DailyFinance.comhttp://www.dailyfinance.comDailyFinance.com%http://www.blogsmithmedia.com/BlogURL%/media/feedlogo.gifDailyFinance.comhttp://www.dailyfinance.comen-usCopyright 2012 Weblogs, Inc. The contents of this feed are available for non-commercial use only.Blogsmith http://www.blogsmith.com/Harry Reid Goes All In for Online Pokerhttp://www.dailyfinance.com/2010/12/09/harry-reid-goes-all-in-with-online-poker/http://www.dailyfinance.com/2010/12/09/harry-reid-goes-all-in-with-online-poker/http://www.dailyfinance.com/2010/12/09/harry-reid-goes-all-in-with-online-poker/#commentsFiled under: ,

Four years ago, playing online poker was a gray-area activity, without legislation. Then, just as Congress was about to close out its 2006 lame-duck session the SAFE Port Act, designed to protect American ports from terrorists, gained approval -- with the Unlawful Internet Gambling Enforcement Act (or UIGEA) grafted onto it.

The UIGEA forbade transferring funds from financial institutions to Internet gambling sites, using the dubious rationale that terrorists could exploit those sites to launder money. The law's passage caused one online poker entity to cease doing business with American players, making it arduous for new players to deposit money into sites that still wanted them.

It also cast a pall over the enterprise of online poker -- though you'd never know it from the commercials and leased-time TV shows that, on any given night of the week, hype websites like PokerStars and FullTilt.

Gambling on the Lame-Duck Session

Considering the UIEGA's genesis, it's fitting that the salvation of online poker may come on the back of another piece of congressional legislation: the recently announced tax-cut package, being presented at this month's lame-duck session. Nevada Senator Harry Reed (D) is attempting to introduce legislation that calls for online poker's regulation and taxation.

"We always anticipated that there would be an opportunity to push a proposal through at the lame duck," says John Pappas, executive director of The Poker Players Alliance, a Washington, D.C.-based lobbying organization. "With the government needing money, we think there is a real opportunity here. The effort will be to get the bill through and signed into law."

Sponsored Links
But that may be easier said than done. Republican opponents of the bill are rallying hard against it. Senator Jon Kyl of Arizona told Politico that there is "zero chance -- no chance whatsoever that would be part of the tax deal." At least one congressional aide has taken to calling Harry Reid "Harrah" Reid, playing off the name of a casino that stands to gain greatly if Reid's proposal gets made into law. Harrah's, after all, owns the World Series of Poker franchise -- and management is champing at the bit to introduce an American online poker site connected with the most famous poker tournament in the world.

A leaked draft of Reid's proposal reveals a plan to have licensees pay a 20% tax on all deposits, and it calls for a 15-month online poker hiatus -- during which ongoing poker sites in the U.S. will temporarily stop operating here (in order to create a level playing field between new sites and existing ones). It would also have an initial two-year period during which gaming-machine manufacturers, as well as casino and race-track operators, would be the only entities licensed.

A Market Twice Today's Size

Unbothered by the moral qualms that Kyl and other online poker opponents like to raise, Pappas of the Poker Players Alliance envisions a bullish market if Reid's bill manages to pass. "We think online poker could go to twice the size that it is today," he enthuses. "Right now there are 10 million Americans with accounts, and we can see it going up to 20 million."

With all those poker neophytes expected online, veteran players must be viewing Reid as their unlikely ace in the hole.

Permalink | Email this | Comments

]]>ace in the holecardcard gamecard gamescardscasinoCasinoEarningsfive-card studfulltiltFullTiltPokergamingharrahsharrahs entertainmentHarrahsEntertainmentharry reidlas vegasonlineonline pokeronline poker banonline poker roomonline poker sitesonline poker tournamentonline pokerl tournament thoughtspokerpoker tournamentpoker tournamentspokerstarsworld series of pokerMichael KaplanThu, 09 Dec 2010 10:00:00 ESTGetting Welfare Payments in Casinos: Gambling With Government Money?http://www.dailyfinance.com/2010/08/26/welfare-casinos-gambling-government-money/http://www.dailyfinance.com/2010/08/26/welfare-casinos-gambling-government-money/http://www.dailyfinance.com/2010/08/26/welfare-casinos-gambling-government-money/#commentsFiled under:

gamblingIn California and Michigan, welfare recipients have been using their Electronic Benefit Transfer cards to withdraw state-funded payments from ATM machines in casinos. The degree to which the casinos benefited from this is not known, but politicians in both states have called for the machines to be programmed so as not to accept the ATM-like EBT cards.

"You may say that someone can go to the corner store, use the ATM machine there, withdraw funds, and then go to the casino," acknowledges Michigan Senator Bill Hardiman (R-Kentwood), who introduced a bill that would stop casino ATMs in his state from processing welfare payments. "But my feeling is that we shouldn't make it easy for people [to gamble] if they have gambling issues."

"Disgraceful"

In California, where, according to The Los Angeles Times, 79 out of 148 tribal casinos and state-licensed poker rooms have welfare-friendly ATM machines on the premises, it's particularly easy.

"What these people are doing inside casinos in the first place is a good question," says the State Assembly's Republican Leader, Martin Garrick (R-Solana Beach). Stating that $1.8 million in state welfare revenues were withdrawn from ATMs in gambling establishments over an eight-month period, Garrick adds, "It's disgraceful and needs to cease immediately."

While it's unclear whether the casinos were merely laissez faire about the welfare-dispensing ATMs or actually complicit in the machines being there, this is a softball issue that any politician will find easy to take a stand on. California Governor Arnold Schwarzenegger released an executive order forbidding welfare recipients from using their EBT cards at casino ATMs.

Casinos' Payday Lures

Nevertheless, there's at least one person who disagrees. According to the Detroit Free Press, Maureen Taylor, state organizer of the Michigan Welfare Rights Organization advocacy group, feels that Hardiman's bill singles out welfare recipients unfairly. "This is a way to corral low-income welfare recipients, put a red mark on their face and say, 'You're not welcome,'" she told the paper.

Maybe Taylor should move to Las Vegas. No word on whether or not welfare recipients are collecting their government dollars in casinos there, but plenty of working-class folk cash paychecks, without charge, in casinos every week. Places including Palms, Hard Rock, and Green Valley Ranch lure in workers on payday by offering free drinks, T-shirts, or gratis play for anyone who cashes a paycheck at the cage.

"It's brilliant from both sides," says Anthony Curtis, publisher of Las Vegas Advisor and a frequent casino casher. "You get a free drink in exchange for going in there to cash your check. And the casino gets you in when you feel flush and have money to wager. Of course, though, the best thing to do is go in, get your money, have your drink, and hit the road. That's basic strategy."

States Banking Gamblers?

What does Curtis think of welfare-dispensing ATMs near the blackjack pit? "The welfare thing is going too far," he admits. "That's just wrong."

There is, however, a potential bright side: What if some of the welfare recipients gambled with their money and won? "If they won, then the state banked them," says Garrick, agreeing that lucky welfare recipients might owe 50% cuts to their local governments.

Permalink | Email this | Comments

]]>ATMcasinoscheck cashingebtelectronic benefits transfer cardgamblingLas VegasPaydaywelfarewelfare recipientsMichael KaplanThu, 26 Aug 2010 11:40:00 ESTSun and Profit: Las Vegas Wins Big With Hard-Partying Pool Clubshttp://www.dailyfinance.com/2010/08/18/las-vegas-pool-clubs-party-profit/http://www.dailyfinance.com/2010/08/18/las-vegas-pool-clubs-party-profit/http://www.dailyfinance.com/2010/08/18/las-vegas-pool-clubs-party-profit/#commentsFiled under: , ,

Pool clubs have become ubiquitous in Las Vegas. Boasting dance-floor-packing DJs, state-of-the-art sound systems and islands adorned with stripper poles, they're the daytime versions of Sin City's famously profitable nightclubs, and these new-style operations are transforming money-losing swimming pools into profit centers.

"Right now, the pool club is incorporated in the entire hotel product," says Joseph Magliarditi, CEO of the Hard Rock Hotel & Casino. After somebody makes a decision to go to the Hard Rock's pool club, he says, "they can also make a decision to eat at our steak house, Rare 120°, dance at our nightclub, Vanity, and gamble in our casino. Then maybe they decide to stay the night."

And with admission fees in the $40 range, cabanas coming with food-and-drink minimums that run to thousands of dollars per afternoon, and bottles of Grey Goose vodka going for $400 apiece, there's clear motivation to increase the allure of pool clubs: direct profit.

At the Hard Rock, a Sunday bacchanal known as Rehab attracts the hard-bodied, hard-partying set. Over at the Mirage, Bare makes a name for itself by encouraging women to doff their tops and sunbathe European-style. Steve Wynn's newly opened Encore Beach Club strives to bring a St. Tropez vibe to the Vegas Strip. And at HRH, the Hard Rock's recently launched luxury tower, management introduced SKYBAR, which scales down the swimming pool mega-club and reinvents it as an exclusive ultra-lounge, complete with a glass-walled pool and platters of sushi.

