparable places that provide a one-stop-shop for dinner, video poker and a smokin' them while you've got 'em.

Can't argue with that ... although the rapid declivity of both Sunset and E-Can into mega-ashtrays suggests to me a confluence of factors, all of them untoward.

Quote of the Day

Fri, 06 Mar 2009 12:25:00 -0700

"There are lots of voters who seriously believe they get nothing for their taxes and that if they pay less of them, or stop paying altogether, that roads will still be built, public schools, police, fire departments, jail, and all the vast numbers of services (including national defense) will be provided for. Social security? Medicare? Not necessary because we will all be rich! Rich as Croesus!" -- David Klamann, in a letter to Las Vegas City Life. And if you follow the link, you'll see why S&G refers to lawmakers (sometimes ironically) as "solons."

Big bounce in Pennsylvania

Thu, 05 Mar 2009 14:04:00 -0700

Casino revenues in the Keystone State leapt 14% from February of Leap Year to this year, at least at six of the state's seven casinos. (Hollywood Casino at Penn National Race Course is excluded; it wasn't open a year ago.) That's $126 million against $110 million, even with one less day in the month, which is divided 55/45 between the state and operators. A 1,578-machine increase in slots, mostly at Mohegan Sun at Pocono Downs really helped, too, as you'll see.

The comparisons of gross-revenue (not to be confused with cash flow, which can be considerably less) are as follows ...

Mohegan Sun @ Pocono Downs: $12.4 million/$17.8 million (44%)

Philadelphia Park: $28.5 million/$30.3 million (6%)

Harrah's Chester: $28.5 million/$27.9 million (-2%)

Presque Isle Downs: $12.1 million/$13.9 million (15%)

The Meadows [Cannery Casino Resorts]: $17 million/$20.6 million (20%)

Mount Airy Resort: $11.6 million/$15.3 million (32%)

Plus another $19.7 million realized at Penn National. Once expansions are completed at The Meadows and Philadelphia Park (more bad news for Harrah's Chester), and Sands Bethlehem and Rivers Casino in Pittsburgh open, the state expects the annual take to swell to $2.25 billion, with industry employment growing to 8,500 souls.

Three-fourths of the value of the troubled, $1.7 billion Cannery/Crown Ltd. deal now rests on The Meadows. Crown says it expects an annual cash flow contribution to be $115 million versus only $35 million from the two Canneries in Las Vegas. If New Yorkers really are willing to drive an hour and 50 minutes to pull the slot handles in Bethlehem, then Sheldon Adelson's 17% projected ROI won't be as zany as it appeared at first blush.

Case Bets: Taxes, Stratosphere, Riviera, Treasure Island

Wed, 04 Mar 2009 13:43:00 -0700

If you, like me, had hoped for a breather from bad news today, you hoped in vain. In no particular order ...

Faced with a collapsing state budget and a scorched-earth set of spending cuts proposed by Gov. Jim Gibbons, do state Democrats take an Obama-like, "Hard choices are upon us" stance? You're kidding me, right? No, they're seeking refuge in weaselly evasions that they can't make specific proposals because they don't know the exact number that they have to hit.

Will they take on the mining industry or propose the gross-receipts tax on non-casino businesses for which J. Terrence Lanni used to stump? Nope. Even though sales taxes are by nature regressive and both they and gaming revenue are spiraling downward, 60% of the state's eggs will continue to be put into that fraying basket. (The best analogy for this budgetary formula is that of CityLife's Steve Sebelius, who likens it to building a house on the slope of an active volcano.)

The rest of the non-solution, as propounded by Ways & Means chair Morse "Moose" Arberry (D) consists of More Of The Same: Just jack up each existing tax a teensy bit and maybe nobody will notice -- or at least squawk too loudly. The rationale, as explained by one budgetary sage, is that everybody takes it in the shorts (basically), sparing legislators from having to confront one or two particular interest groups. It also means that the increased -- they hope -- revenue starts rolling in on Jan. 1, 2010 ... whereupon the larger issue of Nevada's revenue structure can be safely palmed off on the 2011 Lege, absolving the current bunch of responsibility. Yup, sounds like a real winner.

So Nevadans and tourists alike can brace themselves for higher taxes on: alcohol, tobacco, live entertainment, insurance premiums, property transfers -- and casino revenues. Not to mention the hotel-room tax that's already sailing through. Heck, it seems the gambling industry dodged a credit-chilling acceleration of the tax on markers largely because Midnight Jim went off half-cocked. Gibbons' characteristic ineptitude is rarely a cause for relief but here's an exception to the rule.

As for the Buckley/Arberry proposition that the people who are already paying (you, me, the guy behind the tree) should pay more while the ones who aren't will continue to skate ... to say that it's disgraceful, inequitable and it stinks would be a gross understatement. It's a sad day when Jim Gibbons is your local Profile in Courage but there you have it.

J. Terrence Who? The unfortunate Mr. Lanni was a no-show at his Nevada Business Hall of Fame induction. Maybe, just maybe he's keeping a low profile because MGM Mirage is cracking under the strain of debt that was run up on his watch. Then again, this is a town that has no compunction about giving sentimental awards to mobbed-up old casino execs. But fudge one resumé and you're a non-person, buddy.

More 401-ks stopped. This time it's the Goldman Sachs-owned Stratosphere and both Arizona Charlie's, etc. Gosh sakes, yes, let's raise gaming taxes right this minute.

If a Strip casino were to close, the odds-on favorite would be the Riviera. It has shuttered all but one of its restaurants and has got to be worrying that a rumored six-month postponement of Fontainebleau could be the kiss of death. If that weren't enough, Wachovia Bank has decided to give the Riv a shove under the bus by insisting that -- according to Riviera Holdings President William Westerman (via PR Newswire) -- "Wachovia could gain access to all cash held in Riviera's bank accounts by merely advising the banks of a notice of default without first allowing us the opportunity to cure the default, no matter how trivial."

He adds that Wachovia's alleged brinksmanship has been going on since last Oct. 14. What luck: Of all the banks willing to help prop up the casino industry, Westerman has to deal with the one that decides to play hardball instead. When you consider that people were writing Westerman off 10 years ago, he's no stranger to facing long odds.

Ready for some good news? Cash-parched MGM Mirage is close to gaining some desperately needed liquidity now that the Nevada Gaming Control Board has OK'd Phil Ruffin's purchase of Treasure Island. Ruffin has enjoyed excellent luck with Nevada regulators. Like his New Frontier acquisition, this one went through like greased lightning. An exhaustive LVA profile of Ruffin found him always to be on the up and up. And unlike James Packer, he doesn't plan to fix what isn't broken.

Harrah's enjoys bailout

Tue, 03 Mar 2009 13:27:00 -0700

"Critics argue that the tax-law change rewards companies that took on too much leverage during the credit bubble, such as those that were bought by private-equity firms."

Sound like anybody we know? How about Harrah's Entertainment, which played Russian roulette with the bond market and got its brains spattered all over the wall. Lucky for them, Senate Majority Leader Harry Reid (D-NV) was there with a "Get Out of Jail Free" card -- or at least a tax break that, in effect, rewards morally hazardous borrowing. Thanks to Harry's largesse, it'll be a full decade before Harrah's pays off the gains it's about to realize from buying back part of its $23 billion (!) debt at a discount.

That is, assuming that the crafty Reid hasn't carved out yet another tax exemption for improvident borrowers like Harrah's, Station Casinos and Colony Capital by 2019. And between that gift-wrapped tax deferment and last week's endorsement by Nevada GOP kingmaker Sig Rogich, Reid is as good as re-elected through 2016. (Which must come as a terrible disappointment to Las Vegas Review-Journal Publisher Sherman Frederick, who has been conducting a blushing-maiden campaign for the GOP nod via his blog and Sunday column, trying to draft himself as Nevada's Only Hope of Salvation.) One prospective Reid rival has seen the handwriting on the wall and given up.

