For certain, the biggest news story of the week in gaming was the announcement that Genting is buying the Echelon parcel in Las Vegas from Boyd Gaming. Genting paid $4 million an acre for the site on the famous Strip; Genting is promising it will turn the property into a magnet for the newly outwardly mobile and affluent Asian travelers. It was great news for Nevada and Las Vegas; there will be a new property under construction for the first time in years. It will create construction jobs and all of the secondary spending a multiple-billion dollar project always generates. There will be more rooms, more casino and support jobs and maybe most important of all, more customers and they will be new customers.
With its strategy of attracting Asia, primarily Chinese, visitors Genting promises to do something none of the last built properties in Vegas could do. Genting Resort World will grow the market and even better it will make Las Vegas a destination for a several billion people who previously did not think of Las Vegas when they planned a trip. Will it work? Will another miracle happen in the Las Vegas desert? That desert has seen generation after generation of new casinos reinvent the city and expand its reach and attraction. With the dull thud that marked the openings of CityCenter and the Cosmopolitan many people were beginning to believe the era of Strip miracles had passed. And then, the good citizens of Las Vegas looked into the sky and out-of-the-blue another balloon was descending with yet another wizard on board.
Malaysian casino operator Genting Bhd envisions red and gold pagodas and a panda exhibit on the 87-acre plot of Las Vegas land it bought this week, a new gambling playground for rich Chinese moving their money overseas. A 90-minute flight away, in San Francisco, China’s biggest property developer has formed a joint venture to develop two high-rise condominium towers that are likely to draw wealthy Chinese buyers…it signals a strategic shift. Instead of hunting for natural resources, the driving force behind many of Asia’s biggest foreign acquisitions over the past year, these companies are investing in the United States to cater to Chinese consumers abroad. Emily Kaiser/ Farah Master, Reuters, 3-7-13
To put the purchase in prospective, the $350 million Genting is reported to be paying Boyd would buy as many as ten casinos in Atlantic City. Actually, if you use the $20 million price that Trump Plaza commanded, you could buy more than 10 casinos. Even vacant land today is worth more than a casino in Atlantic City. Pinnacle has just announced the sale of an 19-acre parcel of land that once housed the Sands for $1.6 million an acre – $30 million dollars. Pinnacle originally bought the property in 2006 for $270 million with the intend of building a $2 billion project. Bad timing; Pinnacle and Boyd made the same miscalculation.. While Pinnacle was drafting its plan for a grand casino in Atlantic City, the economy collapsed. Financing became difficult if not impossible to find. As the national economy began to recover slowly another, but equally depressing condition emerged in Atlantic City – the slot machines in Pennsylvania and other states were hurting Atlantic City a lot.
Unfortunately, unlike Las Vegas, when the good citizens of Atlantic City looked up into the sky they did not see a balloon and a wizard – at least no wizard has made a public statement yet. Three casinos have changed hands recently in Atlantic City and one more is scheduled to sell – that is if the buyer can get regulatory approval. The new owners in Atlantic City are not magicians or wizards, they are practical people who see the problems and know it will take hard work and maybe a little luck to survive, much less profit. In the long run, I bet on the practical people they usually have solid plans, a willingness to work hard and a reluctance to lose. But, this week I am filled with enthusiasm for Las Vegas and wizard in the balloon. The wizard is promising to fill Nevada casinos with a billion happily spending Chinese; and we all know the Chinese love to gamble – just look at the $30 billion in gaming revenue Macau generated in 2012. What could go wrong with a plan like that? I think I will go to see “Oz the Great and Powerful” this weekend and dream. It could happen.
Pinnacle Entertainment is selling the land where it once planned to build a $2 billion casino in Atlantic City. In a filing with the U.S. Securities and Exchange Commission, the Las Vegas casino company said it has reached a deal to sell its site to a buyer it did not identify, for $30.6 million. “We own approximately 19 contiguous acres in the heart of Atlantic City, with extensive frontage along The Boardwalk, Pacific Avenue and Brighton Park,” the company wrote in its filing. “During the fourth quarter of 2012, we entered into a definitive agreement to sell our land holdings in Atlantic City for total consideration of approximately $30.6 million, subject to a financing contingency. The transaction is expected to close by the end of the first quarter of 2013.” Wayne Parry, Associated Press, 3-7-13
