Echelon no more: Boyd humiliated yet again; Caesars pulls another plug

Posted on March 4, 2013 by David McKee

If you’ll pardon my vulgarity, shit got real while I was tied up with other projects. Last week’s sale of excess baggage Dania Jai-Alai in Florida was just a tiny prelude to this morning’s blockbuster: Echelon is kaput. Instead, Boyd Gaming will liquidate it to Genting Berhad for $350 million. This closes the book on Boyd’s history as a Las Vegas Strip operator, brings a major new player to the Boulevard and raises hope for struggling north-Strip casinos, including Sam Nazarian‘s low-cost reinvention of the Sahara as SLS Las Vegas. It’s an S.O.S. for Boyd, which needs to pay down its Peninsula Gaming purchase.  The north half of the Echelon acreage, once occupied by the Stardust, was long since bought and paid for; the southern parcels were traded to then-Harrah’s Entertainment for the since-defunct Barbary Coast, at extravagant cost to Harrah’s. Near-term losers today were the new owners of the can’t-be-unloaded land where El-Ad Properties was going to build its Plaza metaresort and Carl Icahn, who’s still stuck with crumbling Fontainebleau. Mind you, before any victory laps are taken, note that Continue reading →

Posted in Architecture, Atlantic City, Boyd Gaming, Carl Icahn, CityCenter, Current, Downtown, Economy, Environment, Florida, Fontainebleau, Genting, Harrah's, history, International, Kansas, Mississippi, New York, Plaza, Politics, Racinos, Regulation, Sahara, Singapore, Station Casinos, The Strip, Wall Street | 7 Comments

Pinnacle expands, Boyd loses face

Posted on February 28, 2013 by David McKee

Jeez, I go on sabbatical to attend to other writing commitments and hella history breaks loose: Internet gambling is now the law of Nevada and New Jersey (so much for federal legalization being “just around the corner,” huh?), Caesars Entertainment floats a “controversial and complicated” IPO — well, nothing new there — and there’s a godawful, bloody massacre on the Las Vegas Strip. Or as civic boosters would call it, business as usual.

Pinnacle Entertainment, meanwhile, put another $20 million into the New Orleans market, breaking ground on a small (eight suites, 150 rooms) hotel to complement its Boomtown New Orleans riverboat. And why not? The Pelican State has been very, very good for Pinnacle, which has surpassed Caesars as Louisiana‘s dominant casino operator. The new hostelry won’t add a lot of jobs (50) over the long run, when it opens in April 2014. However, Pinnacle has poured so much money into the Lake Charles and Baton Rouge markets that Continue reading →

Posted in Boyd Gaming, Current, Florida, Harrah's, Internet gambling, Louisiana, Pinnacle Entertainment, Politics, The Strip | 4 Comments

Revel goes bust

Posted on February 19, 2013 by David McKee

In the most inevitable headline of 2013, Revel has — brace yourselves — filed for bankruptcy. It will become the latest in a long string of casinos that are owned and run by banks: Two-thirds of outstanding debt will be converted to equity in the property, although I doubt that two-thirds of Revel is worth a billion dollars anymore. The best news: “no layoffs are planned.” The most depressing news? “Existing management will remain in place.” That’s because Revel’s new owners are the same financiers who installed the hapless Kevin DeSanctis as chief restructuring officer, er, I mean as CEO. Throwing good money after bad, Revel lenders will fling another $45 million into this bottomless money pit. If Revel has to keep borrowing in order to pay the electric bill, there are some folks in the executive suite who damn well ought to be held accountable for this mess. Bringing in “hired gun” managerial talent would be preferable to keeping the architects of this calamity on the job.

