19 bidders poised as Singapore opens gaming door

Apr 19, 2005 5:58 AM

Fearing that it would be overwhelmed economically by some of its Asian neighbors, Singapore Monday announced it would end a 40-year ban on gambling and would entertain proposals to develop two casinos.

The decision was anticipated by at least 19 gaming companies who already have submitted proposals for entertainment/casino projects in either downtown Singapore or on the island of Sentosa.

In making the announcement of Singapore’s decision, Prime Minister Lee Hsien Loong told members of parliament that "Singapore is seen as unexciting" and needs "crowd pullers. We want Singapore to have the X-factor, that buzz you get in London, Paris or New York." He advised that Singapore cannot stand still. "The whole region is on the move. If we don’t change, where will we be in 20 years?"

Although the decision was expected, opinion polls suggest slightly more than half of Singapore’s four million people oppose casino gambling. But the prospects of creating as many as 35,000 jobs and boosting the economy by as much as one-half of last year’s 8.4% pace motivated even some who initially opposed the idea.

Also influencing others was the intention of the government to limit the number of Singaporeans using the casinos by imposing a hefty daily entrance fee.

Lee Kuan Yew, the founder of modern Singapore and the prime minister’s father, initially opposed the idea of permitting gambling. But, he said, he realized that Singapore could not afford to abandon the idea because the "world could pass us by and we will watch our neighbors with casinos" attracting more tourists.

Loong might just as well have included Las Vegas in his description of city’s that have a "buzz" since four of the primary bidders for a gaming license are Las Vegas Sands Inc. (LVS), Wynn Resorts Ltd. (WYNN), both of which were successful in receiving gaming licenses in the growing gambling mecca of Macau, and MGM MIRAGE Inc. (MGG), and Harrah’s Entertainment Inc. (HET), the two companies that will become the world’s largest in the gaming industry when and if their planned acquisitions take place in the near future.

Other world-class gaming companies that have submitted casino proposals include Australia’s Tabcorp Ltd. and Kerry Packer’s Publishing & Broadcasting Ltd.; Sol Kerner’s Kerzner International Ltd., operator of Bermuda’s Atlantis Casino as well as a number of gaming properties in both Europe and South Africa, and Malaysia’s Genting Bhd.

Financial boost

The cash registers were ringing Monday at American Wagering Inc. (BETM) following the announcement of a favorable ruling from the 9th Circuit Court of Appeals relative to a bankruptcy subordination matter.

The court’s ruling reversed a bankruptcy court decision involving the company’s debt owed to Michael Racusin. As such, the debt owed to Racusin will be paid in the form of 250,000 shares of the company’s common stock rather than $2.8 million in cash.

It was noted, however, that Racusin can appeal the court’ most recent ruling.

Reacting to the court’s decision, Vic Salerno, CEO and president, remarked: "We are very pleased with this affirmation from the Bankruptcy Appellate Panel. We always believed that Racusin bargained for stock and should, therefore, receive stock rather than cash. In addition, we had earmarked funds for the payment of the Racusin claim and this ruling will allow us to reinvest that money back into the company instead. With these funds now at our disposal, we are more confident than ever that we will be able to implement our strategies to grow the company and increase shareholder value in the long term."

Earnings season

Some of the gaming leaders will report their results for the first fiscal quarter of the new year this week, possibly signaling what they can expect for the remainder of 2005.

MGM MIRAGE Inc. (MGG), which expects to complete its acquisition of Mandalay Resort Group Inc. (MBG) within the next couple of weeks, will report on Tuesday, April 18, while Harrah’s Entertainment Inc. (HET), currently working to receive the necessary federal and state approvals for its acquisition of Caesars Entertainment Inc. (CZR), will report a day later.

As for the manufacturing sector of the industry, International Game Technology (IGT), which has seen its share value drop sharply during the past few weeks, will report its earnings on Thursday.

Others that have scheduled earnings announcements include:

Boyd Gaming Corporation (BYD), Monday April 25, at l:30 p.m. PDT.

Multimedia Games Inc. (MGAM), Thursday, April 28, at 8 a.m. PDT.

Argosy Gaming Company (AGY), Thursday, April 28, at 8 a.m. PDT.

Alliance Gaming Corp. (AGI), Thursday April 28, at l:30 p.m. PDT.

Youbet.com (UBET), Thursday, April 28, at 2 p.m. PDT.

Money troubles

Gov. Kathleen Blanco hinted on just how bad the finances are in Louisiana last week when she notified the city of New Orleans that the state won’t be paying the $12.4 million it owes the city for police, fire and sanitation services around Harrah’s New Orleans Casino.

The governor says the state simply doesn’t have the money to meet the requirements of an agreement made when the casino opened calling for the reimbursement to the city of about $3.6 million a year. But things have been so bad that the state has only paid about $2 million of the $14.4 million it owes since the deal was made in 2001.

New Orleans Mayor Ray Nagin has threatened to abandon all enhanced services to the casino if the money isn’t paid.

Blanco responded that he should try to get the money from the casino owner, Harrah’s Entertainment Inc. (HET).

THE INSIDER: March gambling revenues in New Jersey grew 1.9% to $396.3 million, according to the New Jersey Casino Control Commission. Borgata Hotel Casino & Spa showed the largest percentage growth, up 13.8%, following by the Tropicana, up 13.6%, and Resorts, up 11.4%. The biggest decrease was experienced at the AC Hilton that was down 8.4%.

Ameristar Casinos Inc. (ASCA) notified the Securities & Exchange Commission that it had dismissed Deloitte & Touche LLP, its independent registered public accounting firm. The company said that as of April 11 its new accounting firm was that of Ernst & Young LLP.

Atty. John Moran Jr. has submitted his resignation, effective April 22, from the Nevada Gaming Commission. He had served for just eight months of a four-year term. He indicated he plans to pursue a political future.

MGM MIRAGE Inc. (MGG) has hired Cesar Pelli to design a 4,000-room hotel and casino to be located on the Las Vegas Strip between Bellagio and the Monte Carlo.