MGM hits paydirt; Palms sold?; Atlantic City underwhelms

Remember the Harmon Hotel? That Sir Norman Foster-designed tower that had to be amputated at half the intended height in 2008 because of incompetent construction? The only Las Vegas resort ever to be dismantled without having hosted a single guest? MGM Resorts International would probably prefer that it be forgotten. All that remains is a two-acre patch of bare ground. But MGM has cleverly monetized the Harmon site, selling it for $40 million/acre to a partnership led by Brett Torino. If that’s not a record for Las Vegas Strip real estate it’s pretty darn close. And the $80 million will buy a lot of salve for the $348 million wound left by building—and then unbuilding—the Harmon.

Torino’s plan for the site is a retail mall, crowned with a giant video screen, such as the one that makes nearby Harmon Crossing such a standout and an ad-revenue magnet. Evidently the Strip is not so glutted with retail that it can’t support another mall, although the owners of adjacent Crystals must be looking askance at this latest turn of events. Should the Torino project generate foot traffic, though, the most likely beneficiary will be The Cosmopolitan of Las Vegas, just a pedestrian bridge away.

Undoubtedly much to the chagrin of Station Casinos, Vital Vegas author Scott Roeben is reporting that a deal has been made to sell the Palms Casino for somewhere between $800 million and $900 million. Contrary to the predictions of Wall Street analysts, Roeben says the buyer is neither a private equity fund nor a REIT. He asserts that it is a casino company not currently represented in Las Vegas. That description and most of Big Gaming intersect to form a null set. However, there are a few unusual suspects, such as Churchill Downs, Rush Street Gaming and Full House Resorts. Or perhaps negotiations between Hard Rock International and Caesars Entertainment for Bally’s Las Vegas have soured.

Station having spent over $1 billion in buying and reinventing the Palms ($312.5 million for the purchase and $690 million) in renovations, a $900 million sale would represent a small haircut but hardly a scalping. In fact it would be pretty darn good for a resort which almost never generated positive return on investment during its Station interregnum. In for a penny, in for a pound, Station wildly overspent trying to reinvent itself as a Strip-savvy operator, even to the extent of paying Cardi B $300K a pop to play 15-minute sets at Kaos, a real money pit. If a sale happens (and we believe it will, if not now then later), it’s a tacit acknowledgment by Station that it’s going to stick to what it knows best: high-end locals casinos. Elsewhere on the Strip, Hard Rock is dickering with Caesars over what would probably be a tear-down-and-rebuild at Bally’s and the Roman Empire is reportedly fending off multiple offers for The Cromwell, for which we can’t blame them. Now if only someone would buy Harrah’s Las Vegas and implode that ungodly eyesore, which looks like nothing so much as an Iron Curtain penitentiary.

Speaking of Caesars, it’s touting the fact that it’s donating $3 million in parking fees to charity. As long as Caesars has free money to throw around, here’s an even better idea: Abolish the damn parking fees. Customers will probably reward you by spending the money saved elsewhere on-property.

Florida sports betting is just a glimmer in Gov. Ron DeSantis‘ eye at this point but PlayUSA wasted no time in estimating the potential value of the Sunshine State market at $12 billion a year in handle, “the largest in the U.S.” Explained analyst Dustin Gouker, “with Florida’s large population, the brand recognition of Hard Rock, a framework that leaves room for more participants, and a reasonable revenue-sharing structure, Florida will have a higher ceiling than any other market to date.” Through a complicated formulation, the Seminole Tribe would be “gatekeeper” of sports betting in the state, keeping 40% of parimutuel-generated revenue before passing a generous tranche ($125 million/year) along to DeSantis’ administration and its successors. Mind you, this will have to be approved by the Interior Department and survive a promised court challenge (and we’re not optimistic).

“The structure in Florida won’t be quite as ideal for consumers as a truly open and competitive market, with a robust roster of operators competing vigorously to attract their attention,” allows analyst Eric Ramsey. Still, the state has 20 million residents and multiple major-league sporting franchises, to say nothing of 13 universities. Throw in NASCAR and the PGA Tour, and you have a perfect storm of sports wagering. As Ramsey concludes, “The process to legalize sports betting has been unusual so far, but the appeal of Florida’s market is obvious. “Florida should be able to count on an unusual amount of action flowing in from other states because of its appeal as a sports tourism destination, bolstering what will already be the largest local customer base.” New Jersey, watch your back.