The Associated Press‘ Wayne Parry diagnoses the cause of Revel’s near-death experience: Continue reading →

Posted in Atlantic City, Cosmopolitan, Current, Dining, Economy, Entertainment, Marketing, Revel, Wall Street | 6 Comments

Caudill: Binion’s open for business

Posted on February 19, 2013 by David McKee

Ixnay those Binion’s Gambling Hall-closure rumors. Owner Terry Caudill rang up Anthony Curtis to say that it’s (mostly) business as usual at the Downtown fixture. “Neither the casino nor the steakhouse is closing,” he told Curtis. “We have minor projects slated for the summer, but they’re all positive improvements and there will be no interruption in operations.” Mind you, between “the steakhouse [and] the casino,” you could run a Union Pacific freight train through the number of amenities that would potentially become “minor projects.” However, I’ve little doubt that these will indeed be “positive improvements,” although I’m still trying to find out exactly what form they will take.

The Tale of the Allergist’s Wife opened very successfully last weekend and continues for two weekends more (if Continue reading →

Posted in Current, Dining, Downtown, Entertainment, Terry Caudill | 2 Comments

Your move, Steve Wynn

Posted on February 18, 2013 by David McKee

Philadelphia casino-applicant frontrunner Bart Blatstein has a new sidekick. He’s ditched Hard Rock International in favor of … Isle of Capri Casinos. It’s a big win for Isle and a very embarrassing public setback for the Seminole Tribe, which Blatstein characterized as too slow-moving for his needs. The new alliance also has sentimental ties for Philadelphia native — and Isle CEO Virginia McDowell. (Hmmm … a Philly developer and casino manager working together? Should be music to city officials’ ears.) Isle can cover its $25 million bet if it sells Quad Cities laggard Rhythm City Casino, one of the lesser performers in the Isle fleet. If Blatstein’s bid is successful, Isle reaps newfound prestige. If not, it’s not out a red cent. The notion of Isle trumping Wynn Resorts may seem far-fetched but Blatstein is far more juiced into the City of Brotherly Love than is El Steve. (Other rival bidders, such as Penn National Gaming and Parx Casino, have already had a bite of the apple that is the Pennsylvania market — two bites, in Penn’s case — and may be dismissed accordingly.) Given recent oversaturation of the Philly-casino market, it surprising to see developers offering to put in $700 million or more. Then again, did you ever imagine Steve Wynn would be the underdog in this scenario?

Posted in Current, Iowa, Isle of Capri, Penn National, Pennsylvania, Steve Wynn, Tribal | 2 Comments

Case Bets: Binion’s redux; Dr. Doom; Everybody goes to Caesars

Posted on February 15, 2013 by David McKee

Today’s top story is the rumor, first aired on LasVegasAdvisor.com that Binion’s Gambling Hall & Hotel will close in July, lock, stock and million-dollar display. This dovetails with an earlier report that a detailed makeover is in the works. So Binion’s could follow the lead of the Plaza and go the short-term-closure route, rather than trying to overhaul on the fly. The last time owner Terry Caudill tried to redo Binion’s, cash flow petered out early in the process. One hopes that, this time, Terry has the money to see his plans through to fruition. Since rival owners like Tilman Fertitta and Derek Stevens have been upping the stakes for what’s considered an acceptable Downtown casino-hotel, Caudill can either follow suit or get left far behind. Either way, it means that Downtown is “happening” again, something for which Oscar Goodman long strove but which didn’t reach critical mass during his mayoral tenure.

I feel like Pollyanna when I read the prognostications of Ken Adams, who may be the foremost pessimist in casino industry. His grim forecast for 2013 is that “something has to give and some will have to go away if any are to is survive and make a profit … the numbers for January are painting an even darker picture.” Yes, voters and legislators continue to approve more casinos, and they’re not particularly concerned — especially in Illinois — whether adding a slot parlor here and a racino there sends Casino X over the brink in a highly taxed, limited-by-statute industry. Already, two months of slot-route revenues in Illinois have represented 5% and 7.5% of the state’s total gambling haul, while casino revenues continue to slip incrementally.

