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CR75-p02-03-international2-3:SJC-Casino Review 20/12/08 21:34 Page 2
Crown sued for losses and ‘unconscionable conduct’
MGM Mirage is setting up a new division focused on
international gaming expansion, to be led by Lloyd Nathan. The
A gambler who says he lost A$37m (E18m) over 14 learned he had lost millions in Las Vegas. He claims to
months playing baccarat is suing the Crown in Melbourne have secretly made recordings of the conversations in
division will be part of the company’s MGM Mirage Hospitality
subsidiary, formed last year to export the MGM Grand brand
for A$50m (E24.4m) in damages for allowing him to 2007 in which managers allegedly talk him round. division for worldwide by managing hotels owned by local partners and
play, despite being barred. Property developer Kakavas also claims there are emails that outline
licensing the MGM brand to hotel operators. The hospitality unit
Harry Kakavas, who was barred from every the company’s plan. Kakavas has accused licenses the MGM name for the hotel at the MGM Grand
casino in Australia in 2004, said the Rowen Craigie, Crown’s CEO and John Williams, Foxwoods casino and is developing nongaming resorts with
management tried to entice him back after they the COO, of unconscionable conduct. partners in the United Arab Emirates, Vietnam and China.
Master VP
cheer in
Shuffle Master’s senior
vice president Brooke
Dunn is under
investigation by the
for 2009
Securities and Exchange
Commission for alleged
improper trading in the
company’s stock by an
unrelated third party.
Following one of its most challenging years
its liquidity profile with a tors in terms of both operat- per cent year-to-date through The gaming
in recent history, the US gaming industry
secured note issuance and ing fundamentals and credit November. In addition to the equipment company
an announced asset sale; ratings. While Native Ameri- consumer-driven demand made the
will remain under significant pressure in
With unemployment can gaming operators are pressures, those markets are announcement in its
2009, with a recovery unlikely until 2010,
expected to rise significantly feeling similar pressure on facing additional challenges own filing with the SEC.
throughout 2009, Fitch operating trends, the issuers from competitive supply Dunn has since
according to Fitch Ratings. believes that a gaming indus- in Fitch’s rated portfolio gen- increases. relinquished his position
try recovery is unlikely until erally maintain more conser- The largest Native Ameri- as an executive officer
annushorribilis tant to the casino crunch as 2010, particularly if capital vative financial profiles can markets of California and with the company and
UNITED STATES 2009 progresses. It said in a markets remain weak. relative to rating levels, so Connecticut are also experi- was placed on
report: “Given the capital A significant amount of those issuers will have some- encing significant demand administrative leave.
With a view that the global intensity of the business and supply is planned to be what more ability to main- pressure. In addition, some The SEC is reportedly
economy is experiencing a refinancing risk, corporate added to the Las Vegas Strip tain ratings in 2009. Californian Native American recommending that civil
severe recession, Fitch gaming operators are market over the next 12 to18 It said of gaming suppliers operators are struggling to charges be brought
Ratings is forecasting the heavily reliant on access to months including Wynn though: “Due to more stable offset increased fees associ- against Dunn for
steepest GDP decline in the external capital sources and Encore, the Caesars Palace free cash flow profiles, ated with amended state violating securities laws
major advanced economies a number of issuers are at expansion, CityCenter and stronger internally generated Class III gaming compacts for allegedly “tipping”
since World War II and it increased risk of bumping Fontainebleau. Regarding liquidity positions, a less signed in 2008 that allowed insider information to a
believes that with the finan- up against covenants in the impact of the increase in capital intensive business additional supply. third party. Shuffle
cial profile of the US con- 2009, and will be approach- supply, Fitch believes Wynn model, and more conserva- Certain regions have held Master said it is not a
sumer expected to remain ing credit facility expirations is extremely well positioned, tive balance sheet manage- up better, such as the mid- subject of the
stressed in 2009, consumer in 2010 to 2011.” It high- but remains cautious on the ment, gaming suppliers have south, where high energy investigation. Dunn has
spending will decline by a lights that whilst Harrah’s credit profiles of MGM, LVS, the most attractive overall prices for much of the year denied any wrongdoing.
sharp 1.6 per cent in 2009 and Station attempted to and Harrah’s. In addition, the credit profiles and greatest supported that regional “We cannot predict,
and remain soft into 2010. address near-term maturi- Las Vegas Locals market ability to weather the down- economy. However, the however, whether Mr
Considering the com- ties and/or heavy LBO- needs to absorb the Eastside turn.” recent pullback in energy Dunn will make any
bined effect of recent related debt loads with debt Cannery, Aliante Station and The largest commercial prices may pressure the submission, whether the
declines in gas prices, and exchanges, Station was M Resort supply additions, markets, Las Vegas and region in upcoming months. staff will reconsider its
reductions in airline capacity unsuccessful and Harrah’s which will have a notable Atlantic City, are experienc- Other less mature markets recommendation or
and international demand, has yet to complete the impact on both Station and ing some of the most signifi- in the northeast, specifically whether, if the
Fitch believes regional/local transaction. Fitch says that Boyd. cant demand pressure, which Pennsylvania, New York, and recommendation is
markets will fare better than MGM and Ameristar are The weak fundamental Fitch expects to continue Rhode Island, continued to made, the SEC will
destination markets, such as other issuers with notable trends combined with gener- into 2009. Las Vegas Strip rev- grow in 2008, resulting in follow that
the Las Vegas Strip. refinancing risk that will ally high leverage and tight enues have declined 8.7 per notable competitive pres- recommendation and
Fitch believes that the become more concerning liquidity provides the basis cent year-to-date through sure on the more mature file suit against Mr.
bank lending climate will as 2009 progresses, although for Fitch’s negative outlook October, while Atlantic City markets of Atlantic City and Dunn,” Shuffle Master
become increasingly impor- MGM has recently enhanced on corporate gaming opera- revenues have declined 6.7 Connecticut. said.
Casinos Austria confirms interest in Hull
hullofaninterest They are the first leisure operators
UNITED KINGDOM to go public with specific plans to
apply for a new so-called large casino
Having secured a UK operating licence licence in Hull.
from the Gambling Commission in Apollo Resorts and Leisure chairman
September 2008, Casinos Austria Paul Gregg said: “We think it is an
International, one of Europe’s pre- exciting opportunity for Hull. We are not
eminent casino operators, has confirmed only looking at opening a casino under
its interest in partnering in a new £25m the government’s new gambling
leisure complex in Hull. legislation, but a full destination resort
CAI is teaming up with Apollo Casino including five new restaurants on the site
Resorts to bid for the large licence to create a distinctive attraction. We
earmarked for Hull. have looked at a number of other cities
The planning consent includes and a number of other sites in Hull but
52,875sqft of space for a casino on three believe this is the most appropriate.”
levels of a nine-storey block, alongside a Hull City Council will officially invite
23-storey apartment block, student proposals for the licence early in the
accommodation and a 185-room hotel. New Year.
January 2009 • internationalnews 3
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