Sometime today, Chicago Mayor Lori Lightfoot (D) is expected to ramrod her choice of Bally’s Corp. through the City Council. Why the unseemly haste? Lightfoot desperately covets Bally’s $40 million in upfront money to prop up the Windy City’s tottering civic budget, $306 million in the red, although some experts say the math doesn’t add up. Worse yet, Lightfoot knows it, judging from her attempt to jack up the property-tax assessment on the Bally’s Tribune site. It would be levied at $125 million … permanently. (So much for depreciation.) According to The Real Deal, “While Bally’s and owners of at least 25 percent of it could object to higher valuations, they couldn’t argue that it’s less than any amount below the minimum.”
In return, Bally’s would be allowed to slide on Lightfoot’s 30% minority-owned contracting demand, to say nothing of her 10% women-owned contracting edict. A “good faith effort” will now suffice. Also, controversy has not died down regarding Lightfoot’s designation of Medinah Temple as the temporary-casino site, in an apparent attempt to reward a george campaign donor. Said Zoning Committee Chairman Tom Tunney, an opponent of the rushed vote, “Even though Medinah is empty, it’s in the middle of a very congested area. They’re saying that there’s plenty of parking around the Medinah Temple because Medinah itself doesn’t have any parking. But parking was there before Medinah. So the question, in my opinion, is what’s the utilization rate right now? There’s a liquor moratorium. So the ordinance is going to exempt the casino from local liquor moratoriums. That’s a problem.”
In an effort to calm the waters, Bally’s is offering $2 million a year for enhanced security around Medinah Temple, a proffer that has so far gone over like a lead balloon. Reports the Chicago Sun-Times, “That would be enough to cover the annual salaries of about 24 officers making $82,458 each, the city’s going rate for cops with 18 months on the job … and while the $2 million is earmarked ‘to provide additional public safety services in the area,’ it’s not clear exactly what that entails.” Fumed Alderman Brendan Reilly, “The funding allocation for security for the permanent and temporary sites is totally insufficient. Whomever came up with those numbers pulled them out of thin air. Why? Because a public safety assessment was never prepared for either location.” As for the aforementioned loopholes in the host-community agreement, Reilly says “Swiss cheese would be jealous.”
As for Alderman Brian Hopkins, who has mayoral aspirations of his own, the timing of the vote owes everything to Lightfoot’s reelection campaign. He complained, “The mayor has realized that, the longer this drags out, the more political damage she incurs just from the constant attention on trying to put through a fraudulent, rubber-stamp process.” He’s got a point.
In a feat of baby-splitting, the Nevada Gaming Commission gave Barry Diller some of what he wanted—a large ownership share of MGM Resorts International—but with a giant string attached. Because the SEC is investigating Diller for insider trading, his license is constrained to two years. Bellowed Diller, “That’s not fair!” If Diller thinks he got off hard, then the NGC probably did the right thing. By the time Diller’s license is up for renewal, we should know whether he flouted SEC rules or not and the matter can be properly disposed of. Diller seemed to be anticipating a negative SEC finding, chalking up his troubles to “bad timing.” Yes, the timing was so bad that it Actvision Blizzard shares skyrocketed on news of Diller’s buy-in.
The media tycoon had been slated for an unconditional license but that went out the window as soon as the Wall Street Journal reported the SEC probe (the Justice Department has subsequently gotten into the act). MGM’s lead counsel pooh-poohed the investigation as “an unfortunate intervening event” and urged the NGC to give Diller a full license, then try to unwind it should he be found culpable—much easier said than done. Replied Commissioner Rosa Solis-Rainey, “There’s no way we could ignore the ‘intervening event.’ Allowing the process to work doesn’t ‘call into question’ the is veracity of what he’s telling us … It could be a coincidence or not. He either did it or didn’t. I don’t know what the answer is, but it’s not something we can ignore. To me, a gaming license is a privilege.” The lone dissenter was Commissioner Oganna Brown, who dismissed the matter as a big coinky-dink, a trifle of “uncanny timing.” (For the record, we don’t believe in coincidence.)
MGM’s party line was to blame the messenger. Secretary John McManus grumbled about a “difficult and unusual situation where you have an intervening leak of an investigation.” And if the inquiry hadn’t made headlines? Would MGM prefer to have a scandal blow up around a major shareholder? Evidently it would, per McManus, who said the sky was falling: “if we take what I call a more cautious approach of issuing a limited license, it might send a different message about the stability of the environment here and what a licensee or applicant can expect when they come to the jurisdiction.” Oh, the humanity.
