Issue 278
January 9, 2006 - January 15, 2006
Volume 6
page 1
 

This Issue

Gaming News

THE STRIP: BREAKING RANKS

Trump's casino company sees luck turning

Gambling sites eager to roll as governor signs bill regulating Broward's slot machines

Pa.'s leaving money on casino-bids table

Horizon's Edge Casino Cruises Launches from Bayside in Miami

Show Time Etta James will be at The Orleans Hotel & Casino's Orleans Showroom.

Column Is Craps the Best Game? By Donald Catlin

Check out our entertainment highlights & upcoming tournaments

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THE STRIP: BREAKING RANKS

As Reported by Las Vegas Review-Journal

LAS VEGAS, Nevada, - What a difference a year makes, at least for gaming industry competition in Las Vegas.

Industry experts often compare competition among gaming companies to a game of Monopoly. But change in the past 12 months to 18 months has been so sweeping that the experts now say it's as if the game has changed. There are new players, a different board and new rules. The crowd chasing the highest-end customers seems to be growing and the other players are working to catch the rest of the fragmenting market.

No company's role in the Las Vegas gaming industry has changed more dramatically than Boyd Gaming Corp.'s.

Boyd Gaming started out as a sleepy competitor locals gaming business, at least in the minds of many Las Vegans. But last week the company moved to a leading role on the national stage with plans to develop Echelon Place, the second-costliest single hospitality industry project in U.S. history. The project will have 5,300 hotel rooms, 1 million square feet of meeting and convention space, 350,000 square feet of retail stores and a 140,000-square-foot casino.

Boyd Gaming Chairman Bill Boyd said his company plans to become a leader in Las Vegas' luxury hospitality with Echelon Place, offering offer world-class dining and nightlife, shopping, meetings and conventions, and entertainment.

To achieve top-flight luxury for Echelon Place, Boyd Gaming will partner with Shangri-La Hotels and Resorts, the Asia-Pacific's leading luxury hotel group, and the Morgans Hotel Group, a developer of lifestyle-boutique hotels. Bob Boughner will leave his position at Borgata in Atlantic City to lead development of Echelon Place.

The end result likely will be a new wave of development and spirit of competition, the likes of which Las Vegas has never seen before. As early ago as 2004, gaming officials here were saying the casino business was a mature industry with a relatively fixed cast of players. Boyd's bold move with Echelon seems to shatter this notion.

Even a year ago, the gaming industry was dominated by three giants -- MGM Mirage, Harrah's Entertainment and Caesars Entertainment -- each of which was known for its takeovers and none for its own developments.

Now, Caesars has been gobbled up in a buyout by Harrah's. And Mandalay Resort Group, which had been coming on strong, has merged into MGM Mirage.

In the same year, Las Vegas Sands Corp. has gone public and started work on Palazzo, a new resort next to The Venetian, which it also owns. Also, Wynn Resorts Ltd. opened Wynn Las Vegas and started work on Encore, its second Las Vegas property. Both Sands and Wynn Resorts are chasing the premium market.

Niche operators such as Palms, owned by George Maloof; the Hard Rock Hotel owned by Peter Morton; and the Golden Nugget, led by owner Tilman Fertitta, are going through massive expansions. All three hotel-casinos are also chasing high-end customers.

Meanwhile, Robert Earl, who is rebranding the Aladdin as Planet Hollywood; and the San Remo, now the Hooters Hotel; are chasing new classes of casino customers previously given short shrift by major operators.

By contrast, Harrah's Entertainment is focused on operating dormitories for its slot shacks, except for Caesars Palace, which at least still gives lip service to catering to a higher-end clientele, said analysts who asked not to be named.

Harrah's may not stand pat. Schwartz said there is a lingering question of when and how Harrah's will depart from this tried-and-true strategy and unveil a redevelopment plan for its major real estate holdings from Harrah's Las Vegas and Imperial Palace south to Paris Las Vegas.

Station Casinos is left as the sole company focusing exclusively on the locals market. But insiders and analysts agreed although Boyd Gaming and niche operators are not leaving locals to Station without a battle.

While Boyd Gaming officials were reluctant to discuss marketing strategy, Steve Ruggerio, gaming analyst with CRT Capital Group expressed skepticism Boyd will really forsake its traditional customer base or conventioneers to concentrate on high-end customers.

Ruggerio said the premium market is in danger of becoming overcrowded. But he added that although while Echelon Place will be upscale, Boyd will use its ExpoCenter to maintain and enhance its position in the midtier market.

University of Nevada, Las Vegas professor Bill Thompson, who specializes in gaming studies, said that although high-end has been the fastest-growing casino market segment, the market would have to grow 10 percent a year to absorb projects now on the drawing board, or the companies will start cannibalizing each other.

