And then there was one. And that one was MGM Osaka, the sole casino megaresort left standing after the government of Japan concluded its glacial deliberations over the selection of gaming operators. Out goes Casinos Austria, which had appeared set to build a rival property in Nagasaki. But the Nagasaki proposal ran into a raft of problems and was dead in the water for some time now. Global Gaming Business reports that it has officially been nixed, for a rich variety of reasons.
Where to begin? We might start with Casinos Austria’s meager amount of skin in the game, despite being the planned operator. (MGM Resorts International owns 42.5% of its project.) Also at issue was the company’s lack of a track record managing megaresorts. This one would have had a price tag of $3 billion, far more expensive than anything Casinos Austria has built to date. Also, 60% of funding was to be been in the form of bank debt, an aspect that took a hit when principal financier Credit Suisse went bust. The Nagasaki consortium couldn’t definitively state how financing would now be achieved, leading to a waspish, governmental comment: “We cannot eliminate the concern that the parties scheduled to invest/finance may continue to change in the future.”
Nor was Tokyo convinced that Casinos Austria & Co. were doing enough to offset possible negative side effects from the tackyderm. In the end, though, it all came down to money. To wit, “Most of the investment will come from investment companies … and profits from the casino business will be utilized. Concerns cannot be dispelled as to whether priority should be given to returning profits to investors or taking measures to return profits to the IR business and eliminate the harmful influence of casinos.”
No one could blame MGM CEO Bill Hornbuckle if he took a victory lap. As he said last year, “We’ll probably be the only casino for a very long time in Japan. I’m extremely excited about the potential of this, and the kicker is (MGM) is closer to Shanghai, Beijing and the northern China cities than Macao.” Words by which to invest … provided you’re prepared to wait until 2030 for your payday. Nothing in Nippon happens quickly.
Fallout from F1 continues to be felt and not in a good way. Just today, Caesars Entertainment saw its cash-flow projections for the present quarter and the next year trimmed, due in part to Formula One disappointment. Wrote J.P. Morgan analyst Joseph Greff, the Roman Empire suffered from “lower than previously expected performance from F1 in November, an event which benefitted the higher end properties in LV (like Caesars Palace, and to greater extent WYNN’s and MGM’s properties) though had less than expected (JPM’s) positive impact at CZR’s lower price point, non-high end properties.”
Caesars’ problems are as nothing compared to small businessmen who found themselves in Formula One’s all-crushing path. Alan Snel reports that Jay’s Market owner Wade Bohn and others are seeking compensation from Clark County for custom lost to FU, er F1 disruption. Bohn says another business cycle like the runup to the Las Vegas Grand Prix and he’ll be out of business, having lost over $4 million in sales during 2023’s screw-over. Also hurting is beloved local institution Battista’s Hole in the Wall. Added the GM of Stage Door Casino, “We as a community got bamboozled, we got fooled. This has not ever happened before. It just steamrolled out of control.”
The aggrieved businessmen have enlisted community organizer Lisa Mayo to present their case to the Clark County Commission. Their complaints include the fact that F1 was allowed free-of-charge use of streets in order to run the much-hyped race. Adding insult to injury, the racing mammoth continues to dun the county for as much as $40 million in infrastructural improvements (some ongoing) made for its benefit. “I believe the county was taken advantage of,” Mayo told Snel. “Everyone fell for the sizzle of F1.” The commission, for its part, sounds like it just waking up to the problem Formula One created. Disaster architect Steve “The Shill” Hill kept mum, as well he should.
