Stale thinking in Atlantic City; Big trouble in little Macao

New Jersey lawmakers, evidently oblivious to the recent spate of casino closings, have decided that what Atlantic City needs is more and smaller casinos, even though the pitfalls of a casino-based economy have been amply demonstrated. They’re dusting off 2011’s dud “boutique casino” law, which found no takers — unless you count a scrapped Hard Rock International plan — and are removing some of the disincentives. No longer will small casinos have to be built from the ground up. Instead, existing buildings can be repurposed. Also, the 200-room hotel requirement will be sufficient … no longer will operators be obligated to eventually upsize to 500 rooms.

“This bill addresses a small-scale casino license, but it can help, so we should get it done. Allowing renovated buildings to be used for a smaller, boutique casino just makes good sense economically,” said state Senate President Stephen Sweeney (R), whose plan addresses neither Atlantic City’s declining gambling revenue nor his own pronouncement that a Meadowlands casino (0r something comparable) is inevitable. For that matter, it’s not clear how these mini-casinos would fit into the fixed-payment economic scheme outlined by Sweeney and Gov. Chris Christie (R). Just when you think Garden State solons have it together, they come in from left field with something like this.

Meanwhile, the mothballed monolith Revel is still giving fitful spasms of life. The casino’s misery-afflicted owners aren’t entirely clear of a $110 million purchase agreement, even though Brookfield U.S. Holdings missed a Nov. 28 closing date and announced its intention to walk away from the deal. Revel wants the bankruptcy court to schedule an emergency hearing so it can get on with re-selling the behemoth to the eccentric Glenn Straub. The latter is a font of optimism. “We will make the place successful, mark my words,” he announced — and at a $95 million purchase he really ought to be able to do so … if he goes through with it.

Quote of the Day: “With truly significant contributors like that, who needs enemies?’’ — No Casinos Inc. President John Sowinski on the accelerating transfer of Atlantic City’s tax burden from casinos to residents. At least the city has been able to sell bonds that will enable it to make whole casinos whose property taxes were overvalued.

* “We’re getting to understand the junkets and how the VIP rooms operate. We haven’t decided whether that’s offensive to the way we operate,” says Nevada Gaming Control Board Chairman A.G. Burnett. Since Las Vegas casino operators have been in operating in Macao for over a decade, Burnett’s a little late to the party. One junketeer in particular, Cheung Chi Tai, figures in a Sino-American crackdown. Hong Kong police have frozen his assets and Neptune Guangdong Group, in which he has been a shareholder, is distancing itself from Cheung, who appears to have gone to ground. He’s a particularly unsavory figure and the potential that he’s gotten his claws into the Las Vegas market should be cause for concern.

As gaming law expert I. Nelson Rose told Reuters, Nevada oversight is becoming less, not more stringent: “To some extent the Nevada regulators are just crossing their fingers.” Or as former NGCB investigator Patrick Wynn put it, “Nevada’s approach has really been very business-friendly. They’ve always looked toward what can it do for the state, what can it do for the economy.” Agents for junket operators, who are required to supply little background information to Nevada regulators, are feared to be front men for triads. Neptune has been most successful at penetrating the safeguards.

Increased governmental scrutiny in China has not only driven down play in Macao, it’s being felt in Las Vegas, too. “”We see no near-term respite for weak on-the-ground conditions in Macau … funding/liquidity remains very tight, and the business model looks near broken,” wrote Standard Chartered analyst Philip Tulk. “It’s like having your dad visit your frat house,” Linette Lopez wrote of President Li Jinping‘s forthcoming visit to Macao, which is being taken as a sign that the crackdown on triad activity and other forms of corruption is here to stay. One hates to say that the Chinese have a better handle on this than Nevada does, but that appears to be the case.