As the Wall Street Journal story points out, there are far worse outcomes for Harrah's management, its employees -- innocent bystanders to this debacle -- and its debtors, who'll realize some tax forgiveness themselves. Besides, it's clearly preferable that super-leveraged companies pay back some of their debt rather than walk away from the whole kit 'n kaboodle. That goes without saying.

But what lesson is likeliest to be drawn in the boardroom? Will it be, "Damn, but we dodged a bullet there! Let's not pull an LBO stunt like that again"? Or will executives reach the conclusion, "Hey, that was easy! As soon as we're clear of this mess, let's run up another whopping tab. We won't have to pay off the whole thing and we'll probably get another big-ass tax break from Harry in the bargain. Party on, dudes"?

Recent history does inspire confidence that the former option will hold sway over the latter.

Small victory for Sands: There's a silver lining in the (relatively) dismal February revenue numbers from Macao, which are down 16% from last year, to $1 billion. "Dismal," that is, by Macao standards, which are higher than anybody else's.

While Stanley Ho continues to command the plurality of the market (29%), Las Vegas Sands has clawed back. Its January market share (22%) has risen to nearly 26%. These gains came mainly at the expense of Melco Crown Entertainment (down to 9%) and MGM Mirage/Pansy Ho (bringing up the rear with 6%).

Given the worrisome financial straits MGM finds itself in elsewhere, it's time to think the once-unthinkable: That CEO Jim Murren could decide that $30 million/month in revenue isn't worth maintaining a Macanese beachhead and sells the company's subconcession back to Stanley Ho. Then the elder Ho's tactless references to MGM Grand Macau as "my casino" would achieve the status of prophecy.

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.

Quote of the Day

Thu, 26 Feb 2009 11:46:00 -0700

"Nevada is a parasite state when it comes to taxes, and now is probably not the best time to take a little more bite from our visitors. But, of course, the visitors do have one merit: They don't vote in Nevada." -- Richard Abowitz, commenting on the room-tax hike in his "Movable Buffet" blog.

Vdara, Aria previewed

Wed, 25 Feb 2009 14:18:00 -0700

Disclaimer: All of the images below were shamelessly snurched from Steve Friess' blog. If you want to see them in higher resolution and read his entertaining critique, I heartily urge that you pay a visit to Vegas Happens Here.

A 582-square-foot "suite" at Vdara.

Austerity kick: an 809-square-foot suite. Unfortunately, the "subliminable" advertising isn't discernible at this resolution.

Vdara Penthouse Suites come in two sizes, this one encompassing 948 square feet. While high roller at Wynn Las Vegas and Caesars Palace have been so overfurnished they feel enervating, Vdara is going a bit too far toward monasticism, don't you think?

Here's the plus-sized (1,316 square feet) Penthouse Suite, not quite so monkish.

Toward the smaller end of the room spectrum is the 836-square-foot Panoramic Suite. It doesn't stint on the view although, as Friess points out, certain other amenities are AWOL.

A standard room at Aria. How much would you pay for this midweek? One might say that's the $229 Question.

Aria's version of MGM Grand's Sky Lofts (currently the standard-setter for high-roller living). Judging from the furniture, I have an uneasy feeling that somebody has decided the Eighties are "in" again.

Postscript: It's a cold day in Hell when I find myself in full agreement with GOP Assemblyman Tyrus Cobb, but his comments about the impending room-tax hike -- as cited by Friess -- are spot-on. Be sure to read the burgeoning reader-comments thread, too, as it provides an excellent sense of how this will play in Peoria (i.e., not well).

From the mailbag

Wed, 25 Feb 2009 11:40:00 -0700

A reader writes:

I certainly hope the Nevada Assembly doesn't vote to start taxing comps. I see where the House voted to increase the room tax by 3 percent, but since I don't pay for rooms, this is moot for me.

Now, if they start taxing comps (it pays to pay with points rather than "charging" your food, etc. to your room, because by paying with your points as you go you do not incur sales tax), that would be a killer. If something is free, it's free. Even the IRS doesn't bother with comps .... unless you're an idiot and claim them as "income!"

That hasn't been proposed in quite those terms. But during last year's emergency session of the Lege, Gov. Jim Gibbons' Big Idea was to start taxing casinos for comped meals, a notion that's likely to find bipartisan support in the current Lege. Which would start us down the primrose path to a scenario in which all promotional allowances are, through some tortured rationalization, deemed taxable. We haven't reached that point but I certainly wouldn't rule it out, especially given Nevada's propensity for "Don't tax you, don't tax me, tax that guy behind the tree!"

Cry me a river

Tue, 24 Feb 2009 18:36:00 -0700

From the Man Bites Dog File: Area businessmen -- you know, the prototypical low-taxes/small-guvmint crowd -- are complaining about the stimulus package. Not on account of fiscal-conservatism principles but because they don't get enough Washington moolah. Actually, the appended bullet-point list of stimulus provisions and incentives looks pretty good to me, particularly the part about counting canceled debt as income. That measure couldn't be more timely, seeing as Station Casinos is asking unsecured creditors to eat 83% of what they're owed, for the greater glory of Station.

But please, somebody buy a crying towel for SurePayroll President Michael Alter, who voices this lament: "There's very little, if any, money in the stimulus package for small businesses, and what is there is really sort of a trickle-down from the benefits that go to consumers." Aw gosh, how pitiful.

Seems like it's consumers who keep the Michael Alters of this world in business to begin with but I'm kinda crazy that way. Besides, people of his ilk were all gung-ho about trickle-down economics when they were its primary beneficiaries. Not so much fun to be at the secondary or tertiary level of the trickle-down, you say? Welcome to the world of supply-side economics as the non-business-owning person experiences it. What's sauce for the goose ought to be just dandy for the gander.

Some of the less-whiny businessmen in the story have sound criticisms/suggestions vis-a-vis stimulating the economy. Tax credits for companies that provide health plans for their workers is pure common sense, for one (especially when you consider the costs of health-related lost productivity). Still, this ideological identity-crisis thing seems to be catching.

Speaking of shameless, bankers who are accepting federal bailout money have no compunction about crossing their own palms with silver. One of the institutions in question is Nevada State Bank, where I do my personal business ... and from which I should probably withdraw my deposits. But are any of the alternative institutions less ethically challenged?

This just in: The Nevada Assembly voted 35-7 to jam tourists up with an increase in the Clark and Washoe county hotel taxes. The seven opponents include a couple of the worst pricks in the lower house but they're on the side of the angels this time. Too bad it was a losing cause. Sanity may prevail in the state Senate, though I'm pessimistic.

Gibbons retreats, sorta

Mon, 23 Feb 2009 12:33:00 -0700

Gov. Jim Gibbons has scuttled away from one of his several proposals to jack up taxes on the only segment of Nevada that's carrying its own weight -- the casino bidness. He's retreating from a demand that casinos pay taxes on uncollected markers (which, in turn, would be certain to cause a tightening of casino credit). Midnight Jim continues, though, to support raising hotel-room taxes in Clark and Washoe counties, and taxing comped meals. The casino industry's love affair with Gibbons -- which helped get him into office -- has so far proven a one-way romance.

Worries about Boyd. Here's why I resist the occasional invitation to give stock picks: No sooner have I sung the praises of Boyd Gaming's sound fundamentals, its diversified casino portfolio and its (Echelon excepted) aversion to risk, comes news that analysts have the heebie-jeebies in re Boyd. A slow-ramp-up at Water Club in Atlantic City and weakness in the Las Vegas locals market are the primary worries.

