Casino City Newsletter: Issue 270\Volume 5 Page 1



Issue 270	November 14 - November 20, 2005	Volume 5	page 1

This Issue

Gaming News

EXTREME MAKEOVER Aging Las Vegas Hilton gets face-lift

Nine Philadelphia sites recommended for standalone slots casinos

Empire under pressure as PartyGaming buys partners

"The new regulatory framework seeks to open the market in Chile"

Casinos talking to port

Show Time Jay Leno will be at the Caesars Circus Maximus Theater.

Column Can You Beat the Slots? By John Robison

Check out our entertainment highlights & upcoming tournaments

See the lucky winners

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EXTREME MAKEOVER

Aging Las Vegas Hilton gets face-lift

As reported by The Las Vegas Sun

LAS VEGAS, Nevada - Customers arriving at the Las Vegas Hilton are now met with scaffolding, drywall and a construction crew in the lobby as the 36-year-old property undergoes a makeover designed to make it look decades younger.

Construction walls at the rear of the casino feature photos of leggy models assuring visitors that the work going on behind the scenes "won't detour your fun." Another sign says, "Caution: Bright future ahead."

The Las Vegas Hilton, still months away from revealing its new self, has a lot to gain from the millions of dollars its new owners are plowing into the off-Strip hotel.

Colony Capital paid $280 million last year to buy the 59-acre Hilton site from Caesars Entertainment.

In a recent interview with In Business Las Vegas, a sister publication of the Las Vegas Sun, Resorts International Chief Operating Officer Roger Wagner called the Las Vegas Hilton "the buy of the century."

"You couldn't replace this building for a billion dollars," Wagner said.

Built by MGM Grand founder and MGM Mirage shareholder Kirk Kerkorian, the Las Vegas Hilton, then called the International, was then the world's largest hotel and home to resident entertainer Elvis Presley. It fell out of the limelight as newer resorts sprouted on the Strip and stagnated in recent years under Caesars Entertainment, which had attempted to sell the property to focus on its better-performing Strip casinos.

Colony snapped up the Hilton at a deflated price and has begun work on a five-year master plan to spiff up the property and use its land more effectively.

Colony in July created a new holding company to operate its six casinos, including the Hilton. Resorts International Holdings also owns Resorts Atlantic City as well as four properties purchased from Caesars Entertainment and Harrah's Entertainment prior to Harrah's buyout of Caesars. Those include the Atlantic City Hilton, Resorts East Chicago, Resorts Tunica and Bally's Tunica.

The casino holding company's headquarters is the Las Vegas Hilton.

The company has already tripled annual cash flow at the property since Caesars owned it and has revived the casino's high roller business, Wagner said. The company is pushing to attract international players, particularly high rollers from Latin America. And it expects to create a frequent gambler program next year that would allow players to rack up points across Resorts' six casinos.

The remodeling effort, expected to cost more than $20 million, will include a new porte-cochere, outdoor landscaping, a remodeled lobby and front desk, a lounge, coffee bar and upgraded casino floor. All of the work is expected to be complete by the end of December.

The finished lobby will feature sparkled marble imported from Italy and Spain, incandescent lighting instead of fluorescent lights and a more upscale front desk with flat-screen TVs.

While the casino will retain its signature crystal chandeliers, new carpeting will be put in along with new wall coverings and column finishings.

Some slot machines also will be moved around to make it easier to walk through the casino and create a more inviting atmosphere for customers entering from the lobby. Employees also will wear new uniforms.

The Hilton's main casino bar will be replaced by Tempo, an ultramodern bar and lounge with 100 seats and a private area for high rollers in the style of a Strip ultralounge.

The property's Perk Place coffee bar and deli will be replaced by Fortuna, a coffee, wine and pastry bar resembling a luxurious Starbucks. The coffee bar will also offer Internet access.

Upstairs, workers have finished upgrading many of the Hilton's more luxurious suites. The property's Lanai and Director suites feature plasma TVs, new marble floors and showers, granite vanity tops and rain shower heads as well as a private terrace.

Of the Hilton's 3,000 or so total rooms, about 300 are suites. Sometime next year, the first series of regular rooms will be remodeled.

Being a private company has its advantages, Wagner said.

"If we want to do something that's disruptive that we think will help us in the long term, we can do that without retribution" from shareholders, he said.

When the company bought the Hilton in June 2004, Colony officials said at the time they expected to spend about $70 million on improvements.

In September the property opened a new poker room, replacing several banks of slot machines in what had once been the site of a shuttered poker room years ago.

