Mixed report from Japan; Wynn Boston Harbor up for grabs

First, the good news: The casino-regulation bill over which Japan‘s Liberal Democratic Party has slaved, may make it into the Diet by Friday, giving the Nipponese parliament just under two months to consider it. (The Diet adjourns on June 20.) Now, the bad news: Prime Minister Shinzo Abe is in a world of hurt, with plummeting job-approval ratings and an expectation that he could resign when the Diet wraps up business. Abe and wife Akie are accused of mixing private business with public duties, using Abe’s position of financial gain. The Finance Ministry’s Junichi Fukuda is already out, having been caught making “crude sexual remarks” on tape. To Americans this must all sound very familiar. Moreover, Abe dare not use one of his favorite ploys — a snap election — as the outcome would probably not augur well for LDP or casinos.

The compromise casino bill restricts gambling to a puny 3% of megaresort square footage. In addition to a $56/day admission fee for Japanese nationals (cheaper than Continue reading

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Wynn: It’s Elaine’s company now; Caesars reverses itself

When Elaine Wynn speaks, Wynn Resorts is suddenly all ears. Last week the company’s plurality shareholder called for a largely new and diverse board of directors, in what is describes as a “first step” toward greater heterogeneousness. Presto! Who should be named to the board but former White House press secretary Dee Dee Meyers, Betsy Atkins and Wendy Webb. Atkins is described as “a corporate governance advocate,” and former Disney exec Webb is CEO Kestrel Advisors, “which advises corporations on growth initiatives, governance, investor relations and strategic issues.” “The Wynn Resorts board now comprises 36% women, bringing Wynn into the top 40 S&P 500 companies in terms of female board representation,” read the formal announcement. Aside from a significant infusion of diversity, two of the three new appointments address one of the foremost criticisms of the board of directors: that it was too passive to the whims of the executive suite. As for the extant, much-criticized board, another head has rolled:  Continue reading

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Quote of the Day

“In 2017 [Grand Victoria] posted revenue of $168.7 million, up from $163.5 million in 2016, according to the Illinois Gaming Board. Its revenue has steadily declined since 2007 after a peak of $436.7 million, and employees have decreased from 2,500 to 800.” — the decline and fall of Grand Victoria, red-headed stepchild of the MGM Resorts International family. Small wonder MGM elected to sell it to Eldorado Resorts, which has a bit of a challenge in front of it.

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They gave a casino and nobody came

Yet again the Commonwealth of Pennsylvania has held an auction for a mini-casino and not received a single bid. This is a mixed blessing, as the auctions to date have raised far more money than legislators thought they would. However, this is the second time they gave a casino and nobody came — not even new contenders Valley Forge Casino and Lady Luck Nemacolin (which hardly seems like it would be able to afford to bid). After several rounds of auctioning casino licenses, the Morning Call asks the pertinent question, “It also remains unclear whether any other sweet spots for a mini-casino exist across the state.” “The choice fruit has been picked with respect to the mini-casino locations,” said Spectrum Gaming Group‘s Joseph Weinert. That doesn’t mean that Keystone State communities aren’t showing a little ankle, hoping to lure a casino. State College, Clearfield County and Lawrence Township have all been mentioned as possibilities.

* Sands China is sufficiently uncertain of its concession renewal in Macao that it’s Continue reading

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Elaine Wynn, power player; Hard Rock’s big splash

Who thought the day would come that Elaine Wynn was the largest single shareholder in Wynn Resorts? She’s flexing her newfound muscles by demanding an all-but-clean sweep of the board of directors (we sympathize). Lest this be seen as a power grab, she’s stated that she herself does not want a seat on the board, although she will be putting forward her own slate of candidates. However, she wants wholesale change “with an interest in fully restoring [Wynn Resorts’] reputation and in transforming it into a corporate governance leader.” You can be certain she’ll be on hand at the upcoming shareholders’ meeting, which she sees as a forum for cleaning house. “I believe that the company’s governance structure needs to be reformed and that the board of directors needs to be reconstituted,” she wrote in Continue reading

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Looking for change in Illinois; Copperfield goes “Poof!”