Advertising during the Oscars: Casinos that ran ads during last night's interminable Academy Awards snoozer included M Resort (twice), Encore, the CasaBlanca in Mesquite and Green Valley Ranch, which has suddenly discovered a great lurve for the local clientele. The latter is quite a turnaround for a property that used to tout its high-end cachet. Oh, and Mickey Rourke got totally, utterly and criminally screwed. Which ruined the evening right then and there.

Atlantic City Death Watch, cont. After taking a long gander at the market, Macquarie Securities analyst Joel Simkins had this to say: “In our view, there is a distinct possibility that one to three casinos could be permanently closed in the next few years, particularly when many older locations are barely breaking even and, we believe, cannot be rehabbed to be economically viable.” [emphasis added]

Anybody care to speculate which casinos Simkins has on the "do not resuscitate" list? Resorts Atlantic City is a no-brainer for the "one." As for the "to three," we could toss in the Atlantic City Hilton and Trump Marina, where the news comes in two flavors -- Bad and Worse.

The Tropicana might also be on the bubble, partly because it's not performing up to its preponderant size and also on account of interim management's inability to restore the business that was lost during the Columbia Sussex reign of error. A veteran Trump-watcher has another suggestion, writing that"his decision to abandon and bad-mouth the company suggests that this may not be the routine Chapter 11 bankruptcy from which the company eventually emerges. Indeed, I wouldn't be surprised if this is the last gasp for Trump's three Atlantic City casinos."

Hotel-tax raise razzed

Tue, 20 Jan 2009 13:52:00 -0700

Gov. Jim Gibbons' (R-NV) latest "up yours" to the casino industry isn't even playing well with the leader of Nevada's Grover Norquist Fan Club, Chuck Muth. The latter's reaction to Gibbons' pious proclamation that he "cannot accept" any income, sales, property or gasoline tax increases on Nevadans was: "But raising taxes on our tourists and Nevadans traveling in-state is something the governor apparently CAN accept. Funny how he neglected to say that, huh?"

Jim Gibbons thinks he's seen this fellow somewhere before but can't quite place him.

Working towards his peroration, Muth adds, "And finally Gov. Gibbons said he wouldn’t support any tax hike 'that targets only our profitable companies and industries.' Instead, he’s proposing a tax hike that targets the very people necessary to make many of our state’s companies and industries profitable. Oy vey."

For a governor who claims to be all het up about the need to stimulate tourism, Midnight Jim sure has some funny ideas about how to roll out the welcome mat. And while Muth and I would disagree vehemently, perhaps violently, about the solution, we're both in firm agreement that "sticking it to our dwindling number of tourists" ain't it.

The silence

Mon, 19 Jan 2009 12:59:00 -0700

That gurgling sound you hear from up north is Gov. Jim Gibbons (R-NV) trying to drown the state government in his bathtub. And if the casino industry gets soaked in the process, fine by him.

What you're not hearing is a peep of protest from gamers who, you'd think, would be tired of acting as the milk cow for the rest of Nevada. Whether it's revoking tax emptions on comped meals, raising the room tax for the umpteenth time or collecting taxes on dishonored markers, the casino industry is the one sector of the Nevada economy that can be singled out for additional levies without any fear of polical repercussion.

Maybe the fellows in the executive suites have tired of being a doormat, but they're giving scant evidence of it these days. After all, it might be awkward to say, "Hell no, we won't" to Midnight Jim after J. Terrence Lanni and friends invested so much capital installing Gibbons in the governor's mansion -- and precious little thanks have they received. By this point you'd think they'd be ready to kick Gibbons' butt up one side of Carson City and down the other. However, they seem more inclined to absorb an(other) ass-kicking than administer one.

As for Gibbons, he seems mesmerized by the logic of those anti-tax obssessives who incessantly repeat the mantra that even the measliest tax burden upon big-box retailers and mining conglomerates will translate into catastrophic job losses. If we subscribe to that line of thinking, should taxes on Nevada's casinos be repealed, employment in the gaming sector would explode!

Actually, no, it wouldn't. When the casinos in Midnight Jim's own backyard have collectively lost money for two fiscal years running, they've got priorities considerably more urgent than expanding their payroll.

More about Siegel. No, not Bugsy. S&G was contacted by Las Vegas Review-Journal reporter Benjamin Spillman to draw our attention to a piece on Stephen Siegel's expansion into the Mount Charleston market. It features commentary by LVA's Anthony Curtis, who -- although we haven't discussed the matter -- is of the same mindset as yours truly. Namely, that as smaller operators continue to struggle and (are expected to) shed properties, Siegel will be nicely positioned to move in and start sweeping them up.

Harrah's vs. Harrah's. I apologize for some confusion that was inadverdantly sown amongst the readership. The dilapidated Harrah's Entertainment Web site to which I was referring was not Harrahs.com but the press site, media.harrahs.com. Not only are some Harrah's properties altogether omitted from the site, other pages -- like the one for Grand Casino Biloxi -- have clearly been neglected for a long, long while. (Web site as corporate metaphor?)

The contrast between, say, the aggressively well-maintained Atlantic City pages and who-cares attitude regarding other ones is a reminder that, nearly four years after completing its absorption of Caesars Entertainment, Harrah's media-relations operation is still "siloed" into a hodgepodge of fiefdoms -- a patchwork of principalities that resembles pre-Bismarck Germany. For efficiency, it doesn't begin to compare with the equivalent MGM Mirage operation down the street.

Meet the new boss, same as the old boss

Fri, 16 Jan 2009 18:17:00 -0700

When I wrote yesterday that the spirit of Bill Yung still seemed to be afoot at the Tropicana Las Vegas, I didn't know the half of it. Mike Weatherford has the skinny on the shuttering of Folies Bergere and it boils down to a payroll dump. Folies performers were Trop employees and Raw Talent Live or whatever show with whom Trop President Ron Thacker is dickering would 'four-wall' the Tiffany Theater, placing Thacker in the role of landlord: collecting the rent and doing maintenance as needed.

Combine this with projected capex spending of about $6 million a year (some of which may be coming from money budgeted for Folies) for the next five years -- at a time when the Trop is falling further and further behind the competition -- and a prolonged Scott Butera regime is beginning to look like a bleak prospect. Here's hoping the bankruptcy court clears the way for an asset sale and soon. What the Trop needs is someone who can do a reverse-Yung: Buy it at a depressed price and use the money thereby saved to spruce the old gal up or, better yet, do a partial tear-down-and-rebuild job on her.

You came to Nevada but it was closed. Not surprisingly, Gov. Jim Gibbons' new budget would balance the ledger by socking it to visitors and literally stealing from the indigent. As for casinos that haven't collected on dishonored markers -- too bad. Gibbons wants them to pay taxes on the duff debts forthwith. If all that doesn't work, Midnight Jim could take a cue from Circuit City and hold a 'going out of business' sale. Speaking of which ...

Progressive Gaming, R.I.P.: The phone is off the hook and the vultures are circling Progressive's corporate HQ. It appears that Progressive's debts will be settled, to some extent, by holding a fire sale of its best intellectual property to "a major slot machine manufacturer." Could it be minority owner IGT? Naaaaaaaaaaaaaaah!

In a sidebar, it's reported that Black Gaming has one month to avoid defaulting on nearly $200 million in debt. It appears that CEO Randy Black Sr. was so busy shoveling money into his own pockets that he missed an interest payment yesterday. Say what you will about Black, he's definitely got his priorities. The "unbundling" of the Strip shows every sign of trickling down to markets like Primm and Mesquite, where Black has enjoyed a near-monopoly for most of the past decade (Mesquite, not Primm).

