F-blue returns from the grave; Caesars socks it to you

The Thing That Wouldn’t Die, aka Fontainebleau, is back again. Former owner Steven Witkoff has sold it to Koch Real Estate Investments for an undisclosed price. Considering that Witkoff bought it from Carl Icahn for $600 million and estimated that “The Drew” (as it was briefly called but never came to be) would cost in the neighborhood of $3 billion to finish, we’re looking at a very pricey megaresort project for Koch (as in Koch Brothers). The latter is in partnership with Fontainebleau Development so, yes, F-blue is a thing once more. Mind you, we’re talking about a casino-resort that’s been under construction for 14 freaking years (so old that Harry Reid was Senate Majority Leader when the original owners came cadging for a bailout). That $3 billion figure may have been optimistic.

Looking on the bright side, Koch trumpeted, “With Las Vegas‘s tourism recovery underway, the city has safely reopened to millions of visitors since June with even more success on the horizon.” Koch assures us that it practices “an agnostic approach to product, geography, and capital position,” which I guess is meant to assure us that this isn’t a leap of faith. As for Fontainebleau Development, it’s—oh no!—the return of the Soffer clan, the people who got us in this mess in the first place. Let’s hope their edifice complex is better-financed this time around. Even so, it may indeed take an act of God to make F-blue pencil out. As Scott Roeben emphasizes, it’s dumping—er, debuting—3,780 hotel rooms into a market that will be hard-pressed to absorb them, even a couple of years down the road. After all, F-blue is being beaten to the punch by not-unchallenged Resorts World Las Vegas. So there’s that. Even Resorts World fan Roeben is nervous about the latter’s prospects. “We suspect Koch will take a wait-and-see approach, sitting on this asset until market conditions improve, should that ever happen,” Roeben writes. Which means the butt-ugly corpse of F-blue is with us to stay for a long time.

Having just slapped customers in the face with a new short-pour liquor philosophy, Caesars Entertainment continues to search for ways to pay for its ultra-pricey merger by sticking it to John Q. Public. As we thought, the readiest instinct is to ratchet up resorts fees. While we were poring over earnings statements last week, Roeben was on a roll and got hold of some inside info from the Roman Empire announcing resort-fee increases at The Cromwell (to $45/night), Paris-Las Vegas ($39) and Planet Hollywood (ditto). This pours cold water on speculation that Caesars was about to part with Planet Ho. Either that or they’re going to milk it for every last time they can until they’re shot of it. There are exceptions to the fees but they’re for a relatively elite few, not the masses. The imposts go into effect March 2.

Oh and there’s the $50/night room deposit. One of our regular sources, posting on VitalVegas, writes, “that $350 they extract from your card for free becomes Float; during your stay it gets invested in Wall Street cash instruments such as Overnight Letters etc. which pay Caesar’s [sic] I don’t know how much interest, but they keep your money as long as they legally can to maximize their Float from it.” Neat trick, huh? Elsewhere on the Strip, Caesars is experimenting with electronic craps at Harrah’s Las Vegas, trawling for low-roller business and customers seeking affordable table minimums. There’s a long explanation of how it works but frankly we don’t give a damn. The salient sentence is this: “One dealer, a stick person, runs the table.” That’s right, two dealers and box man eliminated at one fell swoop. And that, dear reader, is the bottom line on why Caesars is implementing this arcade-like innovation—cost-cutting. So much for the resurgence of Las Vegas bringing back jobs. If CEO Tom “Rain Man” Reeg has his way, there will be three floor people hitting the street for every one rehired. Thanks a lot Eldorado Resorts and same to you, fella. As for the game, Roeben claims it’s a lot of fun to play but that we didn’t get any jollies from his description. Your mileage may vary.

Elsewhere on Roeben’s beat, we learn that Virgin Hotel has a date certain for opening: March 25. This will give staff the luxury of a ‘soft opening’ in essence before the spring-break hordes (hopefully) descend upon the Las Vegas Strip. Virgin branding aside, operation of the resort will be split between Hilton Curio (hotel) and Mohegan Gaming & Entertainment (casino), thereby making it the first tribal footprint in Las Vegas … the first of many, we hope. It brings 1,500 rooms, 12 restaurants and (perhaps most importantly) five pools onto the market, and seems like it will be an acid test for the thesis that customers are primed and ready for a Sin City getaway.