Grand Victoria is such small potatoes in the MGM Resorts International portfolio that the Elgin riverboat’s management used to be farmed out to co-owner Hyatt Gaming (since succeeded by the Pritzker family’s RBG). The Elgin City Council is hoping that will change with a turnover of ownership. It’s counting on getting a bigger chunk of change if Grand Victoria’s performance improves. “Grand Victoria would be a bigger part of the Eldorado‘s portfolio than it is for MGM, so maybe there would be more focus on the property,” said Councilman Terry Gavin. Also not-uninterested is Kane County, which gets 7.5% of Grand Victoria’s net operating income, which goes toward everything from food banks to environmental remediation. The riverboat is a legacy from MGM’s absorption of Mandalay Resort Group, a transaction that left MGM with a number of small-fry properties it has been selling off here and there. Divestiture of Grand Victoria is consonant with that strategy — and MGM doesn’t have to pay Illinois‘ inflated tax rate anymore if the deal goes through.

Elsewhere in the Land of Lincoln, Burr Ridge is wrestling with the question of whether or Continue reading

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Caesars branches out; Atlantic City’s apron strings loosened

Caesars Entertainment CEO Mark Frissora is beginning to put his stamp on the company (unless you count imposing parking fees and that was just copying MGM Resorts International.) Caesars has announced a joint venture with Meras Holding to build and manage two non-gaming hotels on a man-made island in Dubai. The hostelries are part of a larger, $2.2 billion project called Bluewaters (an ironic name when you consider Dubai’s atrocious environmental problems). The man behind Meras is Sheikh Mohammed bin Rashid Al Maktoum, ruler of Dubai and Prime Minister of the United Arab Emirates. Frissora presented it as a low-risk venture, telling the Wall Street Journal, “This is a good way for us to get into places that we haven’t been to. The capital is paid out by someone else. They do the investment.” Caesars, by implication, laps up all the gravy.

At the same time, Caesars is branching out in Continue reading

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Quote of the Day

“Since you can’t take it with you the IRS removes the temptation.” — quip on the marquee of a Methodist church in Augusta, Georgia.

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Japan “better than feared.” Mixed bag in Louisiana

How do evolving casino casino regulations in Japan look? Well, how does ‘not as bad as expected’ sound? Trust me, that’s good news. And don’t take my word: Take that of Morgan Stanley. Taxes will be set at 30%, which Morgan Stanley thinks will support at least 14% return on investment, if not better. There would be an entry fee for Japanese nationals, comparable to $56. The bank also projects $10 billion in annual gaming revenue just from megaresorts in Tokyo and Osaka. (A third resort is expected.) Tokyo might actually be last to market, due to disruption from the 2020 Olympics, “While Osaka seems to have all its stars aligned, there is no certainty around other locations,” opined Big Stan, mooting four other “interested locations,” including Nagasaki, which most of us think of in distinctly non-gaming contexts. The report did make the caveat that hitting those rosy ROI numbers (as high as 20%) was predicated on Continue reading

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Icahn out, Eldorado in; Caesars balks at Hoosier fee

Carl Icahn was in a selling mood last weekend, cashing out of Tropicana Entertainment. The buyer was Eldorado Resorts, which paid Icahn $1.85 billion, then flipped nearly all the physical assets to Gaming & Leisure Properties for $1.2 billion. Not content with that, it paid $327.5 million to Hyatt Gaming and MGM Resorts International to relieve them of Grand Victoria riverboat in Elgin. While Eldorado swung the Tropicana deal for a thrifty 6.6X cash flow, it paid top dollar from Grand Victoria, shelling out an above-average 9X cash flow. “The transaction will also be highly accretive, assuming ERI can achieve its projected operation-driven synergies,” reported JP Morgan number-cruncher Daniel Politzer. Having sold the Tropicana real estate to GLPI, Eldorado will pay $110 million rent to GLPI, which also comes out of this deal smelling like a rose. Wrote JP Morgan analyst Joseph Greff, “we think investors are getting an attractive dividend.” GLPI will absorb six of the seven casinos acquired by Eldorado, except for one in the Lake Tahoe market which already sits on leased terra firma.

