The over $72 million per year Casinos in Nevada

This post is probably of interest more to people who follow the business, in particular the locals casinos.

I'm surprised, like you said, by Arizona Charlies and also the Rampart, which is really far out in Summerlin and is quite small square footage-wise. However, last time I was there it was absolutely PACKED with retirees. This was during a weekday afternoon. You would have thought it was New Year's. They have pretty decent video poker there, and it's a nice atmosphere.

Quote: teddys

I'm surprised by Arizona Charlies and the Rampart last time I was there it was absolutely PACKED with retirees. This was during a weekday afternoon. You would have thought it was New Year's. They have pretty decent video poker there, and it's a nice atmosphere.

Makes you wonder about all those headlines about reduced room rates! Retirees packing a casino are not doing so because of room-rate enticements, pheremone filled nightclubs or Hollywood starlets, they are there for a good bargain thats pleasant and nearby.

Arizona Charlies Decatur seems to have a loyal following, I've never figured out why the owner went bankrupt long ago and Icahn was able to take over!

Arizona Charlie's was always making money. The Beckers lost their shirt tryings to expand into riverboat gambling in the midwest. Icahn took over the choice property. As near as I can tell if you borrow money from Icahn you might as well be borrowing money from Satan. You will lose everything.

Icahn wrested The Stratosphere away from Bob Stupak as well. Then he sold the whole kit and kaboodle for $1.3 billion including Arizona Charlie's Boulder and Aquarius in Laughlin to Whitehall Street Real Estate Fund (WSREF). WSREF seem to have felt that the 17 acre empty lot next to the Stratosphere was worth about $0.5 billion. They closed the deal in February of 2008 and revenue began to tank immediately. WSREF nominally sold 22% of the now massively bleeding company for $600 million to their parent organization, Goldman Sachs, who was getting bailed out by President Obama. Now the employees are losing their jobs and their retirement plans as the new company struggles under this massive debt caused by this unbelievably misguided real estate speculation. The company was turning a good profit until it was sold at such an inflated price and incurred all that debt. Capitalism at it's bloodthirstiest.

Fortunately the government is there to bail them out.Icahn bought all those casinos when their owner was in distress, and now he is using his billion dollar profit to try and buy multiple casinos across the country (including Fountainbleau in Las Vegas).

The Following Casinos were on the list for 2008 and were dropped from the list for fiscal year 2009

@ CIRCUS CIRCUS HOTEL
@ STRATOSPHERE TOWER, CASINO & HOTEL - inside city limits of Las Vegas
@ ARIZONA CHARLIE'S DECATUR - inside city limits of Las Vegas

Im surprised Harveys is on there, when I was there in December it was a ghost town.

M should do well. There were rumors that they got clipped by a dice team their first three nights and that they happened to take a real beating at their roulette wheel their first week, but it seems to be a much loved casino that gets only raves not rants.

SouthPoint offers only 2x on craps and somehow I thought that might set the tone for the entire place but it seems they overcame their initial reputation for being stingy with comps.

The Gaming Commission keeps track of casinos that make over $72 million for statistical purposes. They also have more stringent rules about Cash to back up the tables and slot machines.

The Following Casinos were on the list for 2008 and were dropped from the list for fiscal year 2009
@ CIRCUS CIRCUS HOTEL
@ STRATOSPHERE TOWER, CASINO & HOTEL - inside city limits of Las Vegas
@ ARIZONA CHARLIE'S DECATUR - inside city limits of Las Vegas

The Following STRIP Casinos were on the list for 2009 and were dropped from the list for fiscal year 2010
@ IMPERIAL PALACE

The number of casinos in Nevada not on the strip that made over $72 million was 18 in FY2010, down from 22 in FY2009

In FY2010 5 casinos fell off the list and only the M Resort was added.
Eastside Cannery and the brand new Alliante Station did not make the list in the first full fiscal year of operation.

Texas Station was the only Station Property to fall off the list. Now only Cannery Resorts in North Las Vegas is on the list.

Rampart Casino in Summerlin fell off the list.
The paired casinos Eldorado and Silver Legacy in downtown Reno fell off the list.

The worst performance by a company was American Casino and Entertainment Properties (ACEP/LLC) . When Goldman Sachs bought the company , 3 out of 4 casinos earned more than $72 million a year. In two years that was reduced to none. The Aquarius in Laughlin fell off the list (Stratosphere, and Arizona Charlies fell off last year).

Yeah, hard times and mismanagement seem to have taken a slight toll.
Its still a profitable business for many, particularly those without a borrow like crazy attitude from years back.
That Korean owned casino in Mesquite near the freeway did all its construction from earnings not borrowings.
Same with that oriental owned dump on the outskirts of Henderson ... I forget its name but smoke so thick you need a gas mask. A green chip at a BJ table causes a heart attack and the craps table on a Saturday night goes UP to 5.00. A real dump but it too is relatively debt free.

