ADAMS REPORT
A Review of Current Gaming Literature
Volume VI, Issue 2
February 2002
Editorial
Mr. Ho, Mr. Adelson and Mr. Wynn, Win in Macau.
New jurisdictions have been rare in the last five years. Detroit and California are the exceptions.
Detroit is home to three, by all accounts very successful, casinos. California Indian gaming
certainly feed the growth of the manufacturers, but did little to boost the fortunes of conventional
casino companies. So, when there is opportunity for new jurisdictions, the bidding can get
interesting.
So far, Macau has been that, interesting. Stanley Ho is being forced to give up his monopoly.
The bidders for the three licenses included most of the major casino companies in the world.
Even the Donald lined up, but did not succeed. The winners are Stanley Ho, Steven Wynn and
Sheldon Adelson. Keep your eye on this one; there is more entertainment on the way. Gangland
killings, disgruntled losers and some exciting new properties are sure to be part of the outcome.
There has already been one shooting, Donald Trump doesn’t feel he was treated fairly, Park
Place and MGM Mirage are waiting on the sidelines in case one of the bidders can’t raise the
money, and of course Mr. Wynn is promising a casino unlike any thing we have ever seen.
The Chinese gambling haven of Macau dealt out a "trey" of new gaming licenses,
and turned to a Las Vegas maestro to bring flare and family atmosphere to the enclave's seedy
streets. The three concessions went to Stanley Ho, Macau's casino king who held the monopoly for
40 years; Steve Wynn, Las Vegas casino tycoon who developed the Mirage and posh Bellagio
(and numbered among The Forbes Four Hundred Richest in America in 1998); and Galaxy
Casino, linked to the Las Vegas Sands as well as local businessmen. Everyone, himself most of
all, expected that self-made legendary billionaire Ho--who ranks 452 on the Forbes World's
Richest People list--would emerge a victor. "Whenever I compete, I won't lose because I dislike
the word 'lose', all my life," he told reporters. Greg Levine, Forbes.com, 2-8-02
Lawless Spirit May Make Macau Tricky. The place has a centuries-old reputation for
lawlessness that has been long-reflected in links between organized crime and government
officials. Yet leaders of mainland China are attempting to purge it of the deadly triads that control
prostitution, load sharking, drug dealing and gambling tables at Macau’s six casinos – a Wild
West dynamic found in much of the rest of the Asian nation. “Everything’s for sale. Money is
king. There’s an element of live for today so don’t worry about tomorrow,” said University of
Pennsylvania Professor Arthur Waldron.
…Meantime, the Chinese government opened the casino bidding process to wrest control of the
peninsula’s casinos from Stanley Ho as mainland leaders attempt to break the hold of organized
crime on the gambling market, which is a popular destination for Asians throughout region.
…“They’re (Wynn and Adelson) really going to have their wits about them,” Waldron said of the
Las Vegans. “They’re going to have to realize they’re going into a shark’s pond. It’s always been
a rather lawless place.” Even then, he warns, hard-bitten Strip executives could find themselves in
a difficult mess that potentially threatens their reputations and their U. S. gaming licenses. “On
the whole I think it’s a good thing to have foreigners involved in Macau,” Waldron noted, “but I
wouldn’t be surprised if they discovered they have labor problems never encountered in their
corporate experience – threats, extortion.” Dave Berns, lasvegas.com Gaming Wire, Las Vegas Review-Journal, 2-12-02
Give Me A Stepper Please!
Five years or so ago, Aristocrat came to United States with video nickel slot machines. The
games were multi-coin, multi-line games, which meant players could play more than five coins,
and they could wager on more than just the centerline. In fact, by the second or third generation
of these games, a player could wager up to ten coins on nine lines. The games as introduced in
the United States were not new and untested; they were the best of the library, perfected in the
very competitive club environment of Australia. But they were slow to gain acceptance by
conventional casino management in the U. S. Aristocrat was not licensed in Nevada, struggled to
gain a foothold in Atlantic City or Mississippi, only in Indian Country was Aristocrat successful
at gaining significant floor space in those early days.
Then from left field came some help, for the concept, not Aristocrat. IGT won a lawsuit against
Williams Gaming preventing Williams from manufacturing and selling conventional stepper
(reel) slots. Out of necessity, Williams turned to video, developing a video nickel slot machine
like the ones Aristocrat sold; Reel ‘Em In was the result. The Williams game was in a slant top
cabinet and had more exciting graphics and sound than Aristocrat, but still as much fun to play.
Williams took the casino world by storm.
Since that time nickels have been “the growth segment” of the slots. Each month, nickel revenue
has grown dramatically. The first three or four years, nickel revenue grew by 50-100 percent
each month; and nickels have steadily gained floor space as a consequence. The only serious
competition has come from “themed” games, games that borrowed from well-known people,
television programs or board games to create graphics and sound, but failed to duplicate the
essence or the feel of the original concept or person. Video nickels have reached 30-40 percent
of the average casino floor, while theme games are between 5 and 10 percent, an indicator of the
relative “success” of each category.
There is a rule in investing, if it does not apply to you, it certainly does to me. By the time the
majority recognize something as successful, a trend, the thing to have, it is passed, over and
done. The time of dynamic growth for video nickels if not passed, certainly has slowed. It is
clear now that the games no longer create much incremental growth. Rather, video nickels
cannibalize the existing dollar and quarter play (The “growth segment” that preceded themes
and multi-coin, multi-line nickels, linked progressives, are also in decline.) with their more
entertaining format and longer play characteristics. The time may have come, however, for
sometime new, or as it were, something old.
The casino industry needs new stepper slots, ones that are exciting and entertaining for the
players, not for the stock analysts. The industry has been pandering to the Wall Street and not
the players. It is time to change, many of the old (programs that are over five years old) stepper
slots still get decent play to excellent play, a sure sign that players still like the format. Casino
managers, slot managers and especially players are crying out for some really new, exciting and
entertaining “reel” slots.
Nickels playing big in A.C. Casinos’ investment in 5-cent slots pays off. Atlantic City - Gamblers
here are trading their quarters for nickels, with the ironic result being more revenue for the casinos.
Nickel slot-machine revenue, or the amount gamblers lost, surged 62.1 percent last year, to
$560.5 million. That caused declines in quarter (8.5 percent) and dollar (2.4 percent) slot revenue
but helped overall slot revenue grow to $3.1 billion, up 1.7 percent, according to a Jefferies & Co.
analysis. …The new nickel slots typically offer a variety of bells and whistles, such as video “reels,”
fancy graphics, digital sound, entertaining bonus rounds, brand-name themes such as I Dream of
Jeannie and Wheel of Fortune and, most importantly, lots of perceived winning. The nickel slots are
nickel denomination in name only. Gamblers are still inserting $10, $20 and $100 bills into the
machines, but dividing their wagers into smaller pieces. …The average “nickel” bet on Sands’ 360
nickel slots is $1.05, said Tom Reale, the casino’s executive director of slot operations. “The hit
frequency on the nine-line games is at least every other handle pull,” Reale said. …The new breed of
nickel slots do have a better payout percentage than their predecessors. They generally pay out in the
low 90-percent range compared to mid- to high-80s years ago, Reale said. Casinos are continually
replacing quarter and dollar slots with nickel games. Today, one out of five Atlantic City slot
machines is a nickel game, up almost 50 percent over the previous year. On the Las Vegas Strip, one
in every four slots is a nickel game. Nickel revenue there increased 28 percent last year, to $444.6
million. Joe Weinert, Press of Atlantic City, 2-24-02
But, that is just my opinion…
Quick-takes: The month’s trends in a glance.
February has been a continuation of the trends we have seen since Sept. 11 and the
recognition that the economy was not in a growth cycle. The economy is in a recession.
The revenues of most governments are suffering as the revenue sources are impacted by
the economic downturn. Nevada, as other states are also doing, first searched for ways
to reduce governmental spending. Then, one at a time, the state are reaching out for new
sources of revenue; new or increased taxes, hoping, in the process, to stimulate the
economy not slow it down. Twenty-two states are looking at cigarette taxes, nine at new
or expanded forms of gambling, and in a non-governmental example, Miss America
thinks of becoming a slot machine.
SLUMPING ECONOMY: Lawmakers look at budget shortfall. Guinn tells of worst-case
state scenario- State lawmakers were told Tuesday to brace for a budget shortfall of as much
as $66 million, even as they search for tens of millions of dollars to help households hurt by the
slumping Nevada economy. "This is the toughest I've seen it in my 38 years in this state," Gov.
