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Detroit casinos squelch shutdown

Oct 9, 2007 4:14 AM

The willingness of Detroit’s three casinos to fight a closure order may have provided the pressure that avoided a shutdown of state government in Michigan.

That’s the view of gaming industry sources who say the decision by the Motor City, MGM Detroit and Greektown resorts to take Michigan Gov. Jennifer Granholn to court where they won a restraining order may have nudged the governor toward a settlement with lawmakers.

With the casinos determined to remain open, Granholn lost valuable leverage in her showdown with lawmakers.

Casinos doing business in the often hostile environment that characterizes some of middle America are increasingly willing to fight back when they encounter flawed policy.

Four casinos in the so-called Chicagoland market won a court order against a legislative effort to slap a tax on them. The tax would benefit racetracks. It is currently on appeal.

In Michigan, Gov. Granholn’s effort to apply pressure to the legislature would have resulted in a temporary loss of jobs for about 7,000 people and lost taxes of about $900,000 a day from the three casinos. The governor and the Attorney General’s office decided casinos could not operate without the inspectors who are state employees.

But an industry source familiar with the strategy devised by the "Detroit Three" said a careful reading of the appropriate law made it clear the temporary absence of state inspectors did not provide sufficient justification for a shutdown.

Wayne County District Judge William Giovan agreed and in a stinging rebuke aimed at the state asked, "Is the state going to bite off its nose to spite its face?"

He said the damage because of lost jobs and lost tax revenue easily out-weighed arguments about the importance of state inspectors.

Giovan declared that his ruling "was not even a close call."

The state planned to appeal but it became a moot point as the governor and lawmakers settled their budget differences.

A closure would have been a reproduction of the closure of Atlantic City casinos for similar reasons about 15 months ago. In that case, casinos did not get the kind of strongly worded ruling Giovan issued.

Stations a good bet 

As investments go, Station Casinos has been a good one.

That’s what the three members of the state Gaming Control Board were told as they gave their approval to the $5.4 billion buyout of the Las Vegas-based company, a deal led by its founding family and Colony Capital.

The Board was told that a person investing in the company at the time it went public in 1993 and then leaving the money there over the last 14 years would have earned a return of 600 percent.

MGM eyes China

MGM Grand is not wasting time as it moves forward with plans for two luxury hotels in mainland China.

Chairman Terry Lanni is just back from China where he signed preliminary agreements for MGM hotels in Beijing and Shenzhen. The latter is one of the fastest growing cities in the world and a center for foreign investment near Hong Kong.

Both projects are fruits of MGM’s joint venture agreement with the Diaoyutai State Guesthouse at Beijing. The Beijing project, a "small luxury" hotel could conceivably be ready in time for next year’s Olympics. The Shenzhen project is about 18 months away.

Whale food!

Resort marketing techniques at the very high end have taken a turn toward the dramatic.

Super chef Hubert Keller’s Fleur de Lys restaurant at Mandalay Bay has had a $5,000 hamburger available for about two years. The same restaurant also came up with a $20,000 six-course meal about six months ago. In each case the offering is paired with wines or other selections of upscale alcohol that helps justify these out of sight prices.

The hamburger (no mention of whether a slice of cheese is extra) has actually been sold to 10 people, although Fleur General Manager Tobias Peach hastens to add that eight of them were comps.

The Fleurburger, as it is known, is about a half-pound of kobi beef topped with foie gras and black truffles.

Still no takers yet for the six-course meal which begins with Osetra caviar and includes slow butter-poached lobster with bamboo risotto and lobster mint sauce before it concludes with Louis XIII Cognac. But, Peach was saying several days ago, he is "optimistic" it will soon be served for the first time.