The Tropicana casinos affected in the deal are Continue reading

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MGM Boston?!?; Sports betting proceeds fitfully

According the Wall Street Journal, talks are underway between MGM Resorts International and Wynn Resorts for the latter to be shot of Wynn Boston Harbor, which has become a regulatory albatross around Wynn’s neck. Although this would mean giving almost the entire Massachusetts casino market to one company, Massachusetts Gaming Commission Chairman Stephen Crosby sees nothing wrong with that. (Mohegan Sun, which is suing over losing to Wynn, would have new ammunition, though.) But while a Wynn-to-MGM transaction may well pass the MGC’s flight test, it runs into choppier air where Everett Mayor Carlo DeMaria is concerned. He is “very disturbed,” he says, particularly since Wynn made certain covenants with Everett that DeMaria would like to see kept.

Opined Deutsche Bank analyst Carlo Santarelli, “We continue to believe WYNN exits the MA development project and,
Continue reading

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Quote of the Day

“In the case of infectious diseases such as hepatitis C, curing existing patients also decreases the number of carriers able to transmit the virus to new patients, thus the incident pool also declines … Where an incident pool remains stable (eg, in cancer) the potential for a cure poses less risk to the sustainability of a franchise.” — Goldman Sachs analyst Salveen Richter, arguing that curing certain diseases is bad for business.

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At long last, Kansas

JP Morgan has initiated coverage of the Kansas market, long out of sight. It’s coming off a strong (up 6%) March, finishing at $40 million. Boyd Gaming‘s Kansas Star Casino & Resort was dominant, grossing $18 million on an 8% gain. It was followed by Penn National Gaming‘s Hollywood-branded casino at the Kansas Speedway, which raked in $14 million, a 6.5% increase. Boot Hill Casino kicked it up 14%, ending at $4 million while Kansas Crossing brought up the rear with $3.5 million.

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Bumpy month for Atlantic City; Stanley Ho has left the building

Winter has not been kind to Atlantic City, with gaming revenues down 3.5% in March ($193 million). At least Internet gaming is a bastion of strength, 17.5% more productive last month, with Golden Nugget dominating that sector with 34% market share. Resorts Digital continues to move past Tropicana (the new tail-end Charlie) up to 16.5% market share. Borgata‘s terrestrial gambling was flat, year/year. Tables brought in 3.5% less on 6% lower wagering. Slot win grew 2.5% on 4% more coin-in. A good month at Harrah’s Resort ($32 million, up 7%) couldn’t save Caesars Entertainment‘s bacon. Caesars Atlantic City got clobbered, its $22 million representing a 25% plunge. Bally’s grossed $16 million, for a 7% decline.

Resorts Atlantic City is inching toward Bally’s and potentially out of last-place status. In March it grossed Continue reading

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MGM Connecticut hopes fading … for now

MGM Bridgeport will have to wait a bit. According to Connecticut Speaker of the House Joe Aresimowicz (D), the best chance of passage of any gaming-related legislation is narrow. Expressing misgivings about the consequences of further diluting the Nutmeg State’s gambling market Aresimowicz said, “we have to have a comprehensive view of gambling here in the state of Connecticut and what that looks like.” That’s clearly not a near-term goal. Bridgeport‘s Rep. Steven Stafstrom (D) added, “We could pass a bill this year that allows an RFP process to go forward and then next session come back and act on a more comprehensive gaming strategy for the state that may or may not include pieces that came out of that RFP process.”

