Casino News Today

Indiana’s casinos are facing increasing competition from gambling ventures in Michigan and Ohio that could pose a threat to the $900 million in tax revenue the industry generates for the state.

Ohio plans to introduce 17,500 slot machines at the state’s seven horse racing tracks by the middle of next year — including tracks in nearby Toledo and Cincinnati. Michigan continues to add tribal casinos, with more than 20 now in operation, The Journal Gazette of Fort Wayne reported Sunday.

Revenues for the Blue Chip Casino in Michigan City, a town on Indiana’s lakeshore, dropped by 30 percent after the opening of a tribal casino in southern Michigan.

The competition from the two states spells a threat to the nearly $900 million a year in tax revenue Indiana receives from casino gambling.

“In some respects we are playing defense, much more than we ever have,” said Mike Smith, president of the Casino Association of Indiana. “The state could wake up one day and find out that $300 million of their revenue is gone.

“It’s time to take a look at how we built this industry and make sure the tools are there to allow us to compete.”

A recent report from the nonpartisan Legislative Services Agency said Indiana’s gambling revenue was up for the year, unlike elsewhere in the nation, largely because of casinos at racetracks near Indianapolis in Anderson and Shelbyville.

An analyst for the agency said the track casinos displaced about $110 million of revenue that otherwise would have been spent at the state’s riverboats. Riverboat gambling generated $766 million in taxes last fiscal year, while the track casinos brought in another $126.6 million.

There is also a resort casino in French Lick, about 100 miles south of Indianapolis.

“Most observers believe that at least in the state of Indiana, the market is saturated,” said Ernest Yelton, executive director of the Indiana Gaming Commission.

But that hasn’t stopped talk of expanding or moving one of the existing riverboat casinos to Fort Wayne, about 100 miles northeast of Indianapolis near the Ohio border. Bill Thompson, a professor of public administration of the University of Nevada Las Vegas who studies gambling, sees a casino in Fort Wayne as a defensive strategy.

“You have to be mindful that Ohio is ready to open casinos in Toledo, and the Battle Creek casino is reaching into Indiana,” Thompson said. “So Fort Wayne is a defensive move to keep the money from going to Michigan and Ohio, but not a growth area.”

Some people, however, say that could continue a trend away from out-of-state gamblers coming to Indiana to Hoosiers gambling their own money at home.

“We would end up with more Hoosiers gambling, and that’s an important consideration,” said Rep. Win Moses, D-Fort Wayne. “It is not going to be like Vegas where they fly in and leave their money.”

No Comments Yet »

SINGAPORE — Genting Singapore PLC said it will raise up to 1.63 billion Singapore dollars (US$1.14 billion) in a rights issue to boost its capital position and further expand its businesses.

“The rights issue will strengthen the company’s financials and put us in a strong position to tap strategic opportunities,” Managing Director Justin Tan said.

Genting Singapore said about 60% of net proceeds will be used for “future strategic opportunities,” while the remainder will be for working capital purposes.

The casino operator is offering up to 2.04 billion shares at 80 Singapore cents each.

Genting Singapore shares, which are in a trading halt, last changed hands Tuesday at S$1.19 each. The stock will resume trading Thursday.

The shares have more than doubled in price since the start of the year as the operator’s S$6.59 billion resort-casino project on Sentosa island comes closer to a soft launch in early 2010. The project includes a casino, four hotels and a Universal Studios theme park.

Genting Singapore said the project is on track, both in terms of costs and timing.

“The Singapore casino is well funded, so it seems Genting is only taking opportunity of the strong run-up of its shares recently. It’s a good assurance to have some money in the bank,” OCBC analyst Carey Wong said.

Mr. Wong said although Genting Singapore’s focus won’t likely be on acquisitions, the operator could be looking at investments in casinos in Macau, which have been hit by the global economic slowdown, but still hold huge potential.

The company is offering one rights share for every five existing ones and closes Oct. 12.

Genting Singapore, which owns 45 casinos in the U.K., is 54.3% owned by Malaysia’s Genting Bhd.

Genting Bhd. will subscribe to all shares it has the rights to under the offer. It also agreed to sub-underwrite the deal with underwriters DBS Bank and CIMB-GK.

