Two Way Hard Three | Las Vegas Casino & Design Blog

July 12, 2008

Vegas Gang #12 - July 11th, 2008

Posted by Hunter

The show is up:

This time we feature:

* Wynn Hires Tim and Tim / Wynn Early Financials
* Nevada and Illinois Post Bad Numbers
* Tropicana E.Coli Outbreak
* Don Barden / Pittsburgh
* MGM Mirage / Wynn Resorts Market Cap

Comments welcome below.

Don't forget the Podcast-a-palooza:


Read archived comments (13 so far)
July 13, 2008 12:03 PM Posted by Jeff in OKC

I hate to give ColSux credit for anything, but, my understanding of the story based on local news reports is that Tropicana staff tests the well water weekly. When the water tested positive for e-coli, they notified the County and voluntairly closed the rooms that were at risk. They moved those guests to other rooms at the Trop, their Westin, or other Strip properties. The Trop and County tested the water several times over the next week, and it never tested positive for e-coli, except for that one time. I don't think there were any reports of illness from this. I'm not saying it's the best response ever, but it does sound pretty good to me.
P.S. Another great show. You're on a real winning streak, here.

July 13, 2008 3:53 PM Posted by steve_c

Great show, guys! Seems like the Trop cant catch a break.

Off topic, have you guys seen the new guest rooms at Treasure Island??

If any of you like whats being done at Mirage (or even not), you'll prob. love the new guest rooms at TI. They are kind of in the same style as the Petite suites that were remodeled last year.

I really like it. Not too over the top, yet very chic.

July 13, 2008 3:55 PM Posted by Hunter


I haven't seen the new TI rooms but I know Chuck has:

I'll be checking out the new Mirage rooms on my next trip.

July 14, 2008 7:25 AM Posted by Jeff in OKC

Regarding the smoking ban areas. I don't think tribal casinos have to ban smoking, because that's sovereign land. I have no idea how close any ancestral lands are to any of these casino areas, but do you think it could give them a leg up on competitors?

July 14, 2008 11:58 AM Posted by detroit1051

Great show although the discussion about Don Barden raised my blood pressure a little. I lived in Detroit when he tried to get one of the three casino licenses. I may be treading on thin ice here, but his proposal and financial ability appeared to me to be severely lacking. He then, in my opinion, tried to strong-arm his way in by implying that since Detroit was a predominently minority city, he "deserved" one of the casinos. Fortunately, he did not prevail, and MGM, Mandalay and the Sault Ste Marie Chippewa tribe were awarded the contracts. If you'll recall, Steve Wynn was also one of the finalists who didn't make it. When MGM acquired Mandalay, they had to sell MotorCity Casino, and it's now owned by Marian Ilitch, who is a very capable operator.
I'll resist adding anything further about Barden and his getting the cable deal for Detroit which he then sold for $300 Million.

Ontario's smoking ban was a big factor in the decline of business at Casino Windsor, now Caesars Windsor. It's hard to put a number on it because there are two other factors which hurt their business: difficulty/delays crossing the border back into the U.S. after 9/11 and the U.S. Dollar.
I know that here in South Florida, the smoking ban at the three operating racinos is a big drawback especially when the two Seminole Hard Rock casinos and their other five casinos are smokers' paradises. Smoking, drinking and gambling all go together. The Seminoles have another advantage now they've started table games. Hard Rock Hollywood has more than 70 tables, and it's unusual to see any minimums below $25.
Regarding MGM's market cap, what is going on with Kirk Kerkorian? MGM is $23.82 as I sit here, and its 52 week high was $100. And Kirk is interested in Ford Motor Company?

MGM Grand Detroit showed in June that even in tough economic times, locals will spend at a first class property. MGM Grand Detroit's new casino and hotel complex is definitely 1st class:
"MGM Grand Detroit Casino L.L.C. reported gambling revenue of almost $48.7 million for June 2008, up more than 26.2 percent over the same month last year.
The increase kept total revenue for the three Detroit casinos within one percent of June 2007 revenue, as MotorCity Casino, operated by Detroit Entertainment L.L.C., and Greektown Casino L.L.C. reported declines of 10 percent and 18.5 percent respectively, the Michigan Gaming Control Board reported Friday.
MotorCity reported revenue of $38.1 million and Greektown $23.2 million for June 2008.

July 14, 2008 3:06 PM Posted by David McKee

Detroit, I remember that ugly episode when the Motown casino concessions were being awarded and Barden conducted himself poorly, to the say the least. Much of the strong-arming was done through a church group whose connection to Barden was so transparent one could hardly even call it a "front."

July 14, 2008 5:19 PM Posted by Dave

Re: Barden, I thought that some of his comments were pretty inflammatory--you can do a Google News search and pull up the article, but he was quoted as saying that if members of a certain group are in power, they ought to favors members of that group when conducting business. Carried to its logical extension, that pretty much puts us back in the days of feudalism or worse, where you can only get ahead because of your group affiliation or who you've pledged fealty to. It's certainly not the kind of thing you'd expect to hear from a "business leader" in the 21st century.

