This week, Inside Gaming takes a look at Macau's thriving gaming industry, a Illinois legislative bill that would result in the state's largest-ever gambling expansion, and recent litigation involving the Palms Casino in Las Vegas.
Macau Gaming Thriving
Macau has been the hotspot for gaming over the past few months. On Monday, Wynn Resorts LTD shares gained about 4 percent, which comes on the heels of gross gambling revenues for properties in the Chinese territory gaining more than 66 percent from December 2009 to the same month in 2010. The huge growth in December also surpassed October 2010 as the largest gambling month on record for Macau.
To put that in perspective, the all-time record for Nevada gaming revenues in 2007 was $12.8 billion. Gaming revenues in Macau, the only place in China where gambling is legal, grew by 58 percent during 2010, totaling $23.4 billion U.S. dollars (188 billion patacas).
"These results are above expectations and confirm our belief that Macau gaming revenues will continue to be strong in 2011, even despite a modest cooling of the Chinese economy," said Jefferies & Co. gaming analyst David Katz.
During that time, Wynn Resorts LTD, which operates Wynn Macau and the Encore at Wynn Macau, had a 4.96 percent ($5.15) increase, the highest in the market, to close at $108.99. Right behind, MGM Resorts International, owner of 50 percent of the MGM Grand Macau, grew 3.57 percent (up $0.53) to close at $15.38. Likewise, Las Vegas Sands Corp., which operates the Venetian Macau and Sands Macau, was up .78 percent ($0.36 cents) to $45.59.
What is surprising is that the revenue increase came during a time when China was tightening monetary policies and partial junket commission caps. "With this in mind, we believe the profit story for Macau concessionaires over the next year could be significantly higher than current expectations," said Bill Lerner, Union Gaming Group principal.
For more on Macau's gaming success, visit the Las Vegas Review-Journal.
Gambling Expansion in Illinois?
Gambling in Illinois may see the largest expansion in state history sooner rather than later. Despite opposition from the casino indusrty, the Illinois House is considering a bill for gambling expansion and may see a vote as early as this week after the Illinois House Executive Committee passed the bill by an 8-3 vote last Wednesday. If the House approves the bill, it would be sent back to the Senate where it would likely pass.
According to the bill, six of the state’s eight horse racing tracks would see the addition of slot machines, and five new casinos would be built, including one in Chicago, while creating approximately 50,000 new jobs. Representative Lou Lang, a sponsor of the bill, believes the legislation could help alleviate the state’s $15 billion budget deficit. In an effort to gain support from the gaming industry, Lang is offering a 5 percent tax credit to existing casinos; nonetheless, he is still being met with stiff opposition
“This is a huge expansion that would more than triple the gaming positions in Illinois,” executive director of the Illinois Casino and Gaming Association Tom Swoik said. The expansion is a major concern since Illinois’ gaming market is already saturated; in fact, the industry has lain off 1,450 employees in the last three years. To give you an even better idea, currently there is approximately one gaming device for every 719 Illinois residents (21 or older) while the bill would make it one for every 110 residents. In addition, gaming revenues in the state have only declined in the last three years to the tune of 36 percent.
Working in favor of the bill’s opponents is the limited time frame. If the bill isn’t passed by the House and Senate by January 12, it will die and the whole process would have to begin all over. “The clock can’t tick fast enough as far as I’m concerned,” said Jeff Watson, general manager of Casino Queen Hotel & Casino in East St. Louis. “It will cut the pie into more pieces, not expand the pie,” he said.
Visit gamblingcompliance.com for more on this story.
Dinner for Schmucks
The Palms Casino in Las Vegas is home to some of the most popular dining establishments in the city but has recently been marred by litigation between George Maloof Jr., owner of the Palms, and Michael Morton, a nightclub and restaurant operator. On Tuesday, Jan. 4, 2011, the pair, who had previously engaged in a 10-year business relationship, parted ways and settled their litigation.
The situation developed when Maloof claimed Morton, whose father built the Morton's of Chicago steakhouse chain, mismanaged the business by diverting assets to himself and his own restaurant at Wynn Las Vegas. Maloof denied the allegations, stating that unhappy investors were simply trying to force him out. According to a Palms statement, the situation was settled in an "amicable and mutually beneficial" way. The statement went on to explain:
"Under the terms of the settlement, Maloof will take over the management of N-M Ventures, the entity that owns and operates N9NE Steakhouse, Ghostbar, Rain Nightclub, Nove Italiano, the Playboy Club, Moon Nightclub and the Stuff store, all in the Palms."
The venture was ended when Morton sold his interest in favor of committing himself to his wine bar restaurant "La Cave" at Wynn Las Vegas The statement did not reveal the financial terms of the settlement but did say that the "parties have wished each other well in their future business endeavors," the statement said.
To read more details on the Palms situation, the Las Vegas Review-Journal may satisfy your appetite.