Sun, Jun 21, 2009

Relationship with Pansy Ho reportedly strained

Recent announcements from MGM Mirage show that despite laboring under a $14 billion debt load, the company remains committed to expanding its global reach. Just weeks after delaying a financial crisis by reaching an agreement with Dubai World to finish the construction of the $9 billion CityCenter in Las Vegas, the company announced plans to build a non-gaming hotel in Egypt, and an investment in the company from Malaysia-based Genting.

Genting purchased 14.3 million shares of MGM Mirage—3.2 percent of the company—for $100 million last week. Genting also purchased $100 million in MGM Mirage corporate bonds.

“We are constantly looking to broaden out portfolio of strategic investments and strengthen partnership around the world,” Justin Leong, who oversees strategic investments and corporate affairs for Genting, told the Financial Times.

The announcement has a number of people speculating about possible development partnerships between the two companies.

Bill Lerner of Union Gaming Group told the Las Vegas Review-Journal that Genting is interested in expanding into new markets, particularly Las Vegas and Macau.

The investment could set up Genting as a possible partner for MGM Mirage to operate its MGM Grand Macau. The company might be forced to break off its partnership with Pansy Ho if the New Jersey Casino Control Commission agrees with the recommendation of the state's Division of Gaming Enforcement, which found Ho an unsuitable partner. Ho is reported to be not satisfied with MGM’s response to the DGE report, according to sources.

A hearing is scheduled for later this year on the issue, but depending on the ruling, MGM Mirage could be forced to either dissolve the partnership with Ho or relinquish its 50 percent ownership of the Borgata in Atlantic City. The CCC has rarely disagreed with the DGE when it comes to the suitability of a applicant or an applicant’s partner.

“We're just starting to brainstorm about global marketing relationships, strategic ventures and partnerships,” MGM Mirage CEO Jim Murren told the Wall Street Journal.  He said the company will explore all available options in light of the New Jersey situation.

Speculation is that Genting might be buying MGM Mirage's interest in Macau. MGM public affairs Senior Vice President Alan Feldman told The Edge Financial Daily that “we have had specific discussions about Macau but would not rule out Genting's participation if it made strategic sense for all parties.”

Observers say that there is really no promise that Genting will be able to make it into Macau. First, there exists the possibility that New Jersey authorities might ultimately approve of the partnership with Ho. Second, there is no guarantee that the company will be willing to back out of Macau—it might instead decide to break off the partnership with Boyd Gaming on the Borgata; a possibility more likely given the dire straits of gambling revenue in Atlantic City. And even if the company does want to break off the partnership with Ho, a number of other questions remain, mainly about how Macau gambling concessions can be transferred.

Additionally, Genting doesn't seem to have a great chance of forming a partnership directly with Ho, either, because of its Resorts World project in Singapore. Officials in Singapore have cultivated a reputation for dealing with “unsuitable” elements, and may not appreciate the company partnering with an individual who is under scrutiny in New Jersey. Singapore forced Genting to break off a deal with Stanley Ho, father of Pansy Ho, in 2007. In fact, a Spectrum Gaming investigation, conducted for the Singapore government, is the basis for the unsuitability ruling by the DGE, whose agents helped conduct the Spectrum Gaming probe as independent contractors.

MGM Mirage also announced last week plans to build an MGM Grand hotel in Egypt through a partnership with New Giza for Real Estate Development. The project will be called the MGM Grand New Giza.

The 550-room hotel is scheduled to open in 2013. All equity funding for the development will be provided by New Giza for Real Estate Development. MGM Mirage will provide management services. The relationship is similar to a project in Ho Tran, Vietnam, where the company provides the branding and management services for a Canadian company that will put up all the funding.

“The New Giza community presents an opportunity for us to be part of an extraordinary new master-planned development near Egypt's famed pyramids,” said Gamal Aziz, president and CEO of MGM Mirage Hospitality. “Our partners share our focus on luxury, excellence, customer-oriented design and unparalleled service. Together with this spectacular location, this new resort will quickly become a tourism and conference destination that is both in high demand and full reflective of the MGM Grand brand.”

MGM Mirage Hospitality was formed in 2007 to help spread the company's brand.

The New Giza property will be the company's 10th MGM Grand-branded hotel. In addition to the MGM Grand in Las Vegas and the MGM Grand Detroit, there is also the MGM Grand at Foxwoods in Connecticut, the MGM Grand Macau, and properties under development in Vietnam, Abu Dhabi, Dubai and China.

“It gets their name out there to people in the luxury market,” David Schwartz, director of the Gaming Research Center at the University of Nevada-Las Vegas, told the Las Vegas Review-Journal. “If they want to be in that field I don't know that you can say you're a great hospitality provider with one or two MGM Grands. You need to have several of them, and this seems to be a cost-effective way to do it.”