Table format for over $72 million gaming revenue casino licenses in FY2010
Downloadable

	Las Vegas Strip		Boulder Strip & Henderson
	MGM Resorts Inc	24	BOULDER STATION HOTEL & CASINO
1	ARIA RESORT & CASINO	25	GREEN VALLEY RANCH STATION CASINO
2	BELLAGIO	26	M RESORT SPA AND CASINO, THE
3	EXCALIBUR HOTEL AND CASINO	27	SAM'S TOWN HOTEL & GAMBLING HALL
4	MANDALAY BAY RESORT & CASINO	28	SUNSET STATION HOTEL & CASINO
5	MGM GRAND HOTEL/CASINO		Outside City Limits of Las Vegas
6	MIRAGE, THE	29	ORLEANS HOTEL AND CASINO
7	MONTE CARLO RESORT & CASINO	30	RED ROCK CASINO RESORT SPA
8	NEW YORK - NEW YORK HOTEL & CASINO	31	SOUTH POINT HOTEL AND CASINO
9	LUXOR HOTEL AND CASINO		Inside City Limits of Las Vegas
	Ceasars Inc	->	PALACE STATION HOTEL (in City of LV)
10	CAESARS PALACE	32	GOLDEN NUGGET (in City of LV)
11	BALLY'S LAS VEGAS	33	SUNCOAST HOTEL (in City of LV)
12	FLAMINGO LAS VEGAS/O'SHEAS	34	SANTA FE STATION HOTEL (in City of LV)
13	HARRAH'S CASINO HOTEL LAS VEGAS		Inside City Limits of North Las Vegas
14	PARIS LAS VEGAS	35	CANNERY HOTEL CASINO
15	PLANET HOLLYWOOD RESORT & CASINO		Laughlin
16	RIO SUITE HOTEL & CASINO	36	HARRAH'S CASINO HOTEL LAUGHLIN
	Other Corporations	37	RIVERSIDE RESORT & CASINO
17	GOLD COAST HOTEL AND CASINO		Reno
18	LAS VEGAS HILTON	38	ATLANTIS CASINO RESORT
19	PALMS CASINO RESORT	39	PEPPERMILL HOTEL & CASINO
20	TREASURE ISLAND	40	HARRAH'S CASINO HOTEL RENO
21	VENETIAN CASINO RESORT		South Shore Lake Tahoe
22	WYNN LAS VEGAS	41	HARVEYS RESORT HOTEL/CASINO
23	PALACE STATION HOTEL (in City of LV)	<-

Formerly gaming revenue > $72M	Year
Las Vegas Strip
CIRCUS CIRCUS HOTEL	>$72M in FY08
IMPERIAL PALACE HOTEL	>$72M in FY09
North Las Vegas
TEXAS STATION	>$72M in FY09
American Casino Enterprises /LLC
STRATOSPHERE TOWER	>$72M in FY08
ARIZONA CHARLIE'S DECATUR	>$72M in FY08
AQUARIUS CASINO RESORT	>$72M in FY09
Summerlin - Las Vegas
RAMPART CASINO	>$72M in FY09
Reno
ELDORADO HOTEL	>$72M in FY09
SILVER LEGACY RESORT	>$72M in FY09

Well known casinos that are not > $72M
HARD ROCK HOTEL & CASINO
TROPICANA RESORT AND CASINO
CALIFORNIA HOTEL AND CASINO
MAIN STREET STATION HOTEL, CASINO AND BR
ALIANTE STATION CASINO + HOTEL
FIESTA HENDERSON CASINO HOTEL
FIESTA CASINO HOTEL
SILVERTON CASINO LODGE LAS VEGAS
EASTSIDE CANNERY CASINO & HOTEL

It looks like Las Vegas Hilton fell off the list of casinos that make over $72 million in gaming revenue per year. It last roughly 5 months into fiscal year 2011 before it was removed.

There are now only 22 casinos on the strip that make over $72 million. Stratosphere and Circus Circus recently fell off. Riviera & Sahara were never on.
That leaves only Palace Station for the north end of the strip with strong locals loyalty to make over $72 million.

Well, 72MM is an arbitrary figure anyway.
Stratosphere may come back. I heard something about major renovations there of some sort.
Though what they really have to do is major renovations to the neighborhood.

Quote: FleaStiff

Well, 72MM is an arbitrary figure anyway.
Stratosphere may come back. I heard something about major renovations there of some sort.
Though what they really have to do is major renovations to the neighborhood.

Admittedly $72M is an arbitrary figure. But it is one that the Gaming Commission has used for at least 20 years. And yes, it is a line in the sand, you can be over by $1K or under by $1K. I am as far as I know the only one who broke the code to be able to reveal which casinos are over and under $72 m, for the entire state.

But in light of the privacy laws in Nevada, you can't just rack 'em & stack 'em like you can in other states.Many people are curious how much money individual casinos make. Gary Loveman gets asked all the time which is the most profitable casino from his corporation on the strip. Companies are reluctant to reveal a full slate of information for each individual casino.

If some of the casinos closed, it would be better for the economy of the strip overall. The news reporters called Harrah's Entertainment and asked them about the possibility that Imperial Palace would close to reduce some of the room inventory. At the time up until last fiscal year, IP, was making over $72 million. It's remarkable that the corporation could crank that much revenue out of the aging property with it's very small casino floor with not very many slots.

It's also interesting that aging small casinos like Harrah's Reno, Harrah's Laughlin, Sam's Town and until recently Texas Station and Arizona Charlie's Decatur could make over $72 million, while Hard Rock Casino with it's expensive restaurants, multiple gaming tables, and high end hotel rooms does not.

If you have any doubts that a large revenue casino can be created by simply investing in enough hardware, look at Silverton Casino on the south side of Las Vegas. The casinos is relatively new and has a massive 2135 slots. Even if the slots made the state average of $100 a day, that would be $78 million without even considering the tables. Yet Silverton is not making $72 million, while the aging Harrah's Reno (850 slots) and Harrah's Laughlin (910 slots) are making over $72 million. It shows you the value of the Harrah's loyalty program.

