In a dramatic development, the six-tribe coalition that opposed letting PokerStars into Californiastood aside, clearing the path to unanimous approval by the Assembly Governmental Organization Committee of a bill by state Rep. Adam Gray that would legalize online poker in the Golden State. A provision that would skim off $57 million to $60 million (accounts vary) in revenue to subsidize the horseracing industry doubtless contributed to the 18-0 legislative landslide. Although the Internet poker market in the state is generously estimated at $400 million, it also thought that no more than 10 operators, tops, could be viable in it.
We could see another shakeout in Macao junket operators. According to Daiwa Securities Group, most of the industry is “struggling just to break even.” Part of that problem is that they’re carrying almost $3,9 billion in bad debt — and you can just bet that American casino operators in China are now glad that the Nevada Gaming Commission wouldn’t allow them to issue credit over there, leaving the problem in the laps of the junket operators. Add “stale” debt to the so-called “healthy” bad debt and the hole gets even deeper. Part of the problem is simple: With less VIP play taking place, the volatility of that segment becomes considerably greater. Gross high-roller revenue from baccarat fell 40% last year.
Given the withered high-end market in Macao, junketeers are looking toward overseas markets, as near as Vietnam and as distant as Continue reading →
Just when Wall Street expected levels of revenue on the Las Vegas Strip to rise in March, business did a head-fake and dropped 4%. Again, “the Easter shift” is being blamed but stock analysts should have seen that coming. (A 3% increase in visitation also appears to contradict it.) It’s what they’re paid to do. Casinos on the Strip grossed $487 million, with slot revenue off 5% on flat coin-in (bad luck for the house), while baccarat wagering fell a staggering 29%, although here luck was with the house, the revenue decline being only 4%. However, this is long-term cause for worry, what with baccarat betting being down for six straight months and 10 of the last 11. JP Morgan analyst Joseph Greff predicts this trend will “moderate” but not go into reverse. “Overall, we continue to think that the LV Strip can generate mid-single digit [room-revenue growth] and low single digit visitation growth,” he added. Other table games brought in 3% less, roughly commensurate with the dip in wagers.
Locals played very slightly more at the slots but revenue was still down 2%, while a 9% decrease in table game play meant Continue reading →
Red Rock Resorts — akaStation Casinos — split the difference in Wall Street‘s expectations of this week’s IPO, debuting a $19.50 (Street estimates ranged from $18 to $21 a share). Unfortunately, unlike the MGM Growth Partners offering, the goal of this IPO is rather more base than enlarging the company. The already wealthy Fertitta Brothers stand to make out like bandits. As the Las Vegas Sunsummarized the offering, “CEO Frank Fertitta III and his brother Lorenzo, a director of the company, will each receive $113.5 million of those proceeds after debt is paid off, the filings said. Trusts for their six children will receive a total of $106.8 million.” So there will be lots of rich little Fertittae running around but the company will remain in the torpor that has afflicted it since going private. $531 million might build a handsome new casino in Reno and Las Vegas, the two jurisdictions where Station has land but won’t develop. It’s anybody’s guess whether Continue reading →
“I learned many years ago about the importance of not punching down in weight class. You don’t hit ‘little people’ in this craft, you defend them. In Las Vegas, a quintessential company town, it’s the blowhard billionaires and their political toadies who are worth punching. And if you don’t have the freedom to call the community’s heavyweights to account, then that ‘commentary’ tag isn’t worth the paper on which it’s printed.” — John L. Smith, in a letter announcing his resignation from Sheldon Adelson‘s Las Vegas Review-Journal, after the paper’s leadership barred him from writing about Adelson and Steve Wynn, both of whom had sued Smith in the past.
Confirming the worst-kept secret in Las Vegas, suddenly acquisitive Boyd Gaming announced that it was buying out Cannery Casino Resorts. The price ($230 million) was toward the lower end of Wall Street had predicted for the deal and means the Boyd is getting Cannery at an industry-standard multiple of 7X EBITDA (as opposed to the crazy 13X cash flow it paid for Aliante Casino). That takes some of the sting out of the problem Boyd will facing when it starts competing with itself on the Boulder Strip. There, Sam’s Town and Eastside Cannery are only a (long) block apart, separated by a KOA campground. At least the original Cannery (shown) is seven miles from Aliante, ameliorating any North Las Vegas cannibalization. “We view the transaction favorably,” wrote Deutsche Bank analyst Carlo Santarelli, as well he might, given the Boyd had picked up two casinos for $115 million each, a bargain in today’s market.