The New Giza development is a luxury, mixed-use community being built on 1,500 acres near the site of the nation’s major pyramids. It will include three hotels, retail and dining outlets, sporting facilities and a golf course and some 2,500 residential units.

“We are delighted to have the MGM Grand anchor our hotel and hospitality sector in New Giza,” said Mahmoud El Gammal, CEO of New Giza for Real Estate Development. “MGM's reputation for quality living, dining, entertainment, spa and nightlife offerings will provide the amenities, excitement and energy that reflect the lifestyle of this unique development.”

Also last week, in an ongoing effort to control its debt, MGM Mirage announced that it will be buying back $884.9 million in senior notes that mature later this year as part of a $1.05 billion tender offer that expired last week.

The company said Mandalay Resort Group noteholders tendered $122.3 million of the $226.3 million notes, while its own noteholders validly tendered $762.6 million of the $820 million notes the casino operator was willing to buy back.

MGM Mirage is trying to address its ongoing debt issues. A similar offer was made earlier in June.

Fri, Jul 03, 2009

Low hold percentage one disappointment in early numbers

Less than one month after opening, Melco Crown Entertainment’s City of Dreams in Macau welcomes its one-millionth visitor. The couple was welcomed at the door by CEO Greg Hawkins, who gave them prizes worth HK$118,888, including a night's complimentary stay in the Rock Star Suite at Hard Rock Hotel, and a private shopping spree at the Boulevard, the property’s retail area.

By the end of the first month, COD had brought in 1.2 million people, an average of 41,000 per day. COD opened on June 1.

The company also reported impressive revenue results, as well, during the first month. The VIP market—the “rolling chips” tables—produced a volume of almost US$2 billion in the first month, with the last week of the month seeing almost three-quarter of a billion dollars crossing the gaming tables.

In the all-important mass market, more than $100 million was dropped at the tables, again with the last week surpassing the first by more than 12 percent. An average of 376 mass-market gaming tables
were in operation at City of Dreams in June. The property’s 1.320 gaming machines took in $81 million in June.

One problem for COD was the table hold percentage. In the VIP segment, the tables only held 0.8 percent, well below the casino’s target of 2.85 percent. The mass-market tables were within the property’s target range of 16 percent to 18 percent.

At Melco Crown’s first property, Altira Macau, the VIP tables dropped $2.76 billion in June, allaying fears that COD would cannibalize that property. The hold for that segment of the market was 2 percent.

With a normal table-game hold percentage, Melco Crown estimates that its share of the market in June would have been 15 percent. It offered no estimate for the actual market share, given the disappointing hold at COD.

By Staff   Sun, Jun 21, 2009

President says company is now ‘leaner, stronger’

Isle of Capri Casinos Inc. of St. Louis, Missouri, has turned a financial corner, reporting its second straight positive quarter.

The company released its numbers for fourth-quarter 2008. With a profit of $14.6 million compared with a loss of $51.3 million in the previous year, the report beat Wall Street expectations and followed a positive third quarter for the parent company of the Isle Casino in Biloxi, Mississippi. Plans to expand that property were suspended when the recession hit.

Isle President Virginia McDowell (above) thanked employees for helping to improve customer service as the company streamlined operations. Isle trimmed about $45 million in operating costs and $7.3 million in corporate development costs to become “a leaner, stronger, more focused company,” said McDowell.

Analysts had expected a loss of 3 cents per share, according to a Thomson Reuters survey. In the wake of the good news, company stock gained $1.20, or 9.6 percent, to $13.76 in morning trading. The shares have traded in a range of $2.04 to $19.18 over the past year.

McDowell said customers are spending less, a trend that will continue until the economy and consumer confidence improve.

“The impact of the economic pressure has been felt broadly across our customer base,” McDowell said. “We experienced a significant decline in our retail play, along with a decrease in the trip frequency and spend of our database customers late in calendar 2008. While January and February saw a somewhat substantial increase across both of these customer groups, we did see a moderate pull-back in spending during March and April.”

Despite the encouraging numbers, CEO James Perry said the company “will continue to employ a cautious approach to our business as a result of economic uncertainty.” Even so, Perry said the Isle team is positioned to pursue new acquisitions and management opportunities. After pulling out of the United Kingdom and preparing to exit its Grand Bahama casino, Isle of Capri Casino plans to focus on its domestic casinos.

Sun, Jun 21, 2009

Leading slot manufacturer International Game Technology, which has struggled to maintain market share and cut costs during the recession, had good news to report following its first introductions of server-based gaming products.

IGT has been developing applications for a networked floor for MGM’s CityCenter project, which will open next year with a completely server-ready slot floor. In the meantime, IGT has sold several installations of “sbX Tier One,” a small-scale server-based system that allows casinos to test networked applications without the cost of converting an entire floor.

