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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Exec thrilled to land Louisiana gaming license

23 February 2011

LAS VEGAS, Nevada --On Friday, Dan Lee was awarded Louisiana's 15th and final gaming license.

A day later, both his voice mail and e-mail inboxes were nearly full.

Through his recently established Creative Casinos LLC, Lee proposed the $400 million Mojito Pointe hotel-casino project on a 220-acre site in the western Louisiana community of Lake Charles.

Lee, former chief executive of regional casino operator Pinnacle Entertainment, began developing plans for the site last year when his former employer canceled a casino project for the location and returned its gaming license to the state.

Now, with the license in hand, Lee's attention is directed toward a voter referendum April 30, where Lake Charles residents will be asked to approve the project.

This week, Lee is meeting with bankers and other potential backers to put together financing for the resort, which is expected to include at least 400 hotel rooms, an 18-hole golf course, restaurants, a spa, and entertainment amenities, including a facility for falconry and other exotic birds of prey.

"In a way, I feel like the dog who caught the car," said Lee, 54, who has been operating Creative Casinos out of his Las Vegas home but is now looking for office space in Lake Charles and Las Vegas.

Lee has a financial backer who bought one-sixth of his company for $5 million. He also has a collection of designers, architects, attorneys and consultants, many of whom worked with Lee when he built three casinos for Pinnacle and during his time in the 1990s when he financed five casino project as the chief financial offer of Mirage Resorts.

Lee has already engaged Bergman, Walls & Associates and ABA Design Studio, for Mojito Pointe. He is uses ABA's spacious Summerlin offices for meetings.

Creative Casinos has engaged Morgan Stanley and other investment bankers to help finance the development.

Global Gaming & Hospitality of Las Vegas engaged to complete a market study of the Louisiana gaming landscape that answered questions as to why Lake Charles was the right location for Mojito Pointe.

The project, Lee said, posed greater financial benefits to Louisiana than two other developments competing for the gaming license.

"Mojito Pointe is a destination resort," Lee said. "When you look at jobs potential and tax revenue, Mojito Pointe offers more economic impact for the state."

Lee didn't hire any investor relations or public relations experts for the presentation to state regulators.

"My focus was entirely on the members of Louisiana Gaming Control Board," Lee said. "They were the primary audience, not the media or the investment community."

In the end, Lee's proposal won over eight of the nine gaming regulators (one board member abstained).

Regulators were convinced, Lee said, that Lake Charles is underserved as a gaming destination.

The market, the state's second largest in terms of revenues, has three riverboat casinos, including Pinnacle's flagship L'Auberge du Lac, which Lee developed. Mojito Pointe and L'Auberge will become neighbors.

Houston, which has 6 million residents, is the main customer target for Lake Charles.

The two cities are roughly 145 miles apart, about two-and-half-hour drive along Interstate 10.

"The recession seems to have passed right by Houston," Lee said. "The regulators saw that in our presentation."

Janney Montgomery Scott gaming analyst Brian McGill thought Lake Charles could use another casino.

"An additional property would likely grow the market significantly," McGill said.

With very little hotel-casino construction on the horizon nationwide, Lee's project is attracting the attention of hungry construction and contracting companies.

Once local approval is obtained and financing is achieved, Lee said he'll break ground on Mojito Pointe by the end of the year. The development will have a two-year build-out.

The project is expected to employ 2,000 construction workers and 2,000 full-time and part-time employees.

Lee said Mojito Pointe won't be his last casino project. As the casino industry recovers, he believes other deals will become available.

"We continue to look at all opportunities, but this is going to take my time over the next few years," Lee said.