Adams somewhat exaggerates the threat: “casinos in all three states are reported serious revenue declines which have been attributed to Ohio casinos,” writes of Michigan, Indiana and Pennsylvania. Except for a battered Presque Isle racino in the Keystone State, I would be hard-pressed to name a casino whose revenue declines have been “serious,” unless a couple of percentage points is a matter of life or death. After all, as Adams himself says, Ohio’s much-anticipated casino rollout has been a disappointment, bordering on a flop (Horseshoe Cleveland excepted, right). And yes, Horseshoe Cincinnati could send Indiana’s Continue reading →

Posted in Architecture, Atlantic City, California, Dan Gilbert, Derek Stevens, Dining, Downtown, Economy, Harrah's, Illinois, Indiana, Internet gambling, Marketing, Massachusetts, Ohio, Oscar Goodman, Palms, Penn National, Pennsylvania, Problem gambling, Racinos, Slot routes, Taxes, Technology, Terry Caudill, The Strip, Tilman Fertitta, Tribal | 3 Comments

Crunch time

Posted on February 15, 2013 by David McKee

Photo by Susannah Smitherman

As though S&G correspondence hasn’t been spotty enough of late, thanks to “Maloof Flu,” a number of other external factors will be impinging on your weekly flow of ephemera and arcana. Deadlines for USA Today, Las Vegas CityLife, Casino Life and Desert Companion are bearing down upon me like the Four  Horsemen of the Apocalypse. Also, tonight Las Vegas Little Theatre opens its production of Charles Busch‘s The Tale of the Allergist’s Wife (above, with the spicy Continue reading →

Posted in Current, Entertainment | 1 Comment

Trump: And then there was one

Posted on February 14, 2013 by David McKee

What’s an Atlantic City casino worth? Not too bloody much, especially if the name of Donald Trump is emblazoned across the façade. Trump Entertainment Resorts has parted with unloved, unremunerative Trump Plaza and truly for a pittance — $20 million. This is the most rock-bottom resale price yet recorded for an Atlantic City gambling hall. That’s less than one-tenth of the hotel-casino’s construction cost … unadjusted for 28 years of inflation! The purchaser, Meruelo Group, is known to players in the Reno area, where it owns the Grand Sierra Resort. (Any thoughts, readers?) Meruelo paid $22K/key for the smallish hotel. It chose a good moment to swoop: The Plaza was coming off a catastrophic January, in which revenue fell 41%, to a truly pathetic $4.9 million. There was a time not so long ago that a $10 million monthly gross was a cause for shame along the Boardwalk.

By severing the Plaza from TER, Meruelo is rid of the poisonous Trump brand name. The Golden Nugget continues to flourish without it, having recorded Continue reading →

Posted in Atlantic City, Colony Capital, Current, Donald Trump, Economy, Entertainment, Reno, Revel, Tropicana Entertainment | 11 Comments

SLS/Sahara: Nazarian gets his green (cards); Caesars green-lit for Cincy

Posted on February 14, 2013 by David McKee

Just when Sam Nazarian‘s mooted reinvention of the defunct Sahara as SLS Las Vegas looked dead and gone, The Naz slipped in under the wire with all the offshore money he required and a bit more: Sahara Sam needs $115 million from overseas sources to hang onto $300 million that’s sitting in escrow. He told the Wall Street Journal he and his partners “believe they are close to coming up with $215 million.” That’s considerably more circumspect phraseology than was employed to the Las Vegas Review-Journal, where The Naz presented the financial situation as a done deal. Rather wishfully, Nazarian added, “We’re close to Downtown” and all its newfound hipness. Sorry, Sam, but you’re nowhere near the El Cortez, which helped kick-start the Fremont East action. “We also want to be a place for locals to visit,” added Nazarian, who needs every customer he can get.

