Penn and Pennsylvania; Trop’s big screwup; Louisiana’s big month

A racetrack isn’t something you just pick up and relocate. However, Penn National Gaming has been given the go-ahead by the State of Ohio to “move” its Beulah Park and Raceway Park to, respectively, Youngstown and Dayton. They are presently in the Columbus and Toledo areas but, Penn having persuaded Ohio voters to create 50-mile exclusion zones around those cities, is legally prohibited from competing with its own casinos. At least this morning’s accord gives Penn something to do while the courts ponder whether to permit VLTs in the Buckeye State. Or Penn could sit tight until VLT legality is adjudicated, although that means Beulah and Raceway Parks wouldn’t open in their new localities until early 2015 or thereabouts.

Despite $75 million relocation fees, a requirement to build at least $200 million worth of racino apiece (putting Penn on the hook for $550 million — in addition to $720 million in current casino-construction costs) and a stiff 33.5% tax rate, the company still expects a handsome return on investment. It’s projecting 15%-20% ROI in Youngstown and Dayton, a figure J.P. Morgan analysts considerable achievable. Penn obviously perceives great, untapped money to be had in Ohio, considering the $1.3 billion bet it’s placed on the state.

Foxwoods Resort Casino and its troubles were the focus of a remarkably comprehensive New York Times story, placing Foxwoods’ woes in a national context. It’s the most spectacular of several instances of tribal casinos that are teetering on the brink of default. Foxwoods CEO Scott “Woody” Butera‘s job, by his own description, is to convince lenders that five cents on the dollar is a heckuva deal. Even more, he’s taking on the task of reworking a dysfunctional megaresort. He’s also fielding brickbats brought on by his indifference or hostility toward employee-shuttle services (even at the risk of maxing out Foxwoods’ parking capacity). If he wants to save a few million, perhaps Butera ought to start by whittling executive perks — or hold off on that “new branding campaign” — and work his way downwards. (“We’ve got to find ways to save money. I know! Let’s hire some expensive marketing consultants. Problem solved!“) Capex expenditures, such as an outlet mall and a service station, look like strategically canny and undoubtedly necessary moves, however.

But Butera looks like the Lone Ranger compared to his successor as CEO of Tropicana Entertainment. One of the first big risks taken by Anthony Rodio (right) could also be his last. He’s ultimately responsible for letting one Don Johnson clobber the Tropicana Atlantic City in a $5.8 million beatdown. Quoth the NYT: “He apparently was allowed to bet relatively small amounts when the deck was not in his favor, and up to $100,000 on a single hand when it was. (Also, under typical casino rules, if a blackjack player is dealt two aces, he can split those aces and play two hands, but if he gets another on the next deal, he can’t split again. Johnson was allowed to split aces a third and even a fourth time.)” On top of this, Rodio seems to be trying to provoke a strike by Unite-Here, continuing the confrontational practices of Columbia Sussex hack Mark Giannantonio. If the Trop gets picketed, Johnson’s big blackjack blowout will seem like a minor financial setback.

Although the Trop’s carelessness turned a mediocre month in Atlantic City into a bad one, the Boardwalk appears resilient when one examines the latest jump in casino revenues in Pennsylvania. Keystone State casinos were up 13%, driven by a 30% zoom in table-game winnings. Only Harrah’s Chester Downs (right, -3%) had a down month on weak slot win. Much of that business appears to have been cannibalized by SugarHouse (+40%), which now has 10% of the state’s market share, compared to Harrah’s 11%. Neil Bluhm has run right up Gary Loveman‘s back and, at the current pace, will shortly be tap dancing on his head. At +12% for the month, state leader Parx Casino isn’t exactly hurting, either.

The second-biggest percentage gainer (28%) was Sands Bethlehem, riding a tidal wave of table play (up 63%). Atop a $36 million gross, it’s hard to believe this same property was once eking out $20 million/month and failing to make ends meet. Penn’s Hollywood Casino (+7%) looks as though it will miss analyst estimates for table play but heavy slot winnings will more than compensate. Despit a much smaller volume of winnings, The Meadows racino (above) posted the flashy stat of the month, its table revenue up 165%.

Bitter pill. Hard upon the news that Dan Lee was cashing out of the Lake Charles market come robust numbers from Louisiana: up 9% in February, for a $217 million gross, the Pelican State’s second-highest in the last 14 months (and largest percentage gain, too). Only Pinnacle Entertainment‘s Boomtown New Orleans riverboat had a bad time of it, down 5%. After taking the top spot in the state in January, Lake Charles ($58 million gross) surrendered primacy to Shreveport ($68 million, +12%).

The discontinuation of operations at Isle of Capri Casinos‘ Grand Palais riverboat meant an aberrant 635% revenue increase at its larger, Isle-owned slip mate. (The Grand Palais license has been sold to Shreveport developers.) With a $31 million gross, L’Auberge du Lac outdraws all its Lake Charles competitors combined, while Caesars Entertainment had a bonny month in Bossier City, raking in a market-best $21 million and 21% increase. (How’s that for symmetry?) Boyd Gaming‘s aggregate gross was up 13%, comfortably beating Wall Street‘s expectations. Caesars properties rose a comfortable 10% (doubly impressive given that Caesars grossed the most statewide — $57 million — beating Pinnacle by $6 million), although Isle gets the most-improved nod for posting 13% improvement last month and 8% growth for early 2012.