Prospective buyers could include guys like Stephen Siegel. Snicker if you like at his plan to create "synergy" between the Gold Spike downtown, the obscure Barcelona and the Mt. Charleston Hotel. But Siegel Group Nevada has been quietly rolling up a sizeable bundle of assets, has a reputation for reinvestment and, as I've said before, has done more with the Gold Spike than Tamares Group ever did with it or any of Tamares' other Downtown properties. It also sounds like Siegel's got a knack for marketing, itself no small asset in this economy.

Harrah's LV renews Rita Rudner's contract ... signaling the Apocalypse?

Quote of the Day

Tue, 09 Dec 2008 12:46:00 -0700

“It’s not a tax increase. I would not support it if it were a tax increase.” -- Nevada Gov. Jim Gibbons, approving a 50% decrease in the amount of sales tax that is rebated to businesses.

Sin of omission

Mon, 24 Nov 2008 15:17:00 -0700

As a charter member of the Liberal Elite (which holds its meetings in a location so secret I can never find it) and amicus curae of the Homosexual Agenda -- especially the part that demands better hair-care products for all -- I'm inured to hysteria-tinged e-mails from just about every left-of-center cause you can name. And that's not including the cyber-missives from Republicans Lite like our own esteemed Sen. Harry Reid.

So it was with a mix of recognition and amusement that I perused a literally apocalyptic screed from Nevada GOP Chairwoman Sue Lowden.* (Seriously, Lowden stops justthisclose to calling President-elect Obama the Antichrist.) She ticks off six tax hikes that were voted down in the '08 election, but neglects to mention one that was voted through: An advisory question that advocates sticking hotel guests with a 2%-3% room-tax increase sailed through.

So, even if Lowden is impervious to the irony of Nevadans voting against increased funding for fire protection, it's not lost on her that we don't mind higher taxes so long as people from out of state pay them for us. (Hence her decision to sweep an inconvenient truth under the nearest rug.) I guess we won't object to seeing our houses burn down unless we can devise a means of making tourists bend over and bankroll some new fire engines.

Tacking an extra $3 onto a weekend room night at the Golden Nugget won't make customers suddenly stay from Nevada in droves. But, like the 84-cent stamp at Harrah's Las Vegas, it's something people will remember, and not fondly.

*--If you download the Lowden Letter, be sure to append ".doc" at the end or it won't open.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

On balance, a good day.

Winners & Losers

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Quote of the Day

Mon, 03 Nov 2008 19:09:00 -0700

"The assertion of conservative and libertarian contributors that a 3 percentage-point increase in the hotel room tax will result in doomsday for Las Vegas is overblown.

"On a room that costs as much as $200 per night, the increased cost of $6 is not a deal killer. The real issue is that the $200-per-night cost is more than half a week's wages for most people, and the table limits of $10 to $25 are above the means of most visitors." -- Laughlin resident Bill Bethke, responding to an editorial in the Las Vegas Review-Journal.

They can't be serious

Wed, 29 Oct 2008 11:50:00 -0700

Ian Sutton, over at GamingFloor.com spotted this, probably cobbled together on the quick, in the wake of CBS News' sloppily done piece on Sen. John McCain's popularity within the casino industry:

OK, the McCain+Paris Hilton+Britney Spears linkage is an amusing bit of payback for the famous "celebrity" spot. The rest of the ad is somewhere between disingenuous and deceptive. "More casinos"? That's a state-level issue, one that never shows up on presidential radar even from a distance. This is a stupid scare tactic that you'd have to be mighty gullible to buy.

"A million in campaign cash"? Try $951K at most. And the $133K donated to Sen. Barack Obama is somewhat more than chicken feed, too.

It might be possible to make a tenuous case that a President McCain could (help) enable more tribal casinos -- he's received $62,950 from the Mashantucket Pequots and two other tribes -- but the ad's glib McCain=Vegas equation forfeits that line of argument. Of course, the question of why donations from casinos are inherently more sinister than those from Fannie Mae, Freddie Mac, military contractors, oil companies, pharmaceutical firms, tobacco growers, HMOs, etc., is simply begged.

That '527' ad, though, is downright subtle when compared to this ham-fisted ploy, complete with eerie sound effects. Oooh, those spooooooky casinos! They're coming to get us!!!

If you're going to try and make hay of McCain's relationship with the casino industry, shouldn't you at least derive a metaphor, however hackneyed it may be? (Acoustic guitars should be banned from all Democratic Party and left-leaning ads, by the way.)

When you consider that Bill Clinton's administration flirted with a federal gaming tax and the Bush the Second floated the notion of using casinos to collect delinquent child support, it's only common sense that the casino industry would like to have the next president's ear. And since when did it have to forfeit its First Amendment rights to support the candidates of its choosing?

Besides, the GOP prospects already being touted for 2012 -- Mike Huckabee, and governors Sarah Palin and Bobby Jindal -- are anti-gambling across the board. (Huckabee's proposed tax policy would be downright punitive to casinos and their suppliers.) Small wonder that casino CEOs want McCain to succeed.

Just say 'no'

Sat, 25 Oct 2008 14:35:00 -0700

Fall is in the air here and so is election fever. I'm just back from early voting and a honkin' big Obama rally is gearing up on the other side of town, so the mind is full of matters electoral.

The responsibility that comes with this bully pulpit includes making election recommendations with restraint. So, with exception of a ballot initiative or three, I'm going to attempt to refrain from stumping for individual candidates. Although I would humbly suggest that you might -- might -- want to think carefully before voting for any candidate who enjoys the blessing of that noted casino industry expert, pediatrician James Dobson. (He's not a theologian, but he plays one on the radio.)

Turnout for early voting has been heavy here in Nevada, as elsewhere, but perhaps some of you who are in Clark or Washoe counties are like my better half and enjoy the patriotic sensation that accompanies voting on Election Day. If that's the case, I'd like to share a few thoughts on Question 5.

Buried deep within the ballot, Question 5 asks whether a sliding-scale tax of 2-3% should be tacked onto current hotel-room taxes "to avoid large cuts in the funding of education and other state programs," and later to be employed as a funding stream for K-12 education and teacher salaries.

Opinion within the casino bidness is divided on Question 5, although certain captains of the industry had a hand in its conception (which was far from immaculate, lemme tell ya). Yes, it's for a good cause and, yes, it's purely an advisory question, what opponents call "nothing more than a government-paid opinion poll." (emphasis theirs)

Given the blizzard of varying room-tax rates already in effect, an extra 2% or 3% would be felt most in Glitter Gulch downtown and least out in Laughlin, Boulder City and Pahrump -- if you fancy staying there. The Nevada Secretary of State's office estimates that, should you visit Vegas twice a year, three nights per visit at an ADR of $100/night, the cost of your trips will increase an aggregate of $18.

Would this be a significant economic deterrent? I doubt it -- though perhaps consumers feel otherwise. As with many things in life, it's ultimately a matter of principle. As much as Nevada schools need improvement and as unattractive as our teacher salaries are, if Nevadans want to capitalize them, we need to take that responsibility upon ourselves ... not pass the buck to our customers, our guests, the people who keep the lights burning on the Strip.

This isn't "education funding" -- it's freeloading. And, yes, I would rather pay a (small and progressive) state income tax -- let's say 5% -- than endorse Question 5's exploitive attitude towards the tourists and conventioneers who are the primary and integral bulwark of Nevada's economy. Otherwise, it's like saying, "Thanks for your business and please ignore this kick in your butt."

