New Years in Vegas

[Senor Capper]

Casinos set to ring (ka-ching!) in 2005

12/28/2004



Las Vegas hotels are expecting overflow crowds this New Year?s weekend, with guest rooms generating about 25-30 percent more revenue than hotel rooms last year.

Some of the New Year?s Eve prices include $699 a night at Bellagio, $650 at the Four Seasons, $649 at The Venetian and $509 at the Hard Rock.

Even though the room rates are higher than last year, fewer hotels are reporting early sell-outs. However, most general mangers aren?t worried about filling their rooms.

"We?ll sell out ? we always do," said the front desk manager at an off-Strip hotel. "There?s always a rush of customers who drive in from California looking for rooms."

The Rio announced earlier this month that it had sold out all of its suites at an average rate of $380.

With 130,000 hotel rooms in the city, you?d think it would be possible to find a place to sleep.

"That may or may not be the case," said a tour desk clerk at a tourist center across the street from the Luxor. "You?re taking a chance if you don?t have a reservation."

Nonetheless, casino operators are expecting a huge New Year?s holiday, since it falls on a three-"Gaming revenue could be severely influenced by the timing of the holiday weekend," said Marc Falcone, an analyst with Deutsche Bank.

Regardless of where you sleep ? if you sleep ? there?s plenty to do on New Year?s Eve. Many casinos have VIP parties for their best customers and these, of course, are by invitation only.

Nevertheless you can revel with the hoi polloi in grand fashion all over town.

The Fremont Street Experience has a New Year?s Eve party with BTO for only $35. If you don?t want to brave the weather, The Orleans has a party with Al Jarreau and Sheila E. with tickets ranging from $49 to $195.

At the Aladdin, Paris Hilton will christen her new nightclub, and Green Valley Ranch hosts an Ultra Lounge party with DJ 5 and JC2K Dance Squad.

Keep in mind that many production shows either shut down or stage early shows on New Year?s Eve. Check ahead with the box office.

The brightest star on the Strip will be the midnight fireworks display that will link several major resorts. The $500,000 pyrotechnics display is so sophisticated, some venues have stopped having fireworks displays on New Year?s.

Regardless of where or how you party, remember to keep safe.

 

[Senor Capper]

The biggest and best for 2004



The following are the top 10 stories affecting major gaming companies and the industry in *general.

No. 1 The merger of MGM MIRAGE Inc. (MGG) and Mandalay Resort Group (MBG) for $7.9 billion or $71 per share. This will give the combined company control of some 36,000 rooms on the Las Vegas Strip. Assuming federal and state regulatory approval is forthcoming, the merger is expected to close in the first quarter of 2005.

No. 2 The merger of Harrah?s Entertainment Inc. (HET) and Caesars Entertainment Inc. (CZR) for $9.4 billion or the equivalent of $16.92 per share, making the combined units the largest gaming company in the country. The merger also awaits federal and state regulatory approval.

No. 3 The expansion of casino gaming in the Chinese enclave of Macau that is expected to make the community, just 40 miles from Hong Kong, the largest gaming location in the world. Leading the development are the Las Vegas Sands Inc. (LVS) whose initial public offering set a two-year record at the New York Stock Exchange, and Wynn Resorts (WYNN) whose share price has skyrocketed on the basis of the April opening of a $2.5 billion resort in Las Vegas, and the planning for a $650 million resort in Macau.

No. 4 The casino controversy in California where Gov. Arnold Schwarzenegger negotiated new gaming compacts with 10 tribes that agreed to pay a portion of their revenues to the state. These compacts were opposed by three major tribal casino operators. They attempted to overturn the pacts with a referendum in November. Voters rejected the effort.

No. 5 The impact of poker on the nation?s casinos that grew with major exposure on cable television through Harrah?s World Series of Poker and the World Poker Tour. Fueling the development was the ease with which players could gain access to major tournaments through the Internet.

No. 6 The purchase of Horseshoe Gaming Holdings Inc. for $1.45 billion by Harrah?s Entertainment Inc. (HET), thus placing casinos developed and operated by gaming legend Jack Binion in the Harrah?s fold.

No. 7 The eventual approval, after a great deal of debate, of the establishment of 14 slot machine centers with a grand total of 61,000 video lottery machines. The slots will be located at racetracks, off-track betting centers and four other sites to be selected.

No. 8 The acquisition of privately held Coast Casinos Inc. for $1.3 billion by Boyd Gaming Corp. (BYD), adding to Boyd?s locals exposure in the Las Vegas area. Shareholders in Coast received $495 million in cash and 19.4 million shares of Boyd stock.

No. 9 The expected deregulation of gambling in England that was to open the country to scores of casinos. However, after reviewing proposals for gaming expansion, the ruling Labor Party reduced the number of casinos licenses, causing potential casino operators to lose much of their enthusiasm.

No. 10 The approval in November of a statewide vote permitting horse tracks, dog tracks and jai-alai frontons to install video lottery machines, provided they receive local approval in a vote to be conducted sometime in the spring of 2005.

 

[Senor Capper]

2004
It was truly a year for ?Foulke? heroes


STRIKE may doom Stanley Cup.


