"The small developer, with one or two casinos, can’t get cash as
easily as a brand name like Hard Rock Hotel & Casino," said Marc Falcone,
managing director for Deutsche Bank Securities.
The Hard Rock’s developers oversold their bond offering earlier this
year, because there was so much enthusiasm from investors.
Along with the new casino, some large companies, such as MGM Mirage,
the parent company of Beau Rivage, and Isle of Capri, are getting money
to renovate and expand their Coast casinos.
"The larger companies have access to capital, and they’re paying less
than 7 percent interest on it," Falcone said.
This cheap money could continue the wave of mergers and acquisitions
in the casino industry, such as Harrah’s deal to buy Horseshoe Gaming.
Falcone participated in a leadership roundtable, along with Frank
Fahrenkopf Jr., president of the American Gaming Association; Tim
Hinkley, chief operating officer of Isle of Capri Casinos Inc.; Thomas
Baker, chairman of International Game Technology; Donald Snyder,
president of Boyd Gaming; and Mark Van Norman, executive director of the
National Indian Gaming Association.
Gambling has grown into such a big business that the days of one
entrepreneur being able to build a casino empire may be gone, Snyder
said.
"In Las Vegas, it may be easier to do," because of the sheer number
of tourists, Snyder said. "But in emerging markets, the stake to
establish a casino and buy in with the state are incredibly high."
Biloxi-based Isle of Capri Casinos bid $518 million for a casino
license to operate in Rosemont, Ill. Hinkley defended the price because
it gives the company access to the rich Chicago market.
"There’s not a better location in the whole U.S. than Rosemont," he
said.
The pool of potential new casino sites across the U.S. has stagnated,
Hinkley said, causing the Isle to look overseas.
