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Gaming Guru

Joe Weinert
 

Atlantic City Roundup

20 January 2004

ATLANTIC CITY -- For two years now, Wall Street gaming analysts have picked apart proposals from New Jersey Gov. James McGreevey, characterizing his policies as hurtful to the Atlantic City casino industry.

Now the governor wants to know what they really think of him: McGreevey has invited a dozen gaming analysts do dinner at the governor's mansion in Princeton.

"What he's trying to do is reach out to this group people in recognition of how important the casino industry to the state. We really want to find out what is on their minds and we want to ask them how our decisions affect the casinos and the region," said McGreevey's spokesman, Micah Rasmussen.

"This is an opportunity to pick their brains and find out how we can best continue to attract economic development to the region and to the industry," he said.

Atlantic City gaming attorney Lloyd Levenson is arranging the dinner. He would not comment. Analysts invited by Levenson said they were given little information about the event or exactly why it was being held.

"The sense I got is this is a relationship-building exercise," said Deutsche Bank Securities analyst Marc Falcone, who said he had to "really pull" any information from Levenson.

"I think it's a definite opportunity for us to understand the governor's views. My view is that it should be productive from both sides, so he understands the expectations from Wall Street and we understand his commitment to Atlantic City," Falcone said.

Gaming analysts have not held McGreevey in high regard. The governor in his first year floated the possibility of taxing casino complimentaries, and then considered the idea of allowing slot machines at racetracks. Last year he signed a $90 million casino tax and now is pushing for a casino-funded plan to bail out the horseracing industry.

Falcone called the governor/gaming-analyst dinner the first of its kind in the country.

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The new leader of the New Jersey Senate is intensifying his demand that Atlantic City casinos write checks to support the horseracing industry.

"We need some kind of agreement to increase purses from Atlantic City. It's the right thing to do," said Richard Codey, who became Senate sole president this month after previously sharing the duties with a Republican.

Codey, casino leaders and racing officials have been meeting about once a week on a solution. Casinos reportedly are looking at a payment of between $10 million and $12 million per year in exchange for abandoning the idea of allowing slots at racetracks.

"The casino industry is the lifeblood of so many of our state's initiatives. We want to see casinos expand. We want to liberalize the investment opportunities for Atlantic City," Gov. James McGreevey said. "But we also understand the importance of the racing industry and developing a rational compromise."

New Jersey track operators say they will be at a competitive disadvantage when slots begin operating at New York tracks later this year and at Pennsylvania tracks in future years, as expected.

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Donald Trump's gaming company rejected a $225 million offer for his floating casino in Gary, Ind., sources said. Trump wanted $250 million for the property, which was on pace to produce cash flow of $28 million last year.

The offer came from Don Barden's Majestic Star, which sits next to the Trump Casino and shares some common land facilities with it.

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Mohegan Sun can make a claim to being the world's highest-grossing casino after surpassing Connecticut rival Foxwoods in slot revenue last year.

A strong December gave Mohegan Sun slot revenue of $794 million in 2003, up 8.6 percent thanks to a $1 billion expansion that opened in phases over the previous two years. Foxwoods finished at $792 million, up 0.3 percent.

The two casinos do not publicly report their table-games revenue, which analysts estimate makes up slightly more than a quarter of their overall gaming business.

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The Delaware racetracks reported their first monthly slot-revenue gains in a year, coinciding with the one-year anniversary of the state's indoor smoking ban.

The three tracks won $31.6 million for the five-week December period, up 1.9 percent compared to the similar period a year earlier. For the full year, however, the smoking ban caused revenue to decline 11.3 percent, to $502 million.

(Joe Weinert covers the gaming industry for The Press of Atlantic City. He can be reached at jweinert@pressofac.com.)