"The conservative number, revenue wise, is that a pool can generate $1 million per week," says Magliarditi. "And that mostly happens over the course of a weekend. Right now, the challenge is to get people in for more days."

Bringing Nightclubs Into the Sun

The enormous Encore Beach Club -- more than 60,000-square-feet and reportedly built at a cost of $70 million -- is attempting to answer that challenge by contracting marquee-name DJs such as Kaskade and outfitting bungalows with unique amenities: personal swimming pools, private showers and balconies that overlook the Las Vegas Strip. It all conspires to bring customers to the middle of the desert during the dog days of August. And if you get tired of sipping expensive cocktails or ogling bronzed flesh, there's an open-air pavilion where you can play blackjack and craps.

"Running a beach club is similar to running a nightclub," says the Beach Club's execuitve director of marketing, Jonathan Shecter, who, not coincidentally, comes directly from the nightclub business. After ticking off Lennox Lewis, the Kardashian sisters, Paris Hilton, and Leonardo DiCaprio as a few of his more well-known guests, he adds, "This creates a whole new day-part where thousands of people show up [during a traditionally slow time of year]." Shecter says the Beach Club has driven as many as 1,000 room bookings on a single weekend. "From a business perspective, having a beach club is one of the best things you can do."

Indeed, it takes an activity that hotel guests used to enjoy for free -- hanging out at the pool -- and turns it into something that they feel compelled to pay for. While most hotel-casinos are maintaining their gratis pools for guests, in the shadow of the flamboyant pay-to-play pool parties, the free pools don't feel like much of a celebration. The Las Vegas Review Journal reports that 4,000 bottles of vodka and 2,000 bottles of champagne were ordered when Encore Beach Club opened its doors on Memorial Day Weekend. During a recent Sunday-afternoon visit to the Encore's guest pool in Vegas, things felt considerably tamped down. It was the dowdy equivalent of sipping Diet Pepsi in coach-class while you know that fine wine is flowing in the front of the plane. For a starting price of $40, however, you get an instant upgrade.

David Schwartz, director of the Center for Gaming Research at University of Nevada, Las Vegas, points out that using pools to augment casinos is a venerable gambit. "Back in 1941, the El Rancho had its pool right in front of the casino," he says. "The idea was that people would drive into town from the dusty desert, see the pool, and realize that they need to stay there rather than going downtown where most of the gambling places were. Now, of course, it's about being able to sell more Red Bull and Grey Goose by dressing up the experience and making it cool."

Permalink | Email this | Comments

]]>casinosEncore Beach ClubHard Rock Hotel CasinoKardashianlas vegas pool clubslas vegas poolsLas Vegas Striplas vegas toplessMirage Bareparis hiltonprofitswimmingMichael KaplanWed, 18 Aug 2010 15:22:00 ESTPoker Champs Play the Sponsorship Gamehttp://www.dailyfinance.com/2010/07/24/world-series-poker-tournament-sponsorships/http://www.dailyfinance.com/2010/07/24/world-series-poker-tournament-sponsorships/http://www.dailyfinance.com/2010/07/24/world-series-poker-tournament-sponsorships/#commentsFiled under: ,

The World Series of Poker in Las Vegas this year wasn't just about the game; it was also about lucrative sponsorships. While covering this year's World Series of Poker main event, a 7,319-player tournament with a first prize of $8,944,138, I spotted the rather anonymous pro Steve McLaughlin. He was seated next to Johnny "The Orient Express" Chan, a 10-time WSOP champion who is widely regarded as one of the best players in the game. Additionally, Chan achieved nonpoker fame with a flashy cameo in the movie Rounders.

Ordinarily, Chan is an undesirable guy to play into. But McLaughlin didn't mind at all. He patted the lapel of his sport jacket, upon which was affixed a patch with the logo for the online poker site PokerStars. Chan gets a lot of TV exposure when ESPN tapes this tournament and, inadvertently, so does the player next to him. To leach off of The Orient Express's fame, PokerStars offered McLaughlin an entry-level one-day sponsorship deal. "Johnny did me a big favor," says McLaughlin. "[PokerStars] gave me $5,000 and slapped a logo on me."

When you see players sporting logos for online poker sites, you can rest assured that they're not doing it for free. And while $5,000 is nothing to sneeze at, it's a pittance compared to many of the other sponsorship deals that get thrown around at the main event, which takes place each July inside the Rio Las Vegas Hotel & Casino, owned by Harrah's Entertainment.

Become one of the so-called November Nine -- the tournament's final table of players, who compete in November, after a publicity-generating hiatus -- and you're likely to receive a sponsorship bonus worth $250,000. Win the main event and you can expect upwards of $1 million, plus a major sponsorship deal that, according to an insider, "puts you into a position to play poker for the rest of your life as a sponsored player." This means that you can make a handsome living as a poker pro without needing to win a whole lot of money playing poker.

Betting on the Gamblers

The high stakes, both for the players and the sponsors, has made the sponsorship process anything but lighthearted. "World War III" is the term that one poker agent uses to describe the battle to wrangle and sign players during the 2010 Series. Indeed, by the time the field had been distilled down to 42 players, 40 of them had already been scooped up for sponsorship deals and two were still holding out for more money. (One wound up going with PokerStars and the other went with FullTiltPoker.)

Why are the sites so eager to make these high-rent deals? "If one of our players gets to the final table, it generates a ton of business for us," says Paul Leggett, CEO of UB.com (aka UltimateBet), which is the third-largest site that accepts buy-ins from American players. "We get multiple weeks of exposure and hype from July until November [when the final table gets played and a winner emerges]."

This year, one of the UB-sponsored players made it to No. 12 before getting eliminated. Right now, none of the final table contenders are wearing UB's logo, but sponsorship situations can change quickly. Leggett learned that lesson last year, when UB scored a deal with Joe Cada -- who famously went on to win the main event -- before he'd made the November Nine, only to lose him to PokerStars by the time he played at the final table. "He left us because PokerStars outbid us," says Leggett. "PokerStars picked up Joe with an extraordinary contract, in excess of $1 million and probably multiple millions of dollars over some years."

Though this clearly sounds like a lot of money to pay a formerly unknown 21-year-old kid who happens to have gotten good at poker, when you pencil out the numbers, generous sponsorship deals make some sense. "You have 2.4 million people watching the final table, and all of them want to be the guy who wins it," says a poker agent who asks to remain anonymous but estimates that each conversion to a site is worth an average of $300. "They want to know where to go to be this guy. And the message is clear: Go to the logo that this guy is wearing."

Permalink | Email this | Comments

]]>FullTiltPokergamblingJohnny chanLas Vegasmain eventmarketingnovember nineorient expresspokerpoker tournamentpokerstarssponsorshipsportssteve mclaughlinub.comUbisoftultimate betworld series of pokerwsopMichael KaplanSat, 24 Jul 2010 11:00:00 ESTCantor Fitzgerald: The First Wall Street Firm to Become a Bookie in Vegashttp://www.dailyfinance.com/2010/06/30/cantor-fitzgerald-the-first-wall-street-firm-to-become-a-bookie/http://www.dailyfinance.com/2010/06/30/cantor-fitzgerald-the-first-wall-street-firm-to-become-a-bookie/http://www.dailyfinance.com/2010/06/30/cantor-fitzgerald-the-first-wall-street-firm-to-become-a-bookie/#commentsProfessional gamblers often make the assertion that what they do correlates well with a career on Wall Street. Just like traders, successful sports bettors look for weaknesses in the market, they strive to know things that their opponents don't, and they frequently use technology to predict trends. But their prowess has never been tested in the same way that Wall Street's traders have been tested -- until now. Cantor Gaming, a division of bond trading specialist Cantor Fitzgerald, is the first Wall Street firm to become a bookie in Vegas.

Cantor is taking bets and setting odds for the newly opened M Resort Spa & Casino. But instead of simply handicapping games and accepting wagers, the tech-savvy braintrust at Cantor has turned betting into something more akin to trading. Gamblers inside the M Resort sit behind double-screen terminals or work from handheld devices called eDecks and, unlike in most other casinos, laptop computers are welcome.

More Bets (and More Commissions) Per Game

Another anomaly Cantor has instituted is a form of sports betting known as in-running. Typically, in Las Vegas casinos, gamblers can only bet on a game before it starts and make a handful of so-called proposition bets (say, betting on who'll be ahead at the end of the first half). With in-running, gamblers can bet on the game even during play, accepting ever-changing point-spreads and odds. They can invest money on a Knicks foul shot going through the hoop or a Dodger getting to first base -- contending with ever-evolving odds.

More critically, bettors can create hedges while jumping in and out of positions. But instead of buying into the fast-breaking moves of Microsoft, they're betting on the Mariners' impending fortunes.

This form of wagering is new to Las Vegas but old-hat in other markets. "The idea evolved over the last 10 years," says Andrew Garrood, who helped create the program at M Resort and serves as executive director of Las Vegas Sports Consultants, the sports-handicapping service owned by Cantor. "We started in-running wagering in 2001. We did it as a bookmaker [in England] and we were principal to all the action. We built models and figured we could bring it to Nevada."

Because in-running provides opportunities for gamblers to make more bets per game than they can with traditional wagering, Cantor stands to generate more "vigorish," which is casino-lingo for the 10% commission that bookies collect on all losing wagers.