Per the WSJ, Sahara Sam and partner Terry Fancher “insist the SLS Las Vegas will draw new visitors who are already fans of Mr. Nazarian’s night life and hotel empire in Continue reading →

Posted in Current, Dan Gilbert, Downtown, Economy, Harrah's, International, Maryland, Ohio, Racinos, Regulation, Sahara, The Strip, Tourism | Comments Off on SLS/Sahara: Nazarian gets his green (cards); Caesars green-lit for Cincy

An indispensable man; MGM’s two-front campaign

Posted on February 14, 2013 by David McKee

French statesman Georges Clemenceau once dryly remarked that the cemeteries are full of indispensable men. Clemenceau’s quip obtained fresh sting this week when the gaming world lost Dr. William Eadington. The industry scholar has been struggling with cancer for a year and a half, and succumbed at age 67. A reserved and unpretentious man, Bill was also a font of knowledge, infectiously enthusiastic about his chosen of field of study and always happy to share his highly informed perspective. A modest person, he could state strong opinions about the casino industry’s state of affairs (and its indiscretions) with a mildness that only redoubled their force. Bill was also well ahead of the curve in using the Internet as a preferred form of correspondence (I still have a dog-eared Rolodex card from the Nineties, listing his e-mail address), although us ink-stained wretches were freely encouraged to call him at home. The good doctor was, you see, an ahead-of-his-time practitioner of telecommuting, too. No aspect of the gaming sphere escaped his notice, although if he felt his knowledge of X or Y was a bit sketchy (and it rarely was), he’d be the first to say so.

Dr. Eadington leaves a great legacy, not only in the form of the University of Nevada-Reno‘s Institute for the Study of Gambling & Commercial Gaming, but in those of us who were enriched by his knowledge and willingness to share it. To say his death leaves a void would be a bit of an understatement. In recent years, we have lost UNLV economist Dr. Keith Schwer and reporter/commentator Jeff Simpson. Comparable figures have not arisen to take their place. Mortality has made many withdrawals from our bank of knowledge, but no deposits, leaving us much the poorer.

No Surprise Dept.: Taking his lead from other city fathers, Springfield Mayor Domenic J. Sarno has chosen to put the Penn National Gaming vs. MGM Resorts International choice of casino development in the hands of voters … provided that Continue reading →

Posted in Atlantic City, Boyd Gaming, Current, history, Internet gambling, Macau, Massachusetts, MGM Mirage, Pansy Ho, Penn National, Problem gambling, Regulation, Revel, Stanley Ho, Technology | Comments Off on An indispensable man; MGM’s two-front campaign

Palms 1, McKee 0

Posted on February 13, 2013 by David McKee

A one-night “staycation” the Palms was my undoing, as I contracted a severe cold and have been bedridden ever since. Coincidence? You make the call. Incidentally, at an event for local journos, I couldn’t help notice that many of the “media” were young ladies in short, thigh-gripping dresses, with small purses that dangled about their fannies. I don’t know if they were working girls but they were definitely “working it” and in a very high-visibility manner. Congratulations to Texas Pacific Group and Leonard Green & Partners: You’ve shown that your private equity firms can get down-and-dirty, Vegas-style just like an old-school operator would.

Posted in Palms, The Strip, Wall Street | 1 Comment

MGM back into Atlantic City?

Posted on February 8, 2013 by David McKee

MGM Resorts International has a 50% stake in Borgata that nobody wants … except MGM. In bolstering move that Atlantic City sorely needs, MGM may get to reclaim its half of the resort (with the support of partner Boyd Gaming), not to mention all the revenue that the State of New Jersey has been holding in trust, pending a sale, since it kicked MGM out three years ago. Garden State regulators had found that — surprise! — Stanley Ho was mobbed up and deemed that daughter Pansy Ho had acted as a conduit for some of Papa Ho’s money to flow into MGM Grand Paradise in Macao. Now, if Continue reading →

Posted in Atlantic City, Boyd Gaming, Current, Economy, Election, Horseracing, Internet gambling, Macau, Maryland, Massachusetts, MGM Mirage, Penn National, Regulation, Stanley Ho, The Mob | 1 Comment

December in Vegas: The house won; Sheldon of La Mancha

Posted on February 8, 2013 by David McKee

There are gambling markets … and then there’s Las Vegas. Players opened their wallets — oh, did they ever — and lost big. Casino winnings on the Las Vegas Strip were up 13.5% and Nevada casinos overall did 10% better than last year, for a statewide gross of $943 million. Downtown casino winnings shot up almost 20%. That’s right: 20%. Even Strip slot play was up 4%, thanks to a combination of slightly higher coin-in and incrementally tighter hold. But what mainly drove those balmy Strip numbers, of course, was baccarat, where $185 million was raked in. Whales and smaller aquatic fauna bet larger (up 23%) and lost bigger (ditto). Other table games saw 11.5% higher play and the house was lucky indeed, its winning rising nearly 18%. (According to J.P. Morgan, 18.5%.) Except for some outlying Clark County markets like Continue reading →

