Issue 271
November 21 - November 27, 2005
Volume 5
page 1

This Issue

Gaming News

New CEO looks to turn around Trump casinos in Atlantic City, N.J.

This casino will reopen, mateys

Foxwoods Planning 'Lifestyle' Expansion

Casinos target Asian Americans

Pocono Manor casino-hotel in play

Show Time LeAnn Rimes & Phil Vassar will be at the Las Vegas Hilton Theater.

Column Computers Determine Best Video Poker Playing Strategy By Linda Mabry

Check out our entertainment highlights & upcoming tournaments

See the lucky winners


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New CEO looks to turn around Trump casinos in Atlantic City, N.J.

As reported by The Philadelphia Inquirer

ATLANTIC CITY, New Jersey - James Perry has the money, a new management team and Donald J. Trump's support, but turning around the developer's ailing Atlantic City casinos will require something more.

"You need the patience of Job because it always takes longer than you think," said Perry, who was plucked out of retirement over the summer to become chief executive officer of the Trump Taj Mahal, Trump Plaza and Trump Marina casinos. "This is not going to happen overnight."

Perry and chief financial officer Mark Juliano face the daunting task of reversing a decade of decline for Trump's casinos in a fiercely competitive gambling market.

As customers' tastes and Atlantic City have changed, the Trump properties, two of which opened in the mid-'80s, did not. As a result, they lagged not only in having new attractions, but in appearance.

October revenue figures released yesterday by the New Jersey Casino Control Commission showed how far they have to go.

Overall, the 12 Atlantic City casinos reported $428 million in revenue, up 10.2 percent from October 2004. All three Trump casinos reported a total of $86.3 million in revenue for October, down 11.6 percent from the same month last year.

So far this year, of the three Trump casinos, only the Trump Taj Mahal is seeing growing revenue. Year-to-date revenue at the Taj is up 2.2 percent from a year ago, while Trump Plaza and Trump Marina are both down, 3.9 percent and 4.9 percent, respectively.

The 2 1/2 year old Borgata was again the city's top grossing casino, taking in $63.3 million in total revenue last month. The Taj Mahal was fourth with $43.1 million. Trump Plaza finished ninth among 12 casinos with $25 million, while Trump Marina was second to last with $18.2 million.

"The company needs credibility," Perry said in a recent interview at the Taj Mahal, Trump's flagship property that opened in April 1990, and the source of many of his financial problems in Atlantic City. "The company has to reenergize itself as an operator."

In May, Trump Entertainment Resorts Inc. emerged from bankruptcy with a $500 million line of credit from Morgan Stanley to make much needed upgrades to its Atlantic City casinos and expand into other gambling markets, including Pennsylvania.

"Going from cash conservation and cobbling sufficient funds to pay the bills, to a growth and rejuvenation mode is difficult," said Barbara J. Cappaert at KDP Investment Advisors, a high-yield debt research firm based in Montpelier, Vt. "It's going to take time."

Trump said by teaming Perry, known in the industry for cleaning up balance sheets, with Juliano, who's known for capital reinvestment moves, he's hoping to give his casinos a one-two punch.

"This is a great team," said Trump yesterday. "They are going to bring those properties up to a level that they've never seen before."

Perry, 58, has candidly told Trump it will take at least three years for a turnaround. He said Trump gave him a mandate.

"Mr. Trump said three things to me, 'No. 1, I want to be proud of these properties. No. 2, I want the properties and the people in them to be successful. No. 3, I want to de-lever the company,' " Perry said.

As a condition of the reorganization plan that the Bankruptcy Court approved earlier this year, Trump had to step aside as CEO of Trump Entertainment, the company that runs his casinos. He retained his role as chairman.

Trump had blamed onerous interest payments on junk bonds used to finance his crown jewel -- the Taj Mahal -- for his inability to reinvest in the properties.

This summer his casinos finally got new carpeting and slot machines. Hotel rooms and suites have been refurbished. Public areas are being redesigned. A new $150 million hotel tower is in the works for the Taj Mahal.

"We need to bring the hotels up to speed physically, and go from what we like to call survival mode into growth mode," said Juliano, 50, who was previously president of Caesars Palace in Las Vegas, a property known for its elegance and ability to attract high rollers. He shares Perry's pragmatic approach.

"These are no different than any other hotel," he said. "People have expectations. If you meet them or exceed them, you build brand loyalty and repeat visitation."

But to get there, Cappaert said the Trump casinos needed to lessen their dependence on the day-tripper bus crowd -- typically made up of lower-end slots players who don't spend the night -- and on cash promotions, such as free coins or slot cards.

"It doesn't build loyalty," she said.

While other casino operators, like Harrah's Entertainment Inc., use sophisticated computer systems to track customers and encourage repeat business, the Trump casinos are only now looking to purchase software to better manage customer data.

Argosy Gaming Co., a riverboat casino operator based in Alton, Ill., was highly leveraged and almost bankrupt -- much like the Trump casinos -- when Perry came in and turned things around. In 2000, Argosy was named gambling company of the year, and Perry CEO of the year. He retired from Argosy in 2002.

