Vol. 7 • No. 22 • June 15, 2009

Vol. 7 • No. 22 • June 15, 2009

GGB NEWS June 15, 2009

COVER STORY:

Fontainebleau Fails
Strip property has been in financial trouble since a number of lenders backed out of the project and now seeks bankruptcy protection.

 

FEATURED STORIES:

WEEKLY FEATURE: E.U. Says U.S. Online Policy Blocks Trade
The online gaming policy of the U.S. in recent years has been anything but friendly to foreign operators. Now, a report following an investigation into the matter by the European Commission is officially saying that U.S. policy is in breach of WTO rules.

U.S. Locks Up Poker Winnings
The U.S. Attorney for the Southern District of New York instructed three banks to freeze accounts holding poker winnings totaling more than $30 million.

Kentucky Gets Down To Business
Governor Steve Beshear, backed by Kentucky Derby winning jockey Calvin Borel, is proposing casino gaming to be considered in an upcoming special legislative session, as a way to save 100,000 jobs in Kentucky's racing industry.

New York Tribe Floats Plan To Run Gaming At Belmont Park
Pending long-awaited federal recognition, Shinnecocks already forming proposal for racino at Belmont Park near New York City.

Genting Grabs Stake In MGM Mirage
Malaysian gaming giant eyes possible purchase of MGM Grand Macau after negative assessment of partner Pansy Ho by New Jersey.

Seminoles Balk at Deal with Florida
What was once thought to be a "win-win" for the state and the tribe is now a contentious, unfair agreement that is likely to be rejected by the Seminoles, who now offer Class III gaming at their Seminole Hard Rock casino in Hollywood.

Seminoles Balk at Deal with Florida
What was once thought to be a "win-win" for the state and the tribe is now a contentious, unfair agreement that is likely to be rejected by the Seminoles, who now offer Class III gaming at their Seminole Hard Rock casino in Hollywood.


ALSO:

Gran Scala Nears Last Legal Hurdle In Spain
Russian Ministry Asks Putin To Reconsider Deadline
French Legislation Doesn't Meet EC Standards
Simple Solution To Goa Casino Controversy

Fontainebleau Fails

By Staff   Fri, Jun 12, 2009

Fontainebleau Fails Company requests quick hearing to regain access to capital

Fontainebleau Las Vegas and two of its affiliates filed for Chapter 11 bankruptcy protection in Florida last week.

The move ends almost two months of speculation that the company would have to file. The $3 billion project has more than $1 billion in assets against more than $1 billion in liabilities.

The decision to file was primarily motivated by a number of large lenders backing out of the project.

"It is unfortunate that our lenders forced us to take this step. By reneging on the revolving credit facility, they effectively shut down the project and put thousands of people out of work," Howard Karawan, chief restructuring officer of Fontainebleau Las Vegas, said in a statement Tuesday night. "Our goal now is to secure funding to complete this world-class project and restructure our existing debt."

Fontainebleau Las Vegas has reached a provisional agreement with some of its lenders, and it plans to look at negotiations to obtain financing to recommence construction on the project.

As part of that move, it dropped a $3 billion lawsuit filed against a number of lender in Las Vegas and re-filed in bankruptcy court.

Fontainebleau's attorneys filed the lawsuit April 23 against a group of banks led by Bank of America and JP Morgan Chase after they reneged on an agreement to provide $770 million in financing to complete the project. The banks said Fontainebleau had defaulted on a loan, a claim the developer has denied.

"Fontainebleau Las Vegas will continue to aggressively prosecute claims against these lenders for failing to honor their contractual commitments," Scott Baena of Bilzin Sumberg, bankruptcy counsel to the company, said. "The damage caused by the bad faith of these lenders has not only caused financial hardship to Fontainebleau Las Vegas and its employees, but also to the company's creditors throughout the United States, when economic circumstances are such that they can least afford it."

Affiliates Fontainebleau Las Vegas Holdings and Fontainebleau Las Vegas Capital Corp. submitted separate filings.

Fontainebleau Las Vegas Holdings listed less than $50,000 in assets against more than $1 billion in estimated liabilities, while Fontainebleau Las Vegas Capital Corp. listed similar assets and liabilities.

After the filing, Crown Ltd. wrote down the value of its 19.6 percent equity stake in Fontainebleau Resorts LLC to zero.

The carrying value of $22 million of debt in Fontainebleau is also expected to be written down to zero, the company said in a statement today. Crown has no plans or obligations to contribute further cash to Fontainebleau, it added.

Crown head James Packer spent $250 million to acquire the stake in 2007.

GOODS & SERVICES,

WMS Participation Games Exceed 10,000

Fri, Jun 12, 2009

Slot manufacturer WMS Gaming announced that its participation units in the field—games leased on revenue-sharing arrangements—has passed the milestone of 10,000.