Boyd will be funding the Cannery deal from cash on hand, dipping into the proceeds of a March bond sale. Like Santarelli, JP Morgan analyst Joseph Greff thought the deal Continue reading →
An unwelcome sideshow for Wynn Boston Harbor is playing out in a Massachusetts courtroom, in a court case of “excruciating details.” What is at issue is whether Dustin DeNunzio, Anthony Gattineri and Charles Lightbody attempted to defraud Wynn Resorts by concealing convicted felon Lightbody’s ownership role in the 35 acres Wynn acquired from them. While the three men are all in danger of spending the next 20 years in prison, Wynn Resorts faces the PR blotch of appearing to have been, at best, willfully ignorant of who owned the land it was buying. Wynn go-between Daniel Gaquin is alleged not to have asked who the owners were. Worse still, Wynn’s Matthew Maddox and General Counsel Kim Sinatra were said to have been informed of Lightbody’s involvement and showed no concern.
Claiming vindication was Massachusetts Gaming Commission member Gayle Cameron, who said, “I was absolutely concerned about Continue reading →
By now it is something of an understatement to say that Revel owner Glenn Straub thinks outside the box. Or, as the Philadelphia Inquirer put it, his “plans for the massive property have veered erratically from mud slides to academic think tanks or refugee camps.” However, he’s found one idea that he’s not only sticking to but has already begun putting into motion: the installation of a ropes course in the former valet-parking area. Later, sand will be trucked in to create a Nikki Beach-like lounging space. The vehicular entrance to Revel will become subterranean. What Straub may not be able to pull off, at least not yet, is reopening the megaresort’s restaurants. He needs to have an operational casino to get a liquor license, so he’s caught between a rock and a hard place. Do you reopen the casino now and hope the eateries will follow or do you start with the restaurants on the presumption that they can hang in there until the casino returns?
Although Straub has threatened to evict the old Revel restaurant and nightclub tenants, they appear to be bent on staying put and have Continue reading →
Continuing its thrust into North Las Vegas, a suddenly acquisitive Boyd Gaming has obtained Aliante Casino Hotel & Spa. Unlike its surprise, if still unconfirmed, swoop upon Cannery Casino Resorts, here Boyd is snapping up a property we knew was on the market. For $380 million, Boyd gets what it cost Station Casinos $662 million to build. (Station lost the property in a debt-for-equity swap.) Deutsche Bank analyst Carlo Santarelli writes that the deal “fills a geographic hole in the locals portfolio.” Boyd expects cost savings of $8 million right off the top by integrating stand-alone Aliante into a larger corporate whole. At its present rate of cash flow, Aliante will give Boyd a 4% return on investment, so Boyd better have a lot of B Connected members up in that neck of the woods, which is at far north end of development in the Las Vegas Valley. Indeed, by paying almost 13X cash flow for a locals casino (nearly twice the going rate), it could be argued that Boyd got taken to the cleaners, possibly motivated by the chance to taunt Station by obtaining one of its former trophy properties. Santarelli thinks Boyd could almost double Continue reading →
“As an institution built on the free discourse of sex, politics and culture, we have been following the question over [Donald] Trump’s endowment since Marco Rubio mocked Trump’s small hands back at the beginning of the year. Unlike other U.S. galleries, the EHM is not afraid to show work of a controversial nature … in fact we feel it is important to do so.” — Erotic Heritage Museum Executive Director Victoria Hartmann on the off-Strip museum’s agreement to display a controversial nude painting of Trump — a new, ‘only in Vegas’ experience. (NSFW)
Sleeping giant Boyd Gamingis stirring to life, reportedly on the verge of a $225 million-$240 million buyout of Cannery Casino Resorts, according to Reuters. The latter’s Mike Stone says the deal would “give Boyd a strong foothold in the fast-growing north area of the city, which is emerging as a hub for technology start-ups, attracting affluent professionals with money to gamble.” Although Boyd has land in the north part of the valley, a deal with Cannery would relieve it of the obligation to build up there … a far costlier proposition. The mooted deal is somewhat of a curate’s egg because Eastside Cannery is only a couple of blocks south of Sam’s Town, mainly separated by a KOA RV park. True, Boyd has three casinos in close proximity in downtown Las Vegas, but they’re all popular with the Hawaiian crowd. What Boyd intends to do with this apparent redundancy on the Boulder Strip remains to be seen.