It allows you to make some judgement calls. American Casino & Entertainment Properties promotes their Laughlin hotel, Aquarius, as the market leader in Laughlin. Yet that assertion seems unlikely since the only two casinos to make over $72 million in Laughlin last year were Riverside and Harrah's Laughlin.

-----------------------------------
But as for valuable business information, I think it is better to know which casinos are over and under $36 million. There are 30 between $36m and $72m, and 36 between $12m and $36m, and 33 between $1m and $12m (only hotels with lodging considered). These casinos are sometimes purchased by individuals or small business syndicates. Four Queens was sold for only $22m. If you are shopping for a casino, you will eventually get access to their books, but only after you have put several million dollars in escrow. You can't shop around by looking at data. If you look at the downloadable sheet, I divided the Reno market into all revenue categories.

For example, nearly all of the downtown casinos were bought and sold, or took on major new investors in the past decade. The only exception was the three Boyd casinos. Yet there is very little public information about how much the properties make relative to each other. It is clear that the market is dropping, but which casinos are dropping by the largest percentage? Clearly, the Golden Nugget is the revenue leader, but who's in second, third and fourth and by how much? Do I want to look at the lowest properties? If someone was asking me to invest on a property, and pitching a potential revenue, I would like to know what the other properties make, so I know if the potential is realistic or not.

The three recent low ball purchases in Atlantic City all have the disadvantage that all revenue is public information. Tropicana, Revel, and Trump Marina were all bought for very little money, but their revenue and all other properties down to the penny is public information.

================================
As for the Stratosphere, I did a study of the market. I had some help because someone leaked the financial data on wikileaks that was being presented to Goldman Sachs. The short story is I think that the executives Goldman Sachs was smoking crack to pay $1.3 billion for those 4 properties. The raw land was suddenly assessed at ten times the value that it had been assessed the year before. The empty 17 acres next to the wh@re houses was treated as if it was more valuable than property at center strip. As this was one of GS's largest property purchases before the federal government bailed them out, it's kind of sickening.

People have been writing articles about renovating the neighborhood around Stratosphere for decades, but you don't see much bulldozing. They don't even require the wh@re houses to pull down their signs.

With (1)Arizona Charlie's Decatur, (2) Stratosphere, (3) Las Vegas Hilton, (4) Circus Circus all previously making more than $72 million per year in gaming revenue, and all four of them going under that amount, it is significant commentary on that part of town. It is an arbitrary amount, and they could have all gone under by $1K, but I doubt it. Only Palace Station is left.

>Admittedly $72M is an arbitrary figure. But it is one that the Gaming Commission has used for at least 20 years.
Then we might as well continue to use it.
> And you can be under by $1K.
Well, I guess close really does only count in horseshoes and grenades.

>Companies are reluctant to reveal a full slate of information for each individual casino.
Not even to bankers or stockholders?

>If some of the casinos closed, it would be better for the economy of the strip overall.
Perhaps. It depends on how you define competition. The famed statement "a university doesn't compete with other universities, it competes with the bowling alley" probably applies to casinos as well.
>At the time IP was making over $72 million.
>It's remarkable that the corporation could crank that much revenue out of the aging property with it's very small casino floor with not very many slots.
You forgot that it also sits on a flood drain channel and smells.

"...It's also interesting that aging small casinos like Harrah's Reno, Harrah's Laughlin, Sam's Town and until recently Texas Station and Arizona Charlie's Decatur could make over $72 million, while Hard Rock Casino with it's expensive restaurants, multiple gaming tables, and high end hotel rooms does not. ..."
Some of this has been explored in reference to the discussions about Dottys. I've no real idea just why the Decatur property is so profitable other than the neighborhood. The Hard Rock is hype. Many casinos invest heavily in hype. They pay for it.

>Silverton Casino on the south side of Las Vegas is relatively new and has a massive 2135 slots.
>Yet Silverton is not making $72 million, while the aging Harrah's Reno (850 slots) and Harrah's Laughlin (910 slots)
>are making over $72 million. It shows you the value of the Harrah's loyalty program.
I'm not sure its the loyalty program. Perhaps it is. Silverton is off strip but then so is Laughlin.
Silverton is said to have a Sweat The Money attitude. Does this permeate the place and taint their bottom line?
Are management at Silverton unable to take the Harrah's loyalty program and run it through a xerox machine?
Every place in Vegas comes up with a cutesy name for their player club cards. Why do they start out with hype?
They never seem to start out with: This much action earns so much in points and a point is worth this much.

>American Casino & Entertainment Properties promotes their Laughlin hotel, Aquarius, as the market leader in Laughlin.
>Yet that assertion seems unlikely
What? You mean to say that in a town full of hype where everyone is looser than everyone else there is deceit and puffery?

>If you are shopping for a casino, you will eventually get access to the books, after you have put several million dollars in escrow.
When Steve Wynn first bought the Golden Nugget, he had to fire 49percent of the casino employees including most of the top people. How good were the books?

I know management has now invested 30 million in a shark tank, but believe me... I think that is criminal. As does anyone with a check in delay, anyone with a complaint about the food or anything else. Spend thirty million dollars on a shark tank and you've got dealers who make ends meet by donating plasma? Strange economics in Vegas.

>The three recent low ball purchases in Atlantic City all have the disadvantage that all revenue is public information.
Disadvantage?
>Tropicana, Revel, and Trump Marina were all bought for very little money,
perhaps because of views concerning anything in Atlantic City rather than any casino over another.