Resorts World must be feeling bullish on the Strip, as it has advanced its debut from July to May 14. It’s taking a ‘something for everyone’ approach to the market (except maybe the low rollers at next-door Circus Circus)—as well it may, costing $4.3 billion—and somebody is floating the rumor that Céline Dion will have a residency there, as Resorts World could badly use a headliner to generate foot traffic. It’s a formula that worked at Caesars Palace, so why not at Resorts World? The latter is going to need all the help it can get.

All the projects are predicated on a big Las Vegas recovery and that’s looking a mite problematic. Last week analyst Barry Jonas told Global Gaming News that Vegas would be back when 75% of the American public is vaccinated. Trouble is, only 68% plan to get the shot, according to a poll cited by The Associated Press. Which leaves us 7% short. Mind you, we’ll progress faster with the Biden administration’s mass-vaccination initiative than with the previous administration’s reliance on herd immunity, which really would have retarded Vegas’ return to form. However, polling by IPX finds only 48% of Americans are “optimistic” about traveling this year, while 25% are “somewhat optimistic” and 27% are downright pessimistic. 58% do plan to travel, with a third of those intending to do it as soon as spring break (good news for Virgin). Adds IPX, “45% believe travel will return to pre-pandemic levels of normalcy this year. However, 55% say they are uncertain if travel will ever return to normal without restrictions.”

Bad news for long-haul travel is that only 48% of the 2,020 respondents feel safe flying this year, rising to 80% next year. The good news is that fliers only represent a quarter of all U.S. travelers. Safety is the foremost concern, followed by budget (so much for that pent-up money that consumers are alleged to be sitting upon). Dining, entertainment and flying restrictions are also cited, along with a lack of vacation time. Listen, until you can travel to Las Vegas and see a Cirque du Soleil show or play in a casino without capacity restrictions, Sin City is going to remain a big-ass regional market, relatively one-dimensional and without that one-stop-shop vacation appeal.

Before we move on, nobody much cares for the new name of Mandalay Bay Event Center: Michelob Ultra Arena. (One non-fan has already dubbed it “The Lobe.”) Anyway, you’d better be a fan of Anheuser-Busch products if you’re planning on taking in a Las Vegas Aces game. We’re not entirely surprised by the move because A) selling naming rights, often promiscuously, has been the in-thing with sports owners for a long time and B) seller MGM Resort International could badly use the cash … especially after a 4Q20 in Las Vegas that was somewhere between dismal and dire. It’s an economic reality so our dudgeon over l’affaire Michelob remains low.

Lawmakers in Arizona are looking for new sources of cash and historical horse racing is the ticket. They’re slot machines in everything but name (unless networked for parimutuel play) and if configured as Class II machines they’d be a nifty way to get around the state’s tribal-gaming compacts. State Sen. David Gowan has introduced SB 1794, which would legitimize HHR machines, in hopes of engendering $140 million in tax revenue. It’s also a ploy to get people back to the horse tracks, where attendance has nearly halved in the last 17 years. HHR deployment would be capped at 15% of the number of gaming positions accorded the tribes, hopefully ameliorating that interest group.

As is always the case, HHR is being rationalized as a way to save an industry that can’t stand on its own fetlocks. Said Arizona Horseman’s Benevolent & Protective Association President Bob Hutton, “Implementing historic horse racing will provide much-needed support to the various industry partners that are involved in each race day, attract high quality horses, and revitalize the horse racing experience throughout Arizona.” Not to put too fine a point on it, the official site for the legislative push is www.savearizonahorseracing.com. Desperate much? We’re assuming Gowan is a Republican, by the way, as he balefully posits HHR as a draw to “others looking to escape the hostile environment in California.”

Finally, a sad story from Illinois, where Harrah’s Joliet finds itself with a $5 million negligence suit on its hands. Seems that a guest was viciously stabbed to death, allegedly by stalker Robert Watson, a complete stranger. The victim’s fiancée is suing Harrah’s because Watson “was able to roam hotel corridors looking for victims and unchallenged by security, despite showing up several times on security cameras.” Victim Emanuel Bugarino was stabbed 26 times, in a brutal murder, with security cameras capturing the whole thing. Considering that Watson was arrested two blocks away with Bugarino’s money (complete with bloodstains), this looks like an open-and-shut case, with only Watson’s mental competence standing between him and a guilty verdict. To add insult to injury, Harrah’s allegedly hit up Bugarino’s wife-to-be with their hotel bill almost immediately and continues to direct-mail-market to both her and the deceased. That’s a new one: seeking players from the Great Beyond.