A ways back, the news broke that Caesars Entertainment — being well and truly on its uppers — was trying to shop as many as 10 Southern and Midwest casinos. The goal was to raise at least $500 million to pay for CEO Gary Loveman‘s promiscuous development commitments along the Eastern Seaboard. Well, if a half-billion was all that was needed, Loveman made his goal and them some, offloading Harrah’s Maryland Heights Casino to Penn National Gaming for $610 million.
It’s a costly deal for both sides. Penn paid almost 8X cash flow, a premium price on the face of it (but … see below), and will inherit deferred-maintenance issues. In true Loveman fashion, Harrah’s Maryland Heights “has seen relatively little investment in recent years, even as new rivals around the region have opened up and old ones have expanded,” according to the St. Louis Post-Dispatch. It also creates the problem for Penn of what to do with Argosy Alton Belle, its low-grossing riverboat (roughly $6 million a month, compared to Harrah’s $22.5 million) just 25 miles away in Illinois. Penn will consolidate management of the two, thereby realizing some near-term savings, and it could run Alton Belle as a “convenience gambling” grind joint. However, were I an employee there, I’d start Continue reading
In the unlikely event that Steve Wynn is abducted by aliens and thrown into a Chinese political prison, Wynn Resorts need look no farther than ex-wife Elaine Wynn for continuity of vision. (And, make no mistake, there isn’t a discernible point where El Steve leaves off and “Wynn Resorts” begins. L’etat c’est lui.) If it weren’t for the first Mrs. Wynn, The Mirage 
“What’s wrong with the prescription of spending cuts as the remedy for Europe’s ills? One answer is that the confidence fairy doesn’t exist — that is, claims that slashing government spending would somehow encourage consumers and businesses to spend more have been overwhelmingly refuted by the experience of the past two years. So spending cuts in a depressed economy just make the depression deeper.” — Paul Krugman, on the demise of Greece‘s 
If state Rep. Lou Lang (D), the economic Rasputin of the upper Midwest, and his allies in the horsey set were actually conspiring to topple Illinois‘ casino industry in favor of quick-and-dirty racinos, they’ve done it cunningly. Frontal attacks on casino gambling almost never succeed, so why not water the gaming business down to the point where it’s as unprofitable to run a gambling house in Illinois as it is in Atlantic City? That explanation at least has the benefit of suggesting logical minds are at work. Or maybe Lang’s economic nutbaggery is genuine and he really believes the horse manure he’s been spewing? His horseracing buddies are now peddling a report by Spectrum Gaming Group whose conclusions are, shall we say, highly suspect … which is a nice way of calling them laughable, preposterous, moonshine, wishful thinking or what have you. Spectrum claims that it doesn’t tailor its conclusions to what its clients want to hear, but where do you think this document would have gone if it didn’t parrot 
Barbara De Lollis had better re-cork the champagne. Wall Street Journal coverage of Sam Nazarian‘s much-hyped, $300 million Sahara loan 
Nazarian fixer-upper SLS South Beach.
Although I was only joking when I suggested that Steve Wynn‘s long-sought Cotai Strip land grant would come in on May Day, some Communist Party bureaucrat wasn’t. After many false alarms, 
Santarelli pegs the Wynn Cotai cost at $2.7 billion and rising while his J.P. Morgan opposite number, Joseph Greff, already has it at $3 billion. Wynn, however, tripped up both of them, announcing a budget increase into $3.5 billion-$4 billion range. If Santarelli’s predictions of a 2016 opening and $675 million in cash flow bear out, Wynn’s budget escalation will drive ROI down from 25% to a still-enviable 
Sheldon Adelson‘s presidential campaign officially sank today. It was preceded to Davey Jones’ Locker by $21.5 million in Adelson family money (or $10.75 million per primary victory). It’s been a brief voyage but one revelatory of Sheldon’s inner workings. For instance, there was 
In one of history’s curious quirks, a battle in New York probate court 
There’s a new power player in gaming and it’s … Brookfield Asset Management? The Canadian lender is already calling the shots (along with Warner Gaming) at the Hard Rock Hotel & Casino, a $1.5 billion quagmire into which Morgans Hotel Group led Credit Suisse. Today, Brookfield officially ousted Sol Kerzner from Atlantis Paradise Island and one other Bahamas resort, gaining over $1 billion worth of assets for a cool $175 million. Among those getting cleaned out in the transaction are Kerzner backers Goldman Sachs and — you guessed it — Colony Capital. The twosome are already partners in misery, Colony CEO Tom Barrack having sold Goldman a big chunk of the then-Las Vegas Hilton, which Goldman now has to turn around after Colony lost the Hilton flag and generally ran 
If the question of casino expansion were put to Empire State voters this November, the outcome would probably be adverse. That’s the conclusion of a Benenson Group survey. If the fact that Benenson is President Barack Obama‘s pollster of preference doesn’t impress you, the size of its sample (800 souls) ought to: Most pollsters skimp by on 500 responses or so, resulting in wide margins of error. Not only is New York‘s support for Class III casinos anemic, anti-casino voters are historically militant and would probably carry the day in a tight race.