Speaking of disasters, another is unfolding at Fontainebleau, where casino boss Mark Clifford was unceremoniously canned just 17 days after the blue elephant opened. Arash Markazi took a deep dive into F-blue’s problems, including some unfortunate correspondences with SLS Las Vegas (remember that?) and its dilettante owner, Sam Nazarian. It bears repetition that F-blue’s owners have never run a casino before and appear to not exactly be learning on the job. A key Achilles heel is the Soffer Family‘s aversion to tier matching. (Or is it their Koch Industries puppet masters who are allergic?) Say you’re a Diamond Plus member of Caesars Rewards. Were smart businessmen running F-blue, they’d give you comparable tier status at their property, gratis. Well, they tried it. For 24 hours. Why did they stop? It seems “too many people were coming in.” Kinda says it all right there.
Colleen Birch and all the other top brass at F-blue have to wear this idiocy, if not others they inherited, like a hideous parking garage that is so dysfunctional that customers have to budget 30 minutes just to get out. But they bear full responsibility for driving customers away from their sports book, The Tavern, with its ludicrous $5K minimums for table reservations. Said one unapologetic staff member. “This is going to be the place to watch the games on weekends. Lenny Kravitz was here the other night.” Woo-hoo, Lenny Kravitz! That changes everything doesn’t it? Then again, Lenny was the patron saint of SLS. How did that work out? Not so hot, you say?
As Markazi breaks down, Fontainebleau has an absolutely terrible location, largely surrounded by nothing and needs all the help it can get—but won’t request. We’ll skip over the mostly B-list celebrities who attended the opening, further evidence of F-blue’s cachet deficit. It’s not like Birch & Co. don’t have a fallback strategy that can be summed up in one word. Tiesto. Yes, their salvation hinges on a pricey MP3 spinner and the young people who presumably follow him like lemmings, paying through the coked-up nose for bottle service. Another Resorts World Las Vegas defector, Zedd, will also be joining the F-blue lineup. Evidently when in doubt, the resort simply raids its nearest competitor. (It’s where they found Clifford.) It will be fascinating to see who else jumps from one sinking ship to another.
Tiesto, wisely, followed the example of Lina Lamont in Singin’ in the Rain, who “gave an exclusive interview to every paper in town.” He’s also holding down gigs at MGM Grand, The Venetian and Caesars Palace. That tells you how weak F-blue’s bargaining position is. And are nightlclubbers going to abandon the comfy south Las Vegas Strip to travel to isolated Fontainebleau just to experience a DJ who is widely available closer to base? Probably not. Next stop for F-blue: Asset writedowns. Fortunately for the Soffers, they can do that behind closed doors and few will be any the wiser.
Another botched opening was that of Full House Resorts‘ big-budget gambit to bring a bit of Sin City to Cripple Creek, Colorado. The debut of the megabuck Chamonix was marred, to put it delicately, by Full House’s need to cancel reservations at the 300-room hotel. Despite company optimism, the fire-sprinkler system couldn’t be approved by Dec. 26 (shades of the ghastly Venetian debut a quarter-century ago). Just as bad, the water that was supposed to go into the sprinklers was parked in the parking garage’s water pipes, which obligingly froze and burst. Uh, didn’t Full House plan for such a contingency? Or did one of the subcontractors skimp on insulation? Either way, CEO Dan Lee and his cohort look like small-timers. Cripple Creek is a drive-in market, so not having available rooms in 2/3 of your hotel and an icy parking garage are problematic at best. Casino customers are sometimes forgiving, but the Cripple Creek cripple has some remediation to do. The next Full House earnings call should be a doozy.
Closing a loophole that’s more like a legitimized scam, the New Hampshire Lege is mulling a bill that would revoke “charitable” casinos’ ability to charge rent to the charities they ostensibly support (to the tune of 35% of proceeds). Charities are being hit with steep levies of $500 to $750 a night, gutting their proceeds. So far the bill has passed out of the House and now proceeds to the state Senate. To our gratified surprise, casino owners are on board with the salutary change, made possible by a raising of bet limits on table games last July (to $50 a hand). Aces & Eights Casino has already forsworn charging rent and the rest of industry is apparently willing to follow suit. We give these developments our unqualified approbation.
perhaps you can suggest that inexperienced persons should not be allowed to own or operate a casino