Among the parties that would be taken out of the Vegas picture by a Boyd purchase are Continue reading →
Tilman Fertitta, move over. Derek Stevens is now downtown Las Vegas‘ biggest power player. Even though he has two operational casinos (The D and Golden Gate), plus one in mothballs (the Las Vegas Club), he’s expanded his acreage further by buying out three Granite Gaming Group properties, including Mermaids, as well as La Bayou and strip club Topless Girls of Glitter Gulch. So if you want to have a chocolate-dipped frozen banana, head on over to Mermaids before Stevens closes it (and the other two properties) on June 27. Displaced employees will get first crack at job openings at The D and Golden Gate. “While it will be sad to say goodbye to our family-run Fremont Street mainstays, it is an exciting time for Downtown Las Vegas as Derek Stevens continues to propel its evolution,” said Granite CEO Steve Burnstine, as well he might, seeing as the fate of the two little casinos in question is no longer his problem.
Frankly, I do not think they will reopen under Stevens’ auspices. They are small, tacky and would not be significant cash-flow contributors to Continue reading →
A TV ad campaign for Oregon state-sponsored VLTs has riled up the Coquille Indian Tribe, not least because it depicts the Lewis & Clark Expedition happening upon video gaming in wilderness that has been ethnically cleansed of Native Americans. Coquille Chairman Brenda Meade characterizes the ad’s vision of Oregon as “a land without Indians — an empty wilderness, ripe for economic exploitation, with no competition from indigenous people. The ads are supposed to be funny, but they drive home the reality that Oregon’s political leaders don’t want to share economic opportunity with Indian people.”
Is Sheldon Adelson the secret string-puller behind Kelden Engel‘s petition drive to have part of the Riviera preserved? John L. Smithhints at that in this morning’s edition of Adelson’s Las Vegas Review-Journal. “If he’s carrying the water for someone who might benefit from delaying the convention center expansion, well, let’s just say that will eventually come out,” writes Smith. And who might want to screw things up for the Las Vegas Convention & Visitors Authority, which has been a thorn in his side for years? Preserving one Riviera tower (To what end? And who’s paying for it?) would run a cart and horses through the grandiose expansion plans the LVCVA has drawn up for the site. Also, any delay in demolition potentially screws up the LVCVA’s intention to use the Riviera’s Strip front for surplus display space during shows like the Conexpo-Con/Agg convention. Adelson would shed no tears over that scenario.
And, by picking a freshman at Nevada State College to do his bidding, Adelson would theoretically have seemed to have woven an impenetrable veil. However, as crafty as Adelson has Continue reading →
Shoe mogul Paul Fireman‘s plan to build a $4.6 billion megaresort in Jersey Cityis losing the support of Mayor Steve Fulop (D). New Jersey State Building & ConstructionTrades Council President William T. Mullenwas sent into a howl of outrage, saying, “I am extremely disturbed by Mayor Fulop’s stated willingness to ‘kill’ the plan to expand the state’s casino industry to North Jersey if he decides he doesn’t want it located in Jersey City.” Mullen added that the cities of Elizabeth and Newark might want what Fulop doesn’t. But is Fireman’s plan contingent upon its being in Jersey City? As for Fulop, he has gubernatorial aspirations and may not want to piss off voters in southern New Jersey. “I’m not reluctant to say that sometimes I make a mistake and my position can change based on new information,” he said, by way of explanation. “I have faith that whatever Mayor Fulop decides will be best for our city,” added casino supporter Assemblyman Raj Mukherji (D).
We’re going to have to get used to calling Station Casinos by its new corporate moniker, Red Rock Resorts (ticker symbol RRR). Oh, the Station brand isn’t going anywhere: For consumer-oriented purposes, all the Stations and Wildfires and so on will retain their current names. But, as part of reverting to being publicly traded, Station is becoming Red Rock Resorts, like a big-ass version of its flagship property. The Fertitta Brothers, who paid themselves a tidy $460 million to be bought out of managing the company through a third-party entity, are launching an IPO that aims to raise $569 million. The public offering had been originally scheduled for January but the waters were deemed too choppy at the time and are smoother now. The proceeds of the IPO will be used to purchase Station Holdco LLC, yet another company that “develops, owns, operates, and manages hotel and casino properties” and happens to be run by Frank Fertitta III. So the Station shell game continues. Imagine what the company could do if it put its money toward long-in-abeyance Durango Station or other deferred projects (in Reno, for instance).
