Gaming and its discontents

Iowa, Nebraska and Council Bluffs continue to have their collective ass kicked in court by the Ponca Tribe of Nebraska. The latest drubbing occurred in federal district court. The plaintiffs filed motions arguing that, since Judge Stephanie Rose had asked the National Indian Gaming Commission to revisit its 2017 finding of eligibility for the Ponca, that reconsideration voided said 2017 ruling. Rose disagreed, adding that “the disruptive consequences [to the Ponca] would have been significant.” Employees of the casino would lose jobs and the tribe’s revenue stream would be impeded. “Other courts have declined to vacate agency decisions when doing so would have adverse economic consequences,” Rose wrote, getting in the kicker: “It is not clear … how the Tribe’s casino is any more detrimental than the three casinos, licensed by the state of Iowa, that are already operating in neighboring Council Bluffs.” It’s the prerogative of the plaintiffs to keep appealing but they ought to consider folding what has been a losing hand.

In other Iowa news, sports betting got off to a start at noon last Thursday, with four casinos offering in-person and online wagering, and two others doing walk-up business only. More are expected soon.  Already gaming analyst Dustin Gouker has gone out on a limb and predicted that the Iowa market will rival Nevada‘s. If that sounds crazy, consider that neither Nebraska nor Missouri has sports betting and punters could be pouring into borderline casinos like Ameristar Council Bluffs. As Ameristar General Manager Paul Czak observed to a reporter, “When I looked yesterday Nebraska was 3-to-1 odds to win their half of the Big 10, 12-to-1 to win the Big 10 and 66-to-1 to win the national championship. So I would guess there will be a lot of futures bets being placed tonight and this weekend for those kinds of things.” Daily fantasy sports is also legal now in the Hawkeye State but who needs it when you can bet on the real thing?

* As the momentum behind Tribal Winds Casino fades, the city fathers of East Windsor are begging Gov. Ned Lamont (D) not to build a casino in Hartford. “We should all agree that walking away from the Tribal Winds project does not serve Connecticut’s best interests,” they wrote. “In fact, the only entity that benefits is MGM.” Although Foxwoods Resort Casino and Mohegan Sun appear to have lost interest in actually building Tribal Winds, the selectmen are certain they have the tribes behind them.

* Cordish Cos. has waited until rather late in the game to ask Philadelphia to expunge a contractual requirement that it (Cordish) build a new I-76 on-ramp near Stadium Casino. Considering that Cordish explicitly agreed to this provision when vying for the casino concession, this looks like bad faith. Explaining Cordish’s about-face, attorney Richard Hayden said, “There’s very little, if any, value. It’s only on Eagles game days.” Neighbor Judy Cerrone pushed back, saying, “We didn’t want the casino, but everybody wants the ramp, especially the people who live closest to Packer Avenue. “It’s a nightmare. You can’t get in or out at all when there’s a game or a concert.” We’ll whose viewpoint carries more weight when the Pennsylvania Gaming Control Board deliberates the issue.

* Having lost $36 million on Resorts World Catskills in the last quarter alone, the $1 billion casino may sell itself to corporate parent Genting Malaysia. Nor has voluntary bankruptcy been ruled out. “We’re in a unique position where we can assist with the management of Resorts World Catskills through our Resorts World New York property at a low cost,” Resorts World Americas President Ed Farrell explained. He added that cost savings from corporate synergies would help put the Castkills property—a turkey from Day One—into the black. Bidding against itself, Genting Malaysia offered $9.74/share to Empire Resorts ($8.35/share).

“We are currently generating operating losses as the casino revenues have not exceeded the costs related to the casino since its opening in February 2018,” said Empire in an SEC filing that floated the idea of Chapter 11. The company has had to be repeatedly bailed out by Genting tycoon K.T. Lim. Without Lim’s deep pockets Heaven only knows in what dire straits the casino would be in now. It’s an object lesson in overspending in a market that doesn’t have desperate need of you. While it’s operated deeply in the red for the last six months, there’s been sign of improvement lately, so Farrell isn’t completely whistling past the graveyard.

* Las Vegas Sands heavy exposure to Macao has been one of its strengths when times were flush. But lately that’s not been the case. Also, CEO Sheldon Adelson‘s political ties might make him a tempting target for trade-war retaliation … or so reasons The Motley Fool. Not everyone buys the notion that protests in Hong Kong are going to disrupt business in Macao. JP Morgan analysts argue that would-be gamblers can easily avoid going through Hong Kong and that players from the latter are mostly penny-ante customers anyway. The hiccup in business “should fade away gradually as people will find alternative ways to visit Macau.” “We’ve spoke with people in the industry, including from hotels, and we were told that there were some booking cancellations, but not in significant numbers,” said Maria Helena de Senna Fernandes, head of Macao’s tourist office. Besides, studies show that a disproportionate amount of gaming spend comes from a relatively small number of players bunched at the high end. Still, the political unrest will be a test of Macao’s resiliency.

As for China, it’s engaged in a peaceful conquest of Sihanoukville (home to 16 casinos), where Chinese workers, executives and business owners a creating a de facto colony, 90% Chinese-owned. Beijing is willing to avert its eyes from money laundering to gain a sphere of influence in Southeast Asia. The colonizers have even had the brass to emblazon on one casino, “No Cambodians allowed.”