Posted in Boulder Strip, Boyd Gaming, Current, International, Lake Tahoe, Laughlin, Marketing, Mesquite, North Las Vegas, Reno, Sheldon Adelson, The Strip, Tourism, Wall Street | 2 Comments

Indiana: The good, the bad, the ‘meh’; Vegas: What’s that smell?

Posted on February 8, 2013 by David McKee

January casino revenues from Indiana present a conundrum. Although the state is still the most lucrative casino jurisdiction in the Midwest ($192 million last month), it’s hard to tell whether the half-full glass is filling or emptying. Foot traffic was down 12% but players’ spending rose 7.5%. The two didn’t quite cancel each other out, as Indiana finished the month down 6% from last year. So we’ve gone from more players spending less — the longtime quandary in Illinois — to fewer players spending more. I’m not sure which is preferable although I think new tax rates mean last month’s Indiana results are a harbinger of things to come. Which is one of the key reasons that I believe prophecies of recovery in the gaming sector are more akin to wishful thinking. As Richard H. Thaler, an economics boffin at the University of Chicago says, “I wouldn’t expect [tax increases] to have much of an effect on BMW consumption.”

“It’s almost a zero-sum game whenever a new casino opens,” adds Fitch Ratings analyst Alex Bumazhny, which means Indiana’s three-year streak of declining tax revenues from casinos is unlikely to be broken in 2013. So there’s not only little relief in sight for the Hoosier State, its southern riverboats have to brace for the impact of oncoming Horseshoe Cincinnati (right). The latter is expected to hit Penn National Gaming‘s Hollywood Lawrenceburg (-15% last month) hard, but the worst casualty is the Grand Victoria riverboat, a few miles downriver. At $6.3 million last month (-1%), it was one of the state’s two lowest-grossing casinos (Majestic Star II, -9%, was the other). Loss of traffic from Ohio could easily prove fatal. But if Grand Victoria is in critical condition, one needn’t worry about Horseshoe Southern Indiana*, up 11% as it feasts upon Continue reading →

Posted in Ameristar, Cordish Co., Current, Don Barden, Economy, Environment, Harrah's, Illinois, Indiana, Internet gambling, Kentucky, Laughlin, Mesquite, Minnesota, Penn National, Politics, Racinos, Tourism, Wall Street | 1 Comment

Quote of the Day

Posted on February 7, 2013 by David McKee

“IGT’s valuation is near its all-time low on the basis of net income and cash flow. We believe this reflects the investment community’s lack of faith in the operating strategy and capital allocation decisions of IGT management and the board.” — Orange Capital Managing Director Daniel Lewis, in an open letter to International Gaming Technology Chairman Phil Satre, in what looks like the beginning of the end of IGT CEO Patti Hart‘s tenure.

Posted in Current, IGT, Wall Street | Comments Off on Quote of the Day

Christie: Oops, he did it again; Maryland: Take my casino, please

Posted on February 7, 2013 by David McKee

New Jersey Gov. Chris Christie (R) loves to veto Internet gambling bills so much that he’s just done it for a second time. There was incremental progress: In punting the ball to the Legislature’s one-yard line, Christie endorsed the idea of Internet gambling, just not in the form that reached his desk. He wants a 10-year “trial period” and a 50% increase in the proposed tax rate: 15% of revenues, not 10%. This is why it sucks to own a casino — even Republicans think you don’t pay enough taxes. The “sunset” provision does give the state a (distant) escape hatch if online gambling backfires — as it has been wont to do. It’s also timed in a such a way that it will occur long after Christie has left Trenton. By 2023 or 2024, Jersey residents will probably be so habituated to online play that renewal will be a matter of routine. At any rate, 10 years makes more sense than former Hawaii Gov. Linda Lingle‘s rejected proposal for a one-year “trial” casino. What’s the point of that? Just imagine the sort of pile-of-crap gambling facility you’d build if it had to make a 100% return on investment inside of a year.

