Revel: Slow learning curve ahead; Sheldon spanked in Singapore

By David McKee ~ January 8th, 2013 @ 12:30 pm

By the time Revel CEO Kevin DeSanctis realizes he’s made a mistake, he’s almost always past the point of no return. Although it is my deeply rooted opinion that smoking is a noxious, disgusting habit that invades other people’s space, banning it has been demonstrated to cause a 15% or greater decrease in the revenues of those casinos that did so. Yet, while Revel is stuck toward the bottom of the Atlantic City market, DeSanctis continues to insist that “too early” to know if his no-smoking policy has hurt Revel revenues. Wake up and smell the nicotine, Kevin. Delaware’s racinos don’t permit smoking and they’re paying quite a price … Actually, there are hints that Revel may be having second thoughts about this whole smoke-free thing, which makes it unique (read: uniquely disadvantaged) among Atlantic City casinos. A mysterious new slot lounge may be intended as a smokers’ haven. Why else would you need a discrete slot lounge, other than for high-end play? Right now, Revel needs plain old play, never mind from which end it comes. So, as the Jersey shore claws its way back from Hurricane Sandy and while the Boardwalk recalibrates toward business and hiring plans that go from year to year, not season to season, problems of such a nature are a luxury at Kevin’s Krib.

Keeping in mind the agenda of Unite-Here, it’s done some number-crunching on Revel and predicts it will celebrate its first anniversary with $1.6 billion in debt, which would require $175 million a year in cash flow just to cover interest payments. And to get to that, the union predicts, revenues would have to hit $28 million-$33 million/month. Revel’s hardly been within shouting distance of that level of performance and would have to climb over damn near every casino on the Boardwalk to reach it. “[S]triking an optimistic note Revel executives said they anticipated the business would eventually generate as much income as the Borgata Hotel Casino & Spa which has generated around $558 million in revenue” as of Dec. 17. That’s mighty big talk when you’re in 11th place.

Mind you, the union prexy Robert McDevitt (right) has had a one-point agenda on this issue: Kill Revel at all costs, consequences be damned. He was bent on that course back when the casino was but a gleam in Morgan Stanley‘s eye. Now he wants the banks to cut off life support to the mega-patient. Fortunately for Revel, bankers are turning a deaf ear to McDevitt’s warnings, although Revel has been drawing down upon its loans at a mighty clip. At least a strong New Year’s weekend and a new marketing push from CMO Darlene Monzo are starting Revel’s 2013 in the right direction.

When in Singapore, you’d better behave. Both Resorts World Sentosa and Marina Bay Sands have run afoul of the government for lax enforcement of local casino-admittance rules. You bet they’re going to shape up now: Fines for infractions could increase super-exponentially, from $813,000 apiece to $163 million. Sheldon Adelson has another two years to recoup his $7.5 billion investment — and he well may — because if public backlash continues, he could lose his license in January 2015. Ditto Sentosa owner Genting. Gambling revenue along the Johore Strait has cooled … but it’s still the hottest in the world. Adelson loves to warble the praises of authoritarian societies, servility that they tend to reward with a rude kick in the tuchus.

When I see a headline like this, I know deep in my osteoporotic bones that more casinos and higher gaming taxes are on their way. Maine Gov. Paul LePage (R) may not be the sharpest knife in the drawer but he’s surely smart enough to realize that gambling is the one industry you can tax through those and nobody will squawk. Not even the casinos. (Remember, Penn National Gaming and Cordish Gaming were willing to pay 67% of gross revenues to get into Maryland.) State governments have a nasty habit of regarding casino revenue as “free money” and new-ish Oxford Casino is going like gangbusters. Penn, which opposed the Oxford casino, isn’t exactly hurting at Hollywood Casino Bangor either. With LePage threatening to throw Maine into economic paralysis, exacerbating an already-bad situation, somebody’s going to figure, “Hmmmm … more casinos + more revenue + more tourism = painless solution.” Count on it.

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