Macau threatens to dump Wynn, Adelson groups

Mar 26, 2002 6:32 AM

Two successful bidders for Macau gaming licenses could be on the verge of losing their lead positions, according to a report in the Hong Kong Mail newspaper.

Reportedly, the dispute stems from requests by Steve Wynn and Galaxy Casino for a five-year extension to their 15-year contracts as a condition for signing the agreement.

The extensions, the two bidders said, were needed to compete with the third successful bidder, casino magnate Stanley Ho. Ho has already signed his agreement with Macau.

Macau officials, according to the newspaper report, have notified MP Entertainment ”” the partnership of Mandalay Resort Group (MBG) and Park Place Entertainment Corp. (PPE) ”” to be prepared to step in if either Wynn or Galaxy fail to sign the 15-year agreements by April 1.

Wynn and his minority partner, Wong Chi Seng; Galaxy Casino, which is owned by Las Vegas casino owner Sheldon Adelson of The Venetian and his partner, Yip Wai Chau, and the 80-year-old Ho were selected from among the 21 original bidders for three gaming licenses in Macau.

For more than two decades, the only gambling in Macau was operated by Ho. However, his gaming properties have been described as smoke-filled decrepit buildings that would be overshadowed by Las Vegas-styled casinos envisioned by Wynn and Adelson.

Conditions improving

Economic conditions in Las Vegas are improving faster than expected, says Jason Ader, chief gaming analyst for Bear Stearns.

He added that “the recovery from post 9/11 lows continues to track ahead of our expectations and we believe that if the economy continues to show signs of improvement that our current estimates could prove conservative.”

In a weekly equity research paper, Ader and his associates said they were analyzing the results released by McCarran Airport which showed that the average daily air seats to Las Vegas decreased 5.7% or 3,706 seats to 61,658 during the month of March.

“Las Vegas continues to show signs of sequential improvement in almost every operating metric as evidenced by March’s air seat data and our recent room rate surveys, which we consider two important indicators of forward demand for Las Vegas,” the analysts said.

The company maintains “buy” ratings on Harrah’s Entertainment Inc. (HET), International Game Technology (IGT), and MGM MIRAGE Inc. (MGG), among the large-cap companies, and Ameristar Casinos (ASCA) and Hollywood Casinos Inc. (HWD), in the small-cap category.

Kennedy supporter

Congressman Patrick Kennedy’s connections to Las Vegas gaming interests has come under criticism in his home state of Rhode Island where he is facing at least three congressional challengers.

His opponents have called on him to cancel a $500-per-person fundraiser being hosted by Jan Jones, senior vice president for communications at Harrah’s Entertainment Inc. (HET).

Kennedy has refused to cancel the event, saying his position of having the voters decide the question of building a casino is well-known.

Coming to his defense was Jones who explained that last year when the gaming industry was looking for help in battling the NCAA’s efforts to ban betting on college games, Kennedy played a role in winning support for Nevada’s position.

Detractors have suggested that Kennedy has been using his ­­political influence to push Harrah’s gaming interest in Rhode Island, even though the expected casino builders, the Narragansett Indian Tribe, has chosen to have Boyd Gaming Corp. (BYD) as its gaming partner.

Commenting on the situation, one of Kennedy’s challengers suggested that at a minimum, “there is an appearance of a quid pro quo.”

No dice for MGM MIRAGE

MGM MIRAGE Inc’s (MGG) effort to acquire a riverboat ­­license near O’Hare Airport in Chicago was shot down last week with an announcement by rejected the gaming company’s proposal.

However, the board did not completely rule out the Rosemont location as a potential site for the state’s 10th and final riverboat license. Rather, the board said it “is considering its own counterproposal.”

In an attempt to end a stalemate regarding a license previously owned by Emerald Casino, MGM MIRAGE had suggested it would pay $615 million to buy out the previous owners of the controversial license, allowing sufficient funds for the state and local authorities.

There was no indication when the state would make known its counterproposal plan or when further progress will be made in issuing the final license.

More slots approved

General Manager Danny Adkins of the Tri-State Racetrack & Gaming Center in Charleston, West Virginia, had his wish answered last week when the state’s Lottery Commission approved the addition of 1,000 new slot machines at the track.

“Now,” said Adkins upon hearing the news, “we can truly become a destination resort in the center of the state.”

Because of its location in the center of West Virginia, the Tri-State Greyhound Track in the town of Nitro does not attract as many out-of-state gamblers as do the state’s other pari-mutuel facilities.

“We will be able to add more family entertainment in addition to expanding our gambling center,” Adkins stated. He said the track had plans for an outdoor amphitheater for large concerts and “some sort” of sports venue.

President ousted

The row between JCC Holding Company, Inc., principal owner of Harrah’s New Orleans Casino, and its 49% partner, Harrah’s Entertainment Inc. (HET), grew more heated last week with the announcement that the casino’s board had ousted its chairman, Phil Satre.

Of course, Satre continues as chairman and CEO of HET.

The dispute erupted when, according to JCC, Harrah’s Entertainment attempted to gain a majority of the JCC board of directors and take control of the company.

Meanwhile, Paul Debban was elected to replace Satre as JCC chairman.

The Insider

Alliance Gaming Corp. (ALLY) has announced a 2-1 stock split to take effect on April 8 for shareholders of record on April 3.

Salomon Smith Barney last week started coverage of Alliance Gaming with an “outperform” rating.

Bill Schmitt, chief gaming analyst for CIBC World Markets, has reiterated his “strong buy” rating for Boyd Gaming Corporation (BYD). The company said last week it is experiencing a strong quarter and that earnings should be between $0.27 and $0.30 a share.

Coast Resorts Inc. says it has closed on an offering of $100 million in bonds. The senior subordinated notes were priced to yield 9.5%.

Station Casinos Inc. (STN) announced it expected to take a charge on write-offs related to the Fiesta Rancho Casino in North Las Vegas. The write-offs will be made to comply with new accounting rules.