Baby boomers’ time and money to boost gaming in coming years

May 31, 2005 3:01 AM

A dozen or so years ago, Nevada casino executive Larry Woolf, then president and general manger of the newly-constructed MGM Grand Hotel/Casino, at that time the largest in the world, was addressing a group of newsmen regarding the future of Las Vegas in general and his property in particular. It had been suggested to him that Las Vegas was overbuilt and that it meant both the community and MGM Grand would suffer the consequences.

Woolf, whose success with his company, the Navegante Group and the opening of the first and most successful casino in Ontario, Canada, has become legendary, replied that no one should be concerned about either of those problems because a timeframe was developing that would introduce baby boomers to the mix of future customers and "by all best estimates, they will have a net worth of something approaching seven and one-half trillion dollars."

That view was underscored at a gaming conference last week in Atlantic City when it was noted that over the next five years casino revenues would rise somewhere between three and five per cent.

Speaking with a reporter from Reuters, Andrew Zarnett, a much-quoted bond analyst from Deutsche Bank, remarked, "As the baby boomer generation moves from the 45 to 59 age range to the 50 to 65 range, they have more time and more disposable income. We believe that they will spend that time and money on leisure travel and leisure activity."

He might have been quoting from Woolf’s dissertation of a dozen years earlier.

Lawsuit rescission

In a filing with the Securities and Exchange Commission, Shuffle Master Inc. (SHFL) noted that in late April a district court had granted the company’s rescission motion, ordering that a contract it had with Yehia Awada and Gaming Entertainment Inc. be voided.

Awada and Gaming Entertainment had sued Shuffle Master for $13 million over the exclusive license it allegedly had granted the company regarding the 3 Way Action game. However after the rescission ruling, a lower court ordered that Shuffle Master pay only $130,000, including interest, to Awada.

Maine approval

Efforts to get its racino operation in Bangor, Maine, got a boost last week when Penn National Gaming Inc. (PENN) was approved by the Maine Harness Racing Commission to operate an off-track betting facility at Miller’s Restaurant in Bangor that the company is acquiring for $3.8 million.

The restaurant operation will be part of Penn National’s racing and simulcast activities at Bangor Raceway that is being redeveloped by the company for its future as a racino.

Prior to the completion of the racetrack renovations, however, the company plans to install some 500 video lottery machines at the restaurant. Plans call for the restaurant slots to be ready prior to the end of the calendar year.

Casino opens

Officials of Pinnacle Entertainment Inc. (PNK) were delighted last week to see hordes of prospective gamblers standing in line awaiting the opening of the $365 million L’Auberge du Lac Hotel/Casino in Lake Charles, La.

The Thursday night opening was greeted by festivities and a fireworks display attended by local and state politicians.

Dan Lee, chairman and CEO of Pinnacle, said he was pleased with the warm reception the facility received and added that all 743 rooms in the hotel were booked for the holiday weekend as well as the following weekend.

Although the facility will compete with two other riverboats in the area, L’Auberge, because of its amenities, is expected to dominate and expand the market that attracts customers from the Houston, Texas, area.

Lincoln sale

Rhode Island House and Senate members continued their disagreement on just how to address the demands of the BLB Investors group in their efforts to acquire Lincoln Greyhound Track from English-based Wembley Plc.

The Senate has approved a deal with the acquiring group that increases the number of video lottery terminals at the track from 3,000 to 4,752, provided that part of the machine revenue is shared with the state. The Senate bill also stabilizes the new owners’ tax rate for 18 years and includes a provision that guarantees an equal tax rate with any new gambling enterprise that should open in the state.

The latter portion of the bill results from efforts by Harrah’s Entertainment Inc. (HET) to build a casino in partnership with the Narragansett Indians and to pay the state somewhere between 30% and 35% of their revenues. Lincoln now pays the state 60% of its revenues.

However, despite the Senate bill passing 32-1 the House postponed action on its proposal to further study the impact the Senate action would have on the state’s finances.

THE INSIDER: GTECH Holdings Corporation (GTK) has signed a two-year contract extension with Dansk Tipstjeneste A/S, the operator of the national lottery in Denmark. The company valued the extension at $10 million.

The Palace Casino Resort in Biloxi, Miss., has contracted with International Game Technology (IGT) for the company’s IGT Advantage Casino System.

The New Jersey Casino Control Commission has approved the proposed acquisition by Harrah’s Entertainment Inc. (HET) of Caesars Entertainment Inc. (CZR). Harrah’s, still awaiting federal approval, says it expects to complete the transaction prior to the middle of June.

Station Casinos Inc. (STN) plans to acquire a 50-acre plot on the southwest corner of South Virginia Street and the Mount Rose Highway in Reno, Nev., a property that it plans to develop into a casino.