Shortly after Colony bought the hotel, the owners upgraded the Superbook, the country's largest sports book, including the installation of small LCD screens for players and more comfortable chairs.

Still to be done is more remodeling near the convention center. The Hilton's steakhouse will be remodeled, as will the Plaza Bar and the Shimmer entertainment cabaret. Shimmer, formerly a nightclub, is now home to comedian David Brenner as well as other entertainment acts.

Last year the Hilton announced a deal with singer Barry Manilow to become a resident headliner at the Hilton Theater into 2006.

"Barry is a huge marquee value for us around the country right now," Wagner said. "This property, being off the Strip, needed something to use as a destination marketing device ... The community is talking about Barry Manilow in the same vein as Celine Dion."

The Hilton is also hoping to better capitalize on its "Star Trek" attraction, which includes a tour and ride operated in partnership with Paramount Pictures.

There are a few years left in the contract with Paramount. The property hasn't decided whether to keep the attraction longer term, Wagner said. The attraction is located near the Space Quest casino, a themed casino floor primarily fed by traffic from the Las Vegas Monorail stop.

Most people coming into the property from the monorail tend to be occasional visitors to Las Vegas rather than regulars, Wagner said. That may change once more people begin to use the service and it extends to the airport.

The company is still working on a master plan for the Hilton's 59-acre site.

About 50 of those acres are vacant or underdeveloped, Wagner said.

"We are looking at all kinds of ways to stick our front door closer to where people are wandering around," he said. "Whether that means we'll build a boutique hotel right next to the convention center by the end of the property and knock something down, I don't know. We haven't made any decisions there. We've got all kinds of opportunities."

The Hilton owners are shying away from condominiums, even though plans for about 100 high-rise condos are sprouting across the Las Vegas Valley.

"There's only so many high-end people," Wagner said. "Some of the ones coming out of the ground are selling to investors who think they can spin these things off. The cost of labor and construction and the cost of goods, especially with the Katrina problem now, is going to put these developers in a position where what they sold them for today will not cover what it will cost to build them three years from now when they have to deliver the product."

Nine Philadelphia sites recommended for standalone slots casinos

As reported by www.post-gazette.com

PHILADELPHIA, Pennsylvania - When Mayor Ed Rendell ran this city in the 1990s, he watched in frustration as thousands of city residents and visitors streamed down the Atlantic City Expressway every week to gamble at New Jersey casinos.

Now Mr. Rendell, as governor, has gone a long way toward keeping those gamblers at home by legalizing 14 casinos for Pennsylvania, including two to be built here in the City of Brotherly Love, where he still lives.

But exactly where will those two gambling palaces be located? Near the huge Pennsylvania Convention Center in the bustling downtown area known as Center City? At one of several locations along the scenic Delaware River? Or at ugly old industrial property in north Philadelphia just optioned by casino magnate Donald Trump?

Recommending answers to those site questions has been the job of the Philadelphia Gaming Advisory Task Force, which was named in January by Mayor John F. Street.

It delivered its 436-page report to Mr. Street on Thursday, recommending nine potential sites for the two stand-alone slots parlors, each of which is expected to have about 3,000 slots machines.

The final decisions on which developers get the two casino licenses is up to the Pennsylvania Gaming Control Board. But the siting recommendations from the city's task force are expected to carry considerable weight with the seven-member state agency.

The task force has spent nine months looking at three major issues: where the casinos should go, how much they might mean in terms of revenue and jobs for the city, and what problems can be expected, such as increased traffic congestion, crime and gambling addictions.

"The coming of gaming to Philadelphia could be the best thing that ever happened to us, or it could be the worst," Mr. Street told a news conference Thursday in City Hall, a stately old building at Broad and Market streets with a statue of William Penn on top.

"In some cities the expected revenue from gaming didn't materialize, and it ended up creating nightmares for them," such as adding to crime problems and having to treat more people with gambling addictions, Mr. Street said.

"We are also concerned that putting thousands of slot machines at inappropriate locations could create traffic nightmares."

But the mayor professed confidence that such problems wouldn't occur in Philadelphia. He said he wants casinos to be "a part'' of the solution for making Philadelphia more attractive for tourists and natives, combining with Independence Hall and other historic attractions, plus restaurants, universities, museums, art galleries, shops, theaters, nightclubs and sports stadiums.

The gaming task force said the city can expect several thousand new permanent jobs from the two casinos, as well as temporary construction jobs. There also will be up to $30 million for city coffers from a 4 percent gaming "host fee" the law provides for the city and county, which in Philadelphia's case are the same entity.