A Derivative of a Derivative

Garrood has a background in financial derivatives, and he maintains that in-running is no different. "Sports are predictable events," he says. "Dramatic as sports may be, you've seen everything before. Let's say the Los Angeles Lakers are ahead by five points with three minutes left to go. You use historical analysis to figure out what each side of the outcome is worth."

Comparisons to derivatives are appreciated by professional sports-bettor Steve Fezzik, an online moderator at lvasports.com and a two-time winner of the Las Vegas Hilton's Supercontest NFL handicapping tournament. "During the NCAA finals, I had $30,000 in my account, and over the course of a game, I'd be all-in with a hedged portfolio," he says. "You wait for the one situation in five where the line is off. It's like someone is slicing up a loaf of bread and asking you which piece you want. Of course, you take the piece where the slicer made a mistake and cut it too thick."

Critics of in-running maintain that some people don't want to bet sports as if they're day-trading a stock. Sometimes, the reasoning goes, you just want to sit back, drink a beer and enjoy the game.

Kenny White, who runs Cantor's Las Vegas Sports Consultants, sees it differently. He points out that casual gamblers view in-running as a convenience rather than a complex puzzle of wagers. "You see momentum changing and can make a bet," he says. "Plus, you can get money down after the game begins. Ordinarily, if you're stuck in traffic and reach the sports book after the tip-off, you are locked out from betting. That's no longer the case."

An Equal Opportunity Bookie

Cantor is standing behind its convictions in a way that many sports books in Las Vegas do not. Often, casinos discourage action from consistent winners, or so-called sharp bettors. They will literally limit amounts that skilled players are allowed to wager -- or refuse their action altogether.

The M Resort is, for now at least, welcoming the sharps. It's also outdoing competitors by allowing all gamblers to bet higher on totals (that is, betting whether or not both teams' scores will be above or below a specific sum), which are particularly easy for pros to beat. "The M wants [sharp bettors] to be there," believes Fezzik. "They want your information, and that's a progressive attitude. But people are concerned about the long-term profitability" -- and viability -- of the M Resort's strategy.

"It's a fact that the world's best gamblers beat games of skill, which include sports betting, and the M is attracting the world's best sports bettors. The success of Cantor relies on getting their share of square [that is, non-professional] action," says Fezzik. However, by being known as a big-action spot, M Resort should attract high-rolling amateurs, and, says Fezzik, "maybe they will win more from the losers than they lose to the winners."

Garrood seems less concerned. He makes the in-running operation sound easy for a company like Cantor, which he says handles $150 trillion in Treasury business each year. "This is an application of what Cantor has always understood," he says. "It's just dressing up the emperor in new clothes."

Permalink | Email this | Comments

]]>bettingbettorbookiecantor fitzgeraldcasinosderivativesgamblingLas Vegasm resortpallazioresortstradesvenetianMichael KaplanWed, 30 Jun 2010 23:30:00 ESTCasino Jack Abramoff's Latest Gig: Pitching Pizza in Baltimorehttp://www.dailyfinance.com/2010/06/30/casino-jack-abramoffs-latest-gig-pitching-pizza-in-baltimore/http://www.dailyfinance.com/2010/06/30/casino-jack-abramoffs-latest-gig-pitching-pizza-in-baltimore/http://www.dailyfinance.com/2010/06/30/casino-jack-abramoffs-latest-gig-pitching-pizza-in-baltimore/#commentsJack Abramoff once ranked among the shrewdest and most successful lobbyists on Capitol Hill. Now he stands out as one of the greediest -- a man who landed in jail after engaging in a series of over-the-top illicit activities. These days, however, Abramoff's activities are far from illicit.

Freshly sprung from a minimum-security prison camp after completing most of a four-year sentence for fraud, tax evasion, and bribing public officials, Abramoff now lives in a halfway house and toils in the back office at Tov Pizza, a kosher pizzeria in Baltimore. The subject of two movies -- a documentary called Casino Jack and the United States of Money as well as an upcoming Hollywood biopic, entitled Bagman and starring Kevin Spacey -- Abramoff's latest gig has garnered plenty of attention.

"Jack is a nice guy and pleasant to talk to," says Ron Rosenbluth, owner of Tov, who has had Abramoff on the payroll for six months. "But it hasn't been easy. I need to make soup and deal with a broken cheese machine today, while CNN comes in with cameras to shoot a story."

Coincidentally, Rosenbluth (pictured left in his pizza shop) happens to be running for the State Central Committee in Baltimore's 41st District, but he says that he has not asked Abramoff for campaign advice: "He's a Republican and I'm a Democrat."

The Director's Take
Alex Gibney, director of Casino Jack, spent a long time considering Abramoff and his misdeeds. When asked to comment on his documentary subject's latest career move, Gibney replies, "I am amused, due to his past experience with restaurants." Abramoff once owned upscale Signatures, which was known as a favorite watering hole for Bush staffers. "Then," adds Gibney, "he owned a kosher deli. I've been told that it was the worst deli ever."

In terms of quality, it's hard to say where Tov stacks up. Asked for a comment on the place, Baltimore Sun restaurant critic Laura Vozzella says that she has yet to eat there. But, after giving us her non-review, she put out a request for comments from the readers of her blog. The single responder describes the falafel as "soooo good" and the pizza as "not the best" (apparently, the crust is a little thin). "We purposely make a thin crust," says Rosenbluth. "Since we opened [more than 20 years ago], I've been emulating a place in New York."

It's been reported that Abramoff will be working in a marketing capacity at Tov. While he may be able to turn around any negative perceptions of Tov's crust, it's hard to imagine Abramoff having the leeway that he enjoyed during his glory days in DC. "I don't think this is a pizzeria's attempt to get the LeBron James of the restaurant business," says Gibney. "I think it's somebody giving Jack a job. He's overqualified, but he just got out of stir."

That said, Gibney does not sound certain that Abramoff will be the typical pizzeria drone. "Jack always had a rich, vivid imagination. If he utilizes it there, I think he will bring something that they didn't have before."


Permalink | Email this | Comments

]]>BagmanBaltimorebriberyCasino jackCasino Jack and the United States of MoneydocumentaryfraudJack AbramoffKevin Spaceykosher pizzeriapizzeriaprisonRon Rosenbluthtax evasionTOV pizzaMichael KaplanWed, 30 Jun 2010 09:00:00 ESTIn the Casino Business, Neutral Is the New Positivehttp://www.dailyfinance.com/2010/06/24/casino-business-neutral-positive-moodys/http://www.dailyfinance.com/2010/06/24/casino-business-neutral-positive-moodys/http://www.dailyfinance.com/2010/06/24/casino-business-neutral-positive-moodys/#commentsFiled under: , ,

The U.S. casino gaming market is finally improving, according to a report published Tuesday by Moody's Investor Services. After more than two years of giving negative outlooks to the business, Moody's has changed its view to neutral and recognizes "signs [that the] industry has bottomed out."

While gaming entities have been saying that very thing for a number of months, Keith Foley, a senior vice president at Moody's and author of the report, explains that the numbers are only now beginning to show it.

"We track monthly gaming revenues and they appear to have flattened," says Foley. "Giving that a large majority of casino revenue comes from gaming, we see that as a leading indicator. We think the industry has hit bottom. Profitability will be flat instead of declining."

Foley points out, though, that flat may not be good enough in an industry where room-rates remain low and debt-loads are back-breakingly high.

"It's a problem [particularly on the deeply leveraged Vegas Strip] when you have $400 rooms that you need to rent for $300 to make a return on your investment, but you can get only $99 for those rooms," says Foley. "For 10 years, Vegas defied gravity and made the argument that if you build it, they will come. The flip side is that if you don't build it" -- a reality of the current environment, save for the Cosmopolitan, due to open later this year -- "will they still come?"

That said, Foley acknowledges the potential for improvements sooner than "neutral" might indicate: "If the economy chugs along or improves a little bit, and that translates to a favorable response in gaming revenue, there is potential for a positive outlook. Companies have trimmed expenses, and that could help."

Apparently, that's a view shared by John Paulson. Last month, his hedge fund, Paulson & Co., which made $15 billion by betting the right way on the sub-prime mortgage meltdown in 2007, revealed that it had purchased 40 million shares of MGM Resorts International (MGM) and 4 million shares of Boyd Gaming (BYD). With the MGM purchase, Paulson has 9.06% of the gaming giant's outstanding shares. Earlier this month, according to BusinessWeek, Paulson exchanged $710 million of debt in Harrah's Entertainment for a 9.9% equity stake in that casino company. A spokesman for Paulson declined to comment on the acquisitions.

According to Larry Klatzkin, gaming analyst with Chapdelaine Credit Partners, "It's always encouraging to have someone like Moody's say that the industry is out of major decline. But we have been moving in that direction for a while now. I think it's already priced in and will not affect the market."

