Inside Gaming: Mergers May Multiply for Casinos

Just when you'd thought all the gaming mergers that could be done have been done, financial analysts on both coasts say investors are pushing for more and operators are clamoring to find them. Investors love the synergies and the chance to cut debt service and interest payments spurred by mergers. Insiders say to look for big boys gobbling up some smaller operators, as well as mergers among midsize operators and new entrants from related industries such as hospitality, along the lines of Hilton Hotels, Holiday Inn and Ramada Inn 20 years ago.

***

Some American Indian elders around Southern California say they have Gov. Arnold Schwarzenegger exactly where they want him. Little progress is being made on the state budget, the Democratic Legislature is up in arms over the Republican governor, and tribal casino operators say the time is ripe for them to strike. They say Schwarzenegger set up the casinos as a source of state revenues. They got what they wanted in return for payments to the state: the right to add slots. But the tribes don't need more slots and have added fewy. And they've added a scant $1.5 million to state coffers, not the $1.3 billion the governor estimated. Now, it's up to Schwarzenegger to up the ante.

***

Several West Coast nstitutional investors for the first time are reviewing investment opportunities in gaming, including stocks. The wave of megamergers got Wall Street investors excited about the industry last year, moving stocks skyward. Wynn Resorts Ltd. jumped 140 percent, MGM Mirage 93 percent and Harrah's Entertainment 34 percent. Analysts say institutional investors are likely to forever change the landscape. Add to that continued job growth, lower energy costs and a flagging dollar, and 2005 bodes well for casino operators.

***

Casino executives are touting the Chinese customers and high roller clientele Macau casinos will lure to Las Vegas. Irony of ironies, however -- Los Angelenos coming back from fact-finding missions to the former Portuguese colony say the big "fine dining" draw at Sands Macau, the first American casino to open off the coast of China, is KFC. Now there's a vision for the Strip. One Colonel Sanders after another, each hawking Southern fried chicken.

***

For Angelenos, problem gambling is hardly even on the radar screen of community ills. Addiction specialists around the area say it's partly because gambling is so small compared with the whole of California. But they add that the $15-billion-a-year wine industry, which has broad support for expanding, dwarfs local gambling by comparison. So who'd be in a position to get up in arms about the lesser of two evils?

The Inside Gaming column is compiled by Gaming Wire Editor Rod Smith. You can contact him by phone at 338-9653, fax 387-5243 or e-mail at rodneysmith1@cox.net.

Copyright GamingWire. All rights reserved.

< Gaming News