... and don't even get me started on the subject of Allegiant Managing Partner Ponder Harrison's proposal to start charging passengers for carry-on luggage. (Too bad we can't vote on that!) I guess people are expected to fly to Vegas with nothing but their money and the clothes on their backs -- the few that the TSA lets us wear, that is.

Wynn weighs in

Mon, 06 Oct 2008 12:19:00 -0700

A source at Wynn Resorts reports seeing sandwich boards in the employee cafeteria bearing the following text:

HOW CAN WE HELP?
Wynn Resorts wants to be part of the solution to Nevada's education funding crisis. We are supporting an initiative to increase the room tax in Clark and Washoe County by up to 3 percent, which will raise approximately $125 million per year to improve our student's education and support our schools.

Because the extra fee would be paid almost entirely by tourists, the proposed tax would have virtually NO adverse impact on local residents.

SIGN THE PETITION
Signing the petition ensures that your voice is heard. Signature gatherers will be at Wynn on Wednesday, October 8 from 9 am to 5 pm outside the employee parking garage on Sands Avenue.

VOTE YES ON QUESTION 5
On November 4, Wynn Resorts urges you, your families and friends to vote YES on Question 5 to Support Our Schools.

(No emphases have been added to the e-mail.)

Penn impresses analysts

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

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

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

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

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

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

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

Speaking of taxes ...

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

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

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

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

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

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

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

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

Case Bets: South Point, Gustav, Monte Carlo, Gold Spike, Excalibur, etc.

Tue, 02 Sep 2008 14:15:00 -0700

Why does a holiday weekend suck? Because it means that instead of having to dig through three days' worth of the Las Vegas Review-Journal on Monday (a depressing task under the best of circumstances), a Tuesday start means at least four days of windfall from what Hugh Jackson calls "the dead tree of record" through which one must cut brush. Solution? Chop it up into Insta-Blog fodder! Like ...

Horse dies at South Point, in front of 500 undoubtedly traumatized spectators. Leaving aside the equine tragedy, if South Point can only rustle up 500 attendees for a Friday-night event, its equestrian center may be even more of a gold-plated albatross than was originally thought.

Gulf Coast casinos ordered to close. Good grief, has common sense taken a leave of absence down there? Why was Mississippi required to force the issue?

Monte Carlo not up to code, says Clark County. Whereupon neither the county nor MGM Mirage takes responsibility for remediating the situation, each putting the onus on the other.

Wall Street comes around. The Street has a manic-depressive attitude toward gaming stocks and is coming out of its latest episode of depression. Even so, some of these stocks look ridiculously undervalued, especially Las Vegas Sands, which The Street used to think was worth three times as much.

Speaking of Sands, there's confidence and then there's foolhardiness. Then again, given the company's genius at protracting litigation to superhuman lengths, its sanguine attitude may be born of experience.

Somnolent editors awake from nap, find that Nevada's economic model isn't working, call for more of the same, go back to sleep. (BTW, here's one of those "Nevada Democrats" the editorial reflexively derides.)

First Nevada Palace fell and now the Gold Spike is half-renovated. We're going to have to come up with a new shorthand for "bottom-of-the-barrel casino" now that we won't have the Spike to kick around anymore. Stephen Siegel has done more with the place than his predecessors, absentee owners Tamares Group, accomplished in three years (unless you count the offerings they took out, like table games).

Still, Siegel's being a wee bit charitable when he says "most people underestimate the Gold Spike." Stephen, it is impossible to underestimate the Spike, the only Nevada casino for which I would have used "vile" as a description, back in its Tamares days.

Comment threads in newspapers can be a very mixed blessing, but much of the back-and-forth that follows this story about electronic poker at Excalibur is well worth reading, as it provides a great deal of hard information and a player's-eye perspective on the experiment.

Quote of the Day

Tue, 12 Aug 2008 15:52:00 -0700

"One of the questions that will be answered [about the IRS raid on Pure Management Group] is whether there's any substance to the story that more than $5 million in cash was found in a storage shed of a top executive." -- from the pages of Norm!

A storage shed? People, have we learned nothing from the downfall of Studio 54?

Technorati Profile

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.

A good question

Thu, 17 Apr 2008 11:21:00 -0700

Math was always my worst subject, so it's a good thing I've got sharp-eyed readers who keep me honest. One of them asks how MGM Mirage is going to save $75 million (later restated by the company as $200 million) by showing 400-plus managerial employees the heave-ho. "What," the reader asks, "is the annual salary of the 400 managers? [$]75,000,000/40 = $187,500 [...] pretty good gig for middle management!" (Can't argue with that last point, for sure.)

To be fair, let's re-divide by 440 (the precise number of mid-level people MGM has said it let go), which gives us $170,454.54. But I'm still foxed for an answer -- unless the value of employee benefits, like health insurance (possibly including dependents) is being factored into MGM's equation. Asks the reader, "is somebody fudging some numbers?"

Well, considering that those numbers increased by $125 million in the space of a day, I'd conjecture that despite "months of research" MGM is itself unsure as to what they are. Maybe it just threw a ballpark figure out there and then, when Wall Street reacted with a sell-off, tossed out a bigger one. But that's 101% speculation.

Speaking of MGM Mirage, it must be feeling pretty confident that server-based gambling in Nevada is a "go" because it's inked a memo of understanding with IGT for the latter to set up a all-server-based casino at CityCenter. (Yes, even table games)

Although, as the Las Vegas Review-Journal's Howard Stutz once observed, server-based gaming is forever 'a year away,' it makes more sense to put the infrastructure in beforehand than to retrofit. Plus, with CityCenter's opening night a year and two-thirds away, Nevada has plenty of time to sign off on the technology. It also provides a distinctive selling point for a casino that's been overshadowed by all other aspects of CityCenter so far.

Unfortunately for IGT, the good news was upstaged by 2Q08 results that came in 35% lower than expected. The recession also cast a pall over the outlook for the rest of the year. Here's the full report.

There's got to be some good news, right? Indeed. Tourists visiting Macao are spending 15% more than last year. I wish they were spending it in the good old U.S. of A. But at least they're still spending.

Oh, and CotaiNews.com has launched an offshoot, devoted to worldwide casino developments. The lead story? Myriad Botanical Resort (above) -- what else? According to the blog, Myriad's snow park is still part of the plan. Wacky! Like I said, it's the Dixie Dubai.

Is Eisenhower still president? That's how I felt last night after a BoSox/Yankees game that ran a mind-numbing 4.25 hours and ended with a football score (9-15) ... which didn't preclude Joe Girardi from having Mariano Rivera warm up to protect a six-run lead (had it been a mere five runs, I'm sure panic would have run rampant). The Yankees are aging better than the BoSox, who look ancient and cement-footed, but it took them a week to steal their first base, so don't expect much excitement out of either team. Just mediocre pitching vs. worse pitching, while they take turns clubbing each other into submission.

High spirits in Evansville

Mon, 07 Apr 2008 11:49:00 -0700

The acquisition, by Reno's own Eldorado Resorts, of the Casino Aztar riverboat, is playing to the expected hosannas. Interestingly, while 21% of the workforce was pink-slipped by outgoing owner Columbia Sussex, that seems to be the least of players' concerns. An unscientific online poll has that coming in fifth of five priorities, far behind expanding the entertainment options available at the casino. Whatever the case, the prospective owners are accentuating the positive.

Memo to Dawn Gibbons: Don't quit your day job (fourth item).