>I think that the executives Goldman Sachs was smoking crack to pay $1.3 billion for those 4 properties.
Its known as Other Peoples Money. Thats why government budgets and pre-bailout purchases are so strange. Reality is meaningless.
Its sort of the same emotion as a red chip gambler who is ahead at the tables. He is ecstatic about playing with the casinos money. Bankers and politicians seem to have the same emotions. Only the numbers are bigger.

>The raw land was suddenly assessed at ten times the value that it had been assessed the year before.
Gee, that seems strange. I wonder if anyone at the time kinda had the same feelings.

>They don't even require the wh@re houses to pull down their signs.
Signs? Its the Vegas, Baby. Vegas! attitude that is the only "sign" ... it says 'main entrance' to suspended judgment.
Booze, Broads, and real estate values.
The girls have silicone implants the real estate has "appraisers".
The signs around the Stratosphere are part of the Adult Playground Theme Park that is all of Vegas.

Quote: FleaStiff

>I think that the executives Goldman Sachs was smoking crack to pay $1.3 billion for those 4 properties.
Its known as Other Peoples Money. Thats why government budgets and pre-bailout purchases are so strange. Reality is meaningless.
Its sort of the same emotion as a red chip gambler who is ahead at the tables. He is ecstatic about playing with the casinos money. Bankers and politicians seem to have the same emotions. Only the numbers are bigger.

>The raw land was suddenly assessed at ten times the value that it had been assessed the year before.
Gee, that seems strange. I wonder if anyone at the time kinda had the same feelings.

Honest to god, these are the numbers right out of the SEC document. Remember that Carl Icahn only paid $300 million for these four casinos, but he bought three of them out of bankruptcy. If Carl Icahn loans you money, you are basically dead. He doesn't care about interest, he cares about taking control of companies.

Goldman Sachs settled on the price mid 2007, but until the license changed hands they couldn't settle until the first quarter of 2008. By then the recession was already beginning, and they started to write off the furniture.

The land is about 90 acres of fairly low value commercial land. The land under the Boulder strip property was valued at $12 million when they bought the place for $20 million. The only empty acreage was downtown lot of 17 acres they hadn't built on yet. It's still a parking lot for construction equipment that they lease out.

Assets	2006	2007	2008
Land and improvements	$75,100	$75,100	$723,797
Building and improvements	336,449	339,607	374,406
Furniture, fixtures and equipment	174,463	186,112	100,884
Construction in progress	2,082	2,655	3,001
Total	$588,094	$603,474	$1,202,088

That's why the corporation is remodeling the rooms, because the furniture has been completely written off by now. They are buying second hand furniture. It's not going to turn around the property.

The employees really took it in the teeth to try and pay off this debacle. They lost almost everything.

Quote: pacomartin

The employees really took it in the teeth to try and pay off this debacle. They lost almost everything.

Are you referring to Golden Nugget, Binions, Stratosphere, Wynn, Encore, Riviera, Sahara, etc, etc.?
Employees take it in the teeth, Stockholders seem to also. Executives never do.
You ever hear of a ten fold multiple in real estate valuation that wasn't some fraudulent ping-ponging scheme?
How many rabbits can Harrah's pull out of the hat?

By the way, have you ever inquired of the very beautiful but very secretive Dotty as to why employees rarely ever leave his company? (Yeah, I know... I know. Its an ugly "he" and there really is no Dotty, but since she is imaginary I might as well describe her as young and beautiful. I always try to flatter that sexy video blackjack dealer too, but so far she hasn't agreed to go out with me.

Quote: pacomartin

The land is about 90 acres of fairly low value commercial land.

Value? Gambling zoned? Suitable for an employee parking lot? Value?
Think of Keno.
Remember those large Keno rooms? Some have been reduced to ONE seat. They still operate a keno game but the action is electronic. If the law changes to "You Gotta Have Bricks, In Order To Be A Legal Click Casino" what will be the value of real estate?
If every city allows casinos, why would anyone go to Las Vegas?

Value is hard to determine under todays economics. Look into a crystal ball and value becomes clearer and more certain... to some.

Quote: FleaStiff

Value is hard to determine under todays economics. Look into a crystal ball and value becomes clearer and more certain... to some.

I'm not disputing that value can change quickly, but not normally by ten times in a year.

The Flamingo Laughlin (now the Aquarius) owns approximately 18 acres of land located next to the Colorado River in Laughlin,
The Stratosphere owns approximately 34 acres of land located at the northern end of the Las Vegas Strip; 17 acres is undeveloped.
Arizona Charlie’s Decatur opened in April 1988 ; approximately 17 acres of land four miles west of the Las Vegas Strip.
Arizona Charlie’s Boulder opened in May 2000 as a full-service casino, hotel and RV park ; approximately 24 acres of land.

Back in 2004 the land under the three Vegas properties was being valued at $50.31 million. The entire Flamingo Laughlin (which needed extensive work) was bought for $170m including the buildings and furniture.

Now suddenly the land for all four properties is worth $734m ! It reeks of fraud or at least utter incompetence.


The GS deal was being negotiated in April or May of 2007. At the end of May 2007 the El Ad Group, headed by Israeli mogul Yitzhak Tshuva paid $1.2 billion for the 984-room New Frontier. The deal equates to about $34 million an acre for each of the site’s 34.5 acres.

So Goldman Sachs paid roughly the same amount of money for 17 acres of land, and four very aging casinos. I know that El Ad bought a very expensive parking lot, but I still think within ten years their land will be worth more than all four properties.

