14 thoughts on “Vegas Gang #88 – March 8th, 2013”

1. Another fantastic show, as usual. It is truly the highlight of my weekend and I can’t thank you enough for your efforts.
   I have a couple comments
   Regarding the D banning people under 21 from their casino after 6PM on Friday and Saturday, I see this as good marketing, rather than any big business event. As Hunter and Dr. Dave said, there isn’t anything for kids to do there, and they aren’t any part of the customer demo that the D wants. I would be surprised if kids are 5% of the people staying at the D at any time. And if the D doesn’t want families as customers, it is a good move to be honest and tell them up front. I do applaud it, since I don’t want to be around kids at just about any time and especially in a casino!

   Regarding Boyd Gaming, I’m not sure how you three view them. With 22 properties in 11 states, doing over $2 billion a year and a sterling reputation for honesty and all around just being nice guys, I see them as a good company doing good things.
   The Echelon sale is an admission of a failed project and a big risk that went the wrong way. A billion dollar loss is a big wow, by anyone’s measure. Yet, Boyd was always cautious enough that they would never be crippled by any stage of the process if it failed. Hurt, yes. Crippled and forced to sell out, or close other properties? No. As for Chuck’s assertion that they become insignificant because they don’t own Strip land, I would say they are still bigger and more significant operators than the owners of the Sahara, Riviera, Stratosphere, Casino Royale, Tropicana and Treasure Island. I think they may be bigger in Nevada than Wynn and LVSands, but I’m not sure.
   As for Boyd in downtown, I think the excitement of other properties activities has diminished people’s view of Boyd a bit. I drew from Dr.. Dave’s comments about Boyd downtown that he thinks they are in some kind of trouble there. With 1600 rooms, they trail only Golden Nugget in downtown capacity, and had 90% occupancy in 2012. They are twice as big as the Derek Stevens or Tamares groups. They have an extremely stable and loyal customer pipeline downtown. But they are older and not in our area of influence, so we tend to dismiss them. They have remodeled the Fremont casino floor and rooms within the last couple years, yet their failure to add Wi-fi there has made our group act like they must be as bad as the Las Vegas Club!
   I get the feeling that the D is aiming straight for the Vegas Gang demo of 30-50 year olds, so it is seen as somehow doing things better. Come this June I will turn 55 and qualify for the full AARP benefits, so the D crowd it a teeny bit loud for me. Yet the Boyd crowd is a little too old for me. A middle age tweener, imagine that.

   Love you guys. Keep it up.

2. I’m not down on Boyd at all–I just think they could do something really spectacular Downtown. Orleans has been the company’s top property since Stardust closed, at least when it comes to entertainment. I’d roll the dice on making their Downtown properties (or at least parts of them) a genuine attraction.

   I’m liking the idea of them buying Binion’s even more. It’d give them a more or less contiguous strip of properties (pun intended) running from the Fremont to Main Street Station (all not on Fremont, of course). They would add 400 or so rooms and get space to do something different.

   Imagined the casinos themed like this:
   MSS: classic (1970s) Vegas–value proposition and overflow for Cal
   California: Hawaii (if it ain’t broke….)
   Binion’s: I’d rename it and do a Plaza-style remodel, then brand it younger, kind of like first floor of The D.
   Fremont: Classic (1950s/1960s) Vegas in a way that does justice to the Rat Pack legacy and even ties into the Mob Museum (Argent owned at one time).

   Just my humble opinion. I know this will never happen, but it’s the kind of radical thinking that could help the company make a positive out of a negative.

   And I think that if you let the team that built the Borgata loose in Downtown, they could really shake the place up. In a good way.

3. The metrics you cite aren’t the only ones I judge companies on. For instance, I don’t give two hoots about Exxon Mobil but they sure do make a lot of money.

   I can’t speak for the other guys but for me, the ‘big show’ when it comes to gambling is a casino on the Las Vegas Strip and until you have one, you’re just less interesting.

   Your musical may sell out every night in 50 different cities but if you’re not on Broadway, you’re less relevant. Maybe that’s outdated thinking but having a bunch of riverboats or small locals casinos, profitable though they may be, doesn’t excite me… unless of course you’re in Macau. That’d be the exception to my rule because Macau is exploding so fast it is interesting by default.

   Small operators without Strip properties can still do really interesting things but I wouldn’t call any of Boyd’s moves interesting. They’re safe and they’re sober, not inspiring or innovative.

   If Boyd was making computers, they’d be HP or Dell. Shipping a fair amount of units but booooooring.

4. I like your show its great like always my comments

   1 resort world will rock with its hotel and the beautiful stuff it will bring to the strip and putting a water park in it will be a good thing for Las Vegas. The hotels itself look amazing cant not wait to see this happen. for Boyd gaming if it loses its power watch out station casino might be on top.

