Casino City Newsletter: Issue 350 Volume 7 Page 1

May 28 - June 3, 2007

Kerkorian's bombshell one of the biggest to hit Vegas
by Jeff Simpson, Our partners at The Las Vegas Sun

LAS VEGAS, Nev. – In the nearly eight years I've spent covering the casino industry, there have been few public announcements as dramatic as the short announcement made last Monday afternoon by Kirk Kerkorian's investment arm, Tracinda Corp.

Kerkorian wants to buy Bellagio and CityCenter, and wants to "pursue strategic alternatives" for the rest of MGM Mirage, which is 56 percent owned by the 89-year-old billionaire.

In Las Vegas business news, that's a thunderbolt, ranking right up there with the big announcements and stories that have shaken the resort business during my time in the city.

Like Kerkorian announcing he was making a play in 2000 for Mirage Resorts - his MGM Grand eventually bought Mirage.

Or Station Casinos executives announcing they were refusing to appear at a 2000 Missouri Gaming Commission hearing they were ordered to attend. Station soon had to sell its two Missouri riverboats to avoid the likely loss of their licenses.

Or Macau announcing that two Las Vegas operators, Wynn Resorts and a partnership involving Venetian owner Las Vegas Sands, would be joining longtime monopolist Stanley Ho in concessions to build casinos in the Chinese enclave.

And the 2004 announcements when Boyd Gaming Corp. bought Coast Casinos, MGM Mirage bought Mandalay Resort Group and Harrah's Entertainment bought Caesars Entertainment.

Like last week's disclosure from Kerkorian, those announcements came with little or no warning, and made for a different kind of news from other stories that make big news in the casino business - resort openings, tower implosions and dramatic regulatory hearings among them.

So what does Kerkorian's announcement mean for MGM Mirage and the casino business?

My guess - and a guess is just what it is - is that Kerkorian will end up with CityCenter and Bellagio. It wouldn't surprise me if the rest of the company were sold to private equity firms and taken private (like Harrah's Entertainment is doing), with Kerkorian possibly taking a stake.

One cool thing and one surprising thing struck me about Kerkorian's announcement.

The cool thing about Kerkorian's gambit is that if he did take ownership of CityCenter and Bellagio, he'd join fellow billionaires Sheldon Adelson and Steve Wynn at the top of the resort pecking order in Las Vegas, with each controlling one of the top three money-making properties in Las Vegas (Bellagio is first, Wynn Las Vegas second and Venetian third). And each would have his own under-construction properties destined to enter the market right at the top (CityCenter will certainly be the biggest money - maker, with Adelson's Palazzo and Wynn's Encore locks to enter the top six). Three guys, the six top properties on the Strip - that's nice.

The surprising thing is that Kerkorian's bid doesn't include the MGM Mirage partnership stake in the Macau subconcession with Pansy Ho. Kerkorian's purchase of the subconcession stake would make the parallels with the holdings of Adelson and Wynn even more apt.

• • •

Because most other columnists in the state will presumably use their ink today criticizing the inability of the biennial follies in Carson City to accomplish the people's business, let me take a moment to applaud one good move taken by the Legislature and Gov. Jim Gibbons.

After Gibbons and his predecessor Kenny Guinn screwed up the appointment of a member of the Gaming Control Board, with each executive naming an appointee to fill a seat vacated at the exact instant Guinn's term ended and Gibbons' began, legislators took action, passing Assembly Bill 179 unanimously in the Assembly and the Senate. The bill, which Gibbons signed, extended the term of Gaming Control Board members so future executives won't be tempted to reprise the shenanigans employed by Guinn and Gibbons.

Legislators were sold on the idea by gaming law students at UNLV's Boyd School of Law, who generously credited a column I wrote for inspiring their decision to draft a bill extending the terms.

Thank you, lawmakers, and thank you, Boyd law students.