Quote: FleaStiff

Stratosphere may come back. I heard something about major renovations there of some sort.
Though what they really have to do is major renovations to the neighborhood.

Last time I walked through the Strat couple weeks ago, they had done a lot of renovating to casino floor: new carpeting, mirrors, marble entryway, porte-cochère, etc. No idea about the rooms upstairs.

How is executive pay calculated?
American Casino & Entertainment Company (ACEP) who owns the Stratosphere, two Arizona Charlie's and Aquarius in Laughlin reported their year end results for 2010.

Net revenue is
$451m for 2007 when company was owned by Carl Icahn
$424m for 2008 (Goldman Sachs purchase company 21 Feb 2008)
$356m for 2009
$337m for 2010

The purchase price was $1.3 billion. Yearly revenue was supposed to be well over $500 million by now, just to service the loan. The extravagant purchase price was justified by the ability to develop these properties including the empty 17 acre lot downtown. Carl Icahn only paid $300m to acquire these properties.

Revenue was $328m in 2005 when they owned just three casinos in Las Vegas (before they bought the Flamingo Hilton Laughlin and changed name to Aquarius.

By almost every measure the whole thing should be a disaster.

Why was the CEO's compensation doubled from $450K in 2008 to $900K in 2010? Even the CFO got a $67K raise to $600K, The individual property presidents are getting paid from $282K to $444K.

Because they can get away with it.

Quote: FleaStiff

Because they can get away with it.

Here is an article from last May 2010 in the Las Vegas Review Journal in which I am quoted, as well as the CEO:
SkyJump, renovations seen as boost for Stratosphere parent.

My quote:
"The inability to stabilize revenue in the three Las Vegas properties means increasing challenges for the company," Martin said. "Also, the plight of the Stratosphere is indicative of the increasing challenges facing casinos on the north end of the Strip where gaming revenue can be decreasing even as it is increasing for the Strip as a whole."

CEO Riolo quote (about room renovations)
The renovations could boost room rates between $7 and $15 per night, Riolo said. The property's room rates dropped 10.9 percent in the first quarter to an average of $43.39 per day.

The average room rate for the year was $42.86 (down 54 cents).

I remember talking to the reporter and saying how the CEO would try to distract from the bad news with glowing stories about the new SkyJump ride. But you should consider that a ride that requires well trained operators that only takes one person at a time (even if it is $100 a pop) is not going to make a difference in the bottom line of the property. Stratosphere makes $147m a year now, down from over $200m. To the credit of the ride, the Tower, retail, and entertainment only dropped $800K.

The reporter said that he couldn't write one depressing article after another. The SkyJump caught the imagination of a lot of people. Actually, I can see that. The reporter has something to sell as well.

The Stratosphere can get any favorable articles printed that it wants to.
If the reporter is young and adventuresome, the Stratosphere can offer him a free ride.
If the reporter is not young and adventuresome, the Stratosphere can threaten to put him on the ride if he writes an unfavorable item. So you are quite correct, the ride will not actually bring in all that much revenue, but will sure bring in some spectacular photographs and some favorable publicity.

Frankly, I think the Stratosphere might be more often photographed than that famous sign and the Stratosphere sure is a boon to the entire city's image.

Now as to the room rates, yeah... I don't know if its all that major a concern anyway. If they were to put solid gold into all the rooms they could not rent them out for a price that is much higher than what they have already been renting them out at. Some Vegas dwellers and some tourists may recognize the Stratosphere for being quite a bargain and offering fine value for the money, but that is not enough.

The Stratosphere is inside city limits, but its also a strip casino and is the northernmost strip casino. So categorizing it geographically and politically can be a complex matter. So can categorizing it financially: is it supposed to pull the rest of the Strip up? Is it supposed to atleast bolster the rest of the strip's figures. Or is it supposed to be an example of a bargain and therefore essentially a non-strip casino because it is so isolated by a barren landscape?

Based on executive salaries, the Stratosphere must surely be something so very special.

Quote: FleaStiff

The Stratosphere is inside city limits, but its also a strip casino and is the northernmost strip casino. So categorizing it geographically and politically can be a complex matter. So can categorizing it financially: is it supposed to pull the rest of the Strip up? Is it supposed to atleast bolster the rest of the strip's figures. Or is it supposed to be an example of a bargain and therefore essentially a non-strip casino because it is so isolated by a barren landscape?

Executive salaries are very high. Even the CEO of Hooters was making $300K (they have stopped filing with the SEC so I don't know what he makes now).

As to city limits:
The organization of Paradise and Winchester started back in the early 1950's when the strip casinos first began. It protected the property from being taken over by the City of Las Vegas and subjected to city taxes.

The 1st casino to be built in the city limits was Palace Station in the mid 1970's, but it was more of a Bingo Hall then. The Nevada Gaming Commission counts them as part of the Strip.

In the 1970's, Steve Wynn added hotel rooms to Golden Nugget downtown, to begin turning that into a tourist destination as well. Sam's Town was built outside of the city limits, but designed to appeal to locals. The Boyd family built California downtown to appeal to locals and tourists.

By 1980 the city basically grew Arizona Charlie's Decatur up from a bowling alley to a fledgling casino. Santa Fe was the equivalent to Sam's Town on the North west side edge of town (but the moneyed suburbs would grow in that direction). New casinos stopped being added downtown.

By the 1990's the city was looking at the empire building up outside of the city limits, and begin establishing gaming zones to get at some of the tax money. The Stratosphere was the brainchild of Bob Stupak, who wanted to turn his souvenir shop with a few slot machines into a full size casino. He didn't have the capital, and he lost it to Carl Icahn, the billionaire within the first year. The NGC does not follow the Palace precedent, and instead classifies the Stratosphere as part of downtown.

