In 20 years of covering the gaming industry, I have rarely seen an example of looting a company so brazen as the “sale” of Total Rewards from Caesars Entertainment Operating Co. to parent Caesars Entertainment for $0.00. And since Big Caesars
shows no intention of pursuing fair value for Total Rewards or any of the other assets that changed hands for a pittance, junior creditors want the right to sue to get a proper return on what they feel CEOC owes Caesars and vice versa. We’re not talking about chump change, either. The claims against Caesars could escalate as high as $12.6 billion. That’s a considerable hike on the $5.1 billion in fraudulent transfers identified by a court-appointed examiner. Senior creditors probably wish this would all go away so that that CEOC can be converted into a REIT, whereupon they’ll get a big-ass piece of equity in the investment trust.
Junior bondholders, however, aren’t amused by the spectacle of Caesars management, led by Chairman of the Board Gary Loveman, continuing to oversee the very company it allegedly pillaged. (Nor were they mollified by Caesars offer to increase compensation from $1.5 billion to $4 billion.) “The debtors, who remain under the control of many of the same individuals who have been identified by the examiner as wrongdoers and potential defendants, have taken no action to pursue claims against any of those entities,” they write. CEOC has already released Loveman et. al. from liability over the discredited transactions. The junior creditors not only want to see proper value from the asset transfers, they want to two Caesars-linked law firms to refund their fees for having represented Caesars and CEOC simultaneously. (Caesars is as slippery as a greased pig.) Judge Benjamin Goldgar, arbiter of the Caesars bankruptcy, will hear arguments in a month.
* Harrah’s Philadelphia had an off month in the crowded Philadelphia marketplace, down 2% (to $24 million), as was Valley Forge Casino Resort ($10 million). Parx Casino continued to dominate both the marketplace ($48.5 million) and the state, up 9%. The Philly market moved symmetrically, with SugarHouse Casino up 9%, to $26 
million. There’s obviously not any elasticity for the forthcoming Cordish Gaming casino and it will probably increase Parx’s supremacy while taking from everyone else. (Parx is in the northeastern suburbs, a safe distance from urban Cordish.) Continuing to lead the state in table-game play, Sands Bethlehem was up 2%, grossing $44 miilion. Rivers Casino, in Pittsburgh, was also up 2%, raking in $30.5 million, while Hollywood Casino at Penn National Race Course was flat, reporting $22 million. The Meadows Casino, now under Pinnacle Entertainment‘s aegis, jumped 9% to $22 million. In the northeast corner of the state, Mohegan Sun Pocono rose 4%, to $23.5 million, while Mount Airy Casino Resort‘s $16 million represented a 5% gain. Eldorado Resorts scored $11.5 million at Presque Isle Downs, up 2%, while Lady Luck Nemacolin continues to remain a hard-luck proposition, up 1.5% on a $3 million gross.
* Except for Baton Rouge, all Louisiana gaming markets were either flat or slightly down last month. Harrah’s New Orleans continues to see small losses of business (3.5%, $25 million) compared to those at Churchill Downs‘ Fair Grounds racino (off 12.5%, $3 million). Those dropoffs redounded to the benefit of Boyd Gaming‘s Treasure Chest (+8%, $10 million) and Pinnacle’s Boomtown New Orleans (+2%, $10 million). Beware the New Orleans Adovcate‘s Web site, by the way: It has a high-speed .gif of Donald Trump that may induce epileptic seizures.
* Kansas and Oklahoma casinos are discovering the importance of Las Vegas-style diversification of appeal. It’s particularly important in the Sooner State, where 100 casinos are vying for market share. 7 Clans Casino Player Development Manager Mike Beezley is 
charged with contriving reasons for players to bypass casinos closer to home in favor of 7 Clans. “At our First Council casino in Newkirk, I compete with five other casinos right in my backyard. We have to have the best customer service, offer better gaming – meaning looser slots – and give them more entertainment,” he says. Win-Star World Resort & Casino, which caters to the Dallas-Fort Worth market, tries to overpower the competition with sheer quantity: a mind-boggling 7,400 Class II machines and 144 tables (including 26 dedicated to poker). WinStar also has 17 restaurants and is expanding its golf course. Boyd’s Kansas Star (above) and independent Boot Hill Casino & Resort rely on their steakhouses to rope in business. Entertainment offerings in both states are replete with names who also play the Vegas circuit — including ventriloquist Jeff Dunham, who washed out at Planet Hollywood. Vegas may be unique but more and more regional markets are learning how to offer the same experience in miniature form.