To his credit, Christie seems to have genuinely agonized over the pros and cons of his decision, which was made at the last possible moment. Legislators also realize that working with Christie is far less risky than putting the matter before the electorate. To their credit, they’d already stripped the bill of a “juice job” that Continue reading →

Posted in Atlantic City, Current, Economy, Goldman Sachs, Harrah's, Internet gambling, Marketing, Maryland, Massachusetts, Penn National, Politics, Regulation, Steve Wynn, Taxes, The Strip, Tribal | Comments Off on Christie: Oops, he did it again; Maryland: Take my casino, please

Ameristar: No surprises; Illinois, Iowa and Ohio all soft

Posted on February 7, 2013 by David McKee

A preview of Ameristar Casinos‘ 4Q12 report draws an about-what-we-expected reaction from Joseph Greff of J.P. Morgan. Ameristar narrowly missed most of Wall Street‘s expectations, a result Greff partially attributes to “sluggish … regional gaming spend.” Hardest-hit by the competition was Ameristar’s Kansas City casino (left, -8%), which has been losing business to Penn National Gaming‘s racino at Kansas Speedway. Bright spots on the map were Black Hawk, Colorado, and Vicksburg, while dominant performer Ameristar St. Charles held steady — news that will be welcomed over at Pinnacle Entertainment, owner-to-be of it and all other Ameristar properties. That transaction is said to be speeding along and could close sometime this spring. Pinnacle’s concentration of ownership in the St. Louis area is expected to be problematic but it gives CEO Anthony Sanfilippo a perfect excuse to cut loose Lumiere Place, whose luster is now a distant memory.

On the subject of regional sluggishness, let’s look at Iowa and Illinois, which last month grossed Continue reading →

Posted in Boyd Gaming, Colorado, Current, Detroit, Economy, Harrah's, Illinois, Iowa, Isle of Capri, Kansas, MGM Mirage, Mississippi, Missouri, MTR Gaming, Neil Bluhm, Ohio, Penn National, Pinnacle Entertainment | Comments Off on Ameristar: No surprises; Illinois, Iowa and Ohio all soft

All roads lead to Springfield

Posted on February 6, 2013 by David McKee

That idyllic scene above is not Massachusetts but Vermont. However, the Green Mountain State is not only shaped like a funnel, it is one, an untapped market just waiting to be drained by whichever casino lands the coveted western Massachusetts concession, even it might have to wait until 2016 or even 2018. (A couple of “dog ate my homework” applicants missed the deadline — which was hardly a recent development — and were last seen pleading for extensions.) We’ve come a long way from those summertime months when city officials were mulling whether a gambling palace might be a good thing or not …

CBS 3 Springfield – WSHM … to now, when earnest money has been collected from would-be developers. Steve Wynn and Caesars Entertainment have already ponied up for their Boston-area projects. Neil Bluhm crashed the party at the last minute. He might settle for the lightly contested slot-parlor license … but that’s not his style. The uncertain federal standing of the Mashpee Wampanoags (quietly backed by Genting Berhad) meanwhile, has thrown Bay State regulators into a state of paralysis whether or not to accept rival bids in the southeast corner of the state. However, the late-in-the day arrival of Wynn and Bluhm does much to allay fears of the Massachusetts Gaming Commission that had the latter rattling its tin cup in Wall Street‘s direction, clearly unsatisfied with a Caesars-or-nobody choice — and a half-hearted one at that — in Beantown. The real jockeying for advantage is taking place out west, where Mohegan Sun just squeaked under the wire with its entry fee, having just secured new financing. In terms of location, the Mohegans may be at something of a disadvantage: Springfield sits at the intersection of Massachusetts Turnpike and U.S. 91, while Palmer is a couple dozen miles off the north-south axis, east on the Turnpike, midway between  U.S. 90 and U.S. 84. Its close proximity — 85 miles distance — to the Mohegan Sun parent property in Connecticut does little to diminish the stalking-horse nature of the Mohegan bid. In addition to having a direct pipeline to Vermont, Springfield also sits athwart the route to Albany and is a short drive from Hartford. So even if Ameristar Casinos is out of the picture (and a good thing too, as its project budget had gotten wildly out of control), Springfield is still the no-brainer location … even if voters might toss the Continue reading →