By the late 1990's the city put it's hope on a Swiss company that wanted to build a five star resort in Summerlin (now the Marriot Rampart). The Swiss company lost a fortune. Once the zoning was established, Boyd built the Suncoast Casino next door to appeal to a more upscale locals crowd. The nearby Red Rock is just outside of the city limits.

In the last 20 years, the city has not been able to convince someone to start a new casino inside the city limits. The best thing that has happened is that Landry's Restuarant put some serious coin into renovating the Golden Nugget and adding a new hotel tower.

Now, the only four casinos inside the city limits that make over $72m / year in gaming revenue are Golden Nugget, Suncoast, Santa Fe, and Palace Station. The other three: Stratosphere, Rampart, Arizona Charlie's Decatur have fallen below that amount in the past three years. It is possible that longer ago The California or Binion's made more than $72 million in gambling revenue.

Old timers at Binion's say that Benny Binion used to keep a special cache of $25 million at the casino to deal with big time gambler's who wanted to throw down huge bets. He was so cash rich, that he used to make emergency overnight loans to Ceasars Palace if they were running low. But Benny was a genuine mobster. A man was shot in the men's room in 1951, and he spent 1953-1958 at Leavenworth. He died in 1989.

Financial Viability: Defining a Minimum Casino Bankroll

I have said that one of the uses of the $72 million limit, is that it changes the "Casino bankroll" requirements if a casino earns more or less than that amount. I found the above article in Casino Management written by John Mills, Professor of Accounting at the University of Nevada, Reno ( jmills@unr.edu ) .

By my calculation, the Las Vegas Hilton's cash on hand requirement was reduced from $1,432,900 to $935,600 because it just recently dropped below $72 million. That's a reduction of half a million that you have to keep in a safe every earning no interest.

Quote: pacomartin

That's a reduction of half a million that you have to keep in a safe every earning no interest.

Heck, that downtown place has had a million dollars on display earning no interest for eons.

And despite the downturn, The Venetian still banked its craps tables far higher than they needed to, simply for the prestige value of it.

Quote: FleaStiff

Heck, that downtown place has had a million dollars on display earning no interest for eons.

And despite the downturn, The Venetian still banked its craps tables far higher than they needed to, simply for the prestige value of it.

Well the legal requirement for the Venetian is $15-$16 million anyway depending on promotions, with at least $60K per craps table. I don't know how much went over that amount. There is no law against going above the minimum, but it costs a lot to keep money sitting on ice.

I know that Binion's had a $1 million dollar display with $10K banknotes. The old $10K banknotes were sold to collectors. But that was a highly unusual operation. Benny Binion supposedly kept a stash of $25 million at all times in case a whale wanted to throw down.

The new ownership at Binons has restored the display with $1 and $100 notes for photo opportunities. Still it as expensive gimmick, but it was part of Binion's history.

For mere mortals it is more of a challenge and could be a make or break item for a small casino. An employee at Golden Nugget told me that the former owners couldn't make bankroll. The gaming commission requires you to keep records daily, but they only do spot checks once a month or so. Golden Nugget would be under $3 million.

Cosmopolitan Reports on first 17 days earnings

While it is true that non-gaming revenue surpassed gaming revenue on the Vegas strip almost a decade ago, this is by far the most lopsided opening. Cosmopolitan made just $4.3 million in gaming in it's first 17 days ($250K per day), which means that it is doing over $72 million a year($200K per day) for it's honeymoon, but not by much. That puts it on the same level as Flamingo for gambling revenue.

In contrast every single baccarat table was making an eye popping $1million per week for the first two weeks of the Aria opening. Clearly the whales were lining up for this opening, but it looks like the Cosmopolitan was all little fish.

Of course, non-gaming revenue at the Cosmopolitan was stellar (over $800K per day). The average rate was $319 per rented room, and over 50% of the revenue was food and beverage. But the construction costs hit $4 billion. I know that financing major properties is not as simple as a 30 year mortgage, but a 30 year mortgage on $4 billion at 6% is $788K per day.


You can argue that it is still new, but as far as gaming, newer is usually better.

Its the "new" Vegas... you hold pool parties, do your marketing on Twitter and Facebook, have nooks and alcoves and secret pizza places, have gourmet this 'n that along with exotic cocktails ... and never go near the casino.

Think I read somewhere the loan is interest only for 1st 5 years and about $96 million annual. Probably get more details later at Chapter 11 hearing. LOL

Quote: buzzpaff

Think I read somewhere the loan is interest only for 1st 5 years and about $96 million annual. Probably get more details later at Chapter 11 hearing. LOL

So basically someone has already written off half of the $4 billion to build the place, or lost it vanished in the bankruptcy. Goldman Sachs did the same thing with the Stratosphere. It was an interest only loan for several years at 6%. It is still too high to show a profit. But the bank owns the property. They can't foreclose, they just have to keep writing off the losses. It was the same thing with Goldman Sachs at the stratosphere. They are both the business owners and the financing agency. They just keep giving themselves low interest loans to try and show some black ink. Meanwhile Carl Icahn has all the cash from the sale, and he just runs around the country buying properties. Same thing with Phil Ruffin. He bought the Treasure Island with little more than half his revenue from selling the New Frontier.

Some people hit the top of the market, some hit the bottom of the market.