Tax increases could be life or death to rural Nevada casinos, Bill Bible says, making a compelling argument. Which raises a fairness question: Should the privilege tax be applied at a uniform (i.e., regressive) rate to all Nevada casinos or should it be graduated to better reflect the market disparities between, say, Elko and the Strip? Whatever the case, smaller casinos are between a rock (the lobbying power of their bigger brethren) and a hard place (public support for hiking the privilege tax).

Players or profits? That's a dilemma being faced by Atlantic City casinos as they tighten up on comps. So, if you're a bused-in player and you think you're not feeling as much love as in the past, you're probably right.

Analyst Nick Danna says comp-addicted customers need to get the "just say 'no'" treatment for casinos. As he puts it, "There are certain customers that Atlantic City really shouldn't attract anymore because they're just not profitable." Translation: Retiree players have outlived their usefulness to the Boardwalk and need to make way for bright young things with disposable $$.

That's cold.

A small collection of imperfect shows: The never-ending mutation of Le Reve is chronicled. If you're like me and suspect that Franco Dragone just keeps throwing random junk at the wall until something sticks, this article will only bolster that suspicion. As the headline says,the show "reveals itself slowly." Three years of tinkering and they still haven't got it right? Yeah, you could call that "slow," I guess.

Typo of the Day: In the Las Vegas Sun, "Possible hostage situation diffused." I suppose they mean "defused." I'd sure hate to contemplate the alternative: possible hostage situations spreading throughout the Las Vegas Valley.

It Could Happen Here

Wed, 02 Apr 2008 12:19:00 -0700

New Jersey Gov. Jon Corzine is proposing to close nine (yes, nine) state parks and trim hours and at services at a host of others. Corzine isn't the most popular man in the Garden State right now, but he's not afraid to dole out strong fiscal medicine when it's necessary.

Anyway, Nevadans should take a good, hard look at what's happening in New Jersey, especially as our projected state budget deficit spirals toward $900 million. For one thing, basing Nevada's budget on projected (mostly) gambling revenues is now such an obvious folly that it would be nice -- however unlikely -- if the Lege took the bull by the horns and changed the budgeting process, to bring it in line with actual revenues received, not imaginary future ones. (And don't even think about proposing broader-based business tax or the Las Vegas Chamber of Commerce will sic its Bonanza Road-kenneled attack dogs on you.)

Second, we could use someone with the huevos of a Corzine in the governor's mansion. Instead, we have a spineless twit whose notion of "leadership" is to simply slap one-size-fits-all budget cuts on everyone, as though all budgets and needs were equivalent. As others (primarily the much-maligned Erin Neff) have asked, why should mental-health services be placed on the same footing as the state's motor pool? Or, for that matter, with so much new casino capacity looming on the horizon, this hardly seems like the time to be slashing the regulatory budget.

But no, "Midnight Jim" Gibbons can no more learn the meaning of "prioritize" than he can find it in himself to face -- even by satellite link -- the victims of the Endoscopy Clinic of Southern Nevada scandal, let alone enforce his own impotent edicts. Give him a red putty nose and some floppy shoes, and his appropriate attire will be complete.

As for our state parks? Enjoy them while you still can, brother.

Winter in New England

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

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

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

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

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

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

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

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

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

Henhouse, meet fox

Tue, 11 Mar 2008 18:36:00 -0700

Budgetary impasse in Trenton? Guvmint forcibly shut down? Nobody to keep an eye on casinos?

No problem!, says state Sen. James Whelan (former mayor of Atlantic City). His proposal would allow casinos to police themselves for the duration -- provided they were fined tenfold the usual amount for any hanky-panky. (Yes, but who is going to report the aforesaid hanky-panky? The casino that stands to pay 10X in fines? Methinks otherwise.) Oh, and the governor could "summarily suspend a casino license," too.

Food for thought, anyway.

Whelan's successor, A.C. Mayor Scott Evans found himself on the business end of a state house grilling yesterday. In light of past shenanigans involving city officials and former airport Bader Field, New Jersey solons aren't predisposed to sign off on what they perceive as a sweetheart deal between Atlantic City and Penn National, which wants Bader partly for a casino and mostly for a 'flip.'

If the "city officials" cited in the story are correct, Evans' proposed deal would leave at least $200 million on the table."You can slice this and you can dice this any way you want, but it looks bad," growled one legislator. It looks like a long spring (and summer, maybe) for Evans and Bader Field.

Finally! Somebody is taking on the question of why slot casinos should be subsidizing race tracks. I dig the romance of the "sport of kings" as much as anybody. But if it can't stand on its own four feet, why is the casino industry obligated to prop it up?

"Cruise to nowhere" indeed. Gambling ship Sun Cruz 9 looks like it has a date with Davy Jones' Locker. I can't say I ever fancied the idea of gambling out in international waters anyway. Props to the skilled Coast Guard crew that rescued the ship's crew in stirring fashion.

(Mind you, there was no gambling underway at the time nor any gamblers aboard; the ship was in transit from port to port.)

Organized crime in Macao's casinos is really a good thing. Yes, an academic actually said that, rationalizing that loan-sharking and God knows what else keeps Macao's criminal element gainfully employed and off the streets. Who knew that Stanley Ho's triad-infiltrated casinos were performing a public service all these years?

Those crooks had better make hay now because it's reliably predicted that the iron fist of Peking will descend upon them once the 2008 Olympics are over (and the world is looking the other way). Given how extremely unsavory Macao's reputation was prior to China's takeover, I doubt our casino barons will be complaining too loudly, either.

I'll be 83 before a bridge between Hong Kong and Macao breaks even. Yeah, but the Las Vegas Monorail will still be running in the red (and still be tax-exempted). So there.

Just when you try to cut Gibbons some slack ...

Mon, 10 Mar 2008 14:15:00 -0700

See what I mean about how The Gibber governs best when governs least? Not only is he uttering an empty call to employ all available resources (emphasis mine) in the current hepatitis/HIV scare, it turns out he may have unwittingly -- some would say "half-wittingly" -- made matters worse by keeping the Bureau of Licensure & Certification deliberately understaffed. And with that bureau, like all other state agencies, having to prune its budget to comply with Gibbons' mindless, spineless, simplistic mandate for 4.5% budget reductions across the board, it doesn't look as though the situation is bound to improve anytime soon.

By the way, Gov. Gibbons, shouldn't state-funded programs for treating pathological gamblers be exempted from your "off with their heads" budgetary edict? Since the money provided is entirely derived from slot fees (which are subject to fluctuations in slot capacity but not in revenue) remain solely dedicated to the purpose dictated by the 2005 Lege and not be raided to cover a shortfall in revenue projections? And if that's what is happening, what's to prevent the fund from being siphoned for other purposes, too. After all, Nevada politicians had to be dragged kicking and screaming into recognizing problem gambling as a public policy issue in the first place.

It's over for New York Gov. Eliot Spitzer. Already on track to be a one-term governor, today's bombshell makes you wonder if he'll even be able to finish his term. Which is tragic, because Spitzer was a great public servant as NY's attorney general and as a D.A. Unfortunately, he's evidently been undone by intrinsic character flaws, in classic Greek tragedy fashion. Expect a massive, Schadenfreude pile-on.

But then I thought it was curtains for Sen. David Vitter (R-La.) a while back. Wrong again.

Profiles in Cowardice, Chapter II: The Gibber, emerging from his new bachelor pad in Reno, played to a packed house over the weekend and uttered what must be one of the most invertebrate endorsements ever:

"[McCain] is the most qualified individual that I can support based on his military background, his leadership ability, his understanding of the United States and most importantly, he's a Westerner."

Geez, what a mix of shilly-shallying and classic Gibbonsian hoof-in-mouth syndrome. The fact that McCain is "a Westerner" is more important than leadership ability and an understanding of the U.S.? I hope that was a joke. If so, it's right up there with Gibbons' infamously insensitive jape about the Monte Carlo fire. ("I couldn't find my bucket.")

