Inside Asian Gaming

August 2008 | INSIDE ASIAN GAMING 45 Briefs management team. In June, Australia’s Crown Ltd backed out of a US$5 billion project to build Las Vegas’ tallest tower, citing the global credit market squeeze. Meanwhile, Elad Group’s plans for a US$5 billion version of New York’s Plaza Hotel on the site of the former New Frontier are seemingly on hold. Earlier, Deutsche Bank started foreclosure proceedings against developer Ian Bruce Eichner and his company after they defaulted on a US$760million construction loan for the US$3 billion Cosmopolitan Resort and Casino. Caesars Expansion Still On Track Caesars Entertainment (which recently changed its name from Harrah’s Entertainment) is moving ahead with a US$1 billion expansion at Caesars Palace despite reporting a net loss in the second quarter and even as competitors slow or halt construction of several projects on the Las Vegas Strip. The Las Vegas Gaming Wire reported that privately held Caesars said it lost US$97.6 million in the quarter, compared with a net profit of US$237.5 million in the same quarter a year ago. Revenues in the second quarter were US$2.6 billion—a 3.7% decline compared with US$2.7 billion in the second quarter of 2007. Las Vegas-based Caesars is no longer publicly traded after a US$30.7 billion buyout in January by private equity firms Apollo Management Group and Texas Pacific Group that included a cash payment of US$17.3 billion and the assumption of US$12.4 billion in debt.The buyout doubled Caesars interest expenses in the quarter to US$468 million, which was associated with the higher debt levels. However, the slumping national economy and challenging operating conditions in Las Vegas and several of Caesars key markets were the main reasons for Harrah’s results.The company operates 36 casinos in 12 states. During a conference call with analysts, Caesars CEO Gary Loveman said the company didn’t consider stopping construction of the expansion at Caesars Palace, which includes a new hotel tower and convention space. Loveman said Caesars needs to expand because the project is strategically important in the market, given the upcoming opening of the US$2.3 billion Encore at Wynn Las Vegas, the opening earlier this year of the US$1.9 billion Palazzo and the planned 2009 opening of the US$9.2 billion CityCenter. “The first half of the year presented us with the most turbulent economic conditions the casino industry has faced in years,”Loveman said. “Customer visitation fell in the second quarter as consumers coped with higher fuel costs, declining asset values, the impact of widespread flooding in the Midwest and other financial challenges.” Despite the challenging economy, the company continued to invest in expansions and rebranding at some properties. Caesars completed a US$485 million expansion at Horseshoe Hammond in Northern Indiana and a US$565 million expansion of Harrah’s Atlantic City. Call For Suspension of US Online Probe Reuters reported that two US lawmakers have urged the US Justice Department to suspend its investigation of European Internet gambling companies for possible criminal violations that occurred before Congress passed a law in 2006 to crack down on online gambling. Rep. Robert Wexler, a Florida Democrat, and Rep. Steve Cohen, a Tennessee Democrat, warned US Attorney General Michael Mukasey in separate letters the issue could lead to a potentially damaging trade spat between the United States and the European Union at the World Trade Organization. “In all likelihood, this issue will escalate and I understand could result inWTO action focused specifically on how the US government enforces its laws. I cannot see how that can be in the interests of this country,”Wexler said in a letter to Mukasey. European Internet gambling companies lost billions of euros in market value after Congress moved to shut down the US market by making it illegal for banks and credit card companies to make payments to online gambling sites. That prompted the European Commission to launch a formal investigation in March into whether Washington was singling out EU companies for enforcement actions, while allowing US online firms to operate freely. Borgata Ejects Stinky Gambler According to a reported by the Associate Press , Michael Wax, a 440-pound Brooklyn man, was asked to leave the casino at the Borgata in Atlantic City after other gamblers complained about his body odour. Mr Wax admits he stunk, saying he had been playing poker at the casino for 17 hours and didn’t have time to clean up. However, he argues he should have received better treatment from the casino. The 54-year-old limousine company owner, who says he is a frequent gambler at the Borgata, said a poker room manager followed him into the restroom and informed him that patrons at his table were complaining about his body odour. When he tried to re-take his seat at the table, he said a manager told him he couldn’t play anymore and to leave. He said he asked for a free room to freshen up, and the casino refused. Hepromptly fileda complaint about his treatmentwith theCasino Control Commission. His complaint will be reviewed to determine whether any state gambling laws or regulations were violated. Wax said his instincts tell him to find a different casino to patronize, but he likes gambling at the Borgata. He said the casino was out of line to tell him he stinks in front of other patrons. “I would like an apology,”Wax said. Dave Coskey, a spokesman for the Borgata Hotel Casino & Spa, said it is company policy not to comment on matters involving their customers.