Nowadays, each seems to have creative accountants and press agents.

Quote: FleaStiff

Some people hit the top of the market, some hit the bottom of the market.

Nowadays, each seems to have creative accountants and press agents.

Always been true, but the swings are getting wider and wider. Some people are wealthy based simply on market timing.

Analysts: Cosmo the hot property of the future

I think if you can be effusive enough, you can get away with anything. I mean this property earned less than $1 million per day for it's first two weeks, which probably doesn't place them in the top dozen. Mirage still earns $1.5 million per day after a rough year.

The gaming earnings of $250K per day are dismal. I think they were probably beaten out by Flamingo.

Listen to this quote: "The Cosmopolitan found an identity," Bain said. "Aria is still trying to find their identity. In my view Aria and CityCenter are trying to be everything to everyone in the luxury market."

I found a quote from Steve Wynn that in their first year the Mirage earned $1.1 million a day in gaming and $800K in non-gaming revenue.

Aliante Station is one of the better known casinos that was expected to be earning more than $72 million per year. Repeating the list with Station properties highlighted:

	Las Vegas Strip		Boulder Strip & Henderson
	MGM Resorts Inc	24	BOULDER STATION HOTEL & CASINO
1	ARIA RESORT & CASINO	25	GREEN VALLEY RANCH STATION CASINO
2	BELLAGIO	26	M RESORT SPA AND CASINO, THE
3	EXCALIBUR HOTEL AND CASINO	27	SAM'S TOWN HOTEL & GAMBLING HALL
4	MANDALAY BAY RESORT & CASINO	28	SUNSET STATION HOTEL & CASINO
5	MGM GRAND HOTEL/CASINO		Outside City Limits of Las Vegas
6	MIRAGE, THE	29	ORLEANS HOTEL AND CASINO
7	MONTE CARLO RESORT & CASINO	30	RED ROCK CASINO RESORT SPA
8	NEW YORK - NEW YORK HOTEL & CASINO	31	SOUTH POINT HOTEL AND CASINO
9	LUXOR HOTEL AND CASINO		Inside City Limits of Las Vegas
	Ceasars Inc	->	PALACE STATION HOTEL (in City of LV)
10	CAESARS PALACE	32	GOLDEN NUGGET (in City of LV)
11	BALLY'S LAS VEGAS	33	SUNCOAST HOTEL (in City of LV)
12	FLAMINGO LAS VEGAS/O'SHEAS	34	SANTA FE STATION HOTEL (in City of LV)
13	HARRAH'S CASINO HOTEL LAS VEGAS		Inside City Limits of North Las Vegas
14	PARIS LAS VEGAS	35	CANNERY HOTEL CASINO
15	PLANET HOLLYWOOD RESORT & CASINO		Laughlin
16	RIO SUITE HOTEL & CASINO	36	HARRAH'S CASINO HOTEL LAUGHLIN
	Other Corporations	37	RIVERSIDE RESORT & CASINO
17	GOLD COAST HOTEL AND CASINO		Reno
18	LAS VEGAS HILTON	38	ATLANTIS CASINO RESORT
19	PALMS CASINO RESORT	39	PEPPERMILL HOTEL & CASINO
20	TREASURE ISLAND	40	HARRAH'S CASINO HOTEL RENO
21	VENETIAN CASINO RESORT		South Shore Lake Tahoe
22	WYNN LAS VEGAS	41	HARVEYS RESORT HOTEL/CASINO
23	PALACE STATION HOTEL (in City of LV)	<-

An SEC document for Station Casinos was released a few weeks ago.

It provides details on Aliante Station property. Casino Revenue has been
$49,378 for CY2010 ($135,282 per day)
$52,709 for CY2009 ($144,408 per day)
$11,237 for CY2008 ($220,333 per day) which would have been over $80 million annual rate

Other revenue less promotional allowances are roughly $15 million per year. The property took a $466.5 million dollar impairment loss .

The Cannery Casino which opened on January 3, 2003 is the only casino in North Las Vegas to make over $72 million. Texas Station is also located in NLV but has dropped out of that category.

.....

Quote: gofaster87

Wasn't Aliente the loss leader for the Stations group? Has Stations taken over full ownership of GVR and Aliente(they were joint ventures) yet? I heard they were in the middle of negotiations to take over most of the Greenspun share if hasn't been done already.

If by "Loss Leader" you mean the casino that lost the most money, then yes they were. A "loss leader" is usually the item that you sell at a loss just to lead people through the front door. Stations has not taken over either property yet. Aliante Casino is it's own separate company now, "Aliante Gaming". I am not sure how those negotiations are going. they may be detailed in the SEC document which comes in at close to 100 pages. I didn't read the entire document.

.....

So its not really a destination for low rollers, its mainly a community congregating space? Sort of a mall with a variety of stores and restaurants and clubs that also happens to have a casino?

I wonder just how far a locals casino can extend its "reach"? Is it simply the surrounding area or do players go the extra distance if they really want to? Whats the difference between a ten minute drive and a fifteen minute drive? I assume there is some decision making going on as to one casino versus an adjacent or nearby property.

Quote: FleaStiff

So its not really a destination for low rollers, its mainly a community congregating space? Sort of a mall with a variety of stores and restaurants and clubs that also happens to have a casino?

I wonder just how far a locals casino can extend its "reach"? Is it simply the surrounding area or do players go the extra distance if they really want to? Whats the difference between a ten minute drive and a fifteen minute drive? I assume there is some decision making going on as to one casino versus an adjacent or nearby property.