Local preservationist Kelden Engel is trying to fight the power. He’s seeking 51,000 qualified signatures in a petition drive to halt demolition of the Riviera, currently slated for June. Not only is he racing the clock, he may be fighting another adverse circumstance: Since the Las Vegas Convention & Visitors Authority owns the Riviera, there is some question as to whether Clark County would have the standing to intervene in the demolition, regardless of how many signatures Engel collects. In the meantime, the demolition contractor “will have to wrap the building in plastic and chisel away the finish and haul the debris away to prevent asbestos particles from becoming airborne during a planned implosion.” The Riviera, y’see, hails from that era when we thought asbestos was a good thing (sort of like methadone when it was introduced). Engel wants to preserve at least one of the Riviera towers, as a gesture acknowledging old Las Vegas, though I’m not sure it would serve any purpose. Besides, he’s left it a bit late. The Neon Museum has already removed Continue reading →
Taking a page from Kansas, lawmakers in Illinois are exploring the idea of a state-owned casino. A bill before the House Executive Committee would authorized a super-sized casino (up to 10,000 slots) in Chicago, with the proceeds dedicated to “public pensions, capital expenditures and education.” As in previous legislatures, Rep. Robert Rita (D, left) is the point man for the expansion of gambling. It may sound like a big idea but it’s nothing compared to a parallel bill in the state Senate that would authorize five additional casinos and add racinos (600 gaming positions if in Cook County, 450 elsewhere) to the state. Its chances in the House are deemed slim. One potentially affected property, Rivers Casino, isn’t taking this lying down — or at least its representatives in the state capital aren’t. State Rep. Marty Moylan (D) said he had “grave concerns” and any gaming expansion should be accompanied by a reduction in the amount of revenue-sharing that Rivers must do with poverty-stricken suburbs of Chicago. His concerns are echoed by civic leaders who say they were sold a bill of goods by the state, told that theirs would be the last casino license issued.
If there’s any consolation for Des Plaines, it comes from gaming lobbyist Malcolm Chester, who says Continue reading →
Carl Icahn is officially the owner of Trump Taj Mahal, having received the blessing of the New Jersey Casino Control Commission. The OK was given despite Icahn’s having reneged on his promise of a $100 million capex infusion into the failing property. New boss Anthony Rodio (right) likened it to his situation when he took over the Tropicana Atlantic City: “The place had just come out of bankruptcy, employee morale was horrible and the customer base was shrinking. All those things are happening now at the Taj Mahal.” Unfortunately for Rodio, Icahn will only give him $15 million to remediate the most egregious shortcomings of the property. These include leaks in the Chairman Tower (named after Donald Trump, not Mao Tse-Tung) and refurbishment of 150 rooms that are evidently in too much disrepair to be rented at present.
Yesterday morning, it looked like Baton Rouge casinos were going to have to brace themselves for a smoking ban. Today, they’re lighting up celebratory cigars in relief: While proponents of the smoking ban on the city council had six votes, the expected seventh, swing vote failed to materialize and the ban went down, 6-6. This is good news for area casino operators, Pinnacle Entertainment (whose L’Auberge Baton Rouge is pictured), Gaming & Leisure Properties Inc. and Tropicana Entertainment. Perhaps the city councilors were thinking about the fate of Harrah’s New Orleans, which has seen a 10% revenue decline since succumbing to a Big Easy smoking ban, while revenue at Boomtown New Orleans and Treasure Chest, in neighboring Jefferson Parish, is up 6% over the same time frame. “To be fair, Harrah’s New Orleans had been losing share and underperforming prior to the implementation of the smoking restriction as well,” writes Deutsche Bank analyst Carlo Santarelli. Still, it’s a rare victory for smokers, and for those who believe that smoking and gambling go hand in glove.
* Casinos in Reno dodged a $5 million bullet when the Washoe County Commission decided not to charge for back taxes which had been underestimated because Continue reading →