MGM MIRAGE’s Lanni says LV business ‘consistently better’

Jan 8, 2002 7:34 AM

Las Vegas is turning the corner from the devastating economic blow it suffered last September. That’s the opinion of someone who should know . . . Terry Lanni, chairman and CEO of MGM MIRAGE Inc. (MGG).

Interviewed by Ron Insana on CNBC, Lanni was very upbeat, saying that business was very strong during the New Year’s period and that it had been improving each week since the September terrorists attacks.

“I don’t want to give the wrong impression,” he added, quickly. “It was not as good as last year but we are very encouraged because it has been improving steadily since September.”

He noted that there has been some change in the way travelers have been booking rooms in Las Vegas. “They are planning later than they used to,” he said. As for high-rollers, he said, contrary to what some have suggested, “we have overcome the so-called Asian contagion.” Many were fearful of traveling after the attacks, as well as through the anthrax scare, but “it has been consistently better in recent weeks.”

Lanni said he was very encouraged for the Chinese New York celebration slated for Feb. 12.

His remarks were echoed by Jason Ader, chief gaming analyst at Bear Stearns. Ader said he was impressed by what he saw during the Las Vegas New Year celebration and felt that with room bookings for such events such as the Consumer Electronic Show, Super Bowl and the Chinese New Year, the “numbers are very encouraging.”

Ader said that based on the resurgence of Las Vegas he recommended MGM MIRAGE stock as well as International Game Technology (IGT) because of the number of states that will be looking to expand gaming in order to create jobs and generate tax revenues.

Sun out front

It didn’t take long for Sol Kerzner’s online wagering operations to get underway on the Isle of Man, a self-governing 227-square-mile island that is 20 miles off the coast of Scotland.

Less than two months ago, the island’s government officials awarded three Internet wagering licenses with MGG MIRAGE Inc. (MGG) and a European group getting the licenses in addition to Sun International Holdings (SIH).

But it was the Sun International Hotels conglomerate that was responsible for South Africa’s Sun City and the Atlantis Resort Hotel in the Bahamas that beat everyone out of the starting block.

Sun’s operators modeled the Internet site on its Atlantis property, promising that gaming participants would find the style and flair of the Bahamas facility. In order to attract international customers, the site offers gaming in English, Spanish, French, Italian and Portuguese.

However, because of strict regulations governing participation, the site bans players from Austria, the Bahamas, China, Germany, Sweden and the U.S. among a number of countries. Also prohibited are players under the age of 18.

The Isle of Man also requires a $2.9 million deposit to insure that the site operators will guarantee payouts to lucky gamblers.

It was expected that MGG MIRAGE and Littlewoods Leisure, the other two licensees, will be up and running before the end of the year.

Buyout advances

Everything is in place for majority stockholder Chairman and CEO Jeffrey P. Jacobs to acquire the shares of Black Hawk Gaming & Development Company Inc. (BHWK) he already does not own for $12 per share in cash.

At a stockholders meeting on Friday, the company voted to approve the plan presented by Jacobs’ company, Gameco, Inc. When merged, BHWK will become a wholly-owned subsidiary of Gameco. Plans call for the transaction to be completed before the end of February. Jacobs indicated he will have the financing in place by the end of the month.

Black Hawk officials said that if Jacobs fails to obtain the financing or because of some other handicap he is unable to go forward with the merger, the company will be entitled to liquidated damages of $2 million.

Jacobs, whose family is well-known as a real estate developer in Cleveland, Ohio, formerly was a major shareholder in the Boardwalk Hotel/Casino on the Las Vegas Strip.

The tax man cometh

In Mississippi, the practice has been to withhold five percent from any slot machine winnings that exceed $1,200 for the state tax man. Then, winners had the opportunity to apply for a rebate based on their gambling losses.

End result was that the Mississippi tax collectors ended up with one percent or less. This obviously didn’t sit well with that state’s tax collection agency.

So, the law has been changed to eliminate tax refunds. But, only three percent will be withheld when someone wins a jackpot of $1,200 or more.

Kentucky momentum grows

Supporters of what Kentucky calls “alternative gaming” got a big boost over the weekend with Keeneland Association coming out in support of the slot machines at the state’s racetracks and the directors of the horsemen’s association jumping on the bandwagon.

Keeneland operates a racetrack, and owns a part of Turfway Park, but its principal activity has been selling the horses bred in the Bluegrass State.

But as Keeneland’s prexy Nick Nicholson was quoted as saying, “To say, ”˜we don’t want it’ is no longer a responsible position to take.” He added that not only would the racing industry benefit but the state would get much-needed tax dollars.

The horsemen’s association leaders insisted, however, that their support will only continue if slots “protect live racing.”

Another conviction

Another offshore Internet gaming operator has been convicted. This time it was Keith Varga of 21st Century Sports Wagering who was successfully prosecuted by Pennsylvania authorities.

Varga pleaded guilty to one count each of conspiracy, engaging in an unlawful sports betting and wagering business, and money laundering, all felonies.

According to prosecutors, Varga traveled to his base of operations in Aruba every four to six weeks and returned with about $25,000 in cash which he deposited in the U.S.

The Insider

Argosy Gaming Inc. (ARGY) has announced a $60 million plan that would double the size of its riverboat in Kansas City. Upon completion, the property will add 58,000 square feet of gaming space, bringing the total to over 100,000 square feet. Its nearest competition, Ameristar Gaming (ASCA) has 90,000 square feet at its gaming facility.

Tri-State CEO Danny Adkins reports that he is supervising the construction of the Tri-State Racetrack and Gaming Center in Nitro, W. Virginia, so that he can add 600 new slot machines to a 57,000 square foot addition. The facility now has 600 slots.

Park Place Entertainment Corp. has introduced a new multi-casino players’ card that will be used by Caesars Palace, Bally’s and Paris Las Vegas, the Flamingo Las Vegas and the Las Vegas Hilton.

Lyle Berman, Chairman and CEO of Lakes Gaming Inc. (LACO) announced the sale of the Polo Plaza shopping center on the Las Vegas Strip for $31.8 million.

In a shocking development, the 12 Atlantic City casinos reported revenues of $349 million for the month of December, a gain of 18% over the previous December. The December experience brought the yearly numbers to about $4 million higher than the previous year.

Sands Regent (SNDS) announced it had reached a definitive agreement to acquire the Gold Ranch Casino and RV Resort near Reno, Nev. Although no purchase price was given, Sands Regent said it was seeking $17 million in financing to cover the cash portion of the purchase.

Boston Media has rescheduled its iGamingWorld conference from May to June 24-26. The conference will take place at the Bellagio Resort & Casino in Las Vegas.

Dover Downs(DD), the multiple gaming and sports complex in Dover, Del., has selected Advanced Casino Systems’s casino management system for its slots facility.

Archon Corp. of Las Vegas, owner of the Pioneer Hotel/Casino in Laughlin, reported a loss of $1.88 million for the quarter ending on Sept. 30.

Bill Schmitt, chief gaming analyst for CIBC World Markets, has listed Hollywood Casino Corp. (HYD) as a strong buy with a target of $15 a share.