Kenny Guinn said. SEAN WHALEY REVIEW-JOURNAL CAPITAL BUREAU CARSON CITY, 2-6-02 -
Stakes are High. Nine different casino, gambling bills in Legislature. St. Paul – Some want to
build casinos. Others, bingo machines. Maybe even pulltabs. Whatever the case, the Legislature
is facing a barrage of controversial bills to expand state gaming laws that would possibly bring in
more revenue to a state facing a $1.95 billion deficit. And a couple of legislators think a bill
authorizing the stat enter a partnership with Native American tribes to operate a metro area casino
might be the trick to help bring in extra state dollars while benefiting some economically
distressed tribes. …Frank Ball, director of the alcohol and gaming enforcement division of the
Department of Public Safety, said his agency takes a neutral stance on the issue. The division
watches over the gambling industry to make sure it’s fair and free of organized crime. But he said
different gambling institutions such as the pull tab, racing and casino industries aren’t thrilled
about the amount of gaming bills being introduced in the Legislature. They see the amount of
money spent on gambling as a pie, Ball said. The more groups out there trying to get some of the
pie, the smaller the piece. “This has got everyone in the gambling industry very
nervous,” he said.
Megan Boldt, Mesabi Daily News (Virginia Minnesota), 2-19-02
Salem, Ore. – Squeezed by the recession, nearly half of the
states are looking at raising cigarette taxes to generate revenue and discouraging people from
smoking, too. “We’ve never seen as many states looking at increasing cigarette taxes as a
way to make up for fiscal deficits as we’re seeing right now,” said Janis Borton of the
National Conference of State Legislatures. Twenty-two states are considering proposals by
governors or legislators to boost cigarette taxes, according to the group. …Since 1993, the
American Medical Association has advocated higher taxes on cigarettes as a way for states to raise
hundreds of millions of dollars for state budgets while discouraging smoking. The idea picked up
momentum after the Sept. 11 terrorist attacks damaged the already weakened economy. Brad Cain,
State Eye Cigarette Tax Increases.
Associated Press, Yahoo! News, 2-20-02
Miss America Slot Plan Debated. Hurting for funds, the Miss America Organization is
trying to turn its 81-year-old brand into slot machine cash. But it’s drawing a lot of fire in the
process. Miss America says its purpose is to “reflect ideas about national identity, community and
moral standards, as well as beauty, feminity and the roles of women.” …Money is the driving
force behind the idea. The public’s interest in the pageant has faded in recent years – it drew 8.8
million viewers in 2001, the lowest in the 43 years it’s been televised. The royalties paid by TV
networks to air the annual event have been declining as a result. And so the pageant’s
organization has been search for new sources of revenue. It listened to a pitch by Connecticut’s
Mohegan Sun, but decided to stay put in Atlantic City… David Strow, Las Vegas Sun, 2-20-02
The casino industry has grown to be a mature industry. It is characterized, like all
mature industries, by the dominance of large, usually publicly traded, companies with
easy access to capital and good management. The smaller companies have a difficult
time recruiting and retaining good managers, and find it especially difficult to finance
their plans. When a smaller company is able to find financing, the cost is apt to make
profitable operations very difficult. In Nevada for example, a small private company will
mostly likely pay two or three times as much for financing as one of the “five major
corporations.” In the following story, a casino owner in South Carolina came up with a
unique funding scheme; but it seems the cost of the money may have been a bit too high.
Contrast that with the story a Nevada, where the casino and its memorabilia was
purchased for about $1 million less than the memorabilia brought at an auction, thus a
free casino. What a deal!
Jailed Banker Owns Share of Casino Boat. The president of a small-town bank in Ohio,
accused of embezzling $40 million, is part-owner of the Stardancer Casino, a gambling boat in
Little River, according to an FBI criminal complaint. The loss forced the bank to close last week,
but another bank took over the century-old Oakwood Deposit Bank Co. and reopened it Monday.
Thomas J. Bailey, FBI special agent for white-collar crime, interviewed Miller on Jan. 31, at
which time Miller admitted he took the money from Oakwood Deposit Bank Co. in Oakwood,
Ohio, and ‘sent [it] to Stardancer Casinos in Myrtle Beach…,” Bailey wrote in an affidavit filed in
U. S. District Court in Toledo, Ohio. “Miller took these assets from CDs being deposited with
the bank, and he altered the bank’s records to show the CDs were paid off so that he could send
the money to Stardancer Casinos.” Jay C. Grelen, The Sun News, Myrtle Beach, South Carolina, 2-5-02
Sharkey’s stuff sells out. Buyers packed the Sharkey’s memorabilia auction Sunday, the
third and final day of trying to buy a piece of history, said Bill Fileger, manager of Anchor
Auctions of Reno. “The room was completely filled, standing room only,” Fileger said. “It was a
carnival atmosphere.” Some buyers traveled from across the country, coming from Chicago,
Florida, New York, Oregon and California. The 1,655 items had belonged to Milos “Sharkey”
Begovich, who displayed the collection at his Sharkey’s Nugget in Gardnerville until the casino
was sold in June. Holder Hospitality Group, which owns the Silver Club in Sparks, bought the
collection along with the casino for $1.6 million. Sales will not be completely totaled until
today, but Fileger estimated the auction brought in slightly less than the expected $2.5
million. Janice Hoke, Reno Gazette-Journal , 2-24-02-
Recession or not, gaming is growing. More people are gambling in casinos than ever
before in the United States. Year over year, the growth is impressive, but the growth in
the last seven years is staggering. According to a Merrill Lynch report, casino win has
doubled in the last seven years. And the growth is one trend that we can expect to see
continue in the future as more states consider expansion.
U. S. Casino Win up 11% in 2001. Americans proved with their wallets last year that
they’re nowhere close to getting their fill of gambling in U. S. casinos. Gamblers lost $38.7
billion in domestic casinos in 2001, an 11 percent increase over the previous year and more
than double the amount they lost just seven years earlier, according to a year-end report
released Wednesday by Merrill Lynch. Merrill analysts David Anders and Salvatore Di Pietro
predicted that U. S. casino revenue… will increase another 5.8 percent, to $41 billion, this year.
“If you want a real-world comparison, in 2001 people in this country spent about $8.3 billion on
movie tickets,” said Eugene Christiansen, chief executive of Christiansen Capital Advisors, an
independent gambling consultant. Joe Weinert, Press of Atlantic City, 2-22-02
Update: Issues that you have seen before.
It will be a long time before Enron, Anderson and accounting leave the update world.
The beginning of the gaming companies to change accounting firms has started. The
changes in accounting practices have started. And the changes in retirement funds have
started. We may be bored with Enron and Andersen, but we cannot afford to ignore the
unfolding of events and the implications.
Deloitte Is Last Big Audit Firm to Revamp Consulting Business. Deloitte Touche
Tohmatsu announced yesterday that it would separate its accounting business from its consulting
business in response to growing pressure from investors, regulators and clients in the wake of the
Enron collapse. JONATHAN D. GLATER The New York Times, Yahoo! Finance, 2-6-02
Ernst & Young Latest Auditor Moving to Alter Some Practices. The accounting firm
Ernst & Young announced yesterday that it would stop selling information technology services to
companies it audits and that it would no longer serve as internal accountant and external auditor at
the same company. JONATHAN D. GLATER The New York Times, Yahoo! Finance, 2-6-02
"Enronitis": A Disease - and a Cure. DON'T PANIC. Sure, more accounting problems
could surface, and questions may be raised that temporarily depress the stock values of outfits
with perfectly sound balance sheets. Smart investors won't panic, however. ``Enronitis'' -- the fear
that accounting problems could plague untold numbers of companies -- is simply a trigger for a
much-needed correction. ``When markets get overvalued, you never know what is going to come
along and pop the balloon,'' says Don Luskin, chief investment strategist at investment firm
TrendMacrolytics. ``It could be anything. It just happens to be Enron this time.'' Eric Wahlgren, Street.com,
2-7-02
Andersen Loses Hard Rock Hotel. -
Doug Young LOS ANGELES (Reuters) - The Hard Rock Hotel and
Casino in Las Vegas has dropped accounting firm Andersen amid questions surrounding its audits
of now-bankrupt energy trader Enron Corp., but other major hotel and gaming clients said they
would stay with the beleaguered firm for now. Andersen acts as auditor for most of the biggest
casino operators in Las Vegas, including MGM Mirage, Harrah's Entertainment Inc and Mandalay
Resort Group. It is also a major auditor for the related hotel sector, with a client list including
Marriott International Inc.(NYSE:MAR - news) and Hilton Hotels Corp., the No. 1 and No. 3 U.S.
operators. Yahoo! Finance, 2-10-02
New York (Reuters) – Even as the White House and the
U. S. congress offer competing proposals to overhaul the regulation of corporate retirement plans
following the Enron Corp. bankruptcy, business groups are sounding an alarm that some of the
proposals go too far. “We are fearful we’re heading down a road where you put your money in
and three months later you can take it out,” said J. Michael Keeling, president of the Employee
Stock Ownership Plan Association, an advocate for employee ownership. Cal Mankowski, Yahoo! News, 2-2-02
Enron Inspires Debate over Company.