According to the company, average daily revenue per participation gaming machine has increased by over 20 percent, from an average of $58.55 in September 2006 to $70.37 in the March 2009 quarter.

The announcement is evidence that WMS is bucking what has been a trend in casinos of declining revenue-sharing installations. WMS officials say it is because of the new game styles that have been released on participation units, such as the “Sensory Immersion” game style reflected by the slot “The Wizard of Oz” and the “Adaptive Gaming” series, launched with “Star Trek.”

“The combination of unique technologies for the slot floor, industry-leading creative game content and our intellectual property has resulted in the development of the industry’s most successful and exciting portfolio of participation gaming machines,” said Brian R. Gamache, chairman and chief executive officer of WMS Industries Inc. “WMS’ ongoing success in growing our participation installed base and the revenue generated from these games is a direct result of our company-wide commitment to our long-term technology development plan, and the excellent execution we have achieved as a result of this focus.

“Importantly, we continue to advance our market position by readying for commercialization new products enabled with the second and third generations of our foundational technologies that provide a broader array of unique and differentiated entertainment experiences for players.”

GOODS & SERVICES,

ELA to Host 2nd Ibero-American Meeting

Fri, Jun 12, 2009

The Latin-American Gaming Fair—ELA—will be the site of the Ibero-American Meeting of Gaming Operators for the second straight year. ELA 2009 is being held in Mexico City and has been rescheduled for July 23-24.

The 2008 event, held in Monterrey, Mexico, drew over 100 attendees.

The key topic of the 2nd Ibero-American Meeting of Gaming Operators will be: “The development of legal gaming in Ibero-America and its influence in dismantling underground gaming, with special regard to the case of Mexico.”

Pending confirmation, the chair and keynote address have been offered to Mexico’s Minister for Home Affairs, Fernando Gómez-Mont Urueta. Other government guests will include high-ranking civil servants, members of congress and senators.

Gaming operators have been invited from Argentina, Chile, Uruguay, Paraguay, Brazil, Bolivia, Ecuador, Peru, Venezuela, Colombia, Panama, Costa Rica, El Salvador, Honduras, Guatemala, Belize, Puerto Rico, Dominican Republic, Spain and Portugal.

Also expected to attend are several lawyers, experts on the gaming industry of Mexico, who will analyze the legal situation.

The meeting is being organized jointly by the Mexican Association of Gaming Licensees, Casinos de Latinoamerica and ELA.

Following the meeting, guests will attend a cocktail reception, offered by the Mexican Association of Gaming Licensees. Immediately after, there will be the traditional cutting of the ribbon to inaugurate ELA 2009.

GOODS & SERVICES,

IGT Amends Credit Facility

Fri, Jun 12, 2009

Leading slot manufacturer International Game Technology announced today that it has amended and restated its credit facility to extend approximately $1.7 billion of the commitments under the prior facility with a group of 28 lender banks until June 8, 2012.

The extended portion of the credit facility generally provides for an interest rate equal to LIBOR plus 260 basis points on borrowings and a facility fee equal to 65 basis points, payable on the extended commitments, at the Baa2/BBB pricing level. The facility fee and interest rate are subject to adjustment, on a sliding scale, based upon the debt rating of IGT's senior unsecured debt.

The balance of commitments remaining from IGT’s prior credit facility, totaling approximately $410 million, continue under the amended and restated credit facility and will expire as previously scheduled on December 19, 2010. As of June 8, 2009, aggregate outstanding borrowings under the credit facility totaled approximately $810 million, compared to approximately $1.54 billion as of March 31, 2009.

GOODS & SERVICES,

Atronic Gets Big Order From Casinos Austria

Fri, Jun 12, 2009

Casinos Austria has awarded the Atronic Group a contract to provide its “eMillions” wide-area progressive system for installation at all 12 of its casinos. Under the contract, Atronic will provide 140 electronic gaming machines for the link, along with the central computer controller that will run the progressive system. Atronic also will provide Casinos Austria 24 stand-alone slots.

Players at Casinos Austria locations around the country will contribute to a wide-area progressive resetting at €1 million. Atronic’s “Galaxis” on-line system provides the architecture for the wide-area link.

“Casinos Austria’s primary goal is to create the most entertaining and exciting experience for our players, and we are confident to be able to enhance that experience with the introduction of eMillions and Galaxis,” said Christian Richter, director of gaming at Casinos Austria.

The eMillions wide-area link also will use Atronic’s StarJackpots system to control the jackpot levels and to modify the link to Casinos Austria’s requirements. The 140 machines on the link are Atronic “e_” upright and slant-top slots.

“With e_, Galaxis and the latest eMillions games, Casinos Austria will have a unique combination of machines, games and systems components that cannot be found in any other casino in the world,” said Michael Sells, regional sales manager for Atronic. “EMillions’ unique re-spin feature provides players with more chances to win when they spin the reels for a chance to hit the jackpot.”

