Domestic gaming opportunities will provide some of the big business stories of the next six months or so as the pace of U.S. casino development activity increases and Las Vegas-based companies take starring roles in some of the scenarios.
Florida lawmakers are again exploring the feasibility of resort developments by groups other than the Seminoles. This has become something of an annual happening in a state that already has a lot of gambling.
The question there is not really whether casinos should be allowed, but whether they are to be permitted by groups other than the Seminoles who are already operating two Florida casinos that are among the busiest in the country.
Elsewhere: The scheduled launch date for New Jersey’s experiment with online gaming – that’s all games, not just poker – is set for Nov. 26. Las Vegas-based Boyd Gaming and Caesars figure to be the two biggest attention getters there. They dominate the poker market and operate several of the major properties.
Boyd already has the first online license to be issued by the Division of Gaming Enforcement. Does that mean Boyd is putting Nevada on a back burner for the moment so far as online poker is concerned?
Only Caesars, Station Casinos and their respective poker partners are operating in Nevada. The extra added attention being given New Jersey has everything to do with the fact that the online menu of games there is not limited to poker. Also, the state’s borders are a very easy drive from major metropolitan areas of New York and Pennsylvania.
It’s a good bet Boyd officials will have something to say about that as third quarter conference calls are held over the next several weeks.
Other centers of activity getting a lot of attention include Massachusetts where MGM Resorts, Caesars and Wynn Resorts are competing for the several major property licenses to be awarded there.
Wynn will also soon know whether he is granted the license to build what he wants to call Wynn Philadelphia. Wynn’s fallback plan may be to become one of the major players in the New Jersey online business. He has declared his intention to be involved there but had not said much about it as of several days ago.
Las Vegas companies will also be putting their best efforts into spreading the gospel of economic development across New York as voters there digest the essence of spiels that will be made over the next year before voters respond to a ballot issue that could eventually produce as many as seven casinos.
Palms plans: Dan Lee continues dodging questions about his plans for the Palms where he was recently named chief executive officer.
Whatever Lee has in mind at the Palms it may be part of a bigger picture involving private equity groups that have invested heavily in commercial casino activity during recent years and are probably looking to cash out.
This includes casinos such as the Palms.
Maybe it is time to reach for profits by combining clusters of casinos to create investment opportunities appealing to Wall Street and the public markets. It’s speculation that might help explain Lee’s presence. He has a reputation as a financial engineer.
A Palms spokesman said it may be about a month before Lee is willing to take significant questions from the news media or other outsiders curious about what he has in mind for the formerly edgy, hip resort that has weathered some tough times the last few years while still maintaining its potential.
It could be the private equity groups that now own the Palms – Leonard Green & Partners and TPG Capital – want to roll some of their gaming investments into an entity that might benefit from Lee’s financial engineering and deal-making ability.
That’s pure speculation of course, but something like this makes for more sense than Lee doing nothing more than serving as CEO at a hotel and casino whose best days now seem to be in the rear view mirror.
Private equity groups have been bargain shopping, buying up debt to take control of troubled resort properties. Blackstone owns Hilton Worldwide. TPG and Apollo continue to control Caesars Entertainment. Colony Capital has spent a lot of money on casino investments from Las Vegas to Atlantic City during recent years without a lot to show for it.
On the plus side of the picture, the Palms, like several other properties built and opened across the country during recent years, still has enough freshness to attract the interest of investors and operators who see what it could be once consumers develop enough confidence to increase their discretionary spending.
The consequences of poor timing have weighed on the performances of some very attractive Las Vegas hotels and casinos that were given green lights by their developers at a time when there was no sign of the tough economic times headed their way.
It was “poor timing,” Steve Wynn said, thinking about the number of hotel rooms and casino inventory opened during the height of an economic storm that now appears to be receding.
The Aliante and M resorts on the north and south edges of the Las Vegas area were the victims of similar timing problems, but have since been snapped up by investors for a fraction of their initial cost.
TPG and Apollo took stakes in Aliante. Penn National owns the M. Penn CEO Peter Carlino said the M with its “wonderful amenities” represented the kind of deal Penn couldn’t pass up as it continues looking for a property closer to the center Strip area.
Carlino has repeatedly expressed confidence in the M’s potential, saying its eventual success is just a matter of the local housing market improving.
Phil Hevener has been writing about the Nevada gaming business for more than 30 years. He can be reached at [email protected].