Las Vegas has found at least one silver lining to the clouds of recession and Sept. 11
fallout. People spending more time in the airport spent more money.
Travelers Boost Spending, Slot Play At McCarran. Business flourishing as fliers spend
more time at airport McCarran International Airport says many passengers, faced with spending
more time in the concourse waiting for flights since the Sept. 11 terrorist attacks, are using that
time to play slot machines and are spending more on concessions. While the amount of passenger
traffic has been down by double-digit percentages since new security measures were ordered
following the attacks, airport revenues are just under the previous year's levels and some
businesses have done even better since the new restrictions took place. . Richard N. Velotta, LAS VEGAS SUN, 28-02
There has not been much good economic news so far this year. The recession, September
11, and Enron have most companies and their stocks reeling. Even in that dire climate,
there are those doing well, or at least better than the others. The winners in these times
are most often those with good business models; businesses that provide a product or
service in an efficient and friendly manner. Southwest is a good example, Southwest
provides low cost flights, usually on-time, and with friendly service. Southwest did not
layoff 10-15% of its employees, Southwest did not cut back on the majority of its flights,
and Southwest is not failing. There are others who will do well in this climate, those that
product’s day has come, InVision’s day seems to have come.
Southwest Airlines Flush Enough to Hire. Carrier profits as competitors struggle. Dallas
– Southwest Airlines, which bucked the trend of layoffs and flight reductions after Sept. 11, plans
to hire about 4,000 workers this year. …Dallas-based Southwest is the only major U. S. airline
still making money. …In December, Southwest announced it would take two new Boeing 737s,
the first additions to its fleet since the terrorist attacks. But the hiring plans are Southwest’s
strongest indication that it believes it can regain its previous double-digit growth. …The largest
carriers, American Airlines and United Airlines, lost $3.8 billion between them last year. …The
major U. S. carriers lost more than $6 billion last year. …said the industry would finally post a
profit of $270 million in the third quarter, with Southwest accounting for 70 percent of the gain .
David Koenig, Associated Press, Detroit Free Press, 2-19-02
InVision Plans on Expanding Its Technology. InVision Technologies Inc. is known for
its baggage bomb detectors, but the company is also trying to expand its role in searching
everything from people to lumber. Quantum Magnetics, a San Diego company InVision acquired
in 1997, is developing devices to screen passengers and carry-on bags. Quantum will be among
several firms scheduled to begin live testing starting later this month at Orlando International
Airport. The tests will be conducted by the nonprofit National Safe Skies Alliance, and results
will be evaluated by the Federal Aviation Administration. One device is Quantum’s QR Portal,
which uses technology called quadruple resonance, described by the firm as a “close relative”
to magnetic resonance technology used by the medical industry.
…One other product under development is a chair that screens body cavities. The magnetic
resonance device was primarily designed to search people entering prisons but could also have
some use in airport security. Benny Evangelista, San Francisco Chronicle, 2-4-02
Harrah’s Watch
Is there a deeper message here, or are the key Harrah’s executives merely taking a welldeserved profit from their efforts? Whatever their motivation, Harrah’s continues to get
good results from operations and continues to develop business relationships and unique
solutions to common industry problems. This month, Harrah’s finalized an agreement
with an airline to increase traffic to the Laughlin property. Laughlin has suffered for
years from increased competition from Indian casinos in Arizona, New Mexico and
California and from the growth of the Las Vegas Strip. Harrah’s proves its leadership
again, with a typical “Harrah’s” solution.
CEO holds no Harrah's stock directly after sale. - WASHINGTON, Feb 5 (Reuters) - Harrah's
Entertainment Inc.'s (NYSE:HET - news) president sold 22,500 shares in the casino operator and
no longer directly held any stake in the company as of last month, a filing with the Securities and
exchange Commission showed on Tuesday. Yahoo! Finance, 2-5-02
Harrah's CEO sells 17 pct of his stake in company. -
LOS ANGELES - (Reuters) - Harrah's
Entertainment Inc. (NYSE:HET - news) Chief Executive Phil Satre recently sold about 326,400
shares of the casino operator's stock, or 17 percent of his stake, a spokesman said on Wednesday.
Yahoo! Finance, 2-6-02
Harrah's Entertainment, Inc. Reports 2001 Full-Year, Fourth-Quarter Results.
Record Revenues And EBITDA Achieved. Adjusted EPS Rose 36.9 Percent In Year . LAS VEGAS Harrah's Entertainment, Inc. (NYSE:HET - news) today reported Adjusted Earnings Per Share of
$2.04 for the year ended December 31, 2001, up 36.9 percent from the Adjusted EPS of $1.49
reported for 2000. --(BUSINESS WIRE), Yahoo! Finance, 2-6-02
Allegiant Air and Harrah's Reach Agreement On Long-term Charter Flight
Contract. LAUGHLIN, Nev. - (BUSINESS WIRE) - Allegiant Air today announced that it has reached a twoyear agreement with Harrah's Hotel and Casino properties to provide MD-87 jet charter flights to
Laughlin, Nevada from cities across the U.S. The flights will operate daily except Tuesday over
the term of the agreement, with arriving passengers staying as guests at Harrah's Casino & Hotel
in Laughlin. ``We are extremely pleased that an outstanding organization like Harrah's has
selected Allegiant Air to provide their charter operations,'' said Maurice J. Gallagher, the airline's
Chairman. ``This new agreement represents the expansion of a business relationship we have had
with Harrah's over the past few years during which we provided charters on an ad hoc basis.
Harrah's was looking for the operating performance capabilities provided by the MD-87 and we
were able to acquire the appropriate aircraft for the mission. The MD-87 is capable of flying nonstop from any city in the U.S. to Laughlin.'' Yahoo! Finance, 2-12-02
And then, one more area in which Harrah’s excels, litigation.
Harrah's Refiles Lawsuit Against Penn National. - Harrah's Entertainment Inc. has taken
its legal battle over a West Virginia racetrack to a Philadelphia federal court. Harrah's subsidiary
Showboat Development Co. first filed suit against Penn National Gaming Inc. in Las Vegas
federal court last year. Showboat claimed it held an option to operate a casino at a racetrack in
Charles Town, W.Va., should casino gaming become legal in that state. Showboat also claimed a
right of first refusal to buy the track from its developer, Bryant Development Co. Las Vegas Sun, 2-20-02
Wynn Watch
Just when we thought we had painted Steven Wynn into a corner; he is, for our
amusement, entertainment and edification, to design and build the newest and most
exciting casino in Las Vegas. Update: Steve got out of the box; he is going to build the
newest and most exciting casino in Las Vegas, and by the way something as unique and
exciting in Macau.
Wynn Again Adjusts Timetable for Le Reve. Strip developer Steve Wynn said Tuesday he
has again adjusted his timetable to obtain financing for the $1.6 billion megaresort he plans to
build in place of the Desert Inn. The developer of Bellagio and The Mirage said he expects to
have financing in place within six weeks. Jeff Simpson, lasvegas.com Gaming Wire, Las Vegas Review-Journal, 2-6-02
“Le Reve is fundamentally a new project,” Steve Wynn said. “When we built The
Mirage, Treasure Island and Bellagio, they were all essentially the building – The Mirage with
three different budgets. “These three hotels were designed from the outside looking in, creating a
picture to be viewed from outside. With Le Reve, it will be designed from the inside out.
Everything will revolve around the guest and what he’ll see and experience.”