I'll skate past the xenophobic gibes of Utah Attorney General Mark Shurtleff and just note the patronizing tone adopted by state GOP chairwoman Sue Lowden, addressing Ron Paul supporters: "I welcome you to join our Republican party ..." (emphasis added).

What, is there another Republican Party we didn't know about? By supporting Ron Paul, were these voters somehow excommunicated? I didn't know political parties belonged to anybody, let alone Sue Lowden. Whatever happened to "the Big Tent"?

P.S.: The Nevada Democratic "It's All Good" Party has been doing such a good job of self-destructing this year, surely it doesn't need me to give it an extra kick in the shins right now, no matter how well deserved. But I'm serenely confident that the opportunity will arise again, and soon.

Photo/PDF snafu corrected

Thu, 06 Mar 2008 11:54:00 -0700

It seems that our two computer servers here at LVA HQ were having a bit of a snit and not communicating with one another. As a consequence, some of you were unable to see a lovely photo of Isle of Capri's Waterloo casino water feature, and renderings of PBL Melco's City of Dreams, Pinnacle Entertainment's St. Louis County project and the Prasada condo-hotel recently announced for Atlantic City. Also, PDFs of two initiative-and-referendum petitions to freeze Las Vegas Convention & Visitors Authority funding at 2006-07 levels were unavailable.

All these links have, I'm happy to report, been fixed. My apologies for any frustration or disappointment that readers may have experienced. We'll try not to let it happen again.

Pinnacle remains sanguine

Mon, 03 Mar 2008 16:46:00 -0700

... despite pulling back somewhat from its commitment to redevelop the site on which once stood the Atlantic City Sands. Does Pinnacle's hesitation regarding the Boardwalk portend ill for riverboat projects in East Baton Rouge or St . Louis County (below)?

"In a word, no," says a Pinnacle representative. The costs of these projects are but a fraction of the Atlantic City one ($250 million for Riviere, in Lousiana) and it's really a matter of returns, the company says. The expected returns on Riviere, for example, would make it worth financing, even in a softening economy. A multi-billion-dollar property in a market that isn't license-limited (read: Atlantic City) is a different story, though.

There's no deadline, Pinnacle maintains, no gun to their heads. Financing doesn't need to be raised until late 2009 or even 2010, by which time the credit markets could still be quite a different story.

Still, hindsight being 20/20, you have to wonder if Pinnacle would have been in such a rush to demolish the Sands had it known last July what it knows now?

And Oswald acted alone, too. Local newspaper finds man who takes sole credit for two ballot initiatives that would cap Las Vegas Convention & Visitors Authority funding at 2006-07 levels (even though they couldn't go into effect until 2011), adjusted for inflation. I guess the fact that these initiatives would accomplish a prime objective of Sheldon Adelson is just a big coinky-dink, after all. Whew! There I was, all worried about nothing.

Same paper, different day. "The sky is falling!" Why? Because most Nevadans, polls show, want to raise the privilege tax on gaming from the lowest to the second-lowest. That ink might have been better spent lobbying for a gross-receipts tax that would spread the (relatively modest) pain across a broad spectrum of businesses. But to decry a 9.75% privilege tax rate as The End of the World As We Know It when companies like Las Vegas Sands are jostling to pay 50% in Kentucky doesn't pass the laugh test.

Quote of the Day: "Lets see? Four guns, deadly poison and books on anarchy. I don't think we have anything to worry about. " -- Keith Hulbert, in the Las Vegas Review-Journal, commenting on Las Vegas Metro's response to last week's ricin scare.

Not since the Mob ...

Thu, 28 Feb 2008 18:52:00 -0700

That's what Nevada gaming regulators, of all people, are saying about the burgeoning Pure/LAX scandal. Worrisome statements include this observation from an anonymous casino executive: “It’s like running a casino without cash cages, cameras, people wearing jumpsuits without pockets and controlled access." When the circumspect Nevada Gaming Control Board is throwing around the 'M' word, you know things are very bad indeed.

Sound like an opportunity for vast sums of money to go missing, especially with thousands of dollars in cash routinely changing hands? Yeah, I thought so. As for the establishments themselves, the authors note that, "Some clubs share revenue with the casino."

Which could very well mean that ill-gotten or (more likely) unreported revenue that's found its way into nightclub coffers could then have passed into casino ones. Either way, casino executives undoubtedly share the sentiment of the Pure Management mouthpiece who prayed for "a quick and satisfactory solution." Otherwise, this could turn into an IRS big-game safari like few we have ever seen and a boon for forensic accountants all across America.

Small wonder that MGM Mirage executives are described as "shaken." By contrast, Harrah's Entertainment takes a "What, me worry?" view of the matter; a sanguine stance that could prove complacent unless l'affaire PMG blows over real fast.

We'd call it a "lax" attitude ... but that would be unkind.

Cool move by Harrah's; Buyout blues

Wed, 20 Feb 2008 12:11:00 -0700

If you don't receive Raving Consulting's "Raving HOT Flash!" news alerts, then I'll share with you its latest one, which relates a particularly player-friendly move by Harrah's Entertainment:

Win/Loss Statements are now available on-line for Harrah’s Total Rewards members. With their membership number and password, guests are able to access and print Win/Loss Statements from the past five (5) years directly from their home computer. There's no more mailing, faxing or waiting for the critical tax information your savvy players rely on for their tax reporting purposes. The information is available immediately – eliminating the amount of waiting time that has become customary for players during tax season. This type of on-line convenience also figures to reduce the internal paper shuffling (and finger pointing) that can occur, while at the same time, empowering your players to access their information hassle-free.

Let's hope other companies move -- quickly -- to emulate Harrah's. As usual, you have to be an early riser to get ahead of Harrah's, at least where player marketing is concerned.

Speaking of Harrah's: If you're looking for insight into the private equity world, its appeal and its perils, be sure to read James B. Stewart's New Yorker profile of LBO king Stephen Schwarzman. He didn't figure in the Harrah's buyout, but Stewart's (typically excellent) story is a primer on how private equity deals work, particularly in terms of minimizing risk and maximizing profit to the firms fronting the LBOs.

Thanks to an ill-timed public offering on Schwarzman's part, the tax structure for private equity could soon become considerably less advantageous. Read Stewart and find out how.

Coincidence or design? Since private equity firms look for a 15% or greater return on their investment (something not seen in gaming since Paris-Las Vegas opened), reductions in manpower are, sadly, to be expected. (Check the comments, too.) Maybe the nascent recession has something to do with that, but ...

When an entire subsidiary gets the sack, there may be extenuating circumstances. But that's still 200-some-odd bodies that aren't on the payroll anymore. After all, you can always outsource that work to one of the many qualified design-and-construction firms in town. So the "bad actors" are removed and the proverbial "economies of scale" are achieved in one fell swoop, whether intentionally or not.

Ever since the prospect of a Harrah's buyout hove over the horizon, departures have been early, often and high-profile. Whether the latest departures are part of a larger bloodletting or simply a reflection of economic reality will be revealed once warmer market breezes start blowing.

Gaming Tax 2.0 analyzed

Thu, 07 Feb 2008 15:20:00 -0700

While S&G was poking around Steve Sebelius' blog, we found this excellent analysis of the revised petition to boost the Nevada privilege tax on casinos to 9.75% (which would give New Jersey bragging rights on having the lowest rate in the nation). It cuts through the legalese like Steve Wynn's elbow through an expensive painting.