Other underwriters are J.P. Morgan, ABN AMRO Bank, CLSA Singapore Pte., Deutsche Bank AG, HSBC and UBS AG.

No Comments Yet »

NEW YORK — Ameristar Casinos Inc. and Penn National Gaming Inc.’s shares are unlikely to rise significantly in the near future, an analyst said Tuesday, and downgraded the stocks.

Shares of the two casino operators have surged from their 52-week lows - with Ameristar’s stock having advanced more than threefold, and Penn National’s more than doubling - Goldman Sachs analyst Betsy Gordon wrote in a note Tuesday

“Earnings upside is limited as regional revenue trends could remain mixed in (the) third quarter and companies have captured most available cost saves,” Gordon wrote.

She cut ratings on the stocks to “Neutral” from “Buy” and lowered her price target on Ameristar to $17 from $22 and Penn National to $29 from $37.

Ameristar Casinos  shares lost 72 cents, or 4.2 percent, $16.11 in morning trading. The stock has traded between $4.64 and $23 during the past year. 

Shares of Penn National fell $1, or 3.5 percent, to $27.27. The stock has traded between $11.82 and $35.18 over the past year.

No Comments Yet »

ATLANTIC CITY - To the casual observer, work undertaken on the $2.5 billion Revel Casino rising next to Showboat might seem incremental.The 53-story concrete structure was topped off just two weeks ago, though ground was broken in November 2007. About 78 feet of structural steel will be positioned in the next couple months.

But by October, said Kevin DeSanctis, president and chief executive officer of Revel Entertainment Group L.L.C. - the company behind the megacasino - he will seek the remaining $1 billion in loans he needs to complete the project.

“We will go back into the lending markets in the fourth quarter,” DeSanctis said in an interview last week. “We plan to make a push October to December to get that last piece of financing.”

For DeSanctis, it will represent a giant leap of faith that the credit markets have rebounded enough that a billion dollars in financing will no longer be considered untenable, if not impossible to get.

“They’ve improved a lot. Whenever you deal with something not in your control, it’s hard to be confident. But we continue to see improvement, and more and more deals are getting done,” he said. “I am more optimistic today than I was six months ago.”

In late January, DeSanctis announced that all interior work on the casino’s restaurants, retail shops, nightclubs, and a luxury spa - the things that were supposed to help Atlantic City’s transition from day-trip customers to an overnight clientele - would come to a halt. Credit had dried up. About 400 construction workers were laid off.

Fast-forward seven months. As DeSanctis gears up his team to start the mountain of paperwork required to get the remaining financing, he said his time frame hasn’t changed: Revel Casino will open 16 months from the point when crews begin work on the interiors.

“If we start in January 2010, we can open in May 2011,” DeSanctis said. “Everything is relative to financing.”

This has been a summer of discontent for the nation’s second largest casino mecca. Gambling revenue decreased by double digits in June and July compared to a year ago. August revenue figures come out Thursday, and many are expecting more of the same as the recession and Pennsylvania slots houses continue to batter the resort.

“I don’t think the numbers hold a tremendous number of surprises,” DeSanctis said. “I tend to look closer to the Borgata, Harrah’s Resort, and the Taj. Those are the operations that have spent capital and are closer in nature with what we’re opening.”

They also have among the lowest year-to-date revenue declines: 5.2 percent at the Borgata; 12.4 percent at Harrah’s Resort; 2.5 percent at the Taj.

Much is riding on Revel’s completion, both psychologically and financially, gaming analysts and casino operators say. Three other super-casinos planned here were put on indefinite hold last year because of the credit crisis.

“After three years of mostly negative stories about the Atlantic City casino industry, the completion of Revel could give the city a sorely needed positive vibe,” said Joe Weinert of Spectrum Gaming Group L.L.C. in Linwood, N.J. “Revel’s opening could change that perception of Atlantic City in a hurry.”

Mark Juliano, CEO of Trump Entertainment Resorts Inc., which owns the three Trump casinos (including the Taj Mahal, which sits near Revel), said just obtaining the financing needed to complete Revel would be “an enormous boost of confidence for Atlantic City.”

“Obviously, a big project like that right next door to us will have a short-term negative impact,” Juliano said, “but in the long term, it will really help grow the city and help bring in a higher-end customer to the Taj.

“Right now, it’s not doing anybody any good.”

No Comments Yet »