Permalink | Email this | Comments

]]>boyd gamingcasinogamblinggamingharrahsJohn PaulsonLas VegasMGM ResortsMoodysneutralPaulson Co.recessionrecoveryMichael KaplanThu, 24 Jun 2010 13:23:00 ESTDoes the Mohegan Tribe Really Need a $54 Million Government Loan?http://www.dailyfinance.com/2010/06/18/does-the-mohegan-tribe-really-need-a-54-million-government-loan/http://www.dailyfinance.com/2010/06/18/does-the-mohegan-tribe-really-need-a-54-million-government-loan/http://www.dailyfinance.com/2010/06/18/does-the-mohegan-tribe-really-need-a-54-million-government-loan/#comments Considering that the Connecticut-based Mohegan Indian tribe owns the Mohegan Sun Casino, which ranks among the most successful gambling operations on the East Coast, you'd think that the tribe would have the wherewithal to build a community center and tribal government building. The tribe, apparently, believes otherwise and the United States Department of Agriculture agrees - to the tune of a $54 million loan, which comes on top of another $20 million in loans from the USDA.

With the support of six out of seven members of Connectichut's Congressional delegation, the USDA recently approved to loan the money to the Mohegans as part of a rural development program aimed at communities of fewer than 20,000. The loan, offered to communities that have had problems in obtaining credit, is designed to be repaid with interest.

A source close to one of Connecticut's congressional representatives explains that the loan will be applied to a stalled out construction project. Apparently the tribe lost construction financing in 2009 and was unable to continue work on the completion of its community center and government building.

The need for government assistance comes in spite of that fact that Mohegan Sun generated in excess of $1.3 billion in gross revenue last year and $53.6 million in casino profits. The Mohegan Tribe declined to comment.

Nevertheless, with 20% unemployment in the Connecticut construction industry, a spokesman for Senator Chris Dodd (D.-Conn) explains, "Senator Dodd supports the Mohegan Tribe's loan application in the same manner and for the same reasons he supports federal assistance to other Connecticut projects -- creating and preserving local jobs."

According to a Mohegan press release: "The construction is expected to create 114 direct jobs. Federal officials estimate the project will create 1,239 indirect jobs through vendors and subcontractors in the region."

A spokesman for the USDA, contacted this morning, did not respond, specifically, as to why the Mohegans were chosen and other communities were passed up. However, the fact that the Mohegan Tribe owns a successful casino clearly puts it in a position to pay back the loan in a timely fashion. Via a prepared statement, the USDA spokesman said. "[The building] will house health, education, community programs, a library, and Tribal court - critical infrastructure needed to keep rural communities strong throughout the country."

Permalink | Email this | Comments

]]>casinoconnecticutloanMohegan tribetribeUSDAMichael KaplanFri, 18 Jun 2010 14:45:00 ESTThe Las Vegas Bankruptcy Brawl Over Station Casinoshttp://www.dailyfinance.com/2010/06/10/the-fertitta-brothers-fight-to-bring-station-casinos-out-of-bank/http://www.dailyfinance.com/2010/06/10/the-fertitta-brothers-fight-to-bring-station-casinos-out-of-bank/http://www.dailyfinance.com/2010/06/10/the-fertitta-brothers-fight-to-bring-station-casinos-out-of-bank/#commentsFiled under: ,

Red Rock Casino, Resort & SpaThe Fertitta family's Station Casinos, now headed by brothers Frank J. Fertitta, III and Lorenzo Fertitta, has long been a Las Vegas juggernaut. Started with a single casino opened by their late father almost 34 years ago, the company grew to include 18 casinos and resorts, among them a number of properties off the Las Vegas Strip, Green Valley Ranch in adjacent Henderson and Red Rock Resort in the upscale suburb of Summerlin.

Yet, these days the family business is struggling to remain intact. Though the company's properties -- five of which are owned in a joint partnership with Greenspun Corp. -- are said to be cash-flow positive, Station is burdened with $5.9 billion in debt, a sum that led to its filing for Chapter 11 last July. Now the company is in the midst of a heated battle in the bankruptcy courts as the brothers try to salvage parts of the company and as unsecured bondholders scramble to recoup some of the $2.3 billion they had put into Station when things looked much more promising.

From Boom to Bankrupt

The Fertittas - who also own the very successful mixed martial arts fighting franchise UFC, or Ultimate Fighting Championship - got into this situation by having the kind of Sin City optimism that was common during the Vegas boom. Formerly rose-colored views are evidenced by a neighborhood's worth of stalled-out, star-crossed or just plain defunct casino projects that dot the Las Vegas Strip and its environs. Considering the current state of Vegas, an argument can be made that Station will not be the last gaming operator there to find itself in this situation.

The family's trail to Chapter 11, now being hashed out in a Reno, Nev., courtroom, began back in 1993. That's when the entrepreneurial Fertittas took their family business public. Fourteen years later, in 2007, with a leveraged buyout of $5.7 billion, the brothers took the company private again - and raked in their share of the $1.5 billion that came with the buyout (according to the Wall Street Journal, the money went to Fertitta family members and company executives).

In 2007, the Las Vegas Review Journal reported that Lorenzo Fertitta told Nevada gaming regulators that the motivation for going private included a desire for the company to pursue acquisitions and development more aggressively and more efficiently than it would have been able to if it remained a public company.

The privatization was funded with $900 million from the Fertittas (for a 24% stake) and another scoop of funds from Colony Capital. Additionally, secured loans dropped in from JPMorgan Chase, Deutsche Bank, and others. And then there was that $2.3 billion in unsecured debt. "When the LBO happened, it was about the potential of Station," says Christopher Snow, an analyst with Credit Sights. The price may have been high ($90 per share; the stock closed at $82.72 on the day the buyout was announced), but he adds, "The idea was that they would grow into the capital structure."

At the time, Vegas was on a rush and high-hopes seemed reasonable. In short order, though, the city was hit hard by the recession, and it soon became apparent that Station Casinos would have a very difficult time servicing its debt. By July, 2009 the company filed for voluntary Chapter 11 bankruptcy protection.

The Brothers Devise a Plan

Late last year, the Fertittas formed a holding company, Fertitta Gaming LLC, and endeavored to configure their debt in a more realistic -- and profitable -- manner.

Working with the group of secured-debt lenders, the Fertittas restructured the terms of financing on five casinos (Palace Station, Boulder Station, Sunset Station, Wild Wild West and Red Rock -- held under a company called PropCo) that, cumulatively, happen to be the most profitable in the Station portfolio. The agreement calls for the Fertittas to invest $86 million into the group of casinos. In exchange, they would own 46% of those properties, Colony would have 4% while Deutsche and JPMorgan Chase would share the remaining 50%. All told, according to a source who is close to the deal, "it creates a $1.8 billion entity that comes out of restructured debt."

The arrangement is pending approval from Reno-based U.S. Bankruptcy Judge Gregg Zive. Zive has already green-lighted the auctioning of 11 remaining properties, along with gaming-entitled land in Nevada and future management contracts with Indian casinos out of state (these are all under a company called OpCo). Fertitta Gaming (with the backing of JPMorgan, Deutsche, and Colony) has been made the so-called "stalking horse bidder," meaning it will create a floor for the sale. In this case, the stalking horse bid is $772 million. By June 30, those with an interest in bidding on the OpCo assets can submit letters of intent. The auction is scheduled to take place on Aug. 6.

Unsecured Lenders Likely to Lose

Both of these plans seem likely to leave the unsecured parties without so much as a mini bottle of shampoo. Judge Zive has acknowledged, "The economics indicate there is great difficulty for [unsecured bond holders] to be in the money unless the auction generates interest." He expressed fears that if the reorganization of Station doesn't work out, jobs will be lost and there could be "economic disaster for many parties."

A financial turnoff for outsiders is the fact that if anybody other than Fertitta Gaming successfully bids for the casinos - and, obviously, offers more money than its stalking horse bid - there will be an extra $75 million in costs. Frank and Lorenzo's mother owns the property on which one of the casinos is situated, and she will charge an outside bidder that amount for the land. One of the attorneys has equated that extra cost with a "poison pill."

Concerned with recovering money for their vulnerable clients, attorneys for the unsecured creditors argue that they have been effectively iced out of the process. In court filings, they described the PropCo plan as a "deal between insiders." They characterized the OpCo auction as "the latest component of an overall scheme to ensure that the Fertittas retain control of the Station enterprise, at as low a valuation as they can get away with."

Unfair as all of this may sound, to those in the credit business it's hardly a surprise. "The deal, as it's currently structured, favors insiders and senior lenders," says Snow. "But that is part and parcel of how these processes work. The incentive is to bring the company out of bankruptcy with as little debt as possible."

Permalink | Email this | Comments

]]>bankruptcyfertitta brothersgamblinglas vegasstation casinosMichael KaplanThu, 10 Jun 2010 10:30:00 ESTWill New Regulations Make it Harder to Play Online Poker?http://www.dailyfinance.com/2010/05/31/will-new-regulations-make-it-harder-to-play-online-poker/http://www.dailyfinance.com/2010/05/31/will-new-regulations-make-it-harder-to-play-online-poker/http://www.dailyfinance.com/2010/05/31/will-new-regulations-make-it-harder-to-play-online-poker/#commentsOnline poker players will soon find it a lot more difficult to get their gambling fix. On Tuesday, the Unlawful Internet Gambling Enforcement Act (UIGEA) will go into effect, prohibiting financial institutions from transferring funds to so-called "unlawful Internet gambling" sites. The controversial regulation, which rode through on the coattails of the SAFE Port Act, in 2006, is vaguely worded and puts the onus on banks to recognize where their payments are going.