5. Haven’t listened to the show yet, but this discussion is kind of a carryover from the one on Vegas Tripping…where I shared one aspect of my thoughts on Boyd. The second part of my feelings is this: Boyd is the conservative Southern Baptist casino operator. In a town where things are supposed to be fun, edgy, gaudy, exciting, and glamorous…they run the absolute middle of the road, conservative, un-edgy properties in the city. To the best of my knowledge they have no resident shows at any of their properties, and they seem very content to cater to the exact same crowd, and never do anything new…or…exciting…or…fun? They’re the most un-Vega$ of all the operators. Yes, they may have high occupancy due to their niche they have carved, and there’s nothing wrong with that, it’s just not very “Vega$”. With the exception of Main Street Station, I feel like the inside of any of their casinos has no more energy than Harrah’s Council Bluff. Main Street Station only gets a pass due to its artifacts and that it is overall a beautiful property. There was a reason the state chose Boyd to take over Stardust and Fremont after the bust of Argent for skimming…they’re the Southern Baptists of the industry and there was zero chance of them doing anything “Vega$”. I’m not saying they are a bad company for this, I’m just saying that they have zero sex appeal in a city that is the definition of “sex sells”.

6. Re-listening to the episode, I may have been too forceful in my categorizing this transaction as ‘crippling’ for Boyd, given that the $900MM write down is basically a sunk cost at this point, it’s not like they had to write a billion dollar check. Still, it’s a huge loss…

7. Listening to this show now, about halfway through. Great stuff on the RWLV news, just wanted to drop in a couple of quick comments:

   (1) Hunter, your comment on Disneyland and its maintenance made me chuckle. The only Internet travel/tourist community (possibly) more intense than Vegas geeks are Disney geeks. And those people have been screaming, for more than a decade, that Disney’s maintenance is abysmal. Light bulbs burned out, facades that need to be painted, etc., etc. — very similar to the maintenance complaints from Vegas lovers.

   Like in Vegas, some of these complaints are overblown, but a lot are legit. Disney, like MGM, CET, Sands, Wynn, etc. has become very “bottom line shareholder” focused. They’ll sacrifice ongoing maintenance (and long-term brand value / customer loyalty) for short-term profits.

   Disney geeks curse Michael Eisner (who left Disney in 2005) for sending the Mouse House into a penny-pinching spiral.

   I grew up in Orlando, went to WDW dozens of times as a child/teen/young adult. Although I love to take my daughter there now, I do also see a difference. It’s not as “immaculate” or “perfect” as it used to be.

   Or, maybe I’m just looking at it through the grumpy eyes of middle age?

   (2) Regarding Resorts World, and family trips to Vegas. I haven’t yet brought my little one, though I’ve considered it. I wonder if RW will end up “segregating” the adults-only and family-friendly areas of the casino a bit? For example, at the big resorts in Tunica, the front desk, restaurants, etc. are mostly separate from the casino. At Harrah’s, at Gold Strike, at Horseshoe in Tunica, you don’t have to go through the casino to get from the hotel lobby to the hotel elevators. The casino is separated, with a security guard at the entrance to enforce a 21-and-up rule. If you’re under 21, you don’t get into the casino, even to walk through.

   For both people with kids and without kids in Vegas, I think this would be a welcome setup in a new resort. Granted, there’s a lot of value in having restaurants, bars, etc. be directly adjacent to the casino floor, and feed off than energy, especially in the evenings.

   But do the pathways to the pool, the waterpark, the shops always have to traverse the middle of the casino floor? Or could a property determined to be family-friendly rethink that design a bit? Gamblers don’t want to see kids on the casino floor, and families with kids don’t want to walk the casino floor. Should they have to? The property designs in Tunica, Biloxi, etc. say no. (This may very well be influenced by local laws prohibiting minors from setting foot on a casino floor in those places; still, isn’t it a good idea?)

   And, beyond the casino floor, could the hotel rooms and hotel access be designed with families in mind? Back to Disney for a second, WDW has begun adding “family suites” to some of its hotels in Orlando. These are rooms that have an additional bedroom, bunk beds, and/or can be combined with an adjacent room, for large families traveling together. Can Resorts World learn from that, and perhaps design a section of hotel rooms specifically for families? I remember hearing, years ago, that Venetian had “accidentally” designed its hotel rooms perfectly for families with kids, and had become quite popular with that segment. Separate sleeping / living area, with the couch folding out into a bed for the little one(s).

