PokerStars blows it; Wynn woos Philadelphia

Score one for Colony Capital: It took Rational Group to the cleaners to  the tune of $11 million and there’s nothing Rational can do about it. A New Jersey court ruled that the PokerStars parent company had no one to blame for itself, having agreed to the surrender in black and white: If Rational wasn’t approved by April 26 for its purchase of the Atlantic Club Hotel, the money was forfeit. It was all part of the deal. As one of Colony’s lawyers argued, “They took the risk they could get it done.” You might even say they gambled. “We saved their butts and got the short end of the stick,” Rational attorney Wayne Positan pleaded to an unswayed Superior Court Judge Raymond Batten. Perhaps if Positan’s bosses had been more careful about what they signed and with whom they dealt, they’d be $11 million less out of pocket today. Nor would I put it past Colony to go for the remaining $4 million as a “termination fee.” CEO Tom Barrack knows no shame.

The good news for Colony is that it gets free money. But the real winner may well be Trump Plaza, although it’s not going to sell for any $15 million: Carl Icahn will see to that, having already scotched one bargain-price sale. Rational will have to dig a little deeper, since it still wants to be in Atlantic City. There is at least one Caesars Entertainment property (Bally’s Wild Wild West) that could use new ownership but Caesars is the last company that’s going to want to let PokerStars onto the Boardwalk. (Caesars, however, may have been playing footsie with Penn National Gaming regarding the Showboat, although both parties deny it.)

In a veiled jab at Trump Entertainment Resorts and Caesars, Borgata President Tom Ballance said, “I believe some of the assets in this town need to be transferred to owners with better balance sheets who can make them more attractive.” By “owners,” he meant people like Tilman Fertitta, whose $188 million purchase and makeover of Trump Marina into the Golden Nugget has been one of the town’s few success stories lately. Properties like the Nugget, the Tropicana and Resorts Atlantic City are benefiting from the (long overdue) liberalization of potential uses of Casino Reinvestment Development Authority money to put more dollars into amenities. Resorts’ new Margaritaville theme is drawing early raves.

A good thing that new stores and restaurants are coming to Atlantic City. It needs to vamp for time until the Harrah’s Atlantic City convention center opens, perhaps as much as two years hence. A chastened Revel is brainstorming what’s called “seven-day programming … that will better cater to our gaming audience.” In other words, they’re not too good for the day-trippers anymore. New Jersey Casino Control Commission Chairman Matthew Levinson has already been vouchsafed the game plan and says he expects it to succeed. That’s a bit of a burden to put on Fine Point Group, which has barely had time to unpack its suitcases, but let’s hope he’s right.

Sprucing up one’s casino is also a theme we’re hearing out of Philadelphia. Everybody except the Pennsylvania Gaming Commission is saying what is quantifiably inarguable: A fifth casino is going to escalate — rather dramatically escalate, it would appear — the cannibalization that is already taking place. Steve Wynn just passed through Philly, talking up the idea of a small (300-room) hotel and a boutique-y casino, although he could only be so disingenuous, saying the gambling is “is what pays for the whole project,” as indeed it does. While no dollar amount has been attached to the project, Wynn’s customary lavishness will probably mean an investment even bigger than current big spender Bart Blatstein, who plans to pour $700 million into a downtown Isle of Capri-run casino. As monthly reports show, the Philadelphia market is past the point of elasticity. To be more competitive, SugarHouse is spending $155 million to exponentially increase its casino floor and expand its rather stingy package of amenities (one restaurant, one ‘bun and run,’ one bar). Harrah’s Philadelphia has fought back mainly by adding more slots and tables, a strategy which hasn’t stopped the erosion of its market share. Although online gambling could come to Pennsylvania during the current legislature, a few Keystone State casinos were over-eager, put up free-play site and got their knuckles rapped for it. Too soon, gentlemen. Don’t give your enemies ammunition with which to shoot you down.