Sat, Jun 06, 2009

Melco Crown’s big gamble includes different hotels, casinos

Lawrence Ho’s attempt to forge his own business reputation separate from his father, Asian gambling magnate Stanley Ho, took a great leap forward last week when Ho’s Melco Crown Ltd. opened the City of Dreams on Macau’s Cotai Strip. As important as the new facility is to Melco Crown, it is also crucial to the success of the city.

City of Dreams is likely to be the last large stand-alone casino complex until the current economic problems are sorted out. While there have been some encouraging signs pointing to the recovery of Macau in the first quarter of the year, City of Dreams will point the way to determine whether the mass market can fill the gap made by the downturn in the VIP market.

While City of Dreams is a complete resort, catering to both segments of the market, there are concerns that the property will not grow Macau business enough and will end up cannibalizing existing business. Venetian officials were cautiously optimistic that the new resort would bring additional traffic to the Cotai Strip, where it had been on its own since opening almost three years ago.

“The opening of City of Dreams represents a culmination of nearly five years of planning and development," said Lawrence Ho, CEO of Melco Crown. "As our flagship property, it represents a major step forward in Macau’s transformation as the region’s premiere leisure, entertainment and gaming destination."

With 420,000 square feet of gaming space (520 table games and 1,350 slots), the City of Dreams is a massive expansion of the Macau market. And while it adds only a few hundred hotel rooms in the Crown Tower and the Hard Rock Hotel, another 800 rooms will come online when the Grand Hyatt Macau later in the year.

Ho’s gamble with City of Dreams is doubled down by his partner, James Packer, scion of the Packer family in Australia. Ho says business at this time is actually better than when the company opened its first casino, Crown Macau, now re-branded as the Altira Macau.

“Things were much tougher when we opened Crown Macau Tower two years ago. We consider City of Dreams' opening to be a much better time and business climate,” he says. “Melco Crown entertainment still believes in our future and also in the bright future of Macau. We were determined to complete City of Dreams this year and the recent turbulence in the global markets has not deflected us from our task."

The iconic architectural feature of COD is the domed “Bubble,” an attraction that features an immersive multimedia experience produced by Falcon’s Treehouse. The first few days produced a huge demand for the 15-minute show.

With more than 85,000 square feet of retail, COD is battling retail space that is already faltering at the Venetian and the adjacent Four Seasons. COD executives say the layout of the retail space, dubbed the “Boulevard,” should ensure lots of customer traffic. The Boulevard spans the property and is the main causeway between the various hotels and attractions.

Despite the luxury of the Crown Tower, aimed at the VIP market, COD will rise and fall with the mass market. Ho says they are ready.

“We all want to grow Macau into a multi-day destination," Ho said. "We believe that if we give people attractions, people will stay. Gone are the days when people only wanted gambling. We're very culturally sensitive to what our customers want."

Greg Hawkins, president of City of Dreams, believes that the project offers something for everyone.

"As an urban entertainment center," Hawkins says, “we believe City of Dreams delivers the ultimate in sophisticated entertainment, first class hotels, world class retail and the very best in Asian and international dining, providing an incredibly diverse and cosmopolitan collection of contemporary leisure and lifestyle experiences within this single city-like complex. We are confident that we will strengthen Macau as a multi-day stay market."

In many ways, Macau’s future is tied to COD. The economic downturn, combined with strict visa restrictions on visits from mainland China, has hit the former Portuguese colony hard. Revenues were down in both the fourth quarter of 2008 and the first of 2009 compared with the year earlier. Las Vegas Sands has halted construction on its $12 billion development. Galaxy Entertainment has delayed the opening of its Cotai development and Macau Studio City has yet to even begin construction. You can be sure that executives with each of those companies will be closely watching the business that flows through COD, because that business could be the harbinger of the business that will arrive at their doors in the near future.

Sat, Jun 06, 2009

Harrah’s looks to expand in Asia; MGM defends Pansy Ho


The excitement in Macau last week wasn’t limited to the opening of the City of Dreams (see Cover Story). Across the street at the Venetian Macau, the leaders of the Asian gaming industry gathered to honor Macau gaming pioneer Stanley Ho and attend G2E Asia, the leading gaming trade show and conference on the Pacific Rim.

