Monopoly over Miami

A recent visitor to Las Vegas from the Pacific Rim told me that Sheldon Adelson has worn out his welcome in Macao (which is on pace to eclipse all other gaming markets combined) and is fast doing so in Singapore. Judging by his bludgeoning efforts to commandeer the Miami casino market, it’s easy to see why. His lese-majesté behavior could very blow up in his face. What you might call Sheldon’s “charmless offensive” has already failed to some extent. Two mayors he personally lobbied, Miami-Dade‘s Carlos Gimenez and Miami’s Tomas Regalado , have stated their preference for Genting Berhad‘s rival proposal.

In what sounds like a hastily hatched scheme, Adelson minion Andy Abboud is trying to pull together a land deal that would rival Resorts Worldsnearby beachhead. There’s no design, just a vaguely described concept “comparable to Genting,” according to one participant. Neither Adelson nor Abboud has signed on the dotted line just yet, unlike Genting, which plunked down $236 million for its site. (It shouldn’t take Genting long to amortize that with proceeds from its Resorts World New York casino, which already has the bluenoses getting sniffy.)

Instead, Adelson is threatening to take his ball and go home unless he is granted an outright monopoly on Miami. Economically speaking, he says, the town’s not big enough for him and Genting both. When it comes to gauging the potential impact of Las Vegas-sized casinos, the Lege has to go by what Adelson says, his organ grinder’s monkey (Gov. Rick Scott) having nixed an independent study of the matter. Even so, state Senate President Mike Haridopolos (R, below) is fast-tracking the enabling legislation. “Anyone who knows Florida well, travels around Florida, recognizes we are a gambling state,” he told the Miami Herald.

Working against Adelson are several factors, starting with his refusal to invest one thin dime unless and until gambling expansion is legalized. Not only does Genting already have money on the table, Caesars Entertainment covets Gulfstream Park, just up the road. If at least two operators are willing to plow large amounts of development dollars into the Miami market, why should lawmakers gift-wrap it for just one? Genting argues that multiple casinos act as a ‘force-multiplier,’ a contention that has a hefty amount of history on its side. The company is certainly guilty of having been cozy with Stanley Ho, among other Asian misdemeanors, but Sands China has run into a thicket of image problems lately, too. Of course there are those who insist that any expansion of casino gambling will simply dilute the existing revenue base, not expand it. Individual counties are already having to corral the stampede of de facto Internet casinos that wriggled through a loophole in state law.

But if Caesars — or the peripatetic Steve Wynn — wants to get into the Sunshine State, it’s going to cost them some serious coin, since legislators want to see at least $2.5 billion invested per resort. The bill drafted by two Republican solons is admirable in its plausibility. In addition to establishing state-level regulation (something that should have been done long ago), it aims to put $7.5 billion worth of casino-based resorts in those parts of Florida where casino gambling is already legal. The cherry on the sundae is a friendly 10%-20% tax rate. That last bit will stick in the craw of existing racinos, who pay 35% currently, down from Jeb Bush‘s usurious 50% … and would probably have to be granted further tax relief for the bill to pass.

Mixed message. Adelson’s increasingly thuggish stance toward Florida’s democratic process is rather puzzling in light of some recent remarks he made on Wall Street. On Sept. 21, stock analysts gathered for a little ‘Bedtime with Uncle Sheldon’ session. J.P. Morgan‘s Joe Greff reported that Sands execs deemed expansion in Massachusetts “unlikely” — and Florida “even less likely.” The reason? The company requires a bare-minimum cash flow of $250 million/year from stateside projects (Sands Bethlehem is doing far less than that at present) to justify the investment. “As for domestic expansion, we were surprised by management’s luke-warm tone regarding a potential [Massachusetts] project,” wrote a stunned-sounding Carlo Santarelli.

With regard to Florida, Sands’ downbeat tone certainly makes you wonder about the validity (or sincerity) of the economic projections Sheldon has brandished when making its case down South. Not to put too fine a point on it, $250 million would represent an 8% ROI for the $3 billion resort Adelson claims he would build. His all-or-nothing brinkmanship, coupled with the Sept. 21 remarks, strongly suggests financial prospects in the Sunshine State aren’t nearly as roseate as Sands would have you believe.

Chicken Lady in another flap. That rinky-dink Laughlin casino owned by Paul & Sue Lowden never makes headlines in a good way. It sounds like some of the employees have been exposed to too many of Mrs. Lowden’s stump speeches.

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