Visualize Foxwoods Resort Casino. Now plunk it down in the middle of Chicago. That’s essentially what state Rep. Robert Rita (D) proposes to do, pitching a 4,000-10,000-position casino for the Windy City. He also would have the State of Illinois get into the casino business by owning the Chicago mega-casino directly. That’s a nice, little “eff you” to all those struggling, private-sector gaming operators in the Land of Lincoln, isn’t it? Rita’s proposal is certain to bump into opposition from Gov. Pat Quinn (D), who wants to see all new casino tax dollars dedicated toward education, whereas Rita wants some of the theoretical wealth put into construction projects.
“It’s not the big, giant gaming expansion,” Rita claimed, although his alternate piece of legislation looks mighty expansive from here: a slightly smaller casino (6,000 gambling positions) in Chicago, four outstate casinos and an unspecified number of racinos. Rockford and Danville would no longer be assured casinos of their own. The quota of slots per racino has also been halved and, in response to concerns from East St. Louis, Rita has redlined Fairmont Park out of eligibility. In the meantime, existing operators are left to wonder why the Legislature perennially has it in for them.
Solons in Florida have also begun to ponder a constitutional amendment that would put any future casino expansions to a statewide, supermajority vote. The 411-page bill is garlanded with other features, including the proposal to decouple “sham” parimutuel activities like barrel racing from racino operations, enabling tracks and frontons to concentrate upon their true raison d’etre: slots and poker rooms. A vote on the measure could come as early as next week.
The true value of casinos may be as real estate (sort of like real-life Monopoly) or so contends Bloomberg Businessweek. Hence, REIT conversion may look attractive to Pinnacle 
Entertainment and perhaps Boyd Gaming. However, with the Federal Reserve looking to increase interest rates, “The window is probably getting ready to close” says analyst Christopher Jones. The last bout of REIT-mania in the casino industry, 15 years ago, coincided with a closing-window situation involving tax laws. (Losses carried by Boyd on its books should keep it tax-free until 2025.) There are several further obstacles to any REIT conversion by Boyd, regardless of the pressure that new minority owner Elliott Associates may exert. Boyd spokesman David Strow continues to play straight man to Boyd, saying merely, “We always appreciate new investments in the company.” [rim shot]
Speaking of REITs, before it wrapped up, the J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum hosted a visit by Gaming & Leisure Properties, parent of Penn National Gaming. GLPI CFO William Clifford said the company has been dickering with acquisition targets both publicly and privately held. Although he wouldn’t comment on any specific negotiation, he was “very comfortable” predicting additional asset purchases this year. Since privately held casinos have a higher cost of capital (and are more likely to take GLPI equity as a form of payment), they are considered the likelier targets.
Contrary to its early talk of buying amusement parks and such, GLPI is totally focused on casinos at this point. If it were to diversify, it would go the route of finding an underperforming REIT and buying it. For the moment, only Casino Queen, in East St. Louis has flung itself into GLPI’s arms.