Even as the UIGEA hovers, legislation is being proposed that will legalize and regulate online poker, which has become a multi-billion-dollar industry. According to companion bills proposed by Barney Frank (D., Massachusetts) and Jim McDermott (D., Washington), the federal government would receive $42 billion in taxes over the next 10 years via legalized online poker. Under McDermott's bill, various states could choose not to participate in the legalization, but they would lose out on tax revenues generated by the game.

While those bills hang, it appears that the UIGEA, which was already postponed once, will take effect. What that means for online poker players remains unclear. "It may become more inconvenient to deposit money [with online poker sites]," says John Pappas, executive director of Poker Player's Alliance, a nonprofit organization. "Right now you can use a debit card or a wire transfer or an e-wallet."

If the UIGEA makes it arduous to deposit money into online poker accounts, there will be fewer losing players buying into the games. That, of course, would make online poker less profitable for pros and successful amateurs. However, Pappas remains optimistic that "new payment methods will emerge" before the game itself is completely legalized. And he anticipates that happening in the near future.

"It's not a question of if it will be legalized; it's a question of when," he says. "We are working toward having something done this year. Opponents are becoming neutralized or marginalized and we are gaining more supporters."

Permalink | Email this | Comments

]]>gamblinggovernment regulationMichael KaplanMon, 31 May 2010 09:00:00 ESTCasino Jack Abramoff Hits the Big Screenhttp://www.dailyfinance.com/2010/05/14/casino-jack-abramoff-hits-the-big-screen/http://www.dailyfinance.com/2010/05/14/casino-jack-abramoff-hits-the-big-screen/http://www.dailyfinance.com/2010/05/14/casino-jack-abramoff-hits-the-big-screen/#comments Alex Gibney has a thing for money-hungry rogues. The documentary film director first made a splash with 2005's Enron: The Smartest Guys in the Room, adapted from a book of the same title by a pair of Fortune magazine writers. Now comes Casino Jack and the United States of Money, Gibney's latest release. It examines the murky, sometimes illicit dealings of super lobbyist Jack Abramoff and his boldfaced clients, ranging from the government of a largely impoverished island in South East Asia to tribes of Native Americans determined to cash out from the lucrative casino business.

In both cases Abramoff and the Enron guys made many, many millions of dollars by initially exploiting legal loopholes. Enron turned an oil pipeline company into a hedge-fund; Abramoff pressured unsophisticated clients into making big contributions to Abramoff-approved entities. "What's similar between Abramoff [and Enron's] Jeff Skilling and Ken Lay is how they dealt with clients and investors," Gibney told DailyFinance. "They'd go into somebody's office and basically say, 'If you're not smart enough to figure this out, I'm not going to explain it.' They were arrogant, but that kind of arrogance created demand. Abramoff would tell people that he won't haggle over numbers, and then he'd send them invoices that simply stated 'for services rendered.'"

The film examines -- through interviews and archival footage -- how Abramoff was, in some ways, not so different from other lobbyists thriving on Capitol Hill. Still, he stood out for his flamboyance, outrageousness, creativity, and greed. Ultimately he was a victim of his success in squeezing kickbacks out of clients. "What brought Jack down was everybody getting so jealous that they started leaking stuff about him," says Gibney. "The same thing is happening right now on Wall Street. You don't think that the SEC just stumbled upon Goldman Sachs's transactions, do you?"

Abramoff and Enron and Flexible Morals

Other links between Abramoff and Goldman executives include the brazenness of their actions and the paper trails they curiously failed to hide. In both instances there is much crowing about hitting it big at the expense of clients. The email trail helped Gibney illustrate Abramoff's shrewdness. "Jack kept very careful track of his emails, and he took on different personae based on who he was writing to," recalls Gibney. The director says that it kept Abramoff aware of the tone he needed to maintain in order to achieve maximum impact. "The emails became a beautiful record, but they also did him in." As for the masterminds behind the Enron scandal, Gibney notes that audio tapes of phone calls proved even more damning: "They howled with laughter at the people who were in misery."

Smartest Guys and Casino Jack have left Gibney -- and his audiences -- enlightened about how flexible people can be with their morals, particularly when money is at stake. "Economic man is not rational; he is a rationalizer," philosophizes Gibney. "As you start to do things that cross the line, you rationalize your behavior. People at Enron thought they were creating a better market-based world for people to live in. That blinded them to their own corruption, one crime at a time. Jack was on a mission to take over the government and shrink it down so small that it could be drowned in a bathtub. He rationalized things by telling his clients to send scads of money to the Republican Party."

Freakonomics in the Wings

Gibney's next project is a segment within the film version of the best-selling book, Freakonomics; other directors contributing pieces include Morgan Spurlock and Seth Gordon. Gibney's part looks at corruption inside the sport of sumo wresting -- clearly he has not yet tired of chronicling the misdeeds of scoundrels. Despite the bombed Broadway version of the Enron story, he believes that American audiences maintain an appetite for the dark side of business. "People enjoy watching the card-shark doing his magic, but they also want to watch the mother****** getting put away," says Gibney. "Stories of injustice burn people up."

The same could be said of Gibney's subjects, though they are steamed for entirely different reasons. Though Abramoff and Skilling refused to talk on camera, Skilling did share an opinion away from the lens. Out of sheer curiosity, after Smartest Guys had been nominated for an Academy Award, Gibney attended a few days of the Enron trial. "Inside the court room, Jeff Skilling walked right up to me," remembers Gibney. "He had a sh**-eating grin on his face, and he said, 'Congratulations.' The sarcasm was not lost on me. I said, 'Thank you.' Then his wife stepped up and intervened. I think she was afraid that he would take a swing at me."


Permalink | Email this | Comments

]]>alex gibneyEnronjack abramoffMichael KaplanFri, 14 May 2010 12:00:00 ESTMGM Mirage Reports First-Quarter Loss as Convention Business Fizzleshttp://www.dailyfinance.com/2010/05/06/mgm-mirage-reports-first-quarter-loss-as-convention-business-fiz/http://www.dailyfinance.com/2010/05/06/mgm-mirage-reports-first-quarter-loss-as-convention-business-fiz/http://www.dailyfinance.com/2010/05/06/mgm-mirage-reports-first-quarter-loss-as-convention-business-fiz/#commentsFiled under: ,

MGM Mirage reported a loss of $96.7 million for the first quarter of this year. Contributing to the results were anemic convention business and condominium write-downs at the recently opened $8.5-billion CityCenter, shown in this photoMGM Mirage, one of the world's largest gaming companies, reported a loss of $96.7 million for the first quarter of this year. Contributing to the results were anemic convention business and condominium write-downs at the recently opened $8.5 billion CityCenter.

Investors showed their concern by beating back the Las Vegas casino operator's share price by 8.2% to $13.72 at the close on Thursday.

Aria Resort & Casino, which stands as the jewel of the 76-acre CityCenter mixed-use development, had an operating loss of $66 million. Room occupancy was a disappointing 63% for Aria's 4,004 rooms. Revenue per room for MGM Mirage swooned by 8%.

Pulled Down by Market Slide

Grant Govertsen, analyst and principal with Union Gaming Group, attributes Aria's disappointing room sales to the cost of launching a mega-resort in a dead marketplace.

Govertsen is neither surprised nor put off by MGM Mirage's overall negative report. He sees the stock fall, at least in part, as symptomatic of Wall Street's overall condition Thursday. The Dow Jones Industrial Average lost 1,000 points during afternoon trading before scaling back the loss to 347.80 points, or 3.2%, to close at 10,520.32.

MGM Mirage's stock had gained nearly 12% over the last 30 days before Thursday's market slide.

Brighter Future

"MGM Mirage had a tremendous run, so it's not surprising to see it down more than the market," Govertsen says, pointing out that casinos's high betas (a measure of market volatility) contribute to dramatic bounces. He believes that macro improvements in Las Vegas overall will help out CityCenter in particular and MGM Mirage in general. Plus, MGM Mirage can expect an influx of cash when it takes the company public in Hong Kong later this year through the listing of its Macau property.

MGM Mirage's CEO Jim Murren saw similarly blue skies earlier today. He predicted that numbers will turn positive in the coming months. "We see signs of improvement and expect those to accelerate in the second half of the year and into 2011," Murren said in a statement.

Permalink | Email this | Comments

]]>earningsMay 6 Stock Market Plungemgm mirageMichael KaplanThu, 06 May 2010 17:15:00 ESTBanking Business Tactics Help Blackjack Betting Teams Win Bighttp://www.dailyfinance.com/2010/04/24/banking-business-tactics-help-blackjack-betting-rings-win-big/http://www.dailyfinance.com/2010/04/24/banking-business-tactics-help-blackjack-betting-rings-win-big/http://www.dailyfinance.com/2010/04/24/banking-business-tactics-help-blackjack-betting-rings-win-big/#commentsFiled under: ,

For a small coterie of professional gamblers, blackjack is all business. And it turns out blackjack consortiums are run much like investment banks. Walk into a casino, watch people playing blackjack, and it's easy to view the game as a leisurely pursuit that generates thrills for tourists. Usually that's indeed the case. But for a small coterie of professional gamblers, blackjack is all business. It turns out that blackjack teams operate much like investment banks.

