Two Way Hard Three | Las Vegas Casino & Design Blog

Boyd has to take it. Is there anyone else interested right now?

And in the long run, MGM Mirage is probably smart in heading for the exit out of AC. With casinos now opening in and around Philly, possible slot barns headed for the NYC area, more gaming action in Maryland & Delaware, and (of course!) the big tribal casinos in Connecticut, how much Northeast market share is left for Atlantic City?

I believe MGM's stake is a passive (i.e. non-managing) 50% investment in Borgata and a couple vacant parcels. I'm not sure if they have a stake in the connecting Water Club condo/hotel which is likely carrying alot of debt. The land is almost worthless as there are many existing casinos available. I'm not sure at what price the Borgota portion would offer a ROI that is worthwhile to a passive investor. Hence, Boyd is really the only company for which this makes sense.

How do I spell integrity? N-E-W J-E-R-S-E-Y, of course. This seems like a classic case of "Do as I say, not as I do". This has to be the worst decision I can think of at the worst time. I wonder if the new promotional slogans will be something like "Atlantic City- The New Tunica!" or "Hammond's Got Nothin' On Us!".
I think this sale (to Boyd, I'm certain) is going to be something like $20 down and $20 a week. Some kind of deal that allows MGM to ease out of the market and show New Jersey regulators how little this loss means to MGM. Sad, sad, sad.

Jeff-

"Atlantic City- The New Tunica!"

Ummm, no. That's an insult... To Tunica!

The New Jersey bigwigs obviously still think this is no big deal, and they can't see what we see because they have their heads in the sand. Philly is getting its own casinos. NYC may soon get closer casinos. There are many more gaming options in The Northeast today than there were 30 years ago, but for some reason the NJ powers that be don't get it and are fast losing whatever is left of Atlantic City's competitive advantage.

If we read our history, the only reason why MGM Mirage has that 50% stake in the Borgata and the adjacent lands is because MGM bought Mirage Resorts (Wynn & Co. originally owned it). What are the possibilites that Wynn might return to Atlantic City and buy the original development he used to own? Chances are probably slim since he's getting ready to open a casino in Philly...but who knows...?

Arthur-

"What are the possibilites that Wynn might return to Atlantic City and buy the original development he used to own?"

Probably next to none! Remember that NJ kicked Steve Wynn out in the 1980s over his past mob ties (as if anyone doing business in Vegas in the 1960s & '70s did NOT have mob ties?), and he ultimately failed in trying to get back in with Mirage in the '90s. If anything, his new Philly project shows that Wynn thinks AC is worthless and PA is where all the new action is.

Posted by mike_ch

Even if Wynn thinks PA is great, that's not necessarily great for the customer. I'm guessing that the game odds aren't THAT great there, between the tax burden and their profit margin.

However, this isn't a post against high gaming taxes, since we have a lot of sucker's bets, and the other week VegasRex claimed to see 1:1 BlackJack at the Sahara. Even with the nation's lowest gaming tax, the industry still isn't above pulling every available dollar out of the customer. Which seems a bit foolish for the future, since gamblers seem to feel victorious with any result BUT losing all of their money, and if they do then they don't return for a long time.

I don't think the odds in PA are going to be very good compared to NJ, but lately the gambling industry (aside from a few players) are making unsafe shifts everywhere.

Mike C-

They'll probably be fine in Philly. Remember that this is a major metro area, unlike AC, which is a bit out of the way. And no matter how much I hear complaining
about "bad odds", I've never seen an empty Indian casino in California. I'm sure this must be what Wynn is betting on in Philly. Since Philadelphia won't have a "Las Vegas Strip", it's not like players can walk out of one casino and into another.

Posted by mike_ch

atd: Gosh, you and I back and forth so much that we should do a podcast! We can discuss casinos, politics, culture, etc. And casinos will be probably where we disagree the most. :b

I wasn't making a statement so much on whether Wynn can survive in PA (imagine that! A mike_ch post that isn't doom and gloom for Wynn Resorts!) as a potential avenue for NJ. I'm don't follow non-NV payouts, but with the tax rate being what it is in Philly I feel pretty comfortable guessing that odds on the Boardwalk will be better than they are in PA.

But all the gov can do is regulate odds, not set them directly. It would be interesting if Jersey deliberately tried to compete with these areas by reigning payback percentages into a range that would be largely unsustainable in PA, where Wynn's tax burden would drive him over the edge if he tried to keep those odds so he'll just have to give up the odds advantage.

Free market types would say "why does the government have to regulate this, when the casinos will set it themselves?" and to that I once again point to that 1:1 blackjack at the Sahara, or 6:5 everywhere else. It's not that 3:2 doesn't make money, especially under the limited burden they have here. It's that they always want to make more money, faster.

Even if there was no tax here, we'd still have 6:5. But a ban on 6:5....

Mike C-

"It would be interesting if Jersey deliberately tried to compete with these areas by reigning payback percentages into a range that would be largely unsustainable in PA, where Wynn's tax burden would drive him over the edge if he tried to keep those odds so he'll just have to give up the odds advantage."

I don't know. That might open a whole new can of worms for them, as the casinos would protest and show their (lack of) Q4 earnings as "proof" that they can't afford any more. And even if you were to personally go to AC and try to explain to them that they'll attract more players with better BJ odds, I still doubt they'll agree to let NJ make them offer 3:2 odds or better.

And even if all the AC casinos were to loosen their slots and bump up their table odds, that still wouldn't fix AC's structural problems. Again, it isn't all that convenient any more with casinos now so close to NYC, Philly, and DC. And as long as AC doesn't invest in infrastructure upgrades and neighborhood improvement, it won't ever be seen as "safe" and "attractive".

Oh, and you'll have to talk to Hunter about the podcast. :-D

I know this is off topic, however it is ground breaking news. Aria
has cell phone service! I'm typing this on my iPhone from my room.
I have 3g service to boot.