Wynn, Adelson Win Licenses for Macau Casinos. Steve Wynn and Sheldon Adelson
won the race to Macau this morning, as the government of the Chinese coastal city awarded
provisional gaming licenses to the two Las Vegas casino resort developers. In doing so, the two
beat out the Strip’s three largest gaming corporations – MGM Mirage, Park Place Entertainment
and Mandalay Resort Group. …Also left out were high-profile international operators such as
Australian Kerry Packer and South African Sol Kerzner’s Sun International.
…In naming the licensees, Francis Tam, secretary of economy and finance for Macau,
praised Wynn’ “creativity and innovation” in creating Strip resorts such as the Bellagio and
the Mirage. David Strow, Las Vegas Sun, 2-8-02
Bit and Pieces from Indian Country
The Secretary of the Interior is charged with the responsibility for “Indian Affairs”; that
responsibility is not an easy one. The recognition process, tribal-state gaming compacts,
Indian gaming regulation and tribal trust funds are some of issues where the Secretary of
Interior has responsibly and authority. More than one secretary of the Department of
Interior has fallen into difficulty with the federal courts over the manner in which the
authority was handled. February is the month when the contempt trial of Gale Norton,
Secretary of the Interior began, and it has not been a pretty sight.
Norton Announces New Money for American Indian Trust Fund as She Heads off
Charges that She Mismanaged It. Washington - President Bush will seek and additional $83.6
million next year to fix a mismanaged American Indian trust fund that has become a thorn in the
Interior Department’s side, Secretary Gale Norton said Friday. Norton’s announcement of a 76
percent funding increase came as she sought to smooth over differences with suspicious
Indian leaders, and prepares to woo members of Congress skeptical of her plan to fix the trust
fund. Robert Gehrke, Associated Press, SFGate, 2-1-02
Norton Admits Some Indian Trust Records ‘No Longer Exist.’ Testifying in her own
contempt trial, Interior Secretary Gale A. Norton said yesterday the government has lost an
unknown amount of trust fund records for Native Americans, but defended her agency’s
management of billions of dollars in the Indian accounts.
...Norton calmly portrayed the Bureau of Indian Affairs program as one with historical problems,
but one that is now in competent hands. Neely Tucker, Washington Post, 2-14-02
Indian Trust Case Judge Feels ‘Duped.’
Washington – The judge presiding over Interior
Secretary Gale Norton’s contempt trial moved closer to sanctioning Norton and her chief Indian
aid as he repeatedly expressed frustration at how he was misled and “duped” by government
officials in both the Clinton and Bush administrations. U. S. District Judge Royce C. Lamberth
interrupted the government’s chief lawyer several times during final arguments, asking him point
blank why the department’s failure to give him a complete and accurate picture of their troubles
managing more than 350,00 Indian trust accounts didn’t amount to contempt.
…Norton testified in the case last week, assuring the judge that she was finally making progress
with the accounts, which have not been audited for decades. Lawyers for the Indians say the
government hay have cheated their clients out of as much as $10 billion by failing to
properly account for oil, gas and grazing leases of Indian lands in the west. …“That’s what is
most shocking: the amount of money that is at risk. That the trustee (Norton) can allow that
amount of money at risk is mind-boggling.” Bill McAllister, Denver Post, 2-22-02
Indian gaming is a dynamic process. Tribes in Florida, New York, Texas, Oklahoma,
Idaho, Maine and Wyoming are trying to initiate or expand gaming operations. In Idaho
the process took another step with a ballot initiative.
Tribal Sports Betting Cleared.
CHEYENNE, Wyo. -- A federal judge ordered the state Wednesday
to negotiate a gambling compact with the Northern Arapaho Tribe within 60 days for sports and
pari-mutuel betting only. Casino-style gambling, lotteries and slot machines are illegal in
Wyoming and cannot be negotiated, U.S. District Judge Alan B. Johnson ruled. Calcutta, a form
of sports betting, and pari-mutuel betting are allowed in limited forms, so the full gamut of those
two games can be negotiated, Johnson ruled. Las Vegas Sun, 2-7-02
Idaho Tribes Spent $665,000 To Push Gaming Initiative. Campaign finance reports
show Indians' commitment BOISE - Indian tribes diverted more than $665,000 from gambling
operations last year to the initial stage of their initiative campaign to clearly legalize the electronic
gambling machines that have made their reservation casinos so lucrative. Campaign finance
disclosure reports filed with the secretary of state's office on Thursday showed that the Coeur
d'Alene Tribe put up $460,000 in cash and another $115,000 in in-kind contributions while the
Nez Perce Tribe added $90,000 in cash. Bob Fick - Associated Press The Spokesman-Review, 2-1-02
Panel kills compromise on gambling.
Boise- Senate GOP leaders on Monday quashed an
attempt by lawmakers and tribal leaders to pass compromise legislation this year on tribal gaming.
"Now the initiative's the only game in town," David Kerrick, lobbyist for the Nez Perce Tribe, said
after the decision by the Senate's leadership committee. Betsy Z. Russell, The Spokesman-Review, 2-27-02
Tribes consider Maine casino.
-- Maine's Penobscot and Passamaquoddy Indians have
begun discussions about a tentative plan to build a casino and entertainment complex in southern
Maine. Associated Press, Las Vegas Sun, 2-27-02
California has gone from being the backwater of Indian gaming to the leading edge. The
next story is just one example of the increasing sophistication of California Indian tribes.
Tribes Seeking Clout Told: Don’t Just Use Money. Money can’t buy you power, at least
not in the long run. That was the word Thursday from an Indian gambling consultant who urged
tribes to move beyond “checkbook politics” if they want to increase their influence with
lawmakers and be seen as more than cash machines. Without that change, tribes will find their
clout dwindling, as happened to special interests such as tobacco companies, the consultant
predicted. …Coalition building is key to lengthening tribes’ reach, Richard Ross of Ross
Communications said. …Ross also suggested that tribes work to get some of their leaders to run
for office. …Tribes need to be careful, too, of how they are perceived by voters and politicians in
the coming elections, Ross said. Tribes should not become just another special interest … Michelle
Dearmond, The Press-Enterprise, 2-1-02
News from the Net
Online Casinos Buy More Ads. The Internet gambling industry has become the fifth-largest
purchaser of Internet advertisements, according to a media research company. Jupiter Media Metrix
reported online casinos accounted for 2.5 billion online ad "impressions" in December, up 170 percent from
December 2000. Impressions measure the number of times an ad is delivered for viewing to an Internet
user. The only categories that posted more impressions during the month were books, movie and music
retailers; investment services; consumer credit; and travel booking services. Las Vegas Sun, 2-21-02
Literature
Each of the following articles is a direct quote from the publication as cited. The articles in the original
publications vary in length and detail, but are always more detailed than as presented in this report. The
original article should be consulted any time the issue is of importance to you.
Amusement Business
Walt Disney Co. Reports Decline in Parks, Resorts. The Walt Disney Co. reported declines
in revenues and operating income in its parks and resorts business for its fiscal first quarter ended
Dec. 31, as lower attendance at Walt Disney World again out weighed increased activity at the
company’s Southern California locations. Yet the company said again that the worst has passed
for its parks business. Citing tough comparisons with a record-setting quarter last year, Disney
reported that parks and resorts revenues fell 16.9% to $1.43 billion and operating income
fell 51.3% to $187 million. Among other things, Disneyland attendance rose, but per-cap
spending fell 10% as the park drew more visitors from surrounding areas following the Sept. 11
terrorist attacks. …Chairman/CEO Michael Eisner added that Disney’s decade-long investment
in its parks business now over, the company is eagerly awaiting an upturn in the economy, which
he predicted would be reflected first in its parks business. Mathew Benz, Vol. 114, No. 6, 2-11-02
Tourism Officials Hope Lottery Promo Hits It Big. What may very well be the biggest
partnership between a state-run lottery and that state’s tourism industry is now under way in the
Sunshine State. Florida is the latest state to turn to the lottery as a way to promote tourism.
