If you think MGM Mirage CEO Jim Murren sounds apocalyptic when he forecasts no major development on the Las Vegas Strip until circa 2020 (heck, Carl Icahn may keep Fontainebleau on ice until 2015) then get a load of this glum analysis. Twelve trillion bucks in lost wealth sure ain’t chump change and goes a long way toward explaining why the casino industry has hit a wall — and hard — after 17 years of growth. What’s amazing is not that the casino industry finally reached its saturation point in the U.S. (overseas is quite a different story, as you know) but that it took as long as it did.
(Steve Friess‘ analysis of the Vegas economy is somewhat cheerier, although we both agree CityCenter has been virtually a non-event. And, wow, has Randy Black cratered the Mesquite market or what?)
A strong Singapore opening didn’t do any favors for Genting Bhd, which bled red ink as though from a severed artery, despite the infusion of Resorts World Sentosa (left). If the Reuters dispatch is correct, Las Vegas Sands CEO Sheldon Adelson has revised his bold — dare one say, “rash”? — prediction of a $1 billion in annual profit from Marina Bay Sands down to a billion bucks of cash flow (and $120 million of that will go to the tax man) … quite a different thing. Sands execs made some goofy pronouncements during the Marina Bay opening but it sounds like they’re back on their Reality Pills now, although they haven’t abandoned the bombastic hyperbole that is standard-issue Sandsspeak.
Is poker over? One casino in California clearly thinks the craze is so last decade and is switching to e-bingo en masse.
Back from exile. While the name Fred Buro may not ring a bell, he was the president of the Tropicana Atlantic City who got axed by Columbia Sussex CEO William J. Yung III for balking at one set of arbitrary budget cuts too many. (The hatchet man Yung picked to replace Buro still sits at the Trop’s helm.) While Buro was able to even the score by providing damning testimony that finished Yung as a casino owner in New Jersey, he seems to have been temporarily blacklisted. However, MTR Gaming Group has plucked Buro off the shelf and appointed him GM of a Pennsylvania racino. It’s not the Trop but you’ve got to restart somewhere. S&G warmly congratulates Buro on his return to the fold.
Elsewhere in Pennsylvania, September is the projected opening time frame for Neil Bluhm‘s SugarHouse. Unlike any other Keystone State slot parlor or racino, SugarHouse will open with table games, in all probability. Mark your calendars, as this will be the moment of truth for Atlantic City, the juncture when it finds out whether Pennsylvania competition is a fatal dagger blow or “merely” a severe wound. With Philly soon to be out of play and Gov. Chris Christie (R-N.J.) amenable to a potential casino at Meadowlands, the Boardwalk’s options are dwindling quickly. (Congrats to table-enabled Harrah’s Chester, by the way.)
Bankruptcy is good for soon-to-be-cleft Herbst Gaming (with the Herbst boys getting the slot routes, the creditors the casinos). Its chain of grind joints actually managed to post a profitable quarter, despite a $13 million drop in revenue. Cost reductions to the tune of $24 million kept Herbst ahead of a lapping tide of red ink. Declining business at the company’s three Primm casinos accounted all but entirely for a 16% falloff in Southern Nevada revenues. Even so, the Herbst casinos pulled in more than double its slot routs and the latter source of revenue doesn’t appear likely to stage a comeback anytime soon. A slot flea in a Herbst-branded convenience store is as rare a sighting nowadays as the Loch Ness Monster. Rarer, maybe.
It’s obvious that we are in a decade-long (or longer) DEPRESSION, not “recession”, and that any “optimistic projections” are just moonshine and number-massaging. Of course, the media, together with the national consciousness, have a stake in the pretense that we fixed everything by electing Obama and his gang of Dumbocrats.
As far as the casino “industry” (a misnomer if there ever was one, for a group of entities that produce nothing, in fact, DESTROY wealth) goes, one wonders just how long people would persist in traveling long distances to hand someone a dollar and get back 95 cents, over and over (which is what a casino gambling transaction amounts to). So many people are gone from Vegas, never to return, as visitors or otherwise–they no longer have the urge to piss away their money. Not surprising, especially in the midst of the Second Great Depression.
Well the Cosmopolitan is up next and hopefully it will be open by the end of the year. With a cost close to $4 billion dollars the Cosmopolitan (on 8.5 acres of land next to City Center) will cost around $470 million dollars per acre to build when finished. Bruce Eichner announced this ambitious project back in 2005 (the original cost was $1.5 billion dollars) and got launched out of the Cosmopolitan back in January of 2008 when the banks quit loaning him (and the Cosmopolitan) money. But at least it will get finished.
it may be decades before the u.s. economy recovers from the current, tail spinning, athens-west policies dictated by the “change” regime.
until u.s. unemployment is halved, those u.s. businesses which rely on disposable income will stagger. just “creating” parasitic gubmit jobs [read, more zombie legions], is folly. with each “opportunity” yoked onto american business, the more jobs, not just manufacturing, that flee to entrepreneurship friendly regions around the planet.
those countries which benefit from our “change” regime now have burgeoning middle classes. those hungry, newly wealthy citizens will be flensed by gaming venues domestically sited.