In the recently published Repeat Until Rich: A Card Counter's Chronicle of the Blackjack Wars, author and former professional blackjack player Josh Axelrad sheds some light on how these blackjack businesses work. Their means of making money is often built around card counting, a relatively simple mathematical system through which you keep track of cards that have already been dealt, use that information to recognize when the game turns positive for players and bet accordingly.

Historically, the most successful counters have been aligned with small, tightly run, highly secretive consortiums. In his casino-tripping memoir, Axelrad give the pseudonymous name of Mossad to the blackjack corporation he played on. His descriptions underline a few of Mossad's similarities to trading firms.

"Mossad had controls that were analogous to banking controls," Axelrad says. "We had documents that recorded wins, losses, expenses, amounts wagered; it was all kept in a database made from proprietary software. We duly reported our taxes. Over the life of Mossad - which went from 1996 or '97 until 2004 - nobody ever got audited as a result of the team."

Blackjack Jobs: Lucrative But Hostile

Workaday jobs at Mossad ranged from scouting tables to plunking down $10,000 bets at optimal times to surreptitiously signaling big bettors on how much to wager and how to play hands. Meanwhile, at the top end, managers devised strategies and oversaw sessions of play.

Usually team-members worked in fairly hostile environments, as casino personnel hate card counting and do their best to ban counters. That eats into returns, which Axelrad describes as "interesting."

"If you could be in action 24/7, you'd make ridiculous money," he explains. "But, even though card counting is completely legal, casinos are effective at limiting opportunities. So, on a short bank [a playing-period that lasts maybe a week], return on investment would be around 5%."

Money was split in the manner of a customer-friendly hedge fund - after management took a 5% cut, players received 60% and investors received 40% (managers and players always invested) - and accounting was scrupulous. The team even employed computer technology to closely track Mossad's finances.

Investing in Tech and Research

The computer served a secondary purpose, as well. "It analyzed play and results," says Axelrad, who won $700,000 for the team during his five-year stint. "If there were causes for concern [about a player] and that player's results were two deviations to the bad, well, then maybe they would be told to take some time off." The computer also maintained details on gambling opportunities, resulting in what Axelrad classifies as "blackjack's most robust database of casino conditions."

Just as Wall Street firms have researchers who look for good investment opportunities, so did Mossad. Axelrad and the others continually hunted down exceptional games with favorable rules, shuffles that could be tracked and lackadaisical pit bosses.

Sometimes these quests took them to out-of-the-way spots around the United States (newly opened Indian casinos provided fertile gambling ground for the team) and to the fringes of Las Vegas. "We found a good game at Mahoney's Silver Nugget, just about the last casino on anything resembling Las Vegas Boulevard," Axelrad remembers fondly. "The clientele there was so unsavory that armed guards were stationed inside."

In spite of its technology and innovative business model, Mossad hardly proved invincible. One other thing that Mossad had in common with many a trading firm is its end: After a long run of success, it came up against a series of defections, changes in the money-making environment and fresh market-efficiencies (thanks to savvier casino security). All of this led to the team's demise in 2005.

While some of the former members continue to play blackjack in more modest configurations, others have taken on new challenges. Regular viewers of televised poker tournaments have most certainly watched at least two of Mossad's ex-superstars now pursuing followup careers at Texas hold'em.



Permalink | Email this | Comments

]]>booksgamblingjobspokerMichael KaplanSat, 24 Apr 2010 10:00:00 ESTVegas Casinos Trade Gimmicky Themes for Marquee Chefs, Restaurantshttp://www.dailyfinance.com/2010/04/17/vegas-casinos-trade-gimmicky-themes-for-marquee-chefs-restauran/http://www.dailyfinance.com/2010/04/17/vegas-casinos-trade-gimmicky-themes-for-marquee-chefs-restauran/http://www.dailyfinance.com/2010/04/17/vegas-casinos-trade-gimmicky-themes-for-marquee-chefs-restauran/#commentsLater this year, the Cosmopolitan resort and casino will be the newest arrival to the Las Vegas Strip. Up to this point, what the final product will look like has been a bit of a mystery. There has been little-to-no publicity about the design of the Cosmopolitan's rooms or the layout of its gambling floor. Yet, a recent announcement disclosing that the restaurants inside the casino will include offshoots of New York's Blue Ribbon and West Hollywood's Comme Ca offer some valuable clues as to what the Cosmopolitan will end up looking like and the types of guests it hopes to attract.

"Based on that list, Cosmopolitan wants to be hip and urban," says Elizabeth Blau, CEO of Blau & Associates, a Vegas-based restaurant consulting firm. "Those restaurants are good, solid choices that are not going after the low-end market."

In Vegas these days, it's the restaurants that make the casino. Many have abandoned the pursuit of gimmicky themes -- think the Venetian with its gondola rides or New York, New York, with its facade recreating the Manhattan skyline -- for elite chefs and well-established eateries. "Restaurants do define the properties," says Blau, who is a partner in Society Cafe, a casual all-day eatery in Steve Wynn's Encore, which Esquire magazine's John Mariani hailed as one of the best new restaurants in America. "Having great food has become integral to having a great casino."

Michelin Star Attractions

The recently opened Aria, which is part of the 67-acre CityCenter, situated sushi master (and Michelin 3-star chef) Masayoshi Takayama's Bar Masa and Shaboo (complete with its $500 prix fixe menu) front and center, just beyond the front desk where guests check in. When Caesar's Palace opened its luxe Augustus Tower back in 2005, haute cuisine chef Guy Savoy was recruited, evidence of the casino's desire to be perceived as smart and chic despite Caesars' overwhelming dowdiness. Several blocks to the west, trendy Palms Casino Resort is more or less defined by the rollicking, ultra modern, N9NE steakhouse. It's where the guys from Entourage would dine if they were in Vegas and it has attracted real life stars such as Brad Pitt and Leonardo DiCaprio.

"Taking away the nightclubs and restaurants would be impossible," says Palms owner George Maloof, who has used celebrity appearances in the restaurant to create a distinct Young Hollywood vibe for his casino. "They function as brands of the Palms."

In 2008, when Maloof opened Palms Place, a condo building attached to the hotel/casino, he brought in celebrity chef Kerry Simon and Simon's partner Blau. They created a swanky but relaxed restaurant called Simon that sends out a very different kind of message. "I wanted a fun, casual place that has fine dining, sushi, and a great breakfast," says Maloof. Because the boutique Palms Place caters to a high-end clientele, he needed "a three-meal restaurant that would not be a coffee shop. I envisioned a restaurant where a guest could come down at 11 a.m., a little hungover, and sip the best bloody Mary while looking out at the pool." If this mythical guest winds up ordering from the breakfast menu, he might augment his morning cocktail with steak and eggs for $22; at dinner, ahi tuna goes for $32 and the New York Strip is $46. Clientele at Simon ranges from Jay-Z to Ben Stiller to Richard Branson -- and the chef himself regularly tweets when a hot name sits down to eat his high-end comfort food.

Ditching Theme Park Gimmicks for Grass-Fed Beef

Ten years ago, the MGM Grand was designed around a movie theme, with greeters dressed up as characters from The Wizard of Oz and a theme park out back. When Gamal Aziz, the president of MGM Grand, came on board in 2001, he ditched the movie tie-ins and focused on great chefs who were under-the-radar at the time. Aziz brought in Bay Area superstar Michael Mina and the pre-Top Chef Tom Colicchio whose Craft restaurant , which is known for using ingredients from small, family-owned farms such as grass-fed beef, was all the rage in New York. They both served as image-changers. Suddenly the excitement level increased, bigger players were drawn to MGM, and its guests stayed to dine and party rather than running off to enjoy the amenities of competing properties. When Joël Robuchon signed on to open what would be touted as the greatest French restaurant in America, it was very intentionally called Joël Robuchon as it had become widely known what a celebrity chef's name could do for a casino.

Vice president of food and beverage Alexandre Gaudelet brags about having "54 [AAA] diamonds under one roof" and after sampling Robuchon's 16-course tasting menu, at a cost of $385, there is no doubt that great food (Joel Robuchon is the only 3-star Michelin restaurant in town) can elevate the impression one has of a property. That said, however, Vegas being Vegas, certain concessions must be made. "We worked with the Robuchon experience so that you can sit down and have a meal with only two or three dishes if you don't want all 16," says Gaudelet. "Most people in Las Vegas want to be done eating in 1-hour and 45-minutes max."