Featuring more than $10 million in cash prizes and 90 vacations… Play FLA USA leverages the
strength of the lottery in the retail market place in an effort to help boost the state’s top revenue
producing industry. Tim O’Brien, Vol. 114, No. 7, 2-18-02
Atlantic City Insider
Skinny D’Amato’s Legendary Nightclub. The Sands, meanwhile, shows no sign of slowing
the pace of promotions to with its status as having the loosest slots – and the best slot club in
Atlantic City. The casino awarded $500,000 to the winner of its recent “Survivor II” slot
tournament. …Also this year, the Sands will unveil the “500 Club.” The casino is completely
renovating the Copa Room Theater to create an exact replica of Skinny D’Amato’s legendary
nightclub, a favorite haunt and performing spot for Frank Sinatra in the ‘40s and ‘50s, and the
place where Dean Martin and Jerry Lewis first performed as a duo. According to Sands President
Al Luciano, the Copa is being completely gutted to replicate the famous nightclub, right down to
the design of the booths, bar and stage, and the photos of D’Amato with the stars of the day,
which lined the walls. Vol. 6, No. 4, February 2002, p. 3
Casino Player
Connecticut Casinos Offer Prime Gigs. Employees have been among the biggest winners
ever since Mohegan Sun opened its doors in ’96 to compete with Foxwoods Resort Casino; the
two properties are virtual cities unto themselves, currently employing around 20,000 people
between them. It’s been a battle of one-upmanship as both have tried to make themselves
more attractive to prospective workers. When the Mohegan Tribe announced plans for a $10
million on-site child-care facility for employees’ children, Foxwoods countered with a program
that reimburses workers up to $100 each month for every child in day care. Then last spring,
when Mohegan Sun said it would offer an employer-paid retirement saving plan, Foxwoods
responded with a program that pays bonuses to nonsupervisory workers. The perks kept coming
when Mohegan Sun embarked on a campaign to hire 3,500 new workers last summer,
dishing out $500 bonuses for every successful employee an existing worker recruited.
Foxwoods, which had been rewarding employees with $200 for referrals, upped the ante to
$600. And when the Mohegan Tribe built its $29 million Eagleview Employee Center, boasting a
gym, health center, computer room, and on-site parking, Foxwoods introduced a 24-hour hot line
for help with work/life issues, a nursing mothers’ center, and a wellness program utilizing six
area health centers. Each casino now offers a comprehensive medical, dental and vision
package, as well as matching 401 (k) plans, life insurance, tuition reimbursement, and
disability insurance, with even part-timers eligible for many of the benefits. And if all that
isn’t enough to make laid-off Vegas casino workers pull up stakes, Mohegan Sun is one of
only a few employers in Connecticut to offer health benefits to domestic partners of
workers, whether same-sex or opposite-sex. Vol. 14, No. 6, February 2002, p. 20
Gambling Online
The Growing Problem of Credit Card Decline Rates. Credit card rejections are the bane of
the online casino. When the online casino rejects your credit card, they are not only denying
themselves the opportunity to win your money, they are often denying you access to their casino
completely. If your credit card was rejected by your bank due to gaming restrictions imposed by
your bank, it is likely that your credit card will never be accepted by that casino. Of course, the
casinos don’t want to reject your credit card; they simply hand off the transaction request to their
credit card processing company, which in turn requests approval from your bank, who in turn
denies the transaction. By some accounts nearly half of all Internet gaming transactions are
declined by the card issuing bank due to the MCC code – the identifier that tells the card issuing
bank what type of transaction is being processed.
…To combat this difficulty, some online casinos have started to ask their customers to switch
their credit to certain banks, which don’t mind processing online gaming transactions. These
casinos have assembled lists of “non-hostile banks” as they call them, and give bonuses to their
players for switching their credit cards to them.
…Another counter measure the online casinos take is to encourage their players to open accounts
with some of the larger electronic wallet companies, such as PayPal or FirePaty. Many online
casinos now interface with these electronic wallet systems, and allow you to easily transfer
money back and forth between the wallet and your casino account. Hopefully, with some of the
lobbying efforts just underway the problem will only be temporary. March/April 2002, p. 34
Gaming Revenue Newsletter: Atlantic City-Colorado-Mississippi
Atlantic City: Atlantic City gaming revenues were up 17.7% in December, compared to a 2.6%
decline the year before. …For the year, total gaming revenue for Atlantic City is nearly flat at
positive 0.7% compared to last year.
Colorado: Colorado revenues grew 15.3% in December. …Black Hawk grew 16.8%…Central
City gained 21.3% and Cripple Creek was up 7.7%. For the year, Colorado is 7.1% ahead of last
year.
Mississippi: Mississippi revenues also grew in December, up 15.3%. …At year end, slots are up
3.6%. …Year-to-date, games are down 2.2%. Vol. 3, No. 12, February 2002
Gaming Industry Weekly Report
Casino Earnings Better than Expected. Last week we gave you a chorology of certain events,
which could occur in the next month that would be very positive for MGM Mirage. This past
week saw one to those events get completely dashed while the odds of another occurring went
down. In what is a loss for all Las Vegas casinos, the Nevada State Athletic Commission denied
the reinstatement of Mike Tyson’s boxing license. …In Illinois, a report came out which said that
federal subpoenas were issued to the Illinois Gaming Board. The Chicago Tribune said that the
subpoenas were related to the MGM Mirage/Emerald Casino deal which allegedly was being
negotiated by the new head of the Board. …believes that the deal with MGM and Emerald will
not go through for many reasons. Despite all these negatives, MGG stock rose. MGG president
Jim Murren spoke at Preview Las Vegas 2002 and said that things have vastly improved at their
properties and the LV Strip. 2-4-02
A Pratt Family Feud Begins at HWD. In the past we have seen love triangles where three
companies fight with each other to acquire one or the other. We have also seen our share of
patent infringement suits between companies who have partnerships in other areas. Obviously
this means that the gaming industry has had their share of soap operas which sometimes provides
a nice little diversion to the everyday grind of watching gaming stocks trade or trying to conduct
business as usual. It has been a long time since we have seen any type of family feud though. At
Hollywood Casino Corp., we may just have a family feud starting, one that could be similar to a
made for TV movie. Last August, it was announced that Jack Pratt was being replaced as
chairman and CEO of HWD by Edward T. Pratt III, his nephew. While we found that quite odd,
as well as the announcement that Jack Pratt’s brother William was replaced as secretary and
general counsel, we just passed it off as a decision to have a younger Pratt lead the company
through the current expansion and difficult period. All that was changed this past week when it
was announced that Jack and William Pratt, as well as long-time associate of theirs, Harold
Simmons, were being sued by HWD for violating U. S. securities laws by allegedly not disclosing
their plans to take control of the company. HWD also said that the independent directors of the
company had hired an outside accounting firm and that firm found misuse of funds and
undisclosed dealings with family members by jack Pratt when he was big shot in the company. In
a nutshell, HWD accused the two elder Pratts and Simmons of trying to gain control of the
company without filing the proper notifications with the SEC and sued Jack Pratt for breaching
his fiduciary duty when he was chairman and CEO. Vol. 10, Issue 8, 2-25-02
Gaming Update Colorado Division of Gaming
Annual AGP Growth Continues. Colorado casinos generated over $676.6 million in AGP in
2001, up 7.1 percent over 2000, to continue a trend of annual growth since the inception of
gaming in the state on October 1, 1991. Vol. XI, Issue 2, February 2002
Indian Country Today
Washington, DC – The Democratic National Committee has
unanimously passed a resolution supporting the Tigua Indians of the Ysleta del Sur in Texas, in a
move injecting the closing of their casino into national politics. Mary Peirpoint, 2-1-02
DNC Supports Tigua, Slams Cornyn.
International Casino Surveillance Network
The Value of Winning. Known confirmed advantage player…has been active in zones 1 & 2.
The subject got $140,000 at a zone 1 casino and another for $80,000 before he was finally backed
off at a third casino. 2-19-02
International Gaming & Wagering Business
Perception is Reality. Many casino company CEOs think the time has come to craft a new
image for the gaming industry. Former Nevada Gov. Grant Sawyer, in a 1993 interview, recalled
1964 European junket dubbed “The Mission.” Some 34 Nevada businessmen and elected
officials, clad in white Stetsons, took the 21-day trip intended to promote the Silver State’s
gambling and tourism industries. “It was thought the trip might change some opinions of
Nevadans; that we didn’t all wear green aprons and crawl out from under a craps table,” Sawyer
said of the 1950s through the early ‘70s, an era when much of the casino industry was controlled
by the mob. “The image of Nevada nationally and internationally was not good at all,” Sawyer
said. “The image was that of general corruption and crime.”
