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Trop bankruptcy no help

May 12, 2008 8:34 PM

by Ray Poirier | It hasn’t been as bad as the days following the 9/11 attacks, but gaming stocks have found few buyers in recent weeks. The reason was underscored last week when many of the major gaming companies reported their poor first quarter results.

Las Vegas Sands Corp. (LVS), Wynn Resorts ltd. (WYNN), MGM MIRAGE Inc. (MGM), Boyd Gaming Corp. (BYD) and Riviera Holdings Corp. (RIV) all reported declines. And there was little encouragement given for the remainder of the year.

Adding to the industry’s clouds was the report from privately-held Columbia Sussex Corp. that it had filed for bankruptcy protection, primarily caused by the company’s license loss in Atlantic City where a state-named receiver has been operating the Tropicana Hotel/Casino while searching for a buyer.

The bankruptcy impact wasn’t limited to Atlantic City, however, since the company has a major investment in Nevada with its Tropicana Hotel/Casino on the Las Vegas Strip, as well as the Tropicana Express and River Palms in Laughlin, a pair of casinos in Lake Tahoe, Nevada, and casinos in Mississippi, Indiana and Louisiana.

Since the national economic decline has taken its toll on gambling operations in nearly all jurisdictions but especially in Atlantic City where the casinos have been impacted by a smoking ban, there has not been a rush of bidders for the Tropicana. Rumors indicate that Planet Hollywood, which recently turned the troubled Aladdin Hotel/Casino in Las Vegas into a thriving property, may have submitted the top bid of $1 billion.

Whether that will be enough to ease Columbia Sussex out of bankruptcy remains to be seen.