Goldman Sachs analyst Steven Kent last week said the server-based efforts have put the company on a solid path toward earnings growth.

In a client note, Kent praised former CEO TJ Matthews’ focus on software development as opposed to box sales, and new chief executive Patti Hart’s continuation of server-based gaming emphasis. He also cited cost control efforts and product development progress as positives for the company.

“We expect Ms. Hart’s focus to be on rationalizing these previously started programs and determining what is working and what is not,” Kent wrote.

Kent gave IGT a “Buy” rating, setting a $20 price target. Shares of the manufacturer were up 2.7 percent, to $16.73, the day of the note.

Sun, Jun 21, 2009

System company Table Trac, Inc. announced that its patented Casino Trac casino management system will be installed in the Thlopthlocco Golden Pony Casino in Okemah, Oklahoma.

The Casino Trac system was designed specifically for Oklahoma, combining information drawn from both Class II and Class III games into a single database.

“We are pleased and honored to be chosen by the Thlopthlocco Golden Pony Casino to provide the products and services covered by this agreement,” said Chad Hoehne, Table Trac president and CEO. “The Golden Pony has one of the most beautiful and accessible locations in Oklahoma. We look forward to working with them.

“Since our successful development of the Class II and Class III integration in 2006, designed specifically for our Oklahoma casino customers, we have been providing consistent operational reliability and continue our commitment to what we describe as cutting the cost of cutting edge. Golden Pony is the 12th location in the Oklahoma jurisdiction to become a customer.”

Added Carl Noon, general manager of the Golden Pony, “Given the competitive nature of our market, with 66 casinos within 100 miles of our location, the combination of the system's innovative promotional modules as well as price and value considerations made Casino Trac the obvious choice.”

Sun, Jun 21, 2009

Gaming authorities in Singapore have officially recognized Gaming Laboratories International as a fully qualified testing laboratory for gaming devices in the country’s gaming industry.

Singapore’s Casino Regulatory Authority designated GLI with the status of SRTL, for Singapore-Recognized Test Lab, qualifying the organization to provide testing services for gaming equipment placed at casinos within the Singaporean jurisdiction.

GLI will test games, systems and progressives against standards established by the CRA, and GLI will test games and systems for interoperability.

We are honored to achieve the status of an SRTL,” said Ian Hughes, director of global engineering and client services for GLI. “We are glad to have participated in the CRA’s closed consultations with the gaming industry for the Singapore Technical Standards on slots and systems. GLI wishes to thank T. Raja Kumar, CEO of the CRA, and his team for their professionalism throughout GLI’s approval process.”

To be recognized, GLI had to prove, among other items, its accreditation with ISO17025, its internal compliance processes and its experience in testing gaming equipment for major gaming jurisdictions.

By Staff   Sun, Jun 21, 2009

Atronic Austria, the Austrian subsidiary of GTECH Corporation’s Atronic Group slot manufacturer, announced that its new technological development program has been granted financial support by FFG and SFG, agencies of the Austrian government that give support grants to advance technological innovation in several industries.

The slot manufacturer sought funding assistance because of high development costs and short product life cycles that have challenged profits during the recession.

“Through the application of the latest, cutting-edge technology and a radical overhaul of the systems architecture, Atronic is creating the technological base for future product innovations,” said a press release from the company.

“The implementation of a comprehensive security system that meets the highest security standards of the industry gives Atronic a competitive edge in the international market. The firm would like to thank FFG and SFG for their support in enabling the realization of this ambitious and exciting innovations project.”

Sun, Jun 21, 2009

A Cuban national and a Florida native have been indicted in a scheme to manufacture and sell counterfeit video slot machines bearing the brand and logo of International Game Technology.

According to the indictment, unsealed last week, Rodolfo Rodriguez Cabrera of Cuba and Henry Mantilla of Florida made unauthorized copies of IGT slots between August 2007 and April 2009.

Cabrera owned a company called FE Electronic in Latvia, and Mantilla owned a company called Southeast Gaming, Inc., in Cape Coral, Florida. The indictment charges that the two conspired to copy IGT video slot computer programs and place counterfeit labels bearing IGT’s registered trademark on the programs, install them in IGT cabinets, and sell them through their respective companies to casinos in Latvia.

The scheme was uncovered through a joint effort of the FBI, the Latvian Ministry of Interior and IGT.

Each man was charged with one count of conspiracy, two counts of trafficking in counterfeit goods, two counts of trafficking in counterfeit labels and two counts of criminal copyright infringement.

Each faces up to 45 years in prison if convicted.