Treasure Island Resort breaks ground
Press Release

RED WING, Minn. -- Treasure Island Resort & Casino today announced it will break ground on a $50 million project that includes 230 additional hotel rooms, an event center featuring entertainment and convention space and a family fun center. Construction begins June 1 and the project is expected to be completed in fall of 2008.

The development includes an additional two hotel wings, featuring 230 hotel rooms, increasing Treasure Island's room count to 480 rooms. The new rooms consist of 25 suites, featuring six end-suites with the capability of becoming three or four bedrooms and 205 standard rooms. Each room will be equipped with upscale furnishings and incorporate walk-in showers to accommodate guests. The focal feature of the hotel is the impressive illuminated sky bridge, which connects the hotel wings together. This sky bridge will maximize the scenic river views and house three suites on each floor.

In addition to the hotel project, a new 30,000 square-foot event center will allow Treasure Island to enhance entertainment options. The center includes a 2,800-seat showroom that will nearly triple the current size of the venue allowing Treasure Island to host bigger convention events as well as prominent national entertainers. The event center can break into six meeting rooms, each with a separate entrance.

"This project allows us to meet the growing needs of our hotel and convention guests," said Frank Loth, Treasure Island Resort & Casino Interim General Manager and Director of Finance. "For several years we've had to turn away many large corporate events because we haven't had the space for them. Now we'll have the capacity to host these conventions and events, which will bring new visitors and tourism dollars to the area."

Another exciting aspect of this project is the family fun center, which allows Treasure Island to create a truly unique entertainment destination. The center features a 24-lane Brunswick(TM) bowling alley, separate party rooms, snack bar, arcade and lounge area. "Upon completion, our guests will have more entertainment options," commented Loth. "We want to accommodate our guests and continue to provide the best entertainment experience possible."

Audrey Bennett, President of the Prairie Island Indian Community Tribal Council, is excited about the economic impact this will have on the region. "This project is an investment that will secure Treasure Island's status as a premier entertainment destination and a leading contributor to the local economy." Over 50 new jobs will be created for Treasure Island, with a payroll and benefit package exceeding $1.5 million annually. This brings Prairie Island's total work force to over 1,600 people with an annual payroll of more than $50 million. "We are proud to partner with surrounding communities to bring tourists to this area and to continue to give back to the community in many ways."

Treasure Island is pleased to continue supporting local vendors by contracting Knutson Construction, from Rochester and RSP Architects from Minneapolis for the construction and design of the project. Treasure Island has worked with Knutson Construction on four other major projects including the construction of the hotel in 1996, the 200,000 square-foot area added to the casino in 2000, the hotel renovation in 2004 and Parlay Lounge in 2006. This is the first time Treasure Island has contracted RSP Architects. RSP has developed a reputation for delivering creative and innovative work while meeting established programs, schedules and budgets.

Dave Bastyr, Vice President and General Manager for Knutson Construction Services is pleased to be working with Treasure Island once again. Bastyr said, "This is a key project for Knutson for the next 15 months." The project will secure at least 100 new construction jobs for over a year. "We always enjoy working with Treasure Island and the Prairie Island Indian Community. Their commitment to the area is impressive and the impact is felt throughout the entire region," mentions Bastyr.

Treasure Island Resort & Casino is the only casino resort in southern Minnesota and the only facility of its kind located on the banks of the Mississippi River. Treasure Island offers guests some of the best gaming, accommodations, food service and nationally known entertainment in the casino industry. Treasure Island features over 2,500 slots, 44 table games, 10-table poker room, and 550-seat high stakes bingo hall all within seven casinos, each with a unique Caribbean theme. Currently, guests can relax in Treasure Island's luxurious 250-room hotel. Additional guest amenities include a 137-slip marina, 95-site RV-park and a 125-passenger cruise yacht.

The Prairie Island Indian Community owns and operates Treasure Island Resort & Casino, located just south of Hastings, Minn. As the largest employer in Goodhue County, the tribe employs more than 1,600 team members and generates more than $14 million in annual state and federal taxes. Since 1994, the tribe and the casino have donated over $14 million to many civic and non-profit organizations.