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Gaming Guru

Jeff Simpson
 

Jeff Simpson tells why Kerkorian's bombshell is one of the biggest to hit Las Vegas' business world

28 May 2007

LAS VEGAS, Nevada -- In the nearly eight years I've spent covering the casino industry, there have been few public announcements as dramatic as the short announcement made Monday afternoon by Kirk Kerkorian's investment arm, Tracinda Corp.

Kerkorian wants to buy Bellagio and CityCenter, and wants to "pursue strategic alternatives" for the rest of MGM Mirage, which is 56 percent owned by the 89-year-old billionaire.

In Las Vegas business news, that's a thunderbolt, ranking right up there with the big announcements and stories that have shaken the resort business during my time in the city.

Like Kerkorian announcing he was making a play in 2000 for Mirage Resorts - his MGM Grand eventually bought Mirage.

Or Station Casinos executives announcing they were refusing to appear at a 2000 Missouri Gaming Commission hearing they were ordered to attend. Station soon had to sell its two Missouri riverboats to avoid the likely loss of their licenses.

Or Macau announcing that two Las Vegas operators, Wynn Resorts and a partnership involving Venetian owner Las Vegas Sands, would be joining longtime monopolist Stanley Ho in concessions to build casinos in the Chinese enclave.

And the 2004 announcements when Boyd Gaming Corp. bought Coast Casinos, MGM Mirage bought Mandalay Resort Group and Harrah's Entertainment bought Caesars Entertainment.

Like last week's disclosure from Kerkorian, those announcements came with little or no warning, and made for a different kind of news from other stories that make big news in the casino business - resort openings, tower implosions and dramatic regulatory hearings among them.

So what does Kerkorian's announcement mean for MGM Mirage and the casino business?

My guess - and a guess is just what it is - is that Kerkorian will end up with CityCenter and Bellagio. It wouldn't surprise me if the rest of the company were sold to private equity firms and taken private (like Harrah's Entertainment is doing), with Kerkorian possibly taking a stake.

One cool thing and one surprising thing struck me about Kerkorian's announcement.

The cool thing about Kerkorian's gambit is that if he did take ownership of CityCenter and Bellagio, he'd join fellow billionaires Sheldon Adelson and Steve Wynn at the top of the resort pecking order in Las Vegas, with each controlling one of the top three money-making properties in Las Vegas (Bellagio is first, Wynn Las Vegas second and Venetian third). And each would have his own under-construction properties destined to enter the market right at the top (CityCenter will certainly be the biggest money - maker, with Adelson's Palazzo and Wynn's Encore locks to enter the top six). Three guys, the six top properties on the Strip - that's nice.

The surprising thing is that Kerkorian's bid doesn't include the MGM Mirage partnership stake in the Macau subconcession with Pansy Ho. Kerkorian's purchase of the subconcession stake would make the parallels with the holdings of Adelson and Wynn even more apt.

• • •

Because most other columnists in the state will presumably use their ink today criticizing the inability of the biennial follies in Carson City to accomplish the people's business, let me take a moment to applaud one good move taken by the Legislature and Gov. Jim Gibbons.

After Gibbons and his predecessor Kenny Guinn screwed up the appointment of a member of the Gaming Control Board, with each executive naming an appointee to fill a seat vacated at the exact instant Guinn's term ended and Gibbons' began, legislators took action, passing Assembly Bill 179 unanimously in the Assembly and the Senate. The bill, which Gibbons signed, extended the term of Gaming Control Board members so future executives won't be tempted to reprise the shenanigans employed by Guinn and Gibbons.

Legislators were sold on the idea by gaming law students at UNLV's Boyd School of Law, who generously credited a column I wrote for inspiring their decision to draft a bill extending the terms.

Thank you, lawmakers, and thank you, Boyd law students.

Jeff Simpson tells why Kerkorian's bombshell is one of the biggest to hit Las Vegas' business world is republished from Online.CasinoCity.com.