Station vs. Dotty’s: He said, he said; A perfect confluence in Vegas

So, did Station Casinos bid for its gadfly, the Dotty’s chain of slot parlors or didn’t it? Dotty’s owner Craig Estey is alleging a Feb. 5, 2013 meeting at which Station made a play for the dozens of demi-casinos which it has long held are illegal under Nevada law. Station CFO Marc Falcone allegedly offered 7X cash flow for the little grind joints, whose storefront-business model has been the bane of Station’s existence. But, conceding that “preliminary business meetings” had been held with Dotty’s, Station President Steve Cavallaro has denied that any “formal” offer was made. He also says no extensive examination of Dotty’s documents was conducted. He does confirm that Falcone returned from a meeting with Estey, bearing the industry-standard 7X EBITDA number and Cavarallo rejected it as to high.

The important words here seem to be “formal” and “extensive.” Cavallaro has a fiduciary duty to look at anything that might improve the value of Station. Scarfing up the extensive Dotty’s chain would capture a lot of casual-player revenue, so it wouldn’t surprise me if Station didn’t discuss such an acquisition, at least in theoretical terms. As the Las Vegs Review-Journal‘s Steve Sebelius writes, “Even so, a Station-owned Dotty’s chain would seemingly still represent everything Station currently abjures: Ubiquitous, less costly slot outlets that ostensibly take business from larger, more expensive casinos.”

A perfect confluence of events drove Vegas to a potent first quarter. It probably goes without saying that severe weather to north, where customers were socked in by the polar vortex, drove a fair amount of traffic. However, the Las Vegas area also enjoyed a bumper crop of conventions, including the biggest of the bunch: triennial ConExpo-Con/Agg. Those who were here for tourism had not only to check out the Linq (a smaller, less-crowded and more-charming offshoot of the Strip) but the Vegas High Roller, which is exceeding ridership expectations. Throw in three basketball tournaments, the Super Bowl and Chinese New Year and 2014 is off to one of the strongest starts in Vegas history. Especially impressive was Vegas’ top ranking for occupancy in the U.S., considering the enormous number of hotel rooms Sin City has to fill.

Affinity Gaming isn’t well-named. It seems mainly to have an affinity for screwups. Its credit- and debit-card processing system was cracked again. Affinity is saying no customer information was stolen but that was was the Venetian‘s original story, too, when it was hacked and they had to walk it back several times. A previous breach went undetected for seven months. No word on how bad it was this time. Having been skunked by an adversary, Affinity could only say, “We also will continue to evolve and enhance our system security, in response to new and emerging threats.” Isn’t it a bit late for that?