Permalink | Email this | Comments

]]>casinoschefscosmopolitandininggamblinggeorge mallas vegasrestaurantsMichael KaplanSat, 17 Apr 2010 09:00:00 ESTDonald Trump's Win in Atlantic City Is Far From a Victoryhttp://www.dailyfinance.com/2010/04/14/donald-trumps-win-in-atlantic-city-is-far-from-a-victory/http://www.dailyfinance.com/2010/04/14/donald-trumps-win-in-atlantic-city-is-far-from-a-victory/http://www.dailyfinance.com/2010/04/14/donald-trumps-win-in-atlantic-city-is-far-from-a-victory/#commentsFiled under: ,

The bare-knuckle battle between Donald Trump and Carl Icahn lasted 14 months and ended in a Camden, N.J., courtroom. Both moguls were scrapping for control of the addled Trump Entertainment Resorts, and its three Atlantic City casinos: Trump Marina, Trump Plaza, and Trump Taj Mahal. In the end, the bankruptcy judge decided that investors will be better off if the existing bondholders, including Trump, retain control of the company.

Though Trump will hold a mere 5% ownership stake in the hotel/casino group that bears his name, it has not stopped him from crowing about the courtroom win. "This is a great victory for Trump and for the bondholders," he told BusinessWeek, leaving it unclear whether he's talking about his company or referring to himself in the third person. "It's a great loss for Carl Icahn. I was surprised he attempted what he attempted, but that's okay. It's fine."

Far From a Victory for The Donald

Cocky as Trump sounds, you have to wonder how much of a win this really is. Though debt will be going down from $1.7-billion to around $330-million, bondholders will have to pony up an additional $225 million to get there -- plus they hope to sell Trump Marina for an estimated $25 million, less than 10 cents on the dollar that it cost to build in the mid-1980s.

Trump also seems undeterred by the fact that rational investors are steering clear of Atlantic City. Morgan Stanley (MS) took close to a $1 billion hit after cutting its losses on a Boardwalk project called Revel. Pinnacle Entertainment (PNK) took a bath in February after pulling out of a would-be casino it intended to construct on the old Sands Casino plot, and Steve Wynn kicked the tires during a recent bottom-feeding trip to A.C. but left the resort-town empty-handed.

Considering his track record, Trump also seems to have failed to learn from his prior experiences. This is the third voyage to the brink for The Donald and his Eastern seaboard gambling dens: Trump Taj Mahal hopped in and out of bankruptcy in 1991, costing Trump 50% of the operation; one year later, under similar circumstances, he was forced to cede 49% of Trump Plaza to CitiBank. Maybe he's become hardened to the various chapters of overwhelming debt, but he seems downright cheery when characterizing current circumstances for the New York Times: "It's a great time to be a gaming company without much debt and a very healthy capital structure."

Keeping the Trump Legacy Alive

Considering the Trump group's less-than-stellar past, why did the judge allow them to retain control? According to Cory Morowitz, chairman of Atlantic City-based Morowitz Gaming Advisors, that decision was made in an effort to do the most for those for existing investors (including Icahn himself, who holds $480-million worth of Trump debt).

"There was more asset recovery under the Trump plan than under the Icahn plan," says Morowitz. "The smaller balance sheets and reduced debt burden will give the Trump company breathing room to make the investments they need to make. The infusion of capital will hopefully allow them to reposition themselves in order to capture the market that is rejecting them." Money will most likely be spent on upgraded services, amenities, and rooms (an undertaking that has already begun at Taj, with the completion of a new tower).

In light of his small share of the business, coupled with the very public trio of AC bankruptcies under his belt, and the fact that he will have limited say in how the properties are run, you have to wonder why Trump was so gung-ho about keeping his name alive in Atlantic City. "There is hope [in things working out for the casinos] but there is also some ego," says Roger Gros, publisher of Global Gaming Business and a longtime chronicler of Trump and Atlantic City. "If Trump left Atlantic City and his name came off of the buildings, that would be a stain on his reputation. Considering the Celebrity Apprentice ratings, Donald needs to keep his name in lights somewhere."

Permalink | Email this | Comments

]]>Atlantic CitycasinoDonald TrumpMichael KaplanWed, 14 Apr 2010 18:45:00 ESTSteve Wynn Abruptly Walks Away From Philadelphia Casinohttp://www.dailyfinance.com/2010/04/12/steve-wynn-abruptly-walks-away-from-philadelphia-casino/http://www.dailyfinance.com/2010/04/12/steve-wynn-abruptly-walks-away-from-philadelphia-casino/http://www.dailyfinance.com/2010/04/12/steve-wynn-abruptly-walks-away-from-philadelphia-casino/#commentsIf anyone seemed eager to participate in Philadelphia's burgeoning gambling market, it was Steve Wynn, CEO of Wynn Resorts (WYNN). He enthusiastically positioned himself as the savior of a troubled project that had been originally launched by Foxwoods Casino.

Last week, he met with Philadelphia Mayor Michael Nutter and appeared to be weeks ahead of schedule in the design of the would-be gambling den. By the meeting's end, he announced that as far as he was concerned, "the deal is done."

But within a matter of days, Wynn backed out of the deal. In a statement, he said, "This particular project did not, in the end, present an opportunity that was appropriate for our company."

This leaves the Foxwoods Philadelphia casino undertaking in limbo. At the time Wynn got involved, the proposed casino was hanging on by a thread, and the license obtained by Foxwoods was in jeopardy.

Beyond the prepared statement, Wynn hasn't commented on the reason for his change of heart. Stephen A. Cozen, a lawyer for Foxwoods, has revealed no specific details, either. But he did tell the Philadelphia Inquirer that Wynn's reason for retreating "was nothing that anybody would have ever anticipated." He then added, "We feel very much victimized."

Permalink | Email this | Comments

]]>casinoFoxwoodsPhiladelphiaMichael KaplanMon, 12 Apr 2010 17:30:00 ESTLas Vegas Strip Has a Winning Streak in Februaryhttp://www.dailyfinance.com/2010/04/12/las-vegas-strip-has-a-winning-streak-in-february/http://www.dailyfinance.com/2010/04/12/las-vegas-strip-has-a-winning-streak-in-february/http://www.dailyfinance.com/2010/04/12/las-vegas-strip-has-a-winning-streak-in-february/#commentsFiled under: ,

The Las Vegas casino industry seems to have some fight left in it. Following a seemingly endless run of negative months, gambling revenues on the Vegas Strip jumped 33% in February to $568 million from $427.4 million a year ago, according to Nevada's Gaming Control Board.

Casino operators like Sheldon Adelson, Steve Wynn and Jim Murren have their Chinese patrons to thank for the most recent, highly dramatic turn of good fortune. Due, in part, to boom times on the Mainland, Chinese customers flew to Vegas to celebrate their New Year in mid-February and proceeded to gamble it up.

The Chinese New Year is a boon for casino business every year [in 2009, it hit in January], says Rich Moriarty, an analyst with Union Gaming Group in Las Vegas. However, this year's influx of Chinese gamblers came as a pleasant surprise for casino operators: "International inbound volume and luck for the casinos contributed to the month-over-month growth," he says.

Casino wins at the game of baccarat -- a game that is hugely popular in China -- are largely credited with February's revenue increase. "Bacc volume has been as good as we've seen it," says Moriarty. And the winning streak may continue. "The revenue side of gaming is very good. It is offsetting the problems with room rates." Room rates, he explains, have fallen due to a lack of convention business in Vegas and probably won't move higher until the end of the year.

The New Year celebrations seemed to have spread throughout the state of Nevada, which saw gambling revenue spike 14% year-over-year in February. That provides hope that the Las Vegas gaming business's dog days may finally be over. However, that doesn't mean Nevada will be able to outmuscle the steroidal casinos in China's Macau.

"Year-over-year Macau has been going up dramatically; it's in a part of the world where you have millions and millions of people moving to the middle class," says Mike Cintolo, editor of The Cabot Market Letter. "Macau is the main train. For companies based in Las Vegas, a huge part of the revenue is coming from Macau and so is the growth."

Closer to home, there is the belief that MGM Mirage's newly opened CityCenter will contribute to fuel Vegas's acceleration through 2010. "It's incredibly important to have America's largest privately-funded product on the Las Vegas Strip," says Moriarty.

Perhaps inspired by the bump, analysts from JP Morgan and Goldman Sachs have expressed bullishness on the future of Las Vegas. Steven Kent, of Goldman, raised his 12-month price target on MGM's shares from $14.50 to $17.50 and gave the stock a buy rating. JP Morgan's Joe Greff raised his price target on the Las Vegas Sands from $23 to $29, citing the opening the casino operator's $5.5-billion Singaporean casino/resort in June, among other factors. Greff also raised his target price on Wynn Resorts to $88 from $72 based on a combination of Vegas's promised rebound and Macau's continuing sizzle.

Investors seem to concur with the analysts. Over the last 30 days, Las Vegas's big boys have risen dramatically. MGM Mirage (MGM) is up 22.30%, Wynn Resorts (WYNN) is up 16.82%, and Las Vegas Sands (LVS) is up 17.44%. During a recent conference, the irascible and embattled Adelson (the CEO of the Sands, which owns the Venetian among other casinos) made clear that he's not frowning over recent results. No doubt, his facial expression remains on the upside.

This story was updated on April 19, 2010.