Diller’s wasn’t the only license on which the NGC put a short leash. Accel Entertainment, one of the dominant slot-route operators in Illinois, is leapfrogging its desired Indiana and Missouri markets in favor of Nevada. It got a two-year license (and an uphill climb) to try and make a dent in the Silver State. Covering its patootie, Accel has larded its executive ranks with former chairs of the Nevada Gaming Control Board, namely Dennis Neilander and Sandra Douglass Morgan. In the case of Accel, actual wrongdoing motivated the license limitation, specifically a $5 million fine for breaking Illinois rules in a deal it made with DraftKings. Accel is also apparently in the habit of losing important documents and has an ongoing sexual-harassment case. So there’s that.
It gets better (or worse, depending on your perspective). Accel made the boneheaded move of hiring Mob associate Vincenzo Dublino to hawk its machines. Chided Solis-Rainey, “If you had concerns about him, you shouldn’t have gone forward.” (Accel has been ordered to “disassociate” itself from Dublino.) Added Commissioner Steven Cohen, “That is a very serious judgmental issue you have to resolve going forward. If you harbor doubts and have information, don’t hire. Don’t look for cover. It will come back to haunt you at some point down the road.”
For its part, Accel promised to improve corporate oversight and co-opt, er, cooperate with the UNLV International Center for Gaming Regulation to underwrite “a training course for best practices for compliance, plans, audit, and vendor and business background checks.” Well, they’ve learned about it the hard way. “It’s our responsibility to do our diligence and not rely on our partners to do it for us,” Accel general counsel Derek Harmer offered weakly. “Since our last hearing, we have accelerated some of the items previously on our to-do list to illustrate that we heard you loud and clear on the steps that need to be taken on reaching Nevada’s gold standard of compliance.” Translation: We saw the writing on the wall and finally started doing what we should have from the beginning. Accel must be counting itself lucky to get that two-year license—and has the good grace (and sense) not to bitch about it.
Labor contracts are winding down in Atlantic City and Unite-Here Local President Robert McDevitt already has his lead sap out. The union wants “significant” wage increases for its constituency, as well it should. To that end, it has created a Web site warning travelers away from casinos that haven’t signed collective-bargaining agreements (presently, all of them) and darkly cautioning how to “Protect Your Events.” “We’re not threatening anybody,” McDevitt pleaded unconvincingly. “But we’re very serious about leveraging whatever we need to leverage to get our members a good contract.” To drive its point home, Unite-Here is reminding everyone that its 2016 Trump Taj Mahal strike had fatal consequences for that property.
The union has made some progress. It has tentative pacts with Hard Rock Atlantic City and Ocean Casino Resort to abide by whatever terms it hammers out with Caesars Entertainment and MGM. Talks with both companies are in progress. The tenor of the negotiations cannot be pleasant, judging by what McDevitt has to say about them: “The reality is there are very few people at Caesars and no one at MGM that has any kind of institutional knowledge of what a conflict can be like here. They need to know what could be coming.” Nothing good, we fear. Maybe it’s time to skip that Boardwalk vacation.
Jottings: Finally, some good news out of Macao. Given how the gambling market has cratered, the local government is mulling a reduced tax rate on casinos, bringing it down to 34%. Macao-facing casino stocks leapt after the news broke … Harrah’s Southern California has a new “mayor” and it’s actress Jane Lynch. Maybe the LGBT icon should move to Las Vegas and run for mayor here. She’d be an improvement on some of the assclowns who have aspired to the office (but not yet achieved it) … Expect some serious budget creep on the rebranding of The Mirage as Hard Rock Las Vegas. “Prices for building materials have just exploded,” lamented Hard Rock CEO Jim Allen, who doesn’t see inflation subsiding until as late as June 2023. Other casino CEOs have said they’re perceiving no effect or merely on low-rollers … The $1.3 billion MSG Sphere is topping out. Unfortunately it will be too late for the giant video ball to morph into a gargantuan head of Sheldon Adelson, spouting political pronouncements … After 23 years of agony, the Ho-Chunk Tribe has finally received 33 acres of land-in-trust in Beloit. Area voters first gave their approval to the project back in 1999 and it has taken several administrations just to reach a compact. Now the Ho-Chunk have to conjure up a casino, water park and 300-room hotel, but their three other Wisconsin casinos should provide sufficient cash flow.