“The U.S. senators and representatives who refuse even to consider raising taxes on the rich—they squall like scalded babies (usually on Fox News) every time the subject comes up—are not, by and large, superrich themselves, although many are millionaires … They simply idolize the rich. Don’t ask me why; I don’t get it either, since most rich people are as boring as old, dead dog shit. The Mitch McConnells and John Boehners and Eric Cantors just can’t seem to help themselves. These guys and their right-wing supporters regard deep pockets like Christy Walton and Sheldon Adelson the way little girls regard Justin Bieber … which is to say, with wide eyes, slack jaws, and the drool of adoration dripping from their chins. I’ve gotten the same reaction myself, even though I’m only ‘baby rich’ compared with some of these guys, who float serenely over the lives of the struggling middle class like blimps made of thousand-dollar bills.” — author Stephen King, 
If you want a vexing test of one’s intellectual consistency, try the Maryland casino industry on for size. It’s not growing fast enough to suit the state Legislature, which is chafing at the constraints imposed upon it — 
Not surprisingly, the casino goose 
In what might be called The Era of Deferred Maintenance, Landry’s Restaurants CEO Tilman Fertitta still believes in spending money to make money. That’s why he poured $150 million into the former Trump Marina and, consequently, the Golden Nugget Atlantic City has been seeing a reversal of its once-flagging fortunes. (Touch wood.) When your Marina District neighbors are Borgata and Harrah’s Atlantic City, it behooves one to keep up with the Jonses … which, needless to say, Donald Trump didn’t. “The number-one comment we heard from customers was, ‘It looks like a hospital,'” said Nugget GM Tom Pohlman, in what ought to be Quote of the Year.
City will also be lavished on the Isle of Capri casino that will be converted to a Golden Nugget in Biloxi at a cost of $150 million. While Atlantic City remains at a tipping point, pending the full impact of Revel, Feritta is entering the Gulf Coast market at a propitious moment, with Mississippi seeing some of its best casino revenues in years. No disrespect to Steve Wynn but the Golden Nugget brand hasn’t had this much luster in decades.
Respecting Wynn. That’s what J.P. Morgan analyst Joseph Greff did earlier this week, at a time when Wall Street has been falling all over Las Vegas Sands, and not without reason. Crunching many a number, he argued that even without Wynn Macau and its long-promised Cotai Strip sibling, Wynn Resorts still holds “two of the better positioned assets” on the Las Vegas Strip. Greff also likes Wynn’s relative lack of debt and argues that the stock is undervalued in comparison to Sands, Melco Crown Entertainment and MGM Resorts International. Contending that expectations for Wynn’s Macao operations are too low, Greff forecasts that the Cotai development (if/when approved) will generate a 25% return on a $2.75 billion investment. You can’t redeem that large of a project cost anywhere near so fast in America. Heck, you can hardly even justify that big a budget stateside.
Some local businessmen busted out the crying towels last weekend and 
Just to make sure you’re not piggybacking onto its mobile-gambling systems, Cantor Gaming is partnering with Locaid to provide “geo-fencing” for its pocket casinos, which can now be played damn near anywhere on a casino property. (The real endgame, however, appears to be to have these fences in place 
It was a thankless day for Boyd Gaming: It exceeded Wall Street‘s expectations for 1Q12 and stock analysts yawned in the company’s face. Wrote Deutsche Bank‘s Carlo Santarelli, “the fundamental setup … remains tough,” due to a highly competitive locals market in Las Vegas, where Boyd has lost market share, and the incoming impact of Revel in Atlantic City. Despite “largely encouraging” results, particularly “prudent” acquisition IP Biloxi (which accounted for almost 10% of first-quarter cash flow), at Delta Downs and aboard Treasure Chest, Santarelli thought the stock fairly valued at $8/share. Management believes if run rates at IP can be maintained, its purchase price will fall below 7X cash flow, making it a relative bargain.
If somebody loaned you a few hundred million, unsecured, you want to come to Las Vegas and lay some big wagers, right? MGM Resorts International has been there, done that. So it’s looking elsewhere to place its bets. And why not? Wall Street is returning to its profligate ways of 5-7 years ago and when banks are practically throwing money at you, who’s MGM to say, “no.” Of course, there’s that little matter of $13.5 billion in long-term debt, if you want to be a party pooper. To that end, it behooves MGM to open new markets like Florida, where the price of admission will be $500 million, if casino-expansion legislation is revived in the next Lege. Then there’s the $600 million or so the company is willing to spend in Massachusetts … although the proximity of Foxwoods Resort Casino creates a certain redundancy and conflicting agendas threaten the heretofore complimentary relationship between MGM and Ameristar Casinos. Ditto the great city of New York, where MGM wants a second bite at the Big Apple, having lost