Posted in Ameristar, Architecture, Economy, Election, Harrah's, Massachusetts, MGM Mirage, Penn National, Pennsylvania, Pinnacle Entertainment, Politics, Regulation, Sheldon Adelson, Steve Wynn, Tribal, Wall Street | Comments Off on All roads lead to Springfield

Caesars: Cui bono?; Loveman woos Britney

Posted on February 6, 2013 by David McKee

Our question for the day is, “Who benefits?” Taking the long view of Caesars Entertainment to bundle a mixed bag of Planet Hollywood, its-casino-to-be in Baltimore and Caesars Interactive, in whose interest is it to purchase minority stakes, since CEO Gary Loveman intends to maintain majority control. Or, in the case of his Maryland casino, a majority of a minority stake. It’s like being offered a lift by an inebriated motorist. You’re along for the ride but you’re at the mercy of the drunkard behind the wheel. And, as Caesars “strategy” swerves from pillar to to post, your trip would be … interesting, to say the least

First, I think this move — following a series of deals where Caesars runs casinos that Dan Gilbert finances — signals a devolution of Caesars from a casino-owning company to a casino-management firm. Were I Penn National Gaming CFO William Clifford and intending to start shopping for casinos to own on a lease-back basis once my REIT goes through, my first call would be to Loveman. I’d have money and he’d have property that he’s desperate to unload, so it’s a perfect fit … especially with so much real estate on the Las Vegas Strip and major metropolitan areas. (If Caesars were to go belly up, Penn could abrogate the leases, and confiscate the licenses and slot machines … and it would already own the bricks and mortar.)

Secondly, and more near-term, who are the likeliest takers of Continue reading →

Posted in Boyd Gaming, Cirque du Soleil, CityCenter, Cosmopolitan, Current, Dan Gilbert, Entertainment, Harrah's, International, Internet gambling, Kansas, Louisiana, Maryland, MGM Mirage, Missouri, Ohio, Penn National, Planet Hollywood, Steve Wynn, Taxes, The Strip, Wall Street | 1 Comment

Santarelli bails on SGMS; Blasts from the recent past

Posted on February 5, 2013 by David McKee

Scientific Games has lost the faith of Deutsche Bank‘s Carlo Santarelli. The analyst put out a “sell” recommendation this morning on SGMS stock, issuing a new target price of $6/share, down from $7. (Scientific was trading at $9.49 at the time.) Is this a big deal? Yes, because you see gaming stocks pegged as a “sell” slightly less frequently than as you see Halley’s Comet. Most Wall Street analysts take refuge in “neutral” ratings on iffy stocks but Santarelli went way out on a limb. Reasons for his decision include the contention that Scientific’s “business model remains stagnant and will continue to be reliant on tough-to-handicap and somewhat binary legislative events [read: politics],” whose benefit to Scientific is difficult to quantify. “[The] rich premium and difficult to identify synergies make the pro forma outlook … daunting,” not least because Scientific is no longer as dominant a candidate for privatized state lotteries and the online-lottery sector has been slow to develop. Or so the argument. Bottom line: Scientific is overpaying for an asset — WMS Industries — with a “difficult fundamental outlook” during a slow business cycle.

Y’all remember Columbia Sussex, the onetime hotel giant whose highly leveraged, low-budgeted venture into the casino industry was Continue reading →

Posted in Columbia Sussex, Current, Economy, Harrah's, Marketing, Scientific Games, The Strip, Wall Street, WMS Industries | 1 Comment