As I said in the show (but will say better here, because I'm not making it up as I'm speaking "live"), granting concessions for casinos (or any other near-monopoly) because of political factors will always leave the public short-changed. In this case, Pittsburgh isn't getting the casino they deserve. Or maybe they are--the entire PA casino process has been something of an exercise in political gymnastics.

I say that if the people of a state decide that casinos are legitimate businesses, the government should license, tax, and regulate them, and let the market sort out how many casinos a city can support, or who the best operator is.

Otherwise, politicians who seek to "limit" gambling by only allowing select operators in are just guaranteeing a competition-free environment for the lucky winner(s) and ensuring that the operators secure most of the excess, not the public.

I'm not the only one who says this--read Peter Collins' "Gambling and the Public Interest" if you want to hear this argued far more persuasively by a guy with a neat British accent.

July 14, 2008 7:33 PM Posted by detroit1051

More on Barden's Pittsburgh fiasco:

July 15, 2008 5:17 AM Posted by detroit1051

There is only one Steve Wynn. This relates to his early financials:

July 21, 2008 9:50 PM Posted by GregoryZephyr

The Don Barden story was quite interesting. I didn't know much about what was going on in Pittsburgh and only vaguely remember the early developments in Detroit so this was mostly new to me.

August 27, 2008 12:46 PM Posted by detroit1051

Jeff Simpson has a great column in "In Business Las Vegas" regarding mistakes in Pittsburgh and Florida.

Fyi, I took a few photos of Caesars Windsor when I was in Detroit:
Caesars Windsor Augustus Tower and the Colosseum concert venue opened a few months ago. Harrah's operates the casino for the Province of Ontario. The new public areas look quite nice, sort of half-way between a Flamingo and a Caesars Palace. The casino itself has not been changed, and looks a little tired. There are some new slots, BYI, WMS and IGT, but there are still many old games from years ago. We had the same problem as last time I went. No problem getting into Canada, but when we returned through the tunnel to Detroit, we sat under the Detroit River, breathing exhaust fumes, for 45 minutes due to border inspection delays. Whether it's McCain or Obama, that whole process needs to be changed. Caesars has a full concert/event schedule for the Colosseum, but the border crossing is a big negative as is the non-smoking law in Canada. Detroit never looks better than it does from Windsor.

Greektown Casino's expansion is still not done. The hotel will be lucky to open by year-end, and the renovation of the Pantheon high limit area is behind schedule. The casino is still plagued by its "rabbit warren" appearance resulting from combining different buildings with different levels. The oldest Trappers Alley Building is over 150 years old. The parking garage is a big improvement, but it's a block from the casino, connected by an interior bridge. It's a long walk for some people. Even though it looks like there is financing to complete the hotel, the property won't succeed without a buyer with deep pockets and an imagination.

MGM Grand Detroit is the real star of Detroit. It is first classs and was very busy the two days I was there. I didn't get to MotorCity Casino this trip.

August 27, 2008 1:51 PM Posted by mike_ch

After looking through that photo album, I don't know how you do it, 1051. Keep returning to Detroit, I mean. I find being out in Vegas after dark a bit of a hair-raising experience, but that city looks dangerous to be around in the daytime. Quite sad.

I was pretty ho-hum on Casino Windsor; I'm up for Canada but mixed on Harrah's Entertainment. They seem to have done a good job with the changeover to Caesars. I'm not sure what the deal with smoking is, though I know Ontario's laws are stricter than even a smoke nazi like I would have thought to dreamed up, so I can only imagine. Still, people have talked about the whole "non-smoking casinos are ghost towns when nearby casinos with smoking" theory, and I guess that kind of proves it wrong, even if border crossings are annoying and Caesars has government help.

Last I heard, there was complaining about the casinos there being open on government holidays. So they may have to close for Canada Day or whatever else in the future.

August 27, 2008 4:41 PM Posted by detroit1051

"I don't know how you do it, 1051. Keep returning to Detroit, I mean."

Mike, home is more than a physical place. When I was growing up in Detroit, before you were born, it was a beautiful city, the 5th largest in the country, nipping at the heels of number 4, Philadelphia. Detroit today is a disaster, but the metropolitan area is still very nice, and Michigan is a beautiful state with all it lakes. And, more importantly, family and friends make my trips great. Weather was beautiful last week, but when I awakened Monday, I could tell Fall was in the air. That reminded me why I like Florida.
Caesars Windsor is a big improvement over the old Casino Windsor. I do know that business has been affected by the smoking laws and the border hassles. Billy Joel was there recently, or maybe this weekend. It's not pleasant to wait an hour or more, late at night to get back home to Michigan from a concert. I've been tracking the entertainers at Caesars Windsor, and they are the same as here at Seminole Hard Rock. Regional casinos have been great for entertainers who can't command top price in Vegas any more.

I made my first trip to Vegas probably in the late 1980's. It was a small town with few problems. Now, when I read about the crime and social issues, I wonder if it will have more in common with Detroit if there is any permanent downturn in gaming. Detroit was a one horse (car) town, and Las Vegas isn't that much different than Detroit was in the 1950's.