Permalink | Email this | Comments

]]>casinochinalas vegaslas vegas sandsLasVegasSandsmgm grandMgmGrandsheldon adelsonsteve wynnMichael KaplanMon, 12 Apr 2010 16:00:00 ESTFeds Up the Ante on Online Poker With Full Tilt Investigationhttp://www.dailyfinance.com/2010/04/08/feds-up-the-ante-on-online-gambling-with-full-tilt-poker-investi/http://www.dailyfinance.com/2010/04/08/feds-up-the-ante-on-online-gambling-with-full-tilt-poker-investi/http://www.dailyfinance.com/2010/04/08/feds-up-the-ante-on-online-gambling-with-full-tilt-poker-investi/#commentsFiled under: ,

A federal grand jury is investigating online poker site Full Tilt Poker on suspicion of money laundering. Full Tilt Poker, the world's second-largest online poker site, is under investigation by a federal grand jury. High-profile poker players and founding representatives Howard Lederer and Chris "Jesus" Ferguson were both named as quarries in the case.

"FBI agents or prosecutors have spoken to at least two people involved in disputes with Full Tilt, paying special attention to the possibility of money-laundering violations," reports the Financial Times of London.

Although the charge sounds vague, that may be by design. Feds can use suspicion of laundering to win valuable cooperation from otherwise unobliging foreign governments in countries where sites base their operations.

"When you hear money laundering, you associate it with fraud and crime," says Lawrence G. Walters, an attorney whose clients include online gambling entities (but not Full Tilt). "However, by definition, it can be as simple as generating so-called illegal transactions through Internet poker."

A $4.8 Billion Market

Walters describes the investigation as "a shot across the bow" of the online poker industry and expresses surprise that the FBI is spending resources on something that the U.S. Congress, as well Florida and California, are considering legalizing.

But Full Tilt and PokerStars, the two largest online poker sites, get an estimated 70% of the their business from the U.S. And it's a significant business. Gambling research and consulting firm H2 Gambling Capital estimates the size of the online global poker market at $4.8 billion.

Indeed, even beyond the elephantine revenues, online poker is hardly an under-the-radar industry. FullTilt.net, the play-money site associated with FullTilt.com, where poker is played for real money, has sponsored and produced poker-related content for network television.

Hardly Under the Radar

Additionally, the company airs a raft of excellent commercials shot by the acclaimed documentary director Errol Morris. Officially, these TV ads are for the free-play FullTilt.net site, but they surely also generate business for FullTilt.com.

Even though an argument can be made that the U.S. government is missing out on much-needed tax revenue by fighting an ultimately futile battle against online poker sites, careful readers of The New Yorker can't be completely shocked by the federal move on Full Tilt, Lederer and Ferguson.

Last year, when writer Alec Wilkinson was working on a profile of Ferguson, a Department of Justice spokesperson told him the department views online poker as illegal under federal law. When Wilkinson inquired as to why there hadn't been heat on site-affiliated players such as Ferguson, the spokesperson answered: "Just because somebody hasn't been prosecuted yet doesn't mean that they won't be."

Permalink | Email this | Comments

]]>online gamblingonline pokerMichael KaplanThu, 08 Apr 2010 18:30:00 ESTCasino Mogul Steve Wynn Raises the Stakes in Phillyhttp://www.dailyfinance.com/2010/04/06/casino-mogul-steve-wynn-raises-the-stakes-in-philly/http://www.dailyfinance.com/2010/04/06/casino-mogul-steve-wynn-raises-the-stakes-in-philly/http://www.dailyfinance.com/2010/04/06/casino-mogul-steve-wynn-raises-the-stakes-in-philly/#commentsFiled under: , ,

Casino Mogul Steve Wynn Last month, when Steve Wynn first publicly proposed taking over the Mashantucket Pequot Indian tribe's stalled-out Foxwoods casino project in Philadelphia, his plan seemed modest. Wynn described the would-be enterprise as "cute" and characterized its location as "dandy."

As of Monday, during a splashy meeting with Philadelphia Mayor Michael Nutter, the Las Vegas-based casino mogul got serious. Three weeks ahead of deadline, he showed up with color drawings depicting a proposed gambling hall that he promised would be "Wynn top to bottom." With his statuesque blond girlfriend in tow, the recently divorced Wynn put on a full-court press of charisma and salesmanship.

It was the kind of presentation that not every casino boss would be able to pull off. But, as Joseph Weinert, senior vice president of the gambling consultancy Spectrum Gaming Group, puts it, "When Steve Wynn talks, people listen."

Wynn made it clear that he had contributed mightily to the new design, and expressed interest in potentially building a hotel to go with the casino -- a change in strategy from his original proposal. According to The Philadelphia Inquirer, Wynn's sketches "show a low-slung limestone building with red canopies, a fountain in front, shrubs, and flowering landscape." Wynn described it as "classical elements except with contemporary sensibilities." His layout has restaurants separate from the casino floor, so that those profit-centers can attract people who'd rather not be surrounded by gambling.

From the sound of things, Wynn is proceeding as if his union with Philadelphia gaming is already consummated, going so far as to comment that as far as he's concerned, "the deal is done." Mayor Nutter characterized their sit-down as more of an exploratory meeting that was just one more step on the road toward a final decision.

If things do go Wynn's way, gaming consultant Weinert is confident that the Philadelphia outpost will be a serious moneymaker. "Steve Wynn knows the Eastern market, he will attract top management, and the gaming public is aware that the Wynn name stands for quality," says Weinert. "I won't be surprised to see that property generating $100 million of EBITDA." But first, Wynn needs to get approved. Asked to handicap the likelihood of that happening, Weinert says, "I don't know too many people who would bet against Steve Wynn."

Permalink | Email this | Comments

]]>casinofoxwoodsgamblinghotelnutterphiladelphiaphiladelphia gamingsteve wynnwynnMichael KaplanTue, 06 Apr 2010 17:10:00 ESTWho Will Save Revel? Morgan Stanley Walking Away from Atlantic City Casinohttp://www.dailyfinance.com/2010/04/02/who-will-save-revel-morgan-stanley-walking-away-from-atlantic-c/http://www.dailyfinance.com/2010/04/02/who-will-save-revel-morgan-stanley-walking-away-from-atlantic-c/http://www.dailyfinance.com/2010/04/02/who-will-save-revel-morgan-stanley-walking-away-from-atlantic-c/#commentsFiled under: ,

Morgan Stanley has decided to cut its losses in Atlantic City. The Wall Street investment bank says it will be selling its stake in Revel Entertainment Group LLC's Revel casino in Atlantic City, N.J. The investment bank, which had invested $1.2 billion into the project, says it will "take a substantial loss" -- one that is estimated to be somewhere between $800 million to $1 billion.

"At this point, there has been some recovery in the financial market and they can absorb the hit," says Rich Moriarty, a principal with the Las Vegas-based research firm Union Gaming Group. "Morgan is figuring that it's better to walk away and invest elsewhere. The view internally may be that the Atlantic City market will never recover." (Reportedly, the loss will be offset by a recent $775 million legal settlement that fell in Morgan Stanley's favor from an unrelated matter.)

Morgan Stanley's decision comes after the casino said it would require another infusion of cash, something to the tune of $1 billion, in order to build its interior. Kevin DeSanctis, chairman and CEO of Revel, has said that China's Export/Import Bank would potentially put up money, but that has evidently failed to give Morgan Stanley enough peace of mind about the project.

"The indication is that Morgan Stanley does not believe in the project anymore, and I don't think they believe that the money [from China] is coming; otherwise they would wait and let the new investor put his money in," says Randall Fine, managing director of Fine Point Group, a Las Vegas-based gaming consultancy. "It's not rational to invest $1-billion in Atlantic City right now. If you have the billion, and you want to invest in Atlantic City, why not wait and see what happens in Pennsylvania?"

Pennsylvania could indeed pose a threat to Revel and the other casinos of Atlantic City. Gaming was recently legalized in the Keystone State and Steve Wynn is planning to open a casino in Philadelphia, a mere 60 miles from Atlantic City. "If I had a client who could be given Morgan's share of the property for zero dollars in exchange for putting in the billion dollars required to finish it, I would still advise waiting," says Fine.

The Revel's fate is uncertain, but some clues of what may happen to the half-finished casino may be found in the story of the Fountainbleu. The casino, which is in the midst of construction on the Las Vegas Strip, ran out of funding and went into bankruptcy last year. Then bargain-hunting Carl Icahn swooped in and bought the partially-built resort for $156.5 million, a fraction of what had gone into the casino up until that point. "He's mothballing the project and will maintain it on a monthly basis," says Moriarty. "In three- to five-years [when the Vegas climate improves] he can sell it or finish building it."

Moriarty can see a brave investor employing a similar strategy with Revel: "At some point, when you see revenue declines leveling off, and see a return in the market, a project like Revel makes sense." Asked for an estimate of what Morgan can hope to scrape back from its $1.2 billion adventure, Moriarty replies, "Who knows what it will clear at. The market will ultimately define that number, but Morgan Stanley will be getting cents on the dollar."

Permalink | Email this | Comments

]]>Atlantic CityCarl IcahncasinogamblingMorgan StanleyresortRevel CasinoSteve WynnSteveWynnMichael KaplanFri, 02 Apr 2010 20:00:00 EST