I'm not sure why the teachers' union didn't, as was rumored, scrap the tax increase in favor of pushing a lottery. But, hey, by sticking with their 3% tax-increase proposal, they're can probably look forward to spending a lot of quality time with Justice Miriam Shearing or some other distinguished jurist. Lots and lots of time. Because the casino industry is going to be able to litigate this into sawdust. One expert thinks otherwise, though.

C.S. in KY: The other shoe drops

Tue, 05 Feb 2008 16:59:00 -0700

Yesterday, S&G reported on the role played -- a public service, you might call it -- by Columbia Sussex CEO William Yung III in helping to unseat former Gov. Ernie Fletcher, a one-man ethical and moral disaster area. Indirect beneficiary of Yung's largesse was Gov. Steve Beshear, a casino proponent.

Seems that, so grateful was Beshear, Yung was allowed to whisper sweet nothings in the ears of Beshear's casino task force while non-donor Las Vegas Sands was told to peddle its papers elsewhere. Today's headlines bring news that, lo and behold, Columbia Sussex has bought a historic brewery in Covington, Ken., (directly opposite Cincinnati) with a view to converting it into a casino. (The clueless TV report is a hoot.)

Did Yung receive any assurances from a grateful Beshear, perchance? Or is he just placing a bet on possible casino legalization in the Bluegrass State? (Either way, getting casino land for $1 million/acre qualifies as a steal.)

As for Columbia Sussex's "Liar, liar, pants on fire!" campaign against the Culinary Union, it may be backfiring, as the Culinary's D. Taylor claims to have a honkin' big stack of documents detailing fiscal ineptitude at the Las Vegas Tropicana. Judging by what I've heard about the contract talks at the Trop, Yung's people either don't understand the Las Vegas market or are spoiling for a fight. Hard to tell which, right now.

Tax 2.0: The teachers' union has gone back to the drawing board.

Local paper discovers that kids talk differently, fo' shizzle.

Mike Huckabee wins West Virginia GOP convention, dealing humiliation to Mitt Romney.

John Ensign, R-Hypocrisy: They work here, pay taxes, buy locally and fill the growing need for service jobs. If you stayed at a local hotel, they probably made your bed. But Nevada's best-looking senator doesn't want them to get taxes (their taxes) rebated.

Such ingratitude. It makes you wonder where the Ensign family (including proud papa Mike Ensign, former co-chair of Circus Circus) would be without the people the well-coiffed senator wants to kick to the curb, to score political points.

I'm proud to be an American ... except when I read stories like this. (Or when Harry Reid caves cravenly on one front after another, the latest being telecom immunity in the FISA bill. Adios, privacy.)

Bonus Case Bets: Tax rebate, Columbia Sussex, Gold Spike

Mon, 04 Feb 2008 16:17:00 -0700

Even the seraphic strains of Anton Bruckner's Seventh Symphony, as conducted by Carlo Maria Giulini are insufficient to quench my vexation at seeing the overmatched New England Patriots defense literally let victory (and mediocre QB Eli "My daddy don't want me to play for no San Diego Chargers" Manning) slip through their fingers in what may be remembered as the Super Bowl meltdown to end them all. At least Manning didn't pull a Rex Grossman: turn and run upfield in terror when the pocket breaks down.

Still, what better form of distraction that a *second* edition of "Case Bets"?

Assuming that I even get any of this vaunted "stimulus" rebate that Shrub has promised us, my share will either go into A) my savings account or B) paying my bills, especially after all the "economic stimulus" I performed during the holiday-shopping season. However, a cool $750 million is expected to find its way into slot hoppers and onto craps tables, sayeth Deutsche Bank. Good for business here at LVA, although I wish the Bush administration had stimulus plans that extend beyond telling people to go out and shop their @$$ off. This is at least the third time we've heard that golden oldie.

Add Evansville, Indiana, to list of cities where Columbia Sussex is wearing out its welcome (the company is heartily disparaged down in Baton Rouge, which bodes ill for attempts to keep new competition out). Sources of disenchantment in Evansville include welshing on community obligations and a declining tax contribution, as revenues continue to trend downward. Laying off 19% of the Casino Aztar workforce probably wasn't a good P.R. move, either.

Across the river, C.S. owner William Yung III has stepped into yet another controversy, having been revealed as a major patron of Gov. Steve Beshear (D), who coincidentally favors bringing casinos to Kentucky (home of Columbia Sussex HQ). Yung was by far the leading donor to a '527' that ran attack ads against his rival, former Gov. Ernie Fletcher (whose administration, it must be said, appears to have been as crooked as the day is long; this schmuck also promoted "intelligent design" and enabled discrimination against gays and lesbians).

Yung also dropped 10 G's into the Beshear's inauguration fund. Whilst Beshear was saying he doesn't want the public to think "that anybody has got an inside track on this," his peeps met with Yung but rebuffed Las Vegas Sands. So it looks like that was $1 million well spent. As for the the 527 in question, Bluegrass Freedom Fund (which indirectly received some Harrah's bucks as well), it made "ethics reform" its central issue.

Gold Spike 2.0: To paraphrase The Thing from Fantastic Four, "It's flippin' time" for the Gold Spike, arguably the downtown casino most desperately in need of replacement (unless you like having an ashtray in your bathroom stall).

First, a bit of history: Multinational conglomerate Tamares Group snapped up (via a front company) this little grind joint -- along with three nearby parking lots-- for a cool $2.89 million, back in March 2004, then re-registered the bunch to Tamares in '06.

That November, Tamares sells those same four parcels to Gregg Covin for a hairsbreadth shy of $15 million. Holy massive markup, Batman! But wait ... there's more. Covin has now offloaded the Spike to a pair of local apartment developers for $21 million. In place of the Miami-style boutique hotel Covin promised, we can apparently look forward to a bigger, upgraded ... Gold Spike. The owners-to-be, John Tippins and Stephen Siegel (who might want to invest in a necktie), have made a bundle by sprucing up apartments that cater to Las Vegas' sizable transient population. So if you're a fan of the Spike, rest assured that there will soon be more of it -- and table games, too.

As for Tamares, if it has a plan for its raggle-taggle flotilla of downtown parcels (beyond bare-bones gaming, and the opportunistic flip here and there), it remains known to Tamares and Tamares alone.

Rob Peter, pay Paul

Tue, 29 Jan 2008 14:31:00 -0700

And not Ron Paul (aka the Invisible Presidential Candidate) either. No, it's the bold, new economic vision of Gov. Jim Gibbons, as laid out to his local amen corner. Faced with a state budget deficit? Just grab more of the sales-tax money that supports city and county guvmint, and run like hell back to Carson City, leaving cities and counties increasingly reliant on property-tax revenues (which are currently being kept artificially low thanks to legislative intervention).

To give the Gibber his due, he credits this (bad) idea to state Sen. Bill Raggio, who knows more about how state government works than the entire Gibbons administration put together. (Sorry Bill, that's not much of a compliment but it's the best I could come up with on the fly.) And Gibbons is, for the moment, talking about running this past the Lege, which is mighty big of him, given his propensity for unilateral power grabs.

So where does gambling come into this? I'm so glad you asked. Well, if Robin Hood Gibbons makes good on his plan, areas like Clark County are going to be even more cash-strapped than they are at present. We recently had one local sales-tax increase to boost the police force. Heck, even the Review-Journal endorsed it! Look for more of the same, or maybe a bigger hotel tax, if the Gibbons-Raggio plan flies.

And if public services become any more constricted than they are presently, that's only going to help muster support for a larger privilege tax on casinos. So Gibbons' backers in the gaming industry might want to have a quiet word in his ear.

Oh, and the Gibber made a joke about the Monte Carlo fire. Really. What a cut-up.