   Could a theoretical “family tower” even be designed to require little or no contact with the casino floor, while the other towers/rooms retain the traditional Vegas “step off the elevator to a craps table” design? The residential towers (if built) would remain a possibility for this; I know some families love to stay at the Signature, where the kids don’t even see the MGM casino.

   Curious to hear thoughts on this, from the Vegas Gangsters and everyone else….

8. Having already tweeted that I musunderestood Dr. Dave’s concept initially, and I have moved into his corner on the Boyd downtown concept. I would like to propose the following:

   “Sam Boyd’s Stardust Stadium”

   Boyd seems to name their properties downtown “Sam Boyd’s”, so we have to go with that. The Stardust name is waiting for some good Las Vegas use, and this looks likes as good a place as any. Stadium is proposed because I am suggesting that Boyd buy the Las Vegas Club from Tamares. (I get the feeling that the Plaza renovation hasn’t been a financial windfall for Tamares. Therefore, I think they might sell the Las Vegas Club, since the real estate market for the west end of Fremont is probably going to remain flat for as long into the future as we can guess. And they might not get a strong gain from investing in a renovation of the site.) And the Las Vagas Club building has an exterior facade designed to look like a stadium. They could even build another skybridge between the California and the Las Vegas Club, so you could go across 3 buildings without having to go outside!
   I agree with Dr. Dave that buying Binion’s would also be a positive move, and might be better, due to proximity to Sam Boyd’s Fremont and the massive (for downtown) parking garages Binion’s has.

   I will respond to the youthful attacks on the Boyd company at a later time. 😉

9. re: Disneyland – I’ve only been there once in the past 15 years so it is quite possible I was way off the mark there, though on my recent trip it was immaculate. Hard for me to judge in relative terms but I’m sure the Disney experts know better… though I thought most of that concern was dissipated with Iger? I really don’t have much insight here.

   In reading Wynn Resorts’ proposals for new jurisdictions, one of the common threads is a distinct separation of the casino from the rest of the property. Who knows, maybe RW will try to pull off something similar with a ‘Family Tower’ that connects to the water park and restaurants without hitting the casino… or maybe we’ll see the same amount of 21-table stroller sightings that we see now at places like Exacalibur, who knows.

10. I think the comments against Boyd are more the “Vegas geek/snob” coming out in Chuck and Hunter. Boyd is extremely boring. If you’re looking for excitement, Boyd is the wrong place to look. There’s little to talk about when it comes to their properties so they are considered a bit player to Vegasphiles even though nationally, they are hardly a small player. The Palms is off-strip but everyone considered the Maloofs major players. That’s because the Palms had excitement. The Orleans and Gold Coast – not so much.

    So, Boyd isn’t exciting – big deal. More people will visit their casinos in the US in a year than will visit a LVS or Wynn casino in the states. Boyd is still one of the largest gaming companies in the country. They aren’t going anyplace. Their clientele isn’t looking for flash, so the Orleans and their other Vegas properties fit right into their wheel well. In a perfect world, they would have a place on the strip but its not a requirement. Landry’s does fine. So does Pinnacle, Ameristar, Penn National, etc.

11. Great shows.

    Speaking as someone who just made money shorting Boyd stock their downtown properties only have operating income of about $40M a year and is the least profitable part of the company. That is not a lot to make off three large casinos. Their occupancy rates are pretty good but room rates are low. Given their debt levels I think they have major decisions about whether they can afford to remodel all their downtown properties or they let one of them just start to rot away. Personally, I think that Boyd is on their way to Chapter 11, even after the Echelon sale.

    But a question. My understanding of the New Jersey gaming law is someone has to travel to Atlantic City to sign up for internet gaming. But what in the NJ law prohibits operators from opening on-line casinos in the northern, more populous part of the state?

12. According to the regs that govern casino in New Jersey, they must be in certain parts of Atlantic City. At this point, it’s pretty much most of the Boardwalk and the Marina. The big difference in the successful 1976 referendum and the unsuccessful 1974 one was that in 1976 they specifically limited casino gaming to Atlantic City.

13. I understand that the 1976 law prohibits casinos except for very limited geographic areas. It was also very easy to define a casino.

    But my understanding of the new on-line betting is that someone will be able to play from their hime. Which I would guess would mean that they could play from a Wi-fi accessible bar anywhere in the state? Is this correct?

    If the answer to the above question is yes then it is not much of a leap for someone to start a bar with PC’s that look like slot machines. The PC’s would be hooked up to a server in Atlantic City. Just no live games. Isn’t that how the New York racinos started out because of various legal restrictions on on-site gaming?

    What in the most recent law prohibits this?

14. Could be an unintended consequence–I’ve asked questions about this very issues for a few years and haven’t gotten any satisfactory answers.