That corpse you may have stumbled across while strolling the riverbanks of Pittsburgh is Pennsylvania’s ‘one and one-third‘ rule. It was a legislative fig leaf whose ostensible purpose was to prevent the prime casino/racino opportunities in the state from being gobbled up by a couple of operators. It’s what helped doom Harrah’s Entertainment‘s bid for a Pittsburgh casino, as few seemed willing to believe Harrah’s was merely the minority investor/advisor it said it was. (Since Harrah’s was already the owner of a racino in Chester, Pa., that scotched its chances for more than a 33% share of anything else.)
So Pittsburghers got Don Barden instead. Didn’t work out too well. (Then again, who could have predicted Harrah’s would be in the parlous financial health from which it currently suffers?)
Anyway, earlier this month, Pennsylvania’s Gaming Control Board bowed to the inevitable and transferred the Pittsburgh license to developer Neil Bluhm, owner of the as-yet-unbuilt SugarHouse Casino in Philadelphia. Which means that the Pittsburgh project will actually get done now. But …
Although Bluhm technically holds only a small stake in the soon-to-be Rivers Casino, the license is in his name. And a Bluhm-controlled entity, Walton Street Capital, is one of the major stakeholders. And the CEO of the project is Greg Carlin, who also just so happens to be CEO of SugarHouse. (Lest it be unclear, in my opinon — not that it matters — Bluhm has an admirable track record as a developer and is the sort of corporate citizen the casino industry needs.)
So let’s call out the 1.33 rule for the fiction it has become. If the PGCB isn’t going to enforce it in other than the most cosmetic fashion, the Pennsylvania Lege should repeal it. This fan dance isn’t fooling anyone.
Speaking of Neil Bluhm, he and Greg Carlin have turned up in Illinois, where they’re amongst the bidders for the state’s 10th and final casino license. The deleterious financial effects of the Illinois smoking ban and the state’s staggering tax rates on casinos have scared off all but a trio of no-name outfits: Bluhm’s Midwest Gaming & Entertainment, Waukegan Gaming and Trilliant Gaming, steered by the Flying Dutchman of the casino industry, Alex Yemenidjian.
The former MGM Mirage and film-studio exec tried to jimmy his way back into Vegas this year, asking a federal bankruptcy court to force Tropicana Entertainment to accept a loan from a Canadian firm with which Yemenidjian had become affiliated. Bluhm, whose base of operations is Chicago, might have a “home field advantage,” but he’s crying foul over Yemenidjian’s opening gambit. The erstwhile casino executive is plunking down a whopping $435 million to, in effect, buy that 10th license. Crass? Yes. Persuasive? Undoubtedly.
Bluhm, by contrast, is offering only $100 million upfront, followed by a series of conditional $10/year payments. Waukegan Gaming effectively splits the difference, bidding $225 million for the license. If Yemenidjian is going to throw $435 million at the license alone, that raises the question of whether he’s robbing Peter to pay Paul: i.e., Will commensurate capital be available to build the casino? (Magic 8 Ball says, “In this economy?!?“)
Help the Neon Museum. All it takes is two clicks of your mouse. Just go to Hampton Inns‘ Nevada Landmarks page and click on the “Vote for this Landmark” link for the Neon Museum (or the Nevada Northern Railway Museum or Carson City’s Children’s Museum of Northern Nevada, if you’re so inclined). The winner of the plebiscite will receive a donation from Hampton Inns at year’s end. Thank you, Hampton. You’re a class act.
