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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Unexpected competition raises worry for Cordish

4 June 2012

Maryland Live! Casino has more slot machines than the MGM Grand and Bellagio combined and a location adjacent to one of the East Coast's largest shopping malls. And, despite obstacles placed in front of the casino by the state, Cordish Company Chairman David Cordish believes his company's $500 million development will prevail financially.

A 67 percent tax on gaming revenues, the highest in the nation? No problem.

A competing casino roughly 12 miles north, near Baltimore's Inner Harbor? Not a concern.

Cordish knew the landscape for Maryland Live! when the state's constitution was amended in 2008 to legalize slot machines. Lawmakers approved five geographically placed casinos, allowed only electronic games, and slapped down a hefty tax rate.

"If we didn't think we would be successful, we wouldn't have made the investment," Cordish said in an interview from his corporate offices in Baltimore. "That 67 percent tax is hardwired. The state takes the entire dollar and gives us back 33 cents. But I'm not complaining. Maryland truly is an unique gaming experiment."

Maryland Live!, with 4,750 slot machines and electronic table games and five restaurants tucked into a 330,000-square-foot facility, opens Wednesday in the Anne Arundel County town of Hanover, next to the 200-store Arundel Mills retail, dining and entertainment complex.

What angers Cordish, however, is a push by neighboring Prince George's County to have its own casino. The region is expected to provide Maryland Live! with a large number of customers.

Potential competition - not anticipated when Maryland Live! was being conceived - is what Cordish had in mind when he told the East Coast Gaming Conference in May that casino proliferation was getting out of hand.

Residents of Prince George's County voted against Maryland's statewide referendum that set the stage for casino expansion. Now, with Maryland Live! opening, county leaders want to be dealt into the game.

To Cordish, that's changing the rules in the middle of the action.

A casino in Prince George's County that is similar in size to Maryland Live! could effectively slice the market in half, leaving Cordish with unsustainable fixed costs.

"A deal is a deal," Cordish said. "Let the five casinos get open and then study the real numbers."

Cordish supports the casino in Baltimore, even though it could lure away customers. The property is expected to be awarded to Caesars Entertainment Corp. in partnership with Detroit-based Rock Gaming.

If Prince George's County gets into the mix, however, that could remove potential Maryland Live! customers from Washington, D.C., and northern Virginia.

"The state reasoned that giving a casino in Anne Arundel County a huge traffic area to the south would enable the (67 percent) tax to work," Cordish said.

Analysts said gaming in the region, which includes Delaware, West Virginia, Pennsylvania and Atlantic City is getting close to saturation with Maryland now in the mix. Within a 30-mile radius from Anne Arundel, there will almost 14,000 slot machines. A proposed casino in Prince George's County would kick the figure up to almost 19,000 games.

"In a regional market, there is nothing remotely comparable," Cordish said.

The company has gaming experience. Cordish built the Hard Rock casinos in Tampa and Hollywood, Fla., that are now fully owned by the Seminole Indian Tribe. Cordish also developed the Indiana Grand Casino near Indianapolis.

A company division that builds dining and entertainment districts surrounding sports facilities recently opened the $60 million Xfinity Live in Philadelphia next to the city's arena and stadium complex. Cordish has plans for similar attractions with the San Francisco Giants near the team's waterfront stadium and a complex next to the St. Louis Cardinals stadium.

Cordish also wants to build an entertainment complex in downtown Las Vegas that would include a sports arena to house an NBA or NHL franchise.

"We worked with the former Mayor (Oscar) Goodman and we're still working with the current Mayor (Carolyn) Goodman," Cordish said.

Analysts believe Maryland Live! will be a success story, adding to Anne Arundel County's folklore in gaming history.

Wayson's Corner, one of five legal bingo halls that operated in the county in the 1960s, served as the start of Steve Wynn's gaming career. His father, Mike Wynn, had ownership in the facility, which Steve Wynn took over on his father's death in 1963.

According to Las Vegas Review-Journal columnist John L. Smith's 1995 biography, "Running Scared," Wynn and his wife, Elaine, made a comfortable living through the bingo parlor. He managed the facility and called out numbers; she counted the money.

Wayson's Corner led to Wynn's initial Las Vegas investment, a 5 percent stake in the Hotel Last Frontier.

Now, almost 50 years later, Cordish is hopeful Maryland Live! will make its own gaming industry statement, but without additional hurdles from the state.
Unexpected competition raises worry for Cordish is republished from Online.CasinoCity.com.