…The casino industry has always had a lovers’ quarrel with its image. Comfortable with the big
money action, sex, smoke and booze that permeates sport books, slot floors and table game pits,
casino company executives are nonetheless touchy when gambling addiction and the somewhat
sinful indulgences associated with the business are mentioned in the halls of Congress or splashed
across the pages of The New York Times and The wall Street Journal. The uneasiness has grown
particularly acute in the past two decades, as largely family-owned casino companies have
evolved into highly regulated, publicly traded multibillion-dollar corporations run by Ivy League
CEOs and monitored by Wall Street investment houses. There is intense concern among the
new breed of gambling executives that, perhaps, it’s best to be more conscious of the
industry’s image. …The AGA has established industry-wide standards on advertising, gambling
addiction and underage gambling. Casino companies have pledged some $7 million to the
National Center for Responsible Gaming, the country’s only foundation devoted to research on
pathological and youth gambling. Dave Palermo, Vol. 23, No. 2, February 2002, p. 1, 21-22
(The) Kentucky Post
Toronto – The Track where Secretariat ran his final race,
Woodbine is gaining primacy in racing circles these days for a different kind of thunder heard
along the stretch: the clanging of millions of coins in slot machines fueling a resurgence in the
sport of kings, one quarter at a time. Since the slots began spinning in March 2000, annual
attendance has soared to more than 6 million, racing purses are up more than 60 percent.
…The 1,702 government-run slots also have generated an enviable $332.7 (about $196.3 million
in U. S. dollars) in gross revenue - $66.5 million ($39.2 million U. S.) of which was divided
between the track and horsemen during the first nine months of the current fiscal year. …Since
the mid-1990s, Kentucky racetracks – reflecting a worrisome nation pattern in their industry –
have lost tens of millions of dollars to neighboring states’ riverboat casinos. At Turfway, ontrack wagering has declined 43 percent.
…Unless Kentucky racetracks are allowed to offer video slots to lure back gamblers, Elliston
Wars, Turfway and other tracks might not survive the next decade. Barry M. Horstman, 2-12-02
Rolling the Dice to Save Racing.
Las Vegas Review-Journal
Binion’s Horseshoe to Cut Medical Coverage. Latest cost-cutting maneuver may be linked to
possible cash troubles. Hundreds of Binion’s Horseshoe workers face the April loss of their
medical coverage after the downtown hotel-casino on Wednesday told employees that only some
of the property’s nonunion workers would continue to be protected by the Horseshoe’s medical
insurance provider. Jeff Simpson, lasvegas.com Gaming Wire, 2-1-02
Numbers Confirm 2001 Was Poor Year of State’s Casinos. Most ways you parse the
numbers, 2001 was not a good year for Nevada casinos as their winnings fell by 1.4 percent to
$6.9 billion. It was a year plagued by the national recession, the worldwide travel decline that
followed the Sept. 11 terror attacks, and the layoffs of 12,000 to 15,000 workers and reduced
work hours for thousands more. …The industry’s problems were also reflected in visitor
numbers released Tuesday showing 35 million people visited Las Vegas last year, a 2.3
percent decline from 2000. Dave Berns, lasvegas.com Gaming Wire, 2-13-02
Nevada casino revenue rises in '01. Nevada casinos generated total revenue of $18.1 billion
during the 2001 budget year ended June 30, with an increase in non-gambling revenue driving a
3.1 percent increase over the 2000 results. Nearly half of the revenue collected, or 48.6 percent,
was from such non-gambling operations as hotel rooms, food, beverages and entertainment
figures released Friday by the Nevada Gaming Control Board show. The announcement heralded
the release of the control board's Nevada Gaming Abstract-2001, a detailed report on financial
information reported by the 247 state casinos that grossed more than $1 million during the fiscal
year ended June 30. Jeff Simpson, lasvegas.com Gaming Wire, 2-23-02
Trump Finds It Takes More Than a Name to Get a Deal. Donald Trump got trumped last
week when he tried to ace out Steve Wynn and Sheldon Adelson. After learning that Wynn
and Adelson were probably going to win two of the three gaming licenses up for grabs in Macau,
Trump made an 11th hour move. Forging the expense of creating multimillion-dollar
presentations with architectural drawings, schematics and artwork, Trump apparently thought his
name would be enough. He showed Macau’s licensing board photos of his Atlantic City
properties and hoped his reputation would be enough. He was told it was too late to enter the
contest and that he missed the boat by failing to submit the proper paperwork. Norm!, 2-20-02
Las Vegas Sun
Two LV Gaming Shows Merging. The American Gaming Association today said it acquired
the World Gaming congress & Expo, a move that spells the end of the gaming industry’s longestlived trade show. Frank Fahrenkopf, chief executive of the AGA, declined to disclose the price
the AGA paid privately-held GEM Communications for the World Gaming Congress. However,
he said the Las Vegas convention and trade show ill be folded into the AGA’s rival trade show –
the Global Gaming Expo (G2E), launched by the AGA last year. David Strow, 2-8-02
Carson City – A major slot machine manufacturer
told Nevada gaming regulators Thursday it is “rebuilding the company” after the discovery that
its machines were easy targets for some slot cheaters.
…Due to an “abnormality” in the software, the machines could potentially be manipulated by
patrons. Preventing that required a change of software on 60,000 WMS machines. But that
“opened another faucet that needed fixing,” Brian R. Gamache, president and CEO of WMS said.
WMS went through a tremendous growth spurt in which it increased its share of the market from
zero to 16 percent, Gamache said. And the machines that were developed “didn’t deal with
today’s technology. “We made our name getting great games. Now we must balance the
technology.” The company “didn’t have the infrastructure – it didn’t have the proper
documentation in software,” Gamache said. Cy Ryan, 2-22-02
WMS Looks to Rebuild in Wake of Slot Woes.
Original Studio 54 Figure Eyeing Maxim. Ian Schrager is placing a bet on the gambling
business, telling the Wall Street Journal he has put down a deposit to buy the shuttered Maxim
casino-hotel in Las Vegas. The trendy hotelier says he expects to invest about $200 million to
renovate the decrepit Maxim, making it reminiscent of Las Vegas' Frank Sinatra era. The
by-now well-romanticized Rat Pack period is a draw these days for tourists already flocking to
Las Vegas to see the gigantic Paris-, Venice- and New York-themed casinos that have been built
in the past few years. 2-27-02
Lottery, Pari-Mutuel & Casino Regulation
Idaho Tribes Pump $665,000 into Early Stages of Gambling Initiative. Indian tribes
diverted more than $665,000 from gambling operations last year to the initial stage of their
initiative campaign to clearly legalize the electronic gambling machines that have made their
reservations so lucrative. Vol. 13, No. 4, 2-4-02
Former Honolulu Mayor Suggests Hawaii Acquire Midway for Casino Gambling.
Midway Island could offer a compromise in the controversy over allowing casino gambling in
Hawaii, according to former Honolulu mayor Frank Fasi. Fasi, who is running for mayor again
this year, said Congress should turn Midway over to the state or city. He said a resort and casino
could be placed on the island, far from Hawaii’s shores. Midway is located 1,200 miles
northwest of Hawaii and is a national wildlife refuge. The Georgia company which has been
operating the island and conducting eco-tours has announced it will leave the island in March.
State Rep. Galen Fox said he opposed to Fasi’s idea. Under the Indian Gaming Act, once
gambling is permitted in Hawaii, even on Midway, it would be allowed on Native American
property anywhere in the state, he said. He noted that Native Hawaiians are likely to be
designated as Native Americans. Vol. 13, No. 6, 2-11-02
Michigan Gaming Law Newsletter
Michigan Gaming Control Board Chairman Resigns. On Friday, February 1, 2002, the
Chairman of the Michigan Gaming Control Board, Thomas Denomme, resigned from his post as
Michigan’s regulator of commercial casinos. Mr. Denomme was one of five original members
chosen by Governor Engler to make up the Board in 1996. Governor Engler chose Roman
Gribbs, current Board member, a retired Court of Appeals judge, and the former Mayor of
Detroit, as the Board’s new Chairman. In order to round our the five-member Control Board,
Governor Engler appointed Larry G. Garberding, former executive vice president and chief
financial officer of DTE Energy Company/Detroit Edison. Mr. Garberding was appointed to fill
the balance of Mr. Denomme’s term, which expires on December 20, 2004. Vol. 8, Issue 4, 2-6-02
National Gaming Summary
California Casinos Fight for Market Share. It’s been a year since the first of four Indian
casinos began operating – and competing fiercely – in San Diego’s North County area. Pala
Casinos and Rincon Casino appear to be preeminent while Casino Pauma and Valley View seem
to be struggling, according to a report last week in Escondido’s North County Times. …Rincon
Chairman John Currier, says, “As far as we can tell, we’re doing better than Pauma and
Valley View, and we’re not getting rich. It’s very tough.” …The report says that tribal
governments are operating under the philosophy that “bigger is better,” and tribes point to studies
that the bigger tribal casinos are the most successful. Currier has been quoted repeatedly saying
that Rincon has to complete the larger project to remain competitive. 2-4-02
Taxing Matters. Casino Windsor, just across the river from Detroit in Ontario, thinks that many
of its U. S. customers have taxes on their minds as April 15 approaches. Unfortunately, so does
the Internal Revenue Service. The Ontario casino has dusted off a controversial billboard
campaign that trumpets “Tax Free Winnings in Canada,” causing irate IRS officials to complain
that the pitch might encourage Americans to underreport income. …Canada doesn’t tax
gambling winnings, nor do Canadian casinos report winnings by U. S. citizens to the IRS. IN
contrast, U. S. casinos report winnings of more than $1,200 to the tax authorities. 2-1102
Surprise Louisiana Pact for New Tribal Casino. ‘Could destroy Lake Charles market’?
