A.C. hopes building hotel towers will bolster sagging business

March 11, 2008 6:00 PM
by

share

Industry Insider by Ray Poirier | The philosophy that if you build it people will come has worked for decades in Las Vegas. Now Atlantic City hopes it will work for their gaming enterprises.

Last week, Harrah’s Entertainment Inc. debuted its 961-room Waterfront Tower. In June, Boyd Gaming Corp. (BYD) will open the doors to its new 800-room stand-alone Water Club as a neighbor to its highly-successful Borgata Hotel Casino & Spa, a property it owns jointly with MGM MIRAGE Inc. (MGM). By Labor Day, Trump Taj Mahjal Casino Resort on the Boardwalk will have a new 786-room tower.

The projects were all planned and designed before the credit crunch hit the industry causing a number of casino companies to shelve planned projects.

But, in the opinion of N.J. Gov. Jon Corzine, the three major projects announced for Atlantic City will go forward despite the shortage of financing in some areas.

"This actually is something I know something about," said Corzine who prior to jumping into the political arena was chairman of the investment banking firm Goldman Sachs.

"Markets go up and down," he said. "If they were coming to market today, the markets are not keen on highly leveraged transactions. Whether it be six months from now, a year from now, a year and a half from now, we certainly hope the markets provide windows of opportunity. I would expect that they will."

He said both the MGM $5 billion project, set for the Marina area, and the $2 billion Revel Entertainment project on the Boardwalk appear to have solid financing behind them while the third, proposed by Pinnacle Entertainment Inc. (PNK) may be delayed but he expects it to go forward eventually.

After 10 months of declining gaming revenues, Atlantic City finally saw the trend reversed during the month of February.

True, credit for the positive report was given to the Leap Year factor that added one day to the results but still a 1.5% increase in revenues over the same month a year ago was cheered by the casino operators.

"You’re not throwing your hat in the air, but we’ll take victories where we can get them," said Mark Juliano, Trump Entertainment Resorts Inc. (TRMP) chief executive officer.

During February, the 11 casinos took in $384.1 million. Table game play was up 4.9% while even the struggling slot machine activity showed an increase of 0.1%.

THE INSIDER: Workers at Casino Windsor in Ontario, Canada, have voted 97% in favor of a strike action. The contract between the casino and the Canadian Auto Workers union representing 3,000 casino workers expires on April 4.

MTR Gaming Group Inc. (MNTG) has completed the sale of Binion’s Gambling Hall & Hotel in downtown Las Vegas to TLC Casino Enterprises for about $28 million.

Analysts at Sterne Agee Co. have downgraded the shares of Cash Systems Inc. (CKNN) from "buy" to "hold."

Macau officials have listed the official gaming revenue for the month of January as $1.3 billion, an increase of 67.3% over the previous year.

Coreen Sawdon has been named acting CFO of Shuffle Master Inc. (SHFL) replacing Paul Meyer who will continue as the company’s president and COO.

Churchill Downs Inc. (CHDN) will release its financial report for the fourth quarter on Friday, March 14 at 6 a.m. PDT.

Review of casino applicants by the Kansas Lottery Commission, whose task it is to negotiate 13 gaming contracts in four gambling zones, will take 60 days longer than previously announced.

Pinnacle Entertainment Inc. (PNK) plans to begin construction of its $350 million Sugarcane Bay riverboat casino in Lake Charles, Louisiana, sometime this summer.

Columbia Sussex Corp. has asked the New Jersey appeals court to overturn the recent loss of its casino license to operate the Tropicana Hotel/Casino in Atlantic City. The property is being operated temporarily by a state-appointed trustee and is in the process of being sold.

A Senate committee in New Hampshire has recommended that the entire Senate reject two plans for expanded gambling in that state.

Youbet.com Inc. (UBET) will again seek a license to operate in the Commonwealth of Virginia after having resolved its disputes with that state’s horsemen’s group.

MGM MIRAGE Inc. (MGM) majority stockholder Kirk Kerkorian reported that his Tracinda Corp. had made a 5 million share donation to a charitable institution, leaving him with 52.2% of the company’s outstanding shares.