A lot of people asked those questions about Aliante. Unlike Green Valley or Red Rock it wasn't as close to a major highway that might be carrying tourists. It seemed as if they were trying to build the casino first, and then they expected the community to grow up around it. They had a seemingly impossible master plan where every corner of the urban area would have one of their casinos.

Just to tie it back with Cosmopolitan, Aliante made $230K per day in the casino for the first few weeks before dropping back to it's level of much less than that. Yet one more reason that I find it amazing that the news articles are crowing about the success of Cosmopolitan when the casino made just $250K per day for the first two weeks.

These casinos are incredibly oversupplied with gaming equipment relative to their revenue. Aliante has 2000 slot machines, two dozen blackjack tables, 3 full size crap tables, 3 roulette tables, and almost ridiculously a full size baccarat table.

.....

Alianté is certainly hurt by its location. It's about as far into the Northern Hinterlands as you can get in this town. The street it's on is so new it's not on Garmin GPS yet (or at least it wasn't a year ago).

Quote: zippyboy

Alianté is certainly hurt by its location. It's about as far into the Northern Hinterlands as you can get in this town. The street it's on is so new it's not on Garmin GPS yet (or at least it wasn't a year ago).

They built the Texas Station over 15 years ago. Five years after that they bought Santa Fe Station only 5 miles away. Three months later they bought the Fiesta Casino next door to the Texas Station. Then 8 years later they open Aliante only 6 miles from Santa Fe. The Aliante is only 18 miles to their other showpiece suburban casino, Red Rock.

Station casinos was actually proposing three more casinos in the southern part of the city, one more next to Boulder station where Castaways used to be.


In addition to all this they had a rival to City Center called Viva on the other side of the interstate off Tropicana.

.....

Quote: gofaster87

Stations had one planned near the Henderson Airport at one time. I not sure if that is where the dot is on the map.

Those dots don't seem to be very accurate in some cases. I suppose the one in the center is near the airport.
Once again the airport is 5 miles from Green Valley, and only 3 miles from the M Resort.

Quote: pacomartin

These casinos are incredibly oversupplied with gaming equipment relative to their revenue. Aliante has 2000 slot machines, two dozen blackjack tables, 3 full size crap tables, 3 roulette tables, and almost ridiculously a full size baccarat table.

Sometimes you get some bean counter making the purchase decisions. The beancounter doesn't know what baccarat is, he just knows its a line item on his figures and charts. High rollers in evening dress playing baccarat at a full size table in the hinterlands of Nowheresvile? Hey, don't ask him. He just got a memo from someone about a Baccarat table. He doesn't know how the game is played or who is likely to play it.

There are only 15 full size baccarat tables in Nevada that are not part of the 5 major casino owners on the strip (MGM, Ceasars, Wynn, Sands, & Phil Ruffin owns TI)
1 ALIANTE STATION CASINO + HOTEL
1 GREEN VALLEY RANCH STATION CASINO
5 PALACE STATION HOTEL & CASINO

1 PALMS CASINO RESORT
3 COSMOPOLITAN OF LAS VEGAS, THE
3 HARD ROCK HOTEL & CASINO

1 HARVEYS RESORT HOTEL/CASINO


Of the 7 run by station casinos, the one in Aliante seems the dumbest idea. Palms would have to have one to fit their image. Cosmopolitan seems delusional.

Hard Rock though that baccarat would be their salvation. They renovated the casino, and thought that they could find these younger, mid-level hip baccarat players, and it would save them from bankruptcy. It didn't work.

Harvey's at Lake Tahoe is part of the Ceasars Corporation, but it seems to be the only baccarat table operating outside of Clark County.


There are also 150 mini-baccarat tables operating in Nevada. Gold coast Casino (3 blocks from Chinatown) has 14 of them (the largest collection in the state). I assume Palace Station is after the same market, but they are willing to hazard the expense of full size baccarat tables.

>I'm surprised that Cosmopolitan made the list given that they do not seem very concerned about gamblers.
I'm also surprised even though its recently been heard that the Cosmo has finally "got their act together". The casino seems to have been an after thought to the glitterati that swagger up and down the place.

>Gaming Revenue is $5 billion last fiscal year, of which half is coin devices.
>"Non-gaming revenue" was $9 billion for the fiscal year (way over gaming).
Wow. Ferris wheels must be profitable. Oh, yeah... they ain't even built yet.

>Room revenue is $3.5 billion,
Some of which is "casino rate" accounting entries, not really revenue.

>"other entertainment and retail" is $2.2 billion.
Those gift shops and Gucci Stores sure do bring in alot of that "other".

>Rooms occupied at the rate of 91.2%.
Is that the percentage of rooms that have guests in them or is that the percentage of guests who are pissed off at the price they had to pay for their rooms and the manner in which they were quoted to them?

Quote: FleaStiff

Wow. Ferris wheels must be profitable. Oh, yeah... they ain't even built yet.

Is that the percentage of rooms that have guests in them or is that the percentage of guests who are pissed off at the price they had to pay for their rooms and the manner in which they were quoted to them?

Back in FY1990, gaming revnue was $2.279B which was 57.8% of the $3.939B overall revenue . At sometime in the later 1990's gaming revenue became less than half. Now it is down to 36.4%

The occupancy rate does include comped rooms.In general "comps" are considered revenue, and the value of the comp is considered an expense. I'm not sure precisely why,but there are expenses like cleaning the room, serving food, etc. that have to show up as expenses. Maybe it just keeps the accounting straight. It may have an impact on prices.