Saying he had no choice in the matter, Gov. Mike Foster has signed a gaming compact with the
nomadic Jena band of Choctaw Indians to open a southwestern Louisiana casino. New reports
have characterized the deal as secret because the 7-year compact didn’t become public until
several weeks after it was signed on Jan. 17, one day after regulators approved slots at Boyd
Gaming’s Delta Downs horse track in Vinton, La. The casino, with 3,000 slots, 100 table games,
a convention center and a 500-room hotel, also would be located in Vinton of Interstate 10, about
20 miles closer to the Texas border than Lake Charles, La., where Harrah’s Entertainment and
Isle of Capri operate riverboat casinos. Pinnacle Entertainment is build a third casino there.
…The Indians agreed to pay 15.5 percent of net revenues to a state teacher fund. Another 6
percent would go to the local Calcasieu Parish government. …Pinnacle Entertainment Chief
Executive Officer Paul Alanis said the new Indian casino could “devastate” the Lake Charles
casinos and could force his company to downsize its $225 million casino-hotel and golf course
project. “Potentially, I think that development could destroy the entire Lake Charles
market,” Alanis said. “I can assure you that it is significant for the existing market as well as
Delta Downs. 2-18-02
Net Deal Sends Station Offshore. $5M venture with Sun quick way to market that’s bogged
down in U. S. Sun International Hotel has taken Station Casinos Inc., one of the largest landbased operators in Las Vegas, a 50-50 partner in Sun’s casinoatlantis.com Internet casino. Based
in the Isle of Man off England’s western shore, the virtual operation went on line in December.
With its $5 million buy-in for half the Net-bet site on which Sun has already spent $10 million,
Station joins a tiny vanguard of impatient “traditional” U. S. casino companies positioning
themselves offshore to snatch a share of a global market estimated to total as much as $6 billion
next year. 2-25-02
Nevada Gaming Revenue Newsletter
Clark County: Clark County gaming revenue declined 8.4% in November. For the year, Clark
County is up 0.1%. The Strip fell 11.9% for the month; Downtown Las Vegas declined 2.6%,
Laughlin grew 0.2% and boulder Strip declined 9.3%.
Washoe County: Washoe County revenues fell 3.7% in November, with Reno off 5.8%, Sparks
flat, and North Lake Tahoe dropping 3.0%. …For the year, Washoe County is down 5.0%.
South Lake Tahoe: South Lake Tahoe declined 20.4% in November. Year-to-date South Lake
Tahoe is down 6.5%. Vol. 16, No. 2, February 2002
Nevada’s Washington Watch
Nevada Officials Look for Airport Help. Nevada airport officials will be looking to the
federal government to help pay for added security required under federal law. Reno-Tahoe
International Airport has spent $600,00 since Sept. 11 to improve security because of new
guidelines by the Federal Aviation Administration. But Reno airport officials say they need at
least $30 million to widen screening areas for enough room to house new equipment to screen all
baggage…. McCarran International Airport in Las Vegas has already spent $811,000 since Sept.
11 on new security measures. The airport has installed two baggage screening machines and
plans to install nine more. …Aides with Nevada congress members plan to meet with airport
officials to discus potential federal aid. Earle Eldridge, Vol. 8, Issue 66, February 2002, p. 4
Gaming Opponents Gearing Up for Next Round. With “March Madness” just around the
corner, supports of a bill that would abolish Nevada’s legalized sports-book industry are gearing
up for another push to pass their bill. Led by Sens. John McCain (R-Ariz.) and Sam Brownback
(R-Kansas), supporters of the legislation would like to push the bill as soon as possible.
…McCain says he plans to offer the bill as an amendment to another piece of legislation,
although he declines to say which legislative vehicle he’ll use. McCain believes the influence of
the gaming industry – a huge donor to both parties – and the resulting connections to party
leaders will prevent him from getting a regularly scheduled vote on the bill, so he has to push it as
an amendment and not necessarily to legislation related to gaming or athletics. …Reid is
keeping his strategy close to the vest, saying he won‘t play any of his strategic cards until
McCain goes first. “We just have to wait for them. We have to wait for them,” he says. Paul
Kane, Vol. 8, Issue 66, February 2002, p. 14
Observer: Michael Pollock’s Gaming Industry Observer
One Town, One Industry Present many Challenges for Hands-On Administration. New
Jersey has more than 25 years of experience with casino policy at this point and gamblers and
non-gamblers alike should expect no big surprises with the new administration of Gov. James E.
McGreevey. However, the new governor’s approach to all issues, including gaming, is expected
to be quite different from other recent administrations. McGreevey’s style as mayor of
Woodbridge was to be a “hands-on” administrator and the same is expect of him as governor.
…This was shown when, less than three weeks after he bested former Jersey City Mayor Bret
Schundler, he named 88 people to study all aspects of state government. …Dianna Fauntleroy, an
associate with Richard P. Fauntleroy, P. C.; Frank J. Dodd, former state senator and former vice
chairman of the Casino Control Commission, and Lloyd D. Levenson, senior partner with Cooper
Perskie April Niedelman Wagenheim & Levenson, PA, in Atlantic City were charged with
reviewing the casino industry, including potential appointments to important governmental posts.
Their review ahs been completed and turned over to McGreevey, although the contents are being
kept secret. …Despite some recent changes in Atlantic City, the lack of expansion in the industry
is one of the concerns of the transition team. …Part of the problem is the expense of opening a
new casino in New Jersey compared to elsewhere. Land is in short supply and is expensive, the
threat of hurricanes adds to insurance costs, higher taxes increase expenses and regulation on the
number of rooms and size of gambling halls add to the cost. The transition team tried to
determine if there is a way to overcome this disadvantage. …Other issues the examined included
the concern that if neighboring states adopt riverboat gambling, put slot machines in horse racing
tracks or increase gambling in any other ways, it will affect New Jersey’s gambling income and
require changes here, according to the transition team members. …“One thing we do know is,
Gov. McGreevey is very interested in Atlantic City,” Levenson said. “I believe you are
going to see a governor who is personally involved in Atlantic City, but not just because of
the amount of money casinos pay in taxes.” “The industry employs about 50,000 people and
the governor does not want to negatively impact either the revenue stream of the
employment picture,” he said. “In addition to the people who work here, there are thousands of
companies that employ hundreds of thousands of people. Those people’s livelihoods depend on
the health of the casino industry, and they all want to see an expansion of gaming.” Karen Demasters, Vol.
7, No. 2, 2-4-02, p. 8-7
Gaming Feels Enron’s Impact. Houston is a long way from the offices of gaming regulators,
but not far enough. The Enron scandal has sent ripples that are being felt in state capitals across
the nations. The bottom line is that the accounting problems that led to the largest bankruptcy in
U. S. history have made regulation fashionable once more. To put it another way, the scandal
that is triggering hearings in Washington and consternation in accounting offices everywhere has
underscored the riskiness of deregulation. Effective regulation has a clear public-policy purpose:
It builds public confidence and is the best defense against future scandals. With that in mind, the
Enron disaster will clearly quash certain dreams in gaming markets: One, it should dampen the
hopes of accounting firms – including Arthur Andersen had – to be the outsourcee for internal
audit. Andersen had been one of the most visible proponents of an idea to allow outside suitors to
handle the internal audit function. The argument was that outside accountants had greater
expertise and could perform internal audits at lower costs. Although some casinos –
particularly Native American properties – have accepted that idea, it hasn’t caught on in
markets such as Atlantic City, in which regulators have had some serious concerns about
potential conflicts of interest. Vol. 7, No. 3, 2-18-02, p. 8
Press of Atlantic City
Tropicana’s next exhibit a mammoth undertaking.