Our Atlantic City correspondent paid a visit to several of the Boardwalk’s casinos last weekend. The Golden Nugget was slow at 5 p.m. but crowded by 10. Next up was the Tropicana Atlantic City. “It was very busy in the early afternoon. Uncle Carl [Icahn] had claimed a renovation, but in the gaming areas, only the carpet seems to be in this century.” That promised Caesars capex can’t come any too soon, seems like. Hard Rock Atlantic City boasted the draw of live entertainment, with bands in both the lobby and Council Rock restaurant. “Great food in the Legends Player’s Club lounge. The third stop was Golden Nugget [again], which was busy, ate very late at their Chairman’s Player’s Club Lounge, good food, went home tired.”

“[Sunday] we went to Ocean Casino [above]. They were busy due to a slot-play multiplier. We went to their Player’s Club ‘hallway lounge’ and were shocked and insulted. The food was a zero selection salad, overcooked beef or pasta, then zero selection piece of pre-sliced, then refrigerated cake. When we said the beef was overcooked, the server stated he was ‘not allowed’ to give us the pasta in its place. I’ve never heard of a player’s club insulting demeanor before today.” Terry Glebocki, get on it! At least Ocean is not resting on its laurels, putting $15 million into capex upgrades this summer. The amenities are described as “a new high-limit table games area, a new Asian gambling space and two new guest lounges for holders of its loyalty card.” That’s a lot of “new.” The gaming floor will also be reworked to make it more navigable. An additional $1 million has been set aside for raises and bonuses.

Louisiana‘s casinos couldn’t quite keep pace with 2019 but were close enough (-3%) that we’ll call it a wash. In fact, with Diamond Jacks and Isle Grand Palais scratched from the equation, let’s say it’s even and that $225 million in revenue is pretty darn good and promising. All capacity limits have been lifted, which also may have levitated the numbers a bit. Top grossers in the state were Golden Nugget Lake Charles ($31 million, +6%) and L’Auberge du Lac ($30 million, +5%). Delta Downs‘ $17 million (-7.5%) rounded out the Lake Charles market. L’Auberge Baton Rouge continues to dominate that market, its $15 million a 3% gain. Hollywood Casino Baton Rouge was up 14.5% to $6.5 million, while antediluvian Belle of Baton Rouge sank 51.5% for a barely-there $1.5 million.

In New Orleans, the big achiever was Boomtown New Orleans, up 6% to $12.5 million. Harrah’s New Orleans slid 23% to $22.5 million, Treasure Chest dipped 11.5% to $9 million, Amelia Belle fell 22.5% to $3.5 million and Fair Grounds racino was down 9% to $4 million. In the Shreveport/Bossier City area, Margaritaville vaulted 23% to $20 million, trailed by Horseshoe Bossier City at $16.5 million (-11.5%). Penn National Gaming‘s overthrow of Caesars in this market is quite story. Also-rans were Eldorado Shreveport ($11 million, -4%), Boomtown Bossier ($6 million, +3.5%), Sam’s Town ($6.5 million, -17.5%) and Harrah’s Louisiana Downs ($5 million, +16%). Outlying Evangeline Downs won $8 million, a 6% dip from March 2019.

No casino made it into the Boston Globe‘s top 10 best places to work, where diversity and inclusion are concerned. But DraftKings did. “An online sports betting company might not seem the most likely employer to offer progressive gender-transition benefits, but DraftKings recently rolled out a comprehensive plan that goes above and beyond what many organizations provide,” led the Globe. “The Boston company covers medical procedures traditionally considered elective, such as vocal cord and facial feminization surgeries, and provides a concierge service to help employees navigate the process. Paid time off for these and other procedures is also covered as part of the medical leave benefit.”

“There’s an unfortunate perception in general that sports is a place for straight, white, cisgendered, able-bodied males,” said Chief People Officer Graham Walters. “Our goal is to make sure that everyone feels like they belong here.” To that we can add nothing but … Bravo! Keep up the good work.

Jottings: Nevada casinos go to 80% capacity on May 1 and 100% capacity a month later. “The wide availability and rapid administration of [Covid-19] vaccines will allow our valued events industry to reconvene with confidence and in its entirety,” said Las Vegas Convention & Visitors Authority CEO Steve Hill … Online gambling and sports betting are a tax windfall for Michigan. The state collected nearly $18 million last month, while Detroit booked another $5 million. Were it not for heavy promotional discounting, that tally would be higher still … Sports betting is a fait accompli in Washington State, where the Tulalip Tribe has compacted to be the first provider. The walk-up-only betting would cover college, professional, e- and Olympic sports. Meanwhile, card rooms lost for the second year in a row in the Lege … The Gun Lake Tribe in Michigan is plowing $300 million into an expansion of its eponymous casino. The investment will go toward a new spa and a 250-unit luxury hotel. A domed pool with private cabañas and live entertainment will also be included. Later this year Gun Lake Casino will unveil an enhancement that’s been on hold since 2019, adding 450 slots, 12 news tables and more non-smoking space. Good on them.