Also, a new state economic development fund, to be funded with 5 percent of the gross gaming revenues from all 14 casinos, is expected to provide several hundred million dollars to pay for a major expansion of the Pennsylvania Convention Center, which opened in 1993.

The task force has spent months studying where to recommend putting the two gambling casinos.

It listed three general areas within the city. Five sites lie along the Delaware River, which separates Philadelphia from Camden, N.J.; two sites are near the downtown convention center; and two sites about 10 miles from downtown, one in north Philadelphia and one on the city's western edge, bordering Montgomery County.

Mr. Street said he has intentionally not met with any potential casino developers until the report was issued, but will begin doing so over the next few weeks.

All would-be developers have until Dec. 28 to submit a stand-alone casino application with the state gaming board. The board has up to 12 months to make its decisions.

A Trump vice president, Robert Fickus, said Trump will definitely seek a casino license for an 18-acre former industrial property in north Philadelphia called the Budd Co. property. The working-class neighborhood, which contains some older rowhouses and many empty industrial buildings, is called Nicetown.

The massive Budd complex, with several large empty brick structures, one 10 stories high, is where doors for automobiles and chassis for rail cars were once made. It sits a block away from the Tasty Baking Co., a Philadelphia landmark, near the intersection of Route 1 and the Schuylkill Expressway.

Mr. Fickus said he likes the site because it is about 10 miles from all but one of the competing sites. City officials said they don't want both of their new casinos too close to each other, to avoid creating traffic gridlock.

"By spreading out the two casinos geographically, it reaches a broader overall [gaming] market and generates more revenue, which benefits the operator, the city and the state," Mr. Fickus said.

The only other casino site near Nicetown is an area zoned for retail stores several miles west along Route 1, an area bordering Montgomery County. But local officials said the Target company has its eye on that land for a new retail complex anchored by a mammoth Target store.

Five of the nine sites recommended by the Street task force stretch along the Delaware River. One is a vacant city-owned site, where a municipal incinerator used to be; not far away is a site in a neighborhood called Fishtown, where the waterfront property is owned by Ameristar Casinos, a company based in Las Vegas that owns seven casinos around the country.

A third riverfront site, several miles to the south of those two, is now controlled by Harrah's casinos, which acquired the land a year ago when it took over Caesar's casinos; a fourth site, near Harrah's land, contains a sheet metal workers building; and the fifth site is the sprawling former Philadelphia Navy Yard, in the southernmost part of the city.

It isn't certain if casino developers will present proposals to build on all five sites. Harrah's is not expected to pursue a casino within Philadelphia because it's a partner in a new racetrack/casino to be built along the Delaware in Chester, about 10 miles south of Philadelphia.

Mr. Street has expressed an interest in having a minority-owned casino group look into putting a casino on the incinerator site. A group led by lawyer Kenneth Trujillo, a former Philadelphia city solicitor who has political ties to Mr. Street and Mr. Rendell, is considering the idea.

Ameristar spokesman Kevin Feeley said his firm definitely will propose building a $450 million project containing a casino, retail shops, restaurants and entertainment on the Fishtown parcel, which is located between heavily traveled I-95 and the river, not far from the incinerator site.

Mr. Feeley said the Fishtown area is "a working-class neighborhood that has a great mix of people, some longtime residents, some immigrants, some gentrification, with a lot of artists."

The remaining two casino sites are along busy Market Street in the downtown area near the convention center. Shawn Fordham, director of the casino task force, said the advantage of putting one casino there is that it would give convention-goers something to do.

Many conventioneers already schedule one night during their stay in Philadelphia to travel to Atlantic City, and Mr. Street is hoping to capture that market.

But the two parcels near the convention center are among the smallest of the nine potential sites, which could prove to be a drawback, Mr. Fordham said. Casino operators like to have all the slots machines on one floor, which necessitates a large footprint for the casino, and could rule out the two downtown sites, he added.

A "social impact" subcommittee of the gaming task force had several recommendations for city officials, aimed at easing negative effects of slots.

About 70 to 100 additional city police officers should be hired to deal with thefts, fighting and other problems that could result at casinos, it said, and city police should be given "specialized training in casino crimes," such as counterfeiting, fraud and check forgery.

City public health officials should educate residents "on how to identify problematic gambling" by family members, and the city should coordinate efforts with outside consultants and state health officials to develop programs to treat addicted gamblers.