It was the opening ceremony that garnered the most attention. Hundreds of gaming executives and a swarm of media showed up to watch Ho accept the Gaming Visionary Award, presented annually by G2E. Joined by much of his family, including daughter Pansy, who recently was deemed an “unsuitable” partner for MGM Mirage in MGM Grand Macau, and Lawrence, who opened Melco Crown’s City of Dreams two days before. Also attending the ceremony was Macau Chief Executive Edmund Ho (no relation).

The major players in the worldwide gaming industry were present, as attendees and on the exhibit floor. More than 130 companies erected stands on an exhibit floor that exceeded 150,000 square feet. More than 4,000 attendees representing more than 70 countries enjoyed the opportunity to experience the uniquely Macanese experience and networking events that gave attendees chances to mingle with the industry’s top executives.

Courtney Muller, group VP at Reed Exhibitions, which, along with the American Gaming Association produces the event, said the economy was a focus of the G2E Asia.

“Tough economic times are hard for any business,” she said. “In the case of events we have additional challenges because there are so many factors that contribute to a company’s participation as an exhibitor and equally as many factors for the visitors that attend the events. Our goal this year is to deliver a stellar event to the market, even though the event may be smaller in size.”

Frank J. Fahrenkopf, Jr., president and CEO of the American Gaming Association, said the extensive conference program is a key to the show’s success.

The new conference content at G2E Asia 2009 has been designed by the industry, for the industry to provide the unique insight and outlook that will help industry professionals succeed in the Asian markets and beyond,” he said.

Some of the most popular seminar sessions included a gaming certificate program presented by Macau University and the University of Nevada, Las Vegas. Speaking at the keynote luncheon for the program was Lawrence Ho, who offered attendees the perspective of the first day of operation for City of Dreams and the plans for its future. He expressed confidence in the future of Macau and said the resort will provide what the city’s visitors want most.

Attendees were also enthusiastic about topics ranging from poker in Asia, the state of table games and slot machines in the region, marketing in a down economy, updates on gaming legalization in Asia, the future of integrated resorts and much more.

News was broken at the show when Harrah’s Asian chief, Michael Chen, declared that Harrah’s is actively seeking a license in Macau, as well as other regions in Asia. He said that Harrah’s will be an active bidder in both Taiwan and Japan, should gaming become legal there.

IGT said it expected to be a major supplier to the two casinos planned for Singapore.

“We expect the market share in Singapore to be higher than Macau," Kurt Quartier, vice-president of IGT's international casino markets, said.

At the ceremony honoring Stanley Ho, daughter Pansy was surrounded by media asking how she plans to respond to the negative New Jersey report. She said that once MGM Grand makes its response, she will be actively involved in clearing her name.

Lloyd Nathan, MGM Grand’s president for global gaming development, said the company would vigorously defend Pansy Ho at any hearing called by the state’s Casino Control Commission.

“We disagree with their recommendation," he told conference attendees. "Pansy Ho has been and is a great partner in Macau."

Stanley Ho himself responded obliquely to the criticism during his acceptance speech.

"The fact that SJM is listed on a major stock market (in Hong Kong) has provided a new level of transparency of gaming in Macau and helped to clear up the misconceptions about the industry that some people had in the past," he said.

Sun, Jun 07, 2009

Randy Fine was the leader in the development of the Harrah’s Total Reward program. He took a relatively standard slot club and energized it so now it is the most powerful marketing tool in the industry. After leaving Harrah’s, Fine was hired as VP marketing for Carl Icahn’s group of casinos, helping to turn a $300 million investment into a $1 billion windfall, and four years ago formed the Fine Point Group, specializing in marketing. He has assisted dozens of casinos in improving their market share and was recently awarded the management contract for the Greektown Casino in Detroit while it was in bankruptcy. In just three months, he’s improved Greektown’s market share and has made the property an attractive purchase. He spoke with me at Greektown in late April about that casino and his overall view of the industry….

Sat, Jun 06, 2009

Leading slot manufacturer International Game Technology has debuted an electronic, multi-player version of baccarat.

“Golden Baccarat,” which made its first appearance last week at Michigan’s Four Winds Casino Resort, is a five-player reproduction of a baccarat game. Player stations are placed around a “virtual dealer” appearing on an LCD video screen. Wagers, deals and the progression of the game are identical to those in the live game, with the table layout, including cards and chips, displayed on the video screen.

Players wager on banker, player or tie, just as in the live game, and standard baccarat rules apply. Players make no decision other than their wager. Also as in the live game, the house holds a 5 percent vigorish on winning bank hands.

