Thaw in Massachusetts? Hilton has left the building

After screwing the pooch in the previous legislature, it looks as though Gov. Deval Patrick (D-MA) and state lawmakers are finally on the same page regarding casino expansion in the Bay State. Analyst Joseph Greff rates the solons’ chances of success as “solid.” Their plan to carve Massachusetts into three casino-enabled regions, each designated for a destination resort with 3,000 slots, sounds modeled upon Kansas and Maryland. Hasn’t worked too well down there.

However, there will be no shortage of civic suitors for the 1,250-machine, $150 million slot parlor, which will be a much-coveted prize. With the House Speaker Robert DiLeo (below) in its corner, Suffolk Downs would appear to have the upper hoof when jousting for the slot-parlor gig begins. Tribal interests, mainly the Mashpee Wampanoags, stand to benefit from a controversial provision whereby a tribe would be juiced in for one of the resort projects — but only if it can get its act together inside of a year. (The intention is to short-circuit the prospect of a fourth, tribal casino — particularly if the Obama administration prevails in Carcieri v. Salazar.)

Champing at the bit are Wampanoag ally Genting Bhd, Penn National Gaming and upstart Warner Gaming, best known as the current steward of the Hard Rock Hotel & Casino in Las Vegas. Penn’s longer track record and huge casino portfolio will give it a considerable advantage, because at a minimum of $585 million apiece, going after a resort project will require serious cash flow at one’s back. (Ditto Singapore-powered Genting.) Management companies like Warner would have to borrow more … and against much less collateral.

Of course, whoever gets the licenses, International Game Technology, WMS Industries and Bally Technologies all will come out ahead. On the downside, smoking will be prohibited in all casinos and the slot parlor, with its theoretically huge profit margin, will be taxed 49% of the gross, including a hefty subsidy for the horsey set. Destination casinos will be taxed at a considerably more reasonable 25%, which is downright “george” compared to what they have to pay in Pennsylvania, Maryland and Florida.

Patrick (right) was the biggest obstruction last year, kicking a legislative compromise to the curb at the last moment. However, delay has worked in his favor. The 2011 bill hews much more closely to what he wanted than to the 3 + 4 combination of resorts and racinos at which he balked previously.

Despite cheery noises from spokesmen for Colony Capital, it turns out that Hilton Worldwide is dead serious about hauling down its flag at the Las Vegas Hilton by year’s end. Although the decision ostensibly has to do with the property’s upkeep and service standards, the fact that owner Colony is delinquent on its mortgage can hardly have escaped Hilton’s notice. The sort of publicity Colony brings Hilton comes in only one flavor: bad.

A company whose investment style is accurately described as “profligate” by the Wall Street Journal, Colony racked up enormous debts in the gaming sector and can’t make good on any of them. (What kind of dunce borrows $36o million against ancient Resorts Atlantic City? Colony CEO Tom Barrack, that’s who.) The soon-to-be-ex-LV Hilton is managing to stay one step ahead of bankruptcy or foreclosure, but Colony’s days there are clearly numbered. It needs someone like Penn or Isle of Capri Casinos to bail its deadbeat ass out.

As for landing a new brand, one rather doubts it. The cost of removing the massive Hilton logos isn’t something chintzy Colony can afford. Look for the announcement of an “exciting new name” in Vegas casinos. Unless I miss my guess, Colony’s Larry Lightbulb solution will be to rebrand the former International and Hilton as … wait for it, people … “The H.” You can just see it, can’t you?