ATLANTIC CITY
- The casino that raised
eyebrows - and reaped profits - with tic-tac-toe-playing chickens, an exhibit of torture devices,
and Titanic artifacts has now booked a 20,000-year-old woolly mammoth. "Prehistoric Worlds Backyard Discoveries," an archaeological exhibit presented by the Discovery Channel, will be on
display beginning March 23 at Tropicana Casino and Resort. "I think it's going to bring in
customers and it's going to keep customers longer," Tropicana spokeswoman Maureen Siman
said. "Folks that typically may come in for a couple of hours, it will hold them here. If you're
traveling to Atlantic City and not necessarily coming to Tropicana, it may bring you here." It's
another on Tropicana's resume of attractions that are seemingly incongruous with casino
gambling. The casino previously has featured highbrow displays such as "Torture Through the
Ages," "Dresses of Diana, Princess of Wales" and "Titanic: The Artifacts," as well as the
lowbrow $10,000 Chicken Challenge. The "Prehistoric Worlds" exhibit will replace a World
War II memorabilia display. Joe Weinert, 2-22-02
Nickels playing big in A.C. Casinos’ investment in 5-cent slots pays off. ATLANTIC CITY - Gamblers
here are trading their quarters for nickels, with the ironic result being more revenue for the
casinos. Nickel slot-machine revenue, or the amount gamblers lost, surged 62.1 percent last year,
to $560.5 million. That caused declines in quarter (8.5 percent) and dollar (2.4 percent) slot
revenue but helped overall slot revenue grow to $3.1 billion, up 1.7 percent, according to a
Jefferies & Co. analysis. "I think it's the sense of excitement with these games," said Dennis
Gomes, president of resort operations for Tropicana parent Aztar Corp. "There are a lot of
variations in terms of payouts, jackpots and bonuses. They've got a lot of player appeal." The
new nickel slots typically offer a variety of bells and whistles, such as video "reels," fancy
graphics, digital sound, entertaining bonus rounds, brand-name themes such as I Dream of
Jeannie and Wheel of Fortune and, most importantly, lots of perceived winning. The nickel slots
are nickel denomination in name only. Gamblers are still inserting $10, $20 and $100 bills into
the machines, but dividing their wagers into smaller pieces. "You don't see people putting nickels
in there," Gomes said. Joe Weinert, 2-24-02
Ray Koon’s Gaming/Gram
Inter-Casino Linked Systems. Final approvals also were granted by the Board and Commission
[Nevada Gaming Control Board] for the operation of three new inter-casino linked systems.
“Jumbo Bingo Progressive,” submitted by Texas Station Gambling Hall & Hotel, North Las
Vegas, was on filed trial at Texas Station, and four other southern Nevada properties.
“Inter-Casino Linked Keno System,” submitted by the Colorado Bell Hotel & Casino, Laughlin,
was field-tested at the Colorado Belle and the Edgewater Hotel & Casino, also in Laughlin.
“Caesars Palace Inter-Casino Linked Slot System” was submitted by Caesars Palace, Las Vegas,
and was on filed trial at that location and at Caesars Tahoe in Stateline [Lake Tahoe, Nevada]
Vol. 17, No. 1, January 31, 2002, p. 4
Reno Gazette-Journal
Mills Lane the face of the Silver Club - Judge Mills Lane is “getting it on” for the Silver Club
Hotel-Casino. The former jurist, district attorney, special prosecutor and talk show host has
signed a one-year agreement to be the “face and voice” of the Sparks hotel-casino, Vice President
and General Manager Jim Terry announced Friday. - Ed Shur RENO GAZETTE-JOURNAL, 2-11-02
Brothel-Business Dispute Headed to Court. A plan to open Storey County’s newest brothel
this summer about a mile from the largest industrial park in North America has created a legal
showdown between 21st-centry corporate America and one of the county’s Wild West traditions.
At stake, some say, is the economic future of the small rural county (population 3,800) just west
of the Reno-Sparks area. Worse, the ripple effect could devastate the economy of northern
Nevada, they say. Already the novelty of brothels, coupled with an earlier dispute over a plan to
name it after he legendary American Indian chieftain Crazy Horse, has drawn attention from
across the nation, none of it welcome, according to local business owners. …Today, the battle
moves into a Virginia City courtroom where a judge is expected to decide whether to block the
40-room Wild Horse Canyon Ranch & Spa on the grounds that it would ruin property values and
business.
…Already, the issue has become destructive in breaking down relationships among former
business partners, county officials and area workers. Not long ago, they seemed to be working as
a team, intent on attracting Fortune 500 companies to the county. They pointed with pride to the
102,000-acre Reno-Tahoe Industrial Park, complete with two power stations plus access to a
railroad and interstate highway. They boasted it was the largest industrial park in North America
and predicted it would turn the small county into the richest in the state. Yet a rift developed in
January. Lance Gilman of Reno, a major landowner of the park, was granted a license by the
county to open a legal house of prostitution….site was too close for comfort for many of the
businesses in that area.
…Gilman vows to counter-sue if Maddox (the judge) grants the injunction for $1 million a month
in damages. That, he says, is the revenue he would lose for every month his brothel’s opening is
delayed. “This facility verifiably will turn $1 million a month. That is what they make,” Gilman
said. Storey County’s commission stands firmly behind Gilman.
…They say the cash-stropped county sorely needs the tax money that will be generated by the
brothel – up to $300,000 annually. Ray Hagar, 2-12-02
San Francisco – three tickets matched the
winning numbers for an unprecedented $193 million state lottery jackpot, officials said Sunday
morning. …Californians in the hours leading up to Saturday night’s drawing made a mad dash to
lottery outlets to cure lotto fever with a fistful of tickets. Like the Gold Rush ear and the dot-com
boom, they were joined by out-of-staters with a particular avarice for what the Golden State could
offer. …The $193 million sum was the largest single-state U. S. jackpot, and the fifth-largest
including multistate games, the California Lottery said. The biggest lottery payout in U. S.
history was $363 million in May 2000 for the multistate Powerball game. The previous record
jackpot in California was $141 million on June 23, 2001. The jackpot was such a draw that Web
sites sprang up to illegally offer SuperLotto tickets to out-of-state buyers who didn’t come to
California. The rules state that a ticket must be bought in person, lottery officials said. Associated Press,
Three Tickets Match Numbers for $193 Million Lottery.
2-18-02
Strictly Slots
Coin-Free in A. C. It has been the better part of a year since gaming industry giant Park Place
Entertainment announced it would install IGT’s “EZ Pay” ticket-printing equipment at all of its
casinos nationwide. The announcement was a major boost for EX Pay.
…After all, it was in this very publication that survey results were reported showing major
resistance to the idea among the slot faithful.
…The two years that have passed since that survey was conducted have, however, shown much
different player attitudes as the coin-free slots actually began to appear in casinos across Nevada,
California and elsewhere. Players have found the benefits of the system.
…Those players, however, were largely in the West. It has yet to be seen how the system will be
accepted by players in Atlantic City. …Atlantic City is a bastion of traditionalism, replete with
old-school players of thee World War II generation.
…We are finally about to find out. After several months of study by the New Jersey Division of
Gaming Enforcement, EZ Pay was approved in December by the Casino Control Commission for
a live test at Coyote Kate’s Slot Parlor, a new slot area at Bally’s Wild Wild West casino annex.
…There is bound to be more player resistance to the system in Atlantic City than there has been
in other parts of the country.
…Still, I would have to predict that ultimately, ticket-printing slots will be accepted along the
Boardwalk as well as they already have been accepted in the Vegas locals casinos. Years ago,
credit play was met with suspicion. The idea of pushing a “spin” button instead of pulling a
handle was met with suspicion. Bill acceptors were also viewed as foreign matter at first by the
Atlantic City faithful.
…Ticket-printing slots have been in Nevada casinos for a year. They’ve been in California
casinos since they opened. They are spreading throughout all the other jurisdictions. And now,
they are in Atlantic City. When Eastern players have accepted the, that will mean that EZ Pay
has, finally, arrived. And not a minute too soon. Frank Legato, Editor, Voll4, No. 2, February 2002, p. 6
Ken Adams
210 Marsh Avenue, Suite 103
Reno, NV 89509
(775) 322-7722 Fax (775) 322-7806
kenadams@softcom.net