The game is part of IGT’s “M-P” series of multi-player, electronic table games, which also includes roulette, “Digital 21” blackjack, and Texas Hold ‘Em Bonus. The series was created after IGT purchased technology from Novomatic’s Austrian Gaming Industries. “Our electronic, multi-player product line has significantly progressed in the past year,” said Tim Richards, IGT director of table games.

Four Winds, in New Buffalo, Michigan, placed the baccarat game in its fully automated poker room.

Sat, Jun 06, 2009

Canadian table game supplier DEQ Systems announced 14 new installations for its “EZ Baccarat” system, a no-commission version of baccarat with a side bet.

In British Columbia, Starlight Casino, River Rock Casino, View Royal Casino and Boulevard Casino have installed the system, and Edgewater has increased its number of tables offering the system from three to six. In Missouri, where the system achieved approval less than a month ago, Isle of Capri, Ameristar and Lumière Casino have installed EZ Baccarat tables.    

EZ Baccarat accelerates baccarat speed by eliminating the commission. The winning-hand bank commission is replaced by barring one specific winning bank hand and/or reducing the banked winning wagers. The EZ Baccarat method, carrying the trademark “Dragon 7,” bars a three-card total of seven. Players can also make a side wager as to the occurrence of the Dragon 7.

“EZ Baccarat and EZ Trak are proving themselves in every market we enter,” stated Paul Omohundro, sales VP for DEQ.
“Whether it is in direct commercialization such as in Missouri or with partners such as TCS John Huxley in British Columbia, EZ Baccarat and EZ Trak are in demand. We are anxiously awaiting jurisdictional approvals in Florida, Connecticut and Mississippi, where clients are waiting to get the EZ suite of products.”

Sat, Jun 06, 2009

Sat, Jun 06, 2009

The organizers of the Gaming & Amusement Expo Mexico—GAMMEX—have bowed to circumstances beyond their control and effectively canceled this year’s event.

The move was forced by the outbreak of the H1N1 virus earlier this spring. GAMMEX was originally scheduled for the first two days of April 2009. However, due to concerns about travel to and around Mexico, the event was first rescheduled for June 2009 and then, ultimately, postponed until 14-15 April 2010.

To show support for those exhibitors who had already registered for this year’s event, the organizers are offering their assistance in doing business in Mexico.

GAMMEX Executive Director Izkrah Pinto said, “With the objective of giving GAMMEX 2010 added value and support, we are proposing that our registered exhibitors use our offices in Mexico as a business coordinating point.”

“We’ll gladly connect our clients with local operators between now and next year if they wish to do business in Mexico in advance of our expo, and can start working on this immediately,” said Pinto.

Valeria Guzman, GAMMEX marketing manager, said, “We wish to thank our exhibitors’ understanding in the face of such an unfortunate health risk situation, which was totally unforeseen, and once more would like to emphasize that you make use of our office for direct help with your business plan.”

Sat, Jun 06, 2009

Aristocrat Leisure Limited has announced that wholly-owned subsidiary ACE Interactive has received GLI approval for its TruServ server-based gaming platform, under the amended GLI 21 regulations.

Doug Bertinshaw, vice president of marketing at Aristocrat’s server based gaming technologies unit, said, “GLI 21 approval represents a major milestone for ACE and Aristocrat, as TruServ is the first ever GLI-approved true server based gaming platform. This is a validation of our technologically advanced approach and allows us to commercially pursue opportunities for TruServ in casinos across the world.”

Separately, ACE Interactive received an order for an additional 1,000 Indago terminals from Norway’s lottery and betting monopoly, Norsk Tipping. The order brings to 4,000 the number of terminals ordered for the project. Over 1,300 have been installed so far, with a final target of 6,500 terminals expected.

The Indago terminals are being placed in locations throughout Norway. They will be operated and managed with a TruServ SBG central system under the control of Norsk Tipping.

Sat, Jun 06, 2009

Empire Resorts’ board of directors recently picked lawyer and real estate developer Joseph Bernstein to be its chief executive officer for a term that will end December 31 of this year.

Bernstein owned Monticello Raceway through his company Catskill Development LLC, but sold the track to Empire Resorts in 2004 after plans for a Class III tribal gaming facility fellow through.
    
Bernstein was brought on board to assist Empire Resorts to eliminate debt and stay out of bankruptcy.
    
“Progress has already been made by the company as we have rapidly improved cash flow, cut expenses and enhanced productivity, but it is imperative that we have a strong leader like Joe Bernstein who will aggressively pursue initiatives to address the company’s long-term future,” said Empire Resorts Lead Director James Simon.
    