"He has such a vision and has the ability to articulate what needs to be done," said Virginia McDowell, who started last week as Trump executive vice president and chief information officer. She is one of a handful of former Argosy executives that Perry has brought to Trump.

Argosy was recently acquired by Wyomissing, Pa.-based Penn National Gaming Inc., which is rumored to be interested in buying one of the Trump casinos. Neither Penn National nor Trump officials deny that interest.

"If somebody comes in and offers more than what you think you can earn, as a publicly held company, you have a responsibility to check it out," Perry said.

Last week, Trump Entertainment finalized a deal to sell its riverboat casino in Gary, Ind. Perry said the $227 million in net proceeds from the sale will go toward improvements at the Atlantic City casinos and expansion projects, including a potential Trump casino in Philadelphia.

Juliano said the Trump brand is at a premium because of the success of Trump's TV show, The Apprentice.

"It's very difficult to separate their identity from Trump, if not impossible," he said of the casinos. "They're still, because of the Trump name, must-see attractions in Atlantic City. All they need to do is get brought into the next century."

This casino will reopen, mateys

As reported by Las Vegas Review-Journal

BILOXI, Mississippi - Hurricane Katrina accomplished what three other storms couldn't -- sink the buccaneer-themed Treasure Bay casino.

But Bernie Burkholder, who opened the pirate ship-styled gambling barge in 1994, isn't ready to walk the plank.

He vowed to open a land-based, albeit smaller, version of the Treasure Bay by June once he secures financing.

"Some of the money will come through insurance proceeds, as well as from savings and from selling what we can salvage," said Burkholder, watching as construction crews demolished the Treasure Bay's dockside facilities. "But the largest portion will come from borrowing."

Fellow Gulf Coast casino operators openly expressed admiration for Burkholder. Privately, many cast doubt on his ability to obtain financing to bring back the Treasure Bay.

During its years of operation, the Treasure Bay was more of a photo opportunity for tourists than a Gulf Coast gaming leader.

Today, the site sits amid a section of the Mississippi coastline ravaged by Katrina's 135 mph winds and 30-foot storm surge. Motels, restaurants and bars and souvenir shops that were neighbors to the casino lay in ruins. In the Treasure Bay parking lot, casino debris was strewn about. Discarded "Silver Crew" slot club cards were scattered in the sand.

Before Katrina hit, the Treasure Bay had 978 slot machines and 47 table games on a 41,000 square foot-barge built to resemble a Jolly Roger. In addition to restaurants, the Treasure Bay operated a small hotel across Highway 90.

All were damaged beyond repair by the hurricane on Aug. 29. The barge broke from its moorings and came to rest about 100 yards from its dock, dragging two of its four 60-inch concrete and metal-cased pylons.

Because it wasn't part of a publicly traded company, it is unclear what Treasure Bay contributed to the Gulf Coast's $1.2 billion in annual gaming revenue.

"We had more of a loss history than other properties," said Burkholder, president and chief executive officer of the privately held Treasure Bay LLC, which also operates three Caribbean Island casinos.

He said hurricanes closed the Treasure Bay for 13 days in 1998 and 17 days in 2002.

"Because of that loss history, we found ourselves in a position where it wasn't economical to insure the vessel," Burkholder said. "We had insurance on the hotel and castle (restaurant areas) and all land-based structures"

Burkholder said he would rebuild the casino 800 feet from the water, based on the new posthurricane Mississippi gaming regulations. Without knowing any immediate costs, he said construction would start in February, with the casino opening in June. The hotel should follow five months later.

"As a business decision, it's the right thing to do," Burkholder said. "The community is going to rebuild bigger and better than it ever was."

Because Treasure Bay is a small operation and lacked insurance on the gaming barge, Burkholder was not able to pay the casino's 1,000 employees for 90 days as did other casino operators. He said the company tried to find workers jobs in the area; for example, his entire finance department was hired by a local construction company.

While small, the Treasure Bay did have a loyal, local following.

"I miss it," said Biloxi resident Thomas Catron. "We were there Friday night before the storm hit."

Burkholder's rebuilding plans rebutted the pronouncements of some gaming analysts who said not all of the 13 destroyed Gulf Coast casinos would or could be rebuilt.

Jefferies & Co., in a September industry report, said the Treasure Bay would not return.

"We'll be have a casino open in June and probably half our employees back to work by the end of the year," Burkholder predicted.

The fate of other Gulf Coast casinos not operated by the major gaming companies is still in question.

The Copa Casino in Gulfport was demolished earlier this month.

One casino boat, the President, was scheduled to be moved this month to a location west of Biloxi in Lakeshore, Miss. The 38,000-square-foot casino operated 860 slot machines, 33 gaming tables and an eight-table poker room, as well as a small hotel.

However, the hurricane tore the barge loose from its moorings and sent the casino floating about mile from its dock, coming to rest alongside Highway 90 next to a small motel and near the Mississippi Coast Coliseum events center.

The loss of the smaller boats saddened some Mississippians.

"Treasure Bay was a nice place and I liked the President," said James Skoros, a retired military veteran and Biloxi resident. "It's too bad all these casinos were destroyed."


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