Summary

In this episode, Nick and Dan catch-up with Bluberi CEO, Andrew Burke. Listen as Andrew describes how several years of operational and regulatory expansion has positioned Bluberi for the future and how the company's culture and unique approach to brand helps distinguish its offerings in a brutally competitive field. Also hear about Bluberi's unique approach to product design and how its use of character personalities and hybrid mathematical and mechanical concepts give Bluberi products their signature feel. Also in this episode, America's shrinking riverboat sector.

Transcript

Nick Hogan:

Good morning, Dan.

Dan Cherry:

Good morning, Nick. It’s good to see you.

Nick Hogan:

Yeah, good to see you. So here we are in late August. We’ve both been traveling a bit. I’ve been surfing with my boys in the wilds of Galicia, and you’ve just returned for some time in Asia. So, everything go well with your travel?

Dan Cherry:

Yeah, I was in Japan, two and a half weeks gone. I think the longest I’ve ever been from home. So, it was amazing. It’s good to be back. I don’t know where Galicia is, but you can tell me.

Nick Hogan:

Ah, this is the northwest corner of Spain, so it’s very, very raw and rural. You got a lot of rough coastline there and this kind of stuff. And we just lucked out, apparently it’s been a flat summer, but when we turned up, everything started pumping, the whole coast turned on. And then the last day, it just went flat as a pancake. So we got our little slug in there, so it was good. And what was your most memorable thing from Japan?

Dan Cherry:

Yep. Japan was amazing. Food was amazing, culture was amazing. Definitely want to go back. You can’t see it all in one trip, for sure.

Nick Hogan:

Did you get into any Pachinko parlors?

Dan Cherry:

No. No, I didn’t.

Nick Hogan:

Oh man, come on.

Dan Cherry:

It was a no gambling trip.

Nick Hogan:

Okay, okay, okay. Those things are just awesome. I love the chaos of them and the insanity. It’s great.

Okay, so news item. I guess it was last week I caught a headline about PENN Entertainment deciding to pull their Boomtown New Orleans boat out of the water, and they’re plowing around 200 million into a new fully land-based Hollywood casino in the city, and taking out a circulation yet another riverboat. So, this story led me down a rabbit hole about the state of America’s riverboat casinos, which I haven’t really looked at this for a while.

So, for any of the international listeners who are unfamiliar with the movement, I’ll just provide a quick summary. So basically IGRA, the Indian Gaming Regulatory Act was passed in 1988, which cleared the way for the proliferation of tribal casinos throughout the US. And in very short order, a lot of the state governments realized that the public’s views on casinos were way more tolerant than they had assumed, so they began maneuvering to get in the action. So in order to make the casinos more palatable to their residents, many of the states decided to restrict casinos to these Victorian era riverboats, the paddle boats. And the thought that was limiting casinos to functioning vessels gave communities the sense of containing the sinful behavior and the vice there, while also the appearance of beautifully appointed antique vessels was complimenting their riverfronts and skylines, many of which were in state of bad repair.

So, a number of these states dove in big time and at their peak in 2003, there were actually 90 riverboat casinos operating in the United States, which that was a much bigger number than I had though. Now, the downside was that generally speaking, operators absolutely detested these vessels. Many of them opened with mandatory crews requirements, which meant that they were forced to employ professional maritime crews. They were subject to Coast Guard regulations and inspections. And then they were forever struggling with things like weight limits, low ceilings and multi-level casino floors, to name just three big structural challenges.

Now in then 2005, Hurricane Katrina wiped out a number of the riverboat operations in Mississippi, and then operators had the leverage to demand land-based licenses as part of their rebuild commitments, and then the scourge of riverboats began. And really, when you look at the financial performance before and after, you can’t help but think this trend is just going to continue. So, those Mississippi conversions post-Katrina were huge, in terms of both revenues and margins. And then most recently, I looked up when Boyd converted their Treasure Chest casino in Louisiana from a riverboat to a land-based facility, they saw an immediate revenue surge of 88%, which became their new baseline.

So Dan, then out of all that, here’s a quick trivia question for you. So out of those 90 riverboat casinos that existed in 2003, any idea how many continue to operate today?

Dan Cherry:

Oh, wow. Stab in the dark, I’m going to say 35.

Nick Hogan:

Okay. Well, you’re definitely soft, but it’s gone down to 64, which is also a bigger number than I thought were out there. But now, it’s just limited to six states. So we have Missouri, Louisiana, Mississippi, Illinois, Iowa, Indiana. So across, and then 26 have been shuttered since 2003, which is a big thing.

So Dan, I’m curious for you as an operator, because like I said, I went down a bit of a rabbit hole. So inside the companies that still operate them, and I know you work for a couple of them, are there really long-term plans to just phase them out? I mean, is that a thing that people are focusing on? And also as an operator, are you happy to see them go or do you feel that these are more charming historical homages that need to be preserved?

Dan Cherry:

Yeah, no, I mean, I think it’s a good thing and I think it’s the right thing. I mean, in my career, I worked on a few of them. Right? I worked on traditional riverboats with the paddle wheel on the back on the Mississippi. I worked in several [inaudible 00:06:00]. But PENN’s a good example, right?

So, PENN’s been focused in the last few years on fairly low cost, high ROI projects, whether it’s building some smaller hotels at properties that don’t have them, but more recently, the two