Therefore, the dual marketing strategy behind Boyd Gaming's development plans appears shrewd, Thompson said.

Schwartz said MGM Mirage is pursuing a similar two-tiered marketing strategy, initially engineered by Steve Wynn when he headed Mirage Resorts, of offering properties for every budget.

It's better if you can charge $250 a night, but if that's all you offer, you can end up scaring customers away, which Boyd promises not to do, Schwartz said.

"It's a good business plan. Just because you have a Ritz-Carlton doesn't mean you can't have a Holiday Inn," he said.


Trump's casino company sees luck turning

As Reported by Press of Atlantic City

ATLANTIC CITY, New Jersey - For want of a vacuum cleaner, the guest room carpets at Trump Plaza Hotel & Casino stayed dirty.

For want of a dollar, Trump Taj Mahal couldn't add a hotel tower like its competitors did.

For want of a little novelty, slot players at Trump Marina took their coin cups next door to the Borgata Hotel Casino & Spa.

But luck is turning for Donald Trump's casino company, which emerged from bankruptcy last spring and is aggressively trying to make up lost ground. With new management in place and money to spend, Trump Entertainment Resorts Inc. is getting its houses in order - renovating rooms, adding restaurants and spending money on employee cafeterias and new uniforms.

Most importantly, it's making money: In its first full quarter since the Chapter 11 reorganization, Trump Entertainment made $3.2 million, a paltry sum by casino industry standards but an indication that the company's fortunes are finally looking up.

"We're thrilled to death. This is a long time coming," said Trump Plaza cocktail server Marie Sheehan, a 22-year employee who says she's getting bigger tips lately because of the improvements.

The company, which owns three Atlantic City casinos, struggled for years under the weight of $1.8 billion in junk-bond debt, with interest payments eating up most of the cash generated at the slot machines and blackjack tables. After going public in 1996, it never turned a profit.

Skimping on upkeep and unable to pay for upgrades, the Trump casinos scraped by at a time when other Atlantic City casinos were building new hotel towers, opening new restaurants and sprucing up their entertainment lineups to woo customers.

At the Plaza, the red ink made for dirty carpets. Housekeepers had to make do with 45 vacuum cleaners for the 904-room casino hotel and vacuumed rooms every other day instead of daily because there weren't enough, company officials said.

The Chapter 11 reorganization slashed the company's debt, reduced interest payments on it by $102 million a year and provided for a $500 million line of credit. It also provided for changes at the top. Trump, the New York real estate mogul and star of television's "The Apprentice," ceded majority control to bondholders and gave up his job as CEO.

Trump remains chairman of the board, earning $2 million a year under a contract that calls for him to make at least six appearances a year promoting his Atlantic City properties.

His replacement as chief executive is James B. Perry, 55, a veteran casino executive known for his ability to turn around struggling properties.

Since emerging from bankruptcy court protection eight months ago, Trump Entertainment has been on a spending spree, spending $32 million to renovate rooms at all three casinos, revamp the casino floor at Trump Plaza and build a glitzy new Boardwalk-fronting bar there.

It also jettisoned Trump Indiana, a Gary, Ind., riverboat, hoping to focus instead on the big job of updating the Atlantic City casinos.

"The fact that they showed that profit is a reflection that good management is paying off," said Dennis Gomes, a former Trump executive and Tropicana Casino & Resort president. "But it takes about five years to turn a company around."

In addition to renovated rooms, the company's flagship casino - the 1,250-room Trump Taj Mahal - plans to build a 800-room hotel tower beginning in June. That's a key element of the turnaround, since overnight guests typically spend more in casinos than day trippers.

A $25 million upgrade of the Taj Mahal's main concourse is also planned, along with renovations to the employee cafeterias at all three casinos, new uniforms for workers and the use of live music on the Taj's casino floor.

"Lounge bands and decor items were lost (before the bankruptcy), when those are the things that make it a fun and exciting place to be," said Perry. "There was no lounge to sit in, no fun places to go.'"

At the Plaza, the renovation of the casino floor and changes in the casino's marketing program have brought in more high rollers, according to Sheehan.

Gambler Henry Rosato, of Staten Island, N.Y., said he's noticed a difference.

"It's much better," said Rosato, 81, a slot player. "You can see they're putting money into the casino."

Vacuuming is on the rise, too. Thirty new vacuum cleaners have been bought at the Plaza, so every room gets vacuumed every day.

"It's going really well," Trump said. "Business has been very good. People love the buildings. And the stock price is up. The numbers are good now, and they'll get better and better."

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