Oyo, owner of the former Hooters Casino Hotel, is trying to get out of debt by … incurring more debt. The company raised $2 billion in debt last summer, including a $700 million infusion from company founder Ritesh Agarwal. Oyo’s strategy is to stay in front of the collection agency by expanding as fast as it can. Most of the company’s market presence is in timeshares but it vowed that its Hooters purchase was only its first in Sin City. We shall see. In the meantime, Oyo is heavily dependent on the India and China markets, from which it gets 80% of its revenue. It also raises money through its franchising fees—which some partners complain are excessive. Whatever the case, it’s an inauspicious climate for Oyo’s Las Vegas debut.
* Casino operator Delaware North is in big trouble in Suffolk County on Long Island. It’s charged with plundering VLT parlor Jake’s 58, in part by overcharging for construction and rent. It also got caught with its hand in the cookie jar by using casino proceeds to cover the cost of unoccupied hotel rooms. Among a laundry list of charges is that Delaware North “has obfuscated and willfully blocked Suffolk’s OTB access to records” to keep the alleged ledger-demain concealed. There’s a lot of that going around.
* Wildwood Casino in Cripple Creek continues to have #MeToo problems. It is being sued by a former employee who says she was given the sack for complaining about sexual harassment from a patron known as “Scary Larry.” If the accusation proves true, Wildwood is in for a costly education.
Meanwhile, over in Black Hawk, there’s been a falling out between general contractor PCL Construction Services and client Monarch Casino & Resort, with the former suing the latter. Responds Monarch, “Since engaging PCL as general contractor at Monarch Casino Black Hawk, we have worked tirelessly to move the construction project forward. While Monarch has been frustrated with PCL’s numerous construction delays and cost increases, we have remained focused … Monarch believes that PCL’s lawsuit is principally an effort to deflect attention from their failures to deliver the completed project in a timely and cost appropriate manner.”
The bottom line is that counterclaims will follow—and that casino expansion will be delayed until early next year, with remodeling finished in 2Q20. Monarch spun all this as a plus: “While PCL’s performance has delayed our opening from our earlier announced dates, it will only increase the excitement of our team to deliver Black Hawk’s best-in-class resort and hospitality destination for visitors from across the Denver metropolitan area.”
Wall Street does not share their enthusiasm, as shares of Monarch have continued to slip. Reports CalvinAyre.com,”According to a filing with the [SEC] from August, Monarch has a $250-million credit facility that has to be appropriately managed, and that can’t be done without timely completion of the upgrades.” Looks like the odds don’t favor Monarch.
* Tribal Quinault Beach Resort & Casino is tilting at a windmill in the form of Valve Software, accusing it of fathering illegal online gambling, to the detriment of Quinault and its fellows. At issue are “textured digital weapons,” more commonly known as skins. Thanks to the resultant skins game (we couldn’t resist) Valve allegedly “subjected Washington citizens to scam, unsafe and unfair gambling … Valve is well aware of the skins gambling that goes on, is well aware that skins have real world cash value, which has increased their popularity and value, and actively encourages and facilitates skins gambling.” This isn’t Valve’s first rodeo: It won a similar lawsuit over its Counter Strike: Global Offensive. From what we hear, this litigation is just the tip of an iceberg. Should the Quinault win, many others will follow.
* Gambling addiction represents a $100 billion annual drain on the U.S. economy. States where addiction are worst include Nevada (numero uno), Mississippi (#4) and casino-rich Oklahoma (#5). More-surprising entrants in the top five are Montana and South Dakota. Perhaps New Jersey can salvage some prestige by being only seventh. The study is weighted toward casino-friendly states by using casinos per capita as a leading criterion. We’d like to see the results if a level playing field were employed.
Proponents of DFS will be dismayed to see it show up as an indicator of gambling addiction. (A stealth factor in gambling addiction is the soft underbelly represented by online ‘social’ casinos that take your money but don’t pay any.) For that matter, why is the presence of problem-gambling programs only half-weighted? Methinks something doesn’t add up.
* Kudos to Station Casinos for fiscal prudence. Its debt-to-equity ratio is 3.62. Would that some of its more profligate Strip competitors took a page from that book.