Either way, it buys time for Foxwoods Resort Casino and Mohegan Sun to get on with Continue reading

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Study zings MGM; Galaxy resort vetoed

Allowing a fourth casino into Connecticut — and thereby abrogating its gaming compacts — could be extremely costly for the Nutmeg State. That’s the conclusion of a new study by casino pundit Clyde Barrow. He writes that the new casino would have to gross $1.1 billion a year to  make up enough to match the revenue contribution from Foxwoods Resort Casino and Mohegan Sun. Despite MGM Resorts International CEO Jim Murren‘s claims, “Not a single commercial casino in the United States currently generates that level of gross gaming revenue,” Barrow states. At a steep 25% tax rate, the best MGM could do for the state would be $180 million, a far cry from the $271 million that Foxwoods and Mohegan Sun shared with the state last year. Also, Barrow notes, competition from Connecticut has sprung up on all sides — Massachusetts, Rhode Island, New York State — with more on the way.

Even a $90 million shortfall is an optimistic scenario, Barrow adds, pointing out that legislation currently before the Connecticut Lege would require no more than a Continue reading

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New era at Wynn; Resorts turns 40

Kudos to Wynn Resorts CEO Matt Maddox for tacitly acknowledging that women were second-class citizens at the company. He’s created a department to promote diversity — better late than never. Wynn might say it’s not conceding anything but were there not a diversity problem, why would the company create a department to address it? The new Culture & Community Department, remotely overseen by Kim Sinatra, is — per the Wall Street Journal — tasked with “focusing on diversity and inclusion, gender equality, and support for employee charitable efforts.” This includes a Women’s Leadership Forum, where issues like pay equity will be addressed. The Wynn board has two vacancies at this point. Would it be asking two much for them to be filled with members of the fair sex?

The formation of the Culture & Community Department puts a few teeth in Continue reading

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Midwest roundup

Business was booming in Ohio, where the state’s casino industry saw revenues increase 9%. Hollywood Columbus ($22.5 million) was up 8.5% while Hollywood Toledo ($20 million) they gained 8%. Hollywood Dayton (+9%) and Hollywood Mahoning Valley (+13%) were phat, with slot win/day of $331 in Dayton and $355/slot/day in Austintown. Despite being closed two days due to flooding, Belterra Park managed to stay level with last year, grossing $7.5 million. Scioto Downs leapt 11% to $16 million and Miami Valley Gaming jumped 11.5% to $15.5 million. The Jack threesome were all on the positive side of the ledger for once. Dan Gilbert grossed $20 million in Cleveland (up 12%), $12 million at Thistledown (15% higher) and $19.5 million in Cincinnati (5% better). The strong showing by Belterra Park should Continue reading

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Major leagues’ sticky fingers; They did some bad, bad things

Someone once compared golf’s Skins Game to watching rich people win the lottery. Well, the PGA is at it again, demanding an “integrity fee” from legalized sports betting. (Thankfully, Nevada is in a position to tell the league to bugger off.) Let’s call this for what it is: a naked cash grab. The professional sports leagues see a lot of money to be made from skimming off the top of sports-betting money and they’re trying to sell it legislatures like Illinois‘ as a means of legitimizing sports wagering. According to expert witness Chris Grove, whereas the Lege is contemplating a 10% tax on money won (bringing in $68 million), the 1% up-front “integrity fee” would be tantamount to a 20% or 25% tax. The greed of the major leagues knows no bounds and never has. (If Major League Baseball is profiting off sports betting, isn’t it time to let Pete Rose and Shoeless Joe Jackson into Cooperstown?) The churchy set is against the whole thing, sports betting, integrity fees, you name it … as one might expect.

State Sen. Napoleon Harris, a former NFL linebacker, is Continue reading

Posted in Baseball, Illinois, Nevada, Politics, Sports, Taxes | 1 Comment

Quote of the Day

“The company could keep the asset on the books indefinitely without risking its REIT status. In addition, we believe MGM could serve as a backstop buyer if no one else is willing to pay a fair price. While regional casinos aren’t among MGM’s strategic priorities, MGM does own around 73 percent of MGP and has a significant economic interest in the deal being successful. If MGM did step in as the OpCo buyer, we believe the deal would be accretive and strategically beneficial, giving MGM access to a new and attractive presence in Cleveland.” — Union Gaming Group analyst John DeCree on MGM Growth Propertiespurchase of Hard Rock Rocksino in Ohio.

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