Chicago or bust?; Ocean Resort in deep water

With Illinois gaming revenue stuck at 2006 levels, some sense is finally filtering into legislative discussion of a Chicago casino. Could that idea have passed its sell-by date? The inability of Rivers Casino, however successful, and slot routes to move the needle suggests an answer in the affirmative. Eight casinos saw lower gross receipts last year and foot traffic was down in all 10. Also, the pool of players is aging. Even so, most Chicago mayoral candidates are pushing for a casino as a curative to the Windy City’s financial problems. “Illinois, Indiana, Iowa and Missouri are home to 51 commercial casinos, while there are another 95 tribal gaming operations in Minnesota, Wisconsin and Michigan,” reports the State Journal-Register, which warns, “Gambling in Illinois and the Midwest is undergoing some of the same market, demographic and technological stress that long ago killed off Blockbuster Video.”

“This isn’t about having a replacement for slot machines. But if your entire patronage ages out, you’re stuck,” says Brett Abarbanel, research director at UNLV‘s International Gaming Institute. In Illinois, that takes the form of a 61% of casino-derived revenue over 13 years. To this, lawmakers like state Rep. Lou Lang (D) always have one solution: more casinos. Slot routes, however, now outpace casinos as a revenue-generator. With gambling so convenient, is it any surprise that attendance at casinos has fallen 28%. Even Rivers has seen its patronage drop 21% since it debuted. As for adding gambling in the Chicago area, the soft underbelly would seem to be slot routes at Midway Airport and O’Hare International Airport. But remember how often during Rahm Emanuel‘s mayorship a Chicago casino seemed like a done deal. Don’t believe it till it happens.

* Could Ocean Resort go out of business a third time? New Jersey regulators are trying to keep that from happening. Nonetheless they’ve thrown back the curtain on Bruce Deifik‘s tenure and exposed a pretty shambolic state of affairs. Not only did Ocean consistently miss Deifik’s revenue projections, it lost $23 million in its first seven months of operations. We know you’ve got to spend money to make money but this doesn’t look like what they meant by that. “I’m very, very concerned about its future,” said New Jersey Casino Control Commission Vice Chairwoman Alisa Cooper, reviewing Luxor Capital‘s rescue plan. “I sincerely hope that this arrangement before us today will be successful and enable this property to survive.” Ocean Resort will be placed in a trust overseen by former Atlantic Club COO Eric. J. Matejevich.

The trusteeship will have to meet 26 stipulations, covering areas in which Deifik was out of compliance. For example, it will be mandated to have a daily minimum operating cash balance of $10 million, an $11 million reserve and debt service reserves of at least $15 million. Looking at those numbers and what they imply, it’s alarming to think that Deifik was sailing so close to the wind. “Since November 2018 [Ocean Resort] has not been in compliance with division requirements,” said Deputy Attorney General Sara Ben-David. Luxor’s first order of business will be to finish the casino buffet but a deepening trail of monthly losses, climaxing with a $6 million shortfall in December, will not be easy to reverse. It is not inconceivable that Ocean Resort can be operating successfully but the odds appear long.

* We like to give our congratulations to the American Gaming Association‘s tireless Sara Slane. She’s been named as one of Sports Business Journal’s Forty under 40, a list of key influencers in the field of sports. “Sara played an outsized role in creating the opportunity for legalized sports betting to exist in the United States,” said boss Bill Miller. “As the industry’s lead advocate, she successfully united the gaming, sports and entertainment industries, brought lawmakers to the table and drove a communication campaign that delivered a historic policy outcome. This recognition is not only well deserved but is shared by stakeholders within and outside our industry.” Others recognized included Eric Sudol of the Dallas Cowboys and YouTube‘s Tim Katz. As for Slane, we can’t think of a more deserving recipient for this accolade.

* Disney Worldwide Services seems to want to have it both ways when it comes to sports betting. “I don’t see The Walt Disney Company, certainly in the near term, getting involved in the business of gambling, in effect, by facilitating gambling in any way,” said CEO Robert Iger. However, said “facilitating” as defined by Iger does not include the plethora of sports-betting coverage on subsidiary ESPN, which has Scott van Pelt‘s Bad Beats and a Pardon the Interruption knockoff called I’ll Take That Bet. In other words, Disney wants the money that can be made from discussing sports betting but wants to pretend that Snow White‘s hands are spotless. Right. We got it, Mr. Iger.

* What do you do if your racino sits on island that is frequently flooded and your main highway entrance is about to be disrupted by bridge repairs? If you’re Wheeling Island Hotel Casino Racetrack you appeal to the Lege for a satellite casino on dry land. (And, to cover one’s butt, the bill offers satellites to all four racinos in West Virginia.) The satellite would be located at the burgeoning The Highlands mall, already anchored by a Cabela’s and featuring “28 retail stores (including Cabela’s), 21 restaurants, 6 hotels, 20 service businesses, four industrial companies, three car dealers and one movie theater.” Sounds good to us. The early thinking is that the other three racinos wouldn’t apply for satellite casinos too — but you never know.