GOODS & SERVICES,

New Novomatic Installations in Belgium and Spain

Fri, Jun 12, 2009

Novomatic has announced the installation of 70 new Super V+ Gaminator cabinets at casinos Middelkerke and Blankenberge in Belgium and the first TouchBet Live-Roulette system at Casino Barcelona in Spain.

The Belgian order followed a review at the two coastal properties owned by U.K. based Grosvenor Casinos.

Simon Beacham, head of electronic gaming for Grosvenor, said, “It’s now almost five and a half years since we first installed machines in these venues. During that time, the player base and the overall popularity of machines has grown substantially and they have become a major profit generator. We felt it was time to undertake a full review of the product mix and both the layout and number of machines in order to further develop this market.”

Analysis of the review concluded that both venues needed substantially more video product and that the Novomatic Super-V+ Gaminator machines were the most popular in this market.

The redesign of the floor layouts to handle the 25 percent increase in machines, and the on-time completion of installation, were handled by Marnix Baes and his team from Gaming Support, distributor of Novomatic in Belgium.

Domi de Wilde, general manager of both casinos, was happy to have the installation completed in time for the first big weekend of the summer season.

“My team and I are really pleased with the new product,” said De Wilde. “Novomatic games are enormously popular in this market and the initial feedback from our players has been very favorable.

“We should now be well-placed to cater for all our customers, especially those who come to the coast for the summer season and who have not seen our new product offering yet.”

In Spain, Novomatic Gaming Spain has installed the Novo TouchBet Live-Roulette system at Casino Barcelona, bringing the number of Novomatic roulette systems there to three.

The casino becomes the first in Spain to offer Novo TouchBet Live-Roulette. Two Novo Multi-Roulette systems have been in operation at the casino since 2007.

The system features a dealer-operated, live roulette wheel connected to fully automated player terminals. The Barcelona system has 12 slant-top terminals, a camera for live streaming of the wheel and an animated display of the bets, shown on four plasma screens. A single wheel, however, can be hooked up to as many as 250 player terminals.

The game system provides the thrill of live roulette combined with the privacy, comfort and security of individual player stations. Game frequency is also increased when compared to a traditional roulette table.

The inauguration of the Novo TouchBet Live-Roulette installation on May 15th was celebrated with champagne and small gifts for guests.

GOODS & SERVICES,

Shuffle Master Profits Jump

Fri, Jun 12, 2009

Table game equipment supplier Shuffle Master Inc. reported a 50 percent jump in net income for the second quarter, defying the national economic trend.

Shuffle Master reported net income of $4.57 million for the quarter that ended April 30, compared to $3.05 million for the same period a year ago. The profit rise occurred despite an 8 percent drop in revenues to $45.3 million, and despite payouts of $4.4 million to the company’s retired chief executive and one other senior manager.

“Shuffle Master had a decent second quarter given the magnitude of the economic climate, said CEO Tim Parrott, who took over earlier this year when longtime chairman Mark Yoseloff retired. “I’m very encouraged about our future based on what I’ve seen and heard spending time with our management team, employees, and customers.”

Although sales were down, Shuffle Master has cut costs and improved operational efficiencies to achieve the profit.

GOODS & SERVICES,

Five EZ Baccarat Games Placed at City of Dreams

Fri, Jun 12, 2009

DEQ Systems Corp. announced that five of its EZ Baccarat, no commission baccarat with Dragon 7 side bets, have been installed in the new City of Dreams in Macau.

Melco Crown’s City of Dreams opened its doors with three EZ Baccarat tables in the City of Dreams Casino and two in the Hard Rock Casino. It is located directly across from the Venetian Casino on the Cotai Strip and operates an estimated 450 tables of which 80 percent are baccarat.

These installations come less than two months after the product’s approval and when the Wynn Macau went live with four EZ Baccarat tables.

“We are very proud to say that EZ Baccarat was part of the opening ceremonies at City of Dreams,” stated Earle G. Hall, president and CEO of DEQ. “EZ Baccarat is now entering the largest single baccarat market in the world where there are an estimated 3,000 baccarat tables.”

UNITED STATES GAMING,

Las Vegas Market Continues To Tumble

Fri, Jun 12, 2009

The housing and credit crises have slammed Las Vegas’ construction industry. A recent report from the Associated General Contractors indicated that construction employment in Las Vegas fell by 15.2 percent from this time last year. That figure does not include jobs lost at the recently halted Fontainebleau Las Vegas project.

More than 80,000 workers have been left unemployed by the industry’s slide in the last year, according to the AGC’s report. The group asked the federal government to quickly release stimulus dollars to help revive the construction industry.

"Job loss figures like these are exactly what prompted Congress and the administration to craft a stimulus package designed to get Americans back to work as quickly as possible," AGC Chief Economist Ken Simonson said in a statement. "Putting these funds to good use as quickly as possible is the best way to get Americans back to work and the economy back on track."