The company also named Nancy Palumbo, former director of the New York State Lottery and president of Green Planet Group, to its board as an independent director.

Sat, Jun 06, 2009

PokerTek appointed Mark Roberson acting CEO of the company after former CEO Chris Halligan resigned May 29. Roberson has been PokerTek’s CFO and treasurer since October 2007
    
"Mark has proven himself as a capable leader, and we feel he is the right person to lead PokerTek at this time,” said PokerTek Chairman Lyle Berman. “The top priority for the management team under Mark's leadership will be to accelerate PokerTek's progress towards cash flow positive operating results.”
    
Roberson will continue to serve as CFO and treasurer until PokerTek finds a replacement for the position.

Sun, Jun 07, 2009

The Big Wheel Casino & Truck Stop is underway in Fernley, Nevada. Construction on the 20,000-square-foot property will take seven months, and will comprise a casino, a trucker’s service area, a convenience star, bar and a gas station. Negotiations are in the works to add an International House of Pancakes to the property as well. "The traffic on I-80 more than justifies an additional truck stop in the area and I can assure you that Big Wheel will be as trucker-friendly a facility as exists in the western United States," Paul Morabit, president of owner Big Wheel Properties LLC, told the Associated Press. The casino will have table games and 240 slot machines. The project is expected to create 45 new construction jobs and 60 jobs at the actual property.  •  Oklahoma’s Cherokee Nation tribal council plans to discuss whether gaming machines should be allowed smoke shops licensed and regulated by the tribe. The shops are not owned by the tribe but are on land that has been taken into trust or restricted. At a recent meeting of council members, Cherokee Nation Gaming Commissioner Jamie Hummingbird told his colleagues that research would have to be conducted in order to ensure that the tribe did not violate the Indian Gaming Regulatory Act. Hummingbird said he knew of no other tribe in the country with a gaming arrangement with smoke shops.  •  After former Luxor employee Al Gualtier noted the dangers of catwalks without safety railings, the property is installing barriers to prevent accidents from occurring. The rails have not yet been installed at the Las Vegas Strip property, but MGM Mirage spokesman Gordon Absher told the Las Vegas Review-Journal that they would be up soon. Gualtier had to use the catwalks during his time at the Luxor to change light bulbs, and he noticed that if someone fell from the stairs, they would probably not survive. So he reported the situation to Nevada’s Occupational Safety and Health Administration. Nevada OSHA did not issue citations or require railings be installed, but MGM Mirage decided to install them anyway.  •  Golden Gaming plans to build a casino in Carson City, but a lawsuit from landowner RIDL may prevent the plans from going through. In the filing, RIDL alleges that Golden Gaming has broken a contract with the company, failing to pay rent. Golden Gaming has a 30-year lease with the company that began in 2005, but RIDL said it has not been paid as agreed. A court date has not yet been set in the case.  •  The Hard Rock Hotel and Casino in Las Vegas announced it will hire 1,200 employees by the end of the year as it readies to unveil its $750 million expansion.  The expansion, which started in 2007, brings two new hotel towers, additional casino space and 75,000 additional square feet of meeting and convention space. With the new hotel towers, the property's room count will climb from 650 to 1,525.  The hiring process was announced by Hard Rock's PR firm Kirvin Doak on a Twitter account set up to announce various “hot jobs” throughout the hiring process.  •  The Napa Valley Casino, in California’s wine country, wants to expand an existing card room of nine tables to 16. The $4 million expansion would involve bulldozing several existing commercial buildings and boarded up houses in the town of American Canyon, near State Highway 29 to make way for a 14,000-square-foot, two-story structure.  •  The Rincon Band of Luiseño Indians last week re-joined the California Nations Indian Gaming Association (CNIGA), the organization that represents most of the gaming tribes in the state. The Rincon band owns Harrah’s Rincon Casino in San Diego County.  •  Council members in Maryland’s Anne Arundel County have delayed a vote on a zoning bill that would allow a proposed slot casino to be built by Baltimore’s Cordish Company adjacent to the Arundel Mills Mall. The plan, which is the county’s sole slot license bid after rejection of the bid for slots at nearby Laurel Park, has met with opposition from many residents, but a change in the plan to enlarge the parking area is the reason for the delay—such a change requires another public hearing. The vote will now take place July 6.  •  Table games in Delaware, expected to be in place by Christmas, will create as many as 750 new jobs, according to estimates by local casino operators, who point out that this is welcome news in a state with 7.5 percent unemployment.  •  Pennsylvania’s state auditor general is calling on lawmakers to rewrite the slot law to specifically clarify what type of information should be shared among law enforcement agencies when a background investigation is conducted on an applicant for a slot license. It is the latest attempt to head off another situation as that which arose with Mount Airy Casino Resort owner Louis DeNaples, who was awarded a slot license while under county and federal investigation—a fact unknown to regulators because of restrictions on the sharing of information concerning ongoing investigations.  •  City Council in Baltimore, Maryland is considering a bill that would license hundreds of video poker, video slot and video keno games that are currently operating on a quasi-legal basis in bars across the city. The bill would impose a hefty $3,000 licensing fee on each of the machines, which carry labels marking them as “For Amusement Only” but actually function as gambling devices, a violation that is very hard for law enforcement to detect. The per-machine fee would be collected annually, and would replace the 10 percent amusement tax now generating an estimated $522 per machine annually. In all, proponents say the new licensing system could raise as much as $5 million annually, which the city could use to restore programs and services that have been sacrificed to the recession.  •  The Empress Casino in Joliet, Illinois, will reopen June 25, three months after a fire that caused $340 million in damage to the casino’s pavilion. Authorities say the March 20 blaze may have been sparked by a welder working on a kitchen duct system. Joliet lost $850,000 a month while the Empress was closed for repairs.  •  Members of the dealers' union at Foxwoods Resort Casino in Connecticut have voted to continue negotiating with the Mashantucket Pequot Tribe rather than go to binding arbitration. Negotiations will continue until at least August 10. The union represents about 2,500 table-games dealers at the Foxwoods and MGM Grand at Foxwoods.  •  A campaign to expand gaming in Iowa could be delayed by a state law that compels every county with legal gambling to put the issue on the ballot every eight years. Lyon County is considered the first in line to win approval for a casino license. Casinos have also been proposed for Fort Dodge and Ottumwa, and in Franklin and Tama counties. The next general election is in November 2010.

