No sooner were Wall Street analysts uttering serious concerns about a slow post-Sandy recovery for Atlantic City than who should pop up on CBS This Morning but Caesars Entertainment CEO Gary Loveman, doing damage control …
It’s hard to decide which is funnier: doddering Charlie Rose unwittingly picking at a Loveman sore spot by mentioning Macao, where the professor misjudged the political process so badly, or Loveman denying that there’s been a decline in Atlantic City, at about 5:15. The Caesars CEO is actually in peak form here, nimbly rattling off facts, driving home the message that helping employees who were adversely affected by Sandy are a top priority (much as was the case after Hurricane Katrina, one of Harrah’s Entertainment‘s finest hours) and doing his best to counteract the power the images from the New Jersey shore … a Herculean task, to be sure. Whatever pain the casinos are feeling is magnified substantially as it trickles down to their contractors.
The hurricane’s aftermath lends new urgency to Harrah’s Resort‘s plans for a $134 million, 200K-square-foot conference center, which Caesars’ eastern tribune, Don Marrandino (left), pitched to the Casino Reinvestment Development Authority. This seems an excellent use of $45 million in CRDA money, petulant foot-stomping by Trump Entertainment Resorts CEO Robert Griffin notwithstanding. Sandwiched between Harrah’s, Borgata and the Golden Nugget, it would also have the drawing power of being in the freshest part of town. Atlantic City has hemmed and hawed for decades between “Build the facilities, then get the events” and its converse. Caesars is to be commended for coming down on the side of the former, and in a decisive way. (As for the source of the $55 million “private loan,” can you say “Dan Gilbert“? I thought you could.)
Where Loveman diverges from Wall Street is his vision of full Boardwalk recovery by New Year’s. Moodys Investors Service projects 25% revenue declines for 4Q12 and 1Q13 and halved profitability. Resuming coverage of Caesars after Hurricane Sandy, analyst Carlo Santarelli of Deutsche Bank projects 18% less cash flow for Caesars overall than he did when the stock went public, with a slight (4%) EBITDA improvement in 2014. Regarding A.C. specifically, RBC Capital Markets‘ John Kempf essentially ratifies Moodys’ view. Plainly put, his argument in that rival casino markets (like Philadelphia, for one) enjoy greater proximity to customers. With New Jersey’s transit systems in disarray and areas still without power, a seaside jaunt to Atlantic City right now must seem like an idea somewhere between frivolity and folly.
For someone who’s Steve Wynn‘s BFF, Charlie Rose seems extraordinarily out of the loop with regard to what’s been happening lately, particularly with regard to casino expansion right under his somnolent, East Coast nose. No matter how many times I watch it, I can’t believe it. Could someone get this man a strong cup of coffee and a few good minutes with Frank Fahrenkopf, please?
Does the Obama re-election bode well for Internet poker? Online Casino News‘ Brian K. Trembath thinks not … but for a reason that might surprise you. State lotteries in Kentucky and Massachusetts are balking at the idea of federal intrusion into their bailiwick. However, he thinks the recent bromance between the President and Gov. Chris Christie (R-NJ) might portend a more laissez-faire federal attitude toward sports betting in Atlantic City and elsewhere. That sounds a bit of a stretch to me but who thought we’d see the Wire Act relaxed sufficiently to permit online poker. (A stricter re-reinterpretation was one of the bullets Big Gaming dodged on Tuesday night.)
Stick a fork deep into Kentucky Gov. Steve Beshear‘s stop-and-go attempts to bring casinos to the Bluegrass State. If he thought previous Legislatures were obstructionist, the next will be more anti-gambling than ever. He lost five Democratic supporters and one Republican ally in the state house, making the prospects for success in the remainder of his term look bleaker than ever.
One Las Vegas businessman took out his frustration with Tuesday night’s election results on his employees and, you may find this shocking, it wasn’t Sheldon Adelson. Unfortunately, the guy is too cowardly to say who he is, although I suspect the local papers may ferret out his identity.
Since “John Galt,” as we’ll call him for now, has “mostly Hispanic employees,” this would be a good time to post the following graphic from Cuentame. Ignore the rhetoric, just look at the numbers (especially under “Our Workforce”) and you’ll see at a glance why neither the INS nor Big Gaming is eager to start sweeping the Las Vegas Strip in search of undocumented immigrants — or illegal aliens, if you prefer:
