Dark portent for MGM Springfield; Chicago courts casinos

Sarno told the Globe he was confident that the casino would make a robust return to the local economy. That’s despite the fact that MGM has never achieved the optimistic financial projections upon which it sold the casino to city fathers. “MGM is committed to bringing these employees back, ASAP, so that’s our goal,” Sarno said. He added, “We’ve had a good relationship, and I take them at their word.” Workers, MGM promised, would be brought back “as business improves,” which could take a long time given a depressed economy and unabated Covid-19. Casino President Chris Kelley nevertheless vowed, “While I understand this is difficult to hear, I want you to know that as we progress through our phased reopening, team members separated today will remain on our recall list, and we have established a system to welcome them back based on business needs, position, and seniority.”

The purge in Springfield is part of a much larger downsizing of MGM Resorts International, which is parting company with 18,000 of its 68,000 employees. If you’ve already been called back to work you’re safe but if not, you’re probably toast. In a formal severance letter, CEO Bill Hornbuckle wrote, “Nothing pains me more than delivering news like this. The heart of this company is our employees and the world-class service you provide. Please know that your leadership team is working around the clock to find ways to grow our business and welcome back more of our colleagues.” If you get particularly lucky and are recalled to duty before Dec. 31, your seniority will be preserved, MGM promises. Barring an upsurge of end-0f-year tourism, that prospect seems sadly unlikely.

Chicago Mayor Lori Lightfoot (D) has apparently gone off her dubious idea of putting a Windy City casino in the slums (‘You’re poor and minorities, so we’ll dump it on you.’). She’s giving casino companies until Oct. 21 to pitch gaming palaces in the heart of Chi-town. Lightfoot’s minions are promoting it as “once-in-a-generation opportunity for new gaming and entertainment development in the heart of a major American city.” The winner must have “demonstrated excellence in casino design, development, sustainability and operations, financial stability, accommodation of multi-modal transportation needs and giving back to the community.” (What about diversity?) It will also be able to at least strongly suggest where to put the temporary casino it could operate will building the permanent one.

However, the city’s request for information makes it sound like the casino developer will be the lucky one, not the entrepreneur shouldering a big risk: “Chicago’s GDP of $671 billion is greater than that of Sweden, Poland, or Argentina. In fact, if Chicago were a country, it would be one of the top 25 largest economies in the world. Yet despite these powerful statistics, the City’s gaming market remains untouched.” (Mind you, Sweden, Poland and Argentina are not known for their casino industries.)

Lightfoot’s real priority is to “provide much-needed city and state revenues, as well as create well-paying jobs for Chicago residents.” That’s characteristic of the tone of noblesse oblige that’s accompanying Chicago’s rollout of an opportunity that has seen no takers to date. Whether austerity-strapped companies will flock to a low-margin/high-tax (40%) jurisdiction at a time when preservation of liquidity is paramount remains very much to be seen. After all, a constraint on amenities is strongly implied by the city’s demand that supplicants describe how their casino will complement existing convention, hotel and sporting venues, implying that Casino X is going to have to make its nut almost strictly off gambling. Casino operators pay almost as much in taxes in Macao, ’tis true, but the Second City is no Macao, where resorts can offer many more bells and whistles. The Chicago RFI speaks vaguely of casino “amenities” and allowing space therefore but is exquisitely vague about what will be OK.

Lightfoot’s timeline is for a mid-2021 casino award and a 2025 opening. The operator would get rights to slot routes at Midway Airport and O’Hare Airport, for a grand total of 4,000. Ominously, “Lawmakers expect a Chicago casino to send $500 million a year back to the state to spend on non-road infrastructure projects statewide.” That implies an expectation of a $1.25 billion annual gross at a time when Illinois casino revenues are plunging. Lightfoot’s initial, casino-in-the-hood plan would grossed $350 million less, her experts say. No shyte. Her Honor is caught between Gov. J.B. Pritzker (D), who is ruling out McCormick Place and the Loop, and alderman who would like it on the West or South sides of the city. (We still think the old Post Office would be ideal, but nobody’s asking us.) There’s an awful lot of optimism baked into Lightfoot’s numbers but there might be one or two casino companies out there that are crazy enough to rush at this rather than wait for their bottom lines to improve first.

Las Vegas Advisor reports, “The Nevada Gaming Commission isn’t, apparently, sorry to see CG Technology be absorbed by William Hill. The former Cantor Gaming paid out $9 million in fines to the state regulators for improprieties over the past six years, so Gaming voted unanimously to approve its sale to William Hill, which will close on Monday. On Tuesday, William Hill takes over sports books at the Cosmopolitan, Venetian/Palazzo, and Silverton, along with the Palms and Tropicana when they reopen. In a separate deal, William Hill now manages the sports books for Caesars Entertainment. The company also runs books at The Strat, Downtown Grand, Binion’s, Plaza, and Four Queens, plus Circus Circus, the Sahara, and Casino Royale. All told, William Hill will have 120 race and sports books in Nevada, including kiosks and an app.” In light of all that news, one could understand why William Hill CEO Joe Asher would be waxing expansive, even to the extent of taking the company public. We don’t think William Hill’s Silver State ubiquity is an entirely good thing, particularly for bettors, so we’re rooting for Circa Sports and its underdog brethren.

There was actually a time when the Trump brand was a business magnet, particularly in Atlantic City. Not anymore. The latest casualty is Trump Vancouver, whose Malaysian owners are closing it permanently. The boutique property, which opened three years ago, has been a fulcrum of protest and controversy since Day One. Then-Mayor Gregor Robertson said the Trump logo had “no more place on Vancouver’s skyline than his ignorant ideas have in the modern world.” In truth, TA Global is staggering under the present hotel crisis and Simon Fraser University academic Lindsay Meredith says “They’re probably looking at it as a convenient way to dump a deal they made … The Trump brand historically looked to be relatively stable, but it’s become ever-mercurial and a bloody lightning rod.”

Jottings: That on-again/off-again Silver Nugget closure is on again. After operating for a few days with limited hours, the locals casino is seeking permission to shut down until July 2021. It’s getting pretty lonely in North Las Vegas … One of the cherished myths of Coronavirus-deniers is “herd immunity”: If we all get sick then we’ll be magically impervious to the disease. Recent second-wave outbreaks have failed to get much attention but it came home to Nevada last week as the University of Nevada-Reno reported that a man who had fully recovered from Covid-19 suffered a second incursion of the disease. Cruelly, it’s even worse this time around. “If reinfection is possible on such a short timeline, there may be implications for the efficacy of vaccines developed to fight the disease,” cautioned Nevada State Public Health Laboratory Director Mark Pandori … On a happier note, you can dine locally at Allegiant Stadium when it opens. Area foodies will be able to enjoy offshoots of Holsteins (Cosmopolitan), Neon Dogs, BBQ Mexicana (Mandalay Bay), Rollin Smoke Barbeque and Fukuburger, among others. We don’t mean to be a tease but someday you’ll be able to enjoy it.