Sun, Jun 21, 2009

Slot manufacturer WMS Gaming Inc. announced that it has extended its long-term license agreement with Hasbro, Inc and Hasbro International, Inc. through 2016. The ongoing agreement grants WMS exclusive worldwide rights to develop and produce slot machines and other gaming machines featuring the Monopoly brand.

In addition, WMS and Hasbro have expanded the scope of their relationship, with WMS securing exclusive worldwide rights to develop and produce gaming machines based on such classic Hasbro board game brands as Battleship and Clue (or Cluedo, as it is better known in international markets), among others.

WMS had not previously produced slots based on those other board games because the license previously was held by the former Mikohn Gaming, which released Battleship and Clue video slots early this decade. That license has since expired, and Mikohn Gaming no longer exists.

“As the exclusive worldwide licensee of the Monopoly brand for gaming machines, our talented development teams and engineers have taken one of Hasbro’s flagship brands, and by combining its name recognition and familiar icons with creative game content and innovative technologies, developed one of the industry’s most successful series of participation gaming machines for use in licensed casinos,’ said Orrin J. Edidin, president of WMS Industries Inc.

“Since introducing our first Monopoly branded participation games in fiscal 1999, we have developed more than 60 approved Monopoly branded games, including 12 over the last two fiscal years. This extension of the license agreement acknowledges our consistent development of great games based on this worldwide icon and secures access for our creative teams to one of the world’s most enduring entertainment properties for many years to come that will benefit our casino customers, casino patrons, Hasbro and WMS.”

Mark Blecher, Hasbro’s senior vice president and general manager of digital media and gaming, added, “We are pleased to expand and extend the scope of our relationship with WMS, a recognized innovation leader in the gaming industry. WMS has proved itself time and again with its very innovative Monopoly gaming program and we are confident that they will continue to do an outstanding job in creating strong entertainment value in their area of expertise with additional Hasbro brands.”

Sun, Jun 21, 2009

Table game supplier TCS John Huxley has set up sales and marketing operations, along with a complete showroom, in Singapore, creating what will be a new hub for the supplier’s Southeast Asia sales.

Over the past three years, TCS John Huxley Asia has established its presence in the region by introducing a new office in Macau and investing in local manufacturing and printing facilities.

Tristan Sjöberg, managing director for Asia, relocated to Singapore to set up a new hub for the region which will service and support the large scale projects now underway in Singapore, as well as other existing casinos in Malaysia, Myanmar, Laos, Cambodia, Korea and also India and Nepal.

The new office combines sales, technical support and service as well as incorporating a fully equipped showroom that will display the latest TCS John Huxley product offerings.

“There’s a reason why 3,000 companies have their regional headquarters in Singapore,” said Sjöberg. “It’s a very good business environment to base yourself from and has a large talent pool of technical and administrative staff. Singapore will be setting the blueprint for gaming in Asia with many of the surrounding countries looking for guidance in terms of developing a new market from scratch.”

Sun, Jun 21, 2009

Signage supplier Gaming Support announced that it has reached a definitive sales agreement with Regency Entertainment covering the purchase and installation of Gaming Support signage for the expansion of Regency Casino Mont Parnes in Athens, Greece.

Under the terms of the agreement, Gaming Support will provide all custom signage to be featured within the facility. “We’re honored to be awarded this scope of work,” said Nick Hogan, Gaming Support’s VP of sales and business development. “The package selected features a number of cutting-edge design components, including full-scale JackpotJunction XL integration, animatronics and a large body of three-dimensional elements. We look forward to delivering to our valued client what is sure to be a spectacular showcase.”

“As Gaming Support has demonstrated through its many signage projects with Lucien Barrière, Casinos Austria, Holland Casino and multiple slot manufacturers, the team possesses the creativity and material capacity to deliver top-tier work at attractive price points,” stated Evaggelos Dimou, slots director at Regency Casino Mont Parnes.

Sun, Jun 21, 2009

Electronic table game supplier TableMAX Gaming announced that it has signed a turn-key manufacturing agreement with Creative Electronics and Software to produce complete TableMAX Systems.

“We are pleased to partner with CES as demand for our product continues to increase,” said Stephen Crystal, CEO of TableMAX. “CES gives us the ability to provide significant quantities of TableMAX ETGs and will enable us to easily meet the growing demand from our customers each month.”

CES has scalable facilities with the capacity to take production from 10 to 50 TableMAX systems per month. CES is headquartered in South Elgin, Illinois, and maintains an assembly plant in Las Vegas.

“We are proud to be chosen by TableMAX to manufacture their innovative ETG systems,”  said Robert Kowalski, president of CES. “This promises to be a great long-term partnership of CES’ manufacturing capabilities—which emphasize high-quality electronic and mechanical product assembly and testing—and TableMAX’s top-shelf gaming products and growing reach.”