Sun, Jun 07, 2009

“Las Vegas Sands is sitting on trophy assets with one of the world's greatest casinos rising from the Bay in Singapore. The trick will be if the company can hold on to its riches while servicing its $10 billion debt load.”
—Gaming analyst Janet Brashear of Bernstein Research in a note to clients recommending Las Vegas Sands

“For Harrah’s to be able to issue means there’s appetite for the riskiest names in the gaming sector.”
—Chris Snow, gaming analyst for CreditSights, commenting that investors are now willing to risk money on bonds such as those issued by Harrah’s which are secured by a company’s casino properties

“The stumbling block toward reforming the gaming board and the current law remains the House Democratic Caucus. There has been a continuous unwillingness from House Democrat leadership to address the flaws in the gaming law related to the shoddy manner in which background investigations have been handled.”
—Republican state Rep. Doug Reichley of Pennsylvania, expressing frustration at the slow movement of legislation to reform the state’s gaming law to close loopholes in how slot applicants are investigated

“We are so used to Crown getting a better deal than the rest of us that you sort of just accept it in the end. They are Crown, they get whatever they want—who knows why?”
—Clubs Victoria Executive Director Margaret Kearney, on the news that Crown Casino, Melbourne, Australia, has received special consideration from the Victoria state government.

“The decentralized nature of video gambling would turn Illinois into the wild west of gambling.”
—J.R. Davis, chairman of the Chicago Crime Commission, who opposes a video poker bill passed by the Illinois legislature that awaits Governor Pat Quinn’s signature

“Video lottery gaming has saved racing in New York State.”
—Batavia Downs Marketing Director Martin Biniasz

“Attending a casino meeting in Sullivan County is like watching the same movie over and over again for decades. The same people always show up and they say the same thing.”
—An editorial in the Hudson County, New York, Times Herald Record

“The casino doesn't add anything to a community. I would be glad to give you ours. I'll pay shipping one way."
—North Stonington, Connecticut, First Selectman Nick Mullane, who says Foxwoods has increased local traffic from 8,800 cars a day to 25,000

“I am not in favor of negotiating. I never have been. And I never will be.”
—La Center, Washington, Councilwoman Linda Tracy on suggestions that it may be time for the council to talk to the Cowlitz tribe that wants to build a $500 million casino west of the town