Sports in 2004 was all about a reverse of the curse.

Maybe it was the Dave Roberts steal of second base in Game 4 against the Yanks, or the bloody Curt Schilling sock or a St. Louis collapse. Whatever, the Red Sox wiped out nearly 90 years of heartbreak to capture the World Series in the best Boston Tea Party in two centuries.

Rarely does an achievement stand out so much in a year full of athletics, but this did. Everything else was a distant second. Not even the Balco scandal and all the asterisks can take away from ending the curse of the Bambino.

Boston may have played St. Louis in the Series, but the winning cards were dealt when the Yanks blew a 3-0 best of seven lead for the first time in major league history.

For the smart guys who bet the Red Sox before the season began, our hearty congratulations. We can only try to be as fortunate this year. Maybe, the Cubs can finally break through!

There were other sports going on throughout 2004 and you?ll find as many lists as opinions. Here?s our Top 10 list, along with 10 predictions for 2005. We won?t bet the house on these, but 60 percent would work just fine.

Our top stories for 2004

10. NHL strike: We would have placed this one higher if folks really cared. Obviously, the players and owners don?t, so why should we as fans care.

9. NASCAR points: The revised system featured a controversial playoff series of races over the final two months, but fans loved it and the sport thrived.

8. Barrera-Morales III: For us in Las Vegas, the third fight in this epic boxing series was the highlight of a troubled sport this town craves and needs.

7. Lance Armstrong: Tour de Lance instead of France. Now five straight for the man who beat cancer and has Sheryl Crow too!

6. Smarty Jones: The other feel-good story, along with the Red Sox. This one didn?t finish well. No Triple Crown, but Smarty gave horse racing a big boost.

5. Super Bowl XXXVIII: Carolina Panthers miracle run comes up three points and one breast short against New England.

4. Tiger Woods: The "slump" talk just would not cease. All Tiger did was make every cut again and finish second in money to Vijay without a major. Not bad.

3. Shaq-Kobe: The in-fighting, eventual trade of O?Neal to Miami and Bryant?s rape trial kept these two NBA mega stars in the spotlight all year.

2. Peyton?s 49 TDs: Manning?s pursuit of Dan Marino?s single-season touchdown pass mark was just what the NFL needed to help erase Janet?s boob-boo.

Honorable mentions: UConn men/women hoops double, Balco and Bonds, Annika?s 10 wins, Smashnova out-polls Anna, Vijay golf No. 1, Serena?s slide, Ricky Williams quitting Dolphins, Reggie White?s tragic death.

 

[Senor Capper]

Top 2004 stories segue into 2005


Consolidation, urbanization top story list


THE LAS VEGAS STRIP will erupt on New Year?s Eve (Friday night) with a spectacular fireworks display linked among the major Strip hotels.


Tennyson once wrote something about ringing out the old and ringing in the new, which is the traditional thing to do on New Year?s.

For the gaming industry, the upcoming year promises to extend many of the stories that began in 2004, with a few new wrinkles along the way.

The biggest story this past year was the continued consolidation of the gaming industry. Boyd completed its merger with Coast, while MGM Mirage and Harrah?s undertook consolidation with Mandalay and Caesars, respectively.

Though more huge mergers aren?t likely, there should be continued consolidation among smaller companies such as Pinnacle, Penn National or Ameristar.

In 2004, poker continued its meteoric rise in popularity as legions of new players flocked to card rooms or logged onto poker web sites.

Expect the rabid fascination with "going all-in" to continue in 2005, although many believe the passion for poker might be reaching a plateau.

A story that began to unfold in 2004 is the urbanization of Las Vegas through a number of high-rise condo projects. Insiders say we?ve only seen the tip of the condo iceberg and predict the "condo casino" could become the economic model for gaming development in 2005 and beyond.

Slot makers could be looking at a booming 2005, if certain political and jurisdictional developments manifest. First, the demand for Class II slot machines could skyrocket if tribal casinos elect to defy the California governor.

And secondly, the slot industry is champing at the bit to run with its downloadable or server-based slot systems. These cutting edge systems load slot games from a central computer library into generic slot machines on the casino floor.

Although there are venues in Europe that utilize such systems and manufacturers already have the product on the assembly line, U.S. venues have been reluctant to approve the technology. Maybe 2005 is the year.

Consolidation

The gaming industry was rocked by the announcement last summer of MGM Mirage?s $7.3 billion purchase of Mandalay Resorts. Not to be outdone, Harrah?s Entertainment a few weeks later announced a $9.5 billion purchase of Caesars Entertainment.

Both deals are undergoing scrutiny by various gaming jurisdictions and the Federal Trade Commission. If nothing snags the processes, the deals will close in the first quarter of 2005.

In the meantime, the mergers seem to have gained acceptance, at least at the shareholder level. Since the deal was announced, MGM Mirage shares have risen by 55.93 percent, outperforming the S&P 500 index by 48 percent. And Harrah?s shares have risen 18 percent faster than the S&P index.

In the wake of the two mega-mergers, Penn National Gaming announced a purchase of Argosy Gaming that would make it the third largest operator behind Harrah?s and MGM.

But insiders believe Penn National isn?t through. Candidates that might be on its radar screen are Ameristar Casinos, Aztar, Pinnacle and, to a lesser extent, Isle of Capri. Based on its strong position in the Mississippi market, many are betting that Ameristar might be ripe for a merger.

Poker Power

Poker is no longer the "old man?s game" in the smoky corner of the casino. Fueled by cable TV and celebrity tournaments, the popularity of poker is at an all-time high.

That popularity is reflected in Las Vegas casinos scrambling to install (or re-install) or expand their poker parlors.

For instance, Bally?s just opened a new poker room, and Caesars Palace and MGM Grand both announced plans to re-open poker rooms in 2005.

In addition, the Golden Nugget opened a high stakes card room and the Mirage added seven tables to its existing 24 poker tables.

"It?s such a popular game right now," said Dennis Neilander, chairman of the Nevada Gaming Control Board. "It?s driving a lot of patrons into these properties."

That?s what casinos want, of course. Moreover, since they only "rake" a percentage of the pot as compensation for dealing the games, casinos are betting players find their way into more lucrative areas of the casino, such as the table games pit, slot areas, restaurants and bars.

?I?ll take Manhattan?

MGM Mirage announced last fall it plans to build a $3 billion CityCenter mixed-use project on the 66 acres between Bellagio and Monte Carlo. The "mini-Manhattan" will include a 4000-room hotel-casino, three 400-room boutique hotels, about 500,000 square feet of retail shops, dining, entertainment venues and a 1650-unit condominium hotel.

The announcement brought to light the idea that Las Vegas is becoming urbanized with high-rise residential development. Currently there are about 30 condo projects in various stages of development. Among them:

? Steve Wynn plans commercial/residential development on land behind Wynn Las Vegas.

? MGM is in a joint venture with Turnberry Associates to build up to 3,400 condo units on the site of the old Grand Adventures theme park.

? Vegas Grand is building 880 condo units at Flamingo Road and Swenson Street.

? Laurence Hallier and Andrew Sasson are building a series of high-rise condos on Industrial Road, between Harmon and Tropicana avenues.

? Las Vegas Central plans two 46-story towers on Sierra Vista Ave. near the Convention Center.

? The new owner of Alexis Park is converting some units to condos and has purchased the apartments west of the property with the intent to build high-rise condos.

What?s fueling the interest in high-rise condos and how do casinos fit in?

Experts say there?s a pent-up demand for high-density housing such as condos, especially as the Las Vegas area expands deeper into the desert and traffic becomes increasingly congested.

Developer Bruce Langson of Las Vegas Central estimates there could be a "20,000-unit deficit" of condos in Las Vegas.

 

[Senor Capper]

Casino operators who build condominiums also have an incentive: building codes allow double the density of condos when they are on a casino site or adjacent to one. Also, the sales of condos can help defray the cost of subsequent development.

Moreover, condo developers can initially sell 30 percent of their units to companies such as The Formula in Ft. Lauderdale, Florida, which buys blocks of condos, with the stipulation that the developer guarantees price increases that will give them a 15 percent "spread."

"We simply want the 15 percent spread between what we pay and what the other 70 percent of owners pay," said Brian Neiman, founder of The Formula.

Beyond such creative financing, casino operators view high-rise condos as a viable economic alternative to hotel guest rooms.

"The days of building the Bellagios and the Wynns are over," said Jim Murren, MGM Mirage president and chief financial officer, in an interview with the New York Times. Murren added that the reason a casino operator would think condo instead of hotel is the profit margin.

Non-gaming revenue, Murren explains, has now eclipsed gaming revenue at MGM Mirage casinos. Moreover, the margin on gaming revenue isn?t nearly as great as it is on retail sales, entertainment and accommodations.

In addition, insiders say that purchasers of condominiums as a second or vacation home are likely to spend more time in Las Vegas than someone who visits for a weekend four or five times a year. When the condo owner isn?t in town, the unit can be rented and revenue split with the hotel.

Other mixed-use projects include the property behind and west of the Alexis Park, Donald Trump?s acreage behind the New Frontier, a 900-foot high Summit on the site of the old Holy Cow Brewery (Sahara Ave. and the Strip), Sky Las Vegas on the Strip between Circus Circus and Hilton Grand Vacations, and Paul Lowden?s development on the site of Wet ?n? Wild water p

Out of their Class

Two California tribes are currently embroiled in a dispute with the state over their Class II slot machines. The tribes have installed nearly 4,000 of the machines, bringing their total inventory of slots to about 4,000 apiece, double the legal maximum.

If the tribes prevail and courts rule that the Class II machines are covered under existing compacts with the state, then that would open the floodgates to 60 other tribal casinos to add the so-called "bingo slots." That would be a boon for manufacturers like IGT and Bally, which both have subsidiaries making Class II slots.

Downloadable games are definitely the future of casino slots. But regulators have so far failed to okay them because of the fear of hacking and security.

When they are approved, it will be the next huge wave in slot development.