Home subscribe manage Las Vegas Review-Journal
  Jobs Cars Homes Shopping Travel Weddings Golf Best of Las Vegas Photo   Search:

RECENT EDITIONS
Sat Sun Mon Tue Wed Thu Fri

Business
Aug. 26, 2008
Copyright © Las Vegas Review-Journal

Black Gaming posts $20.3 million loss for quarter

Chairman says company in 'defensive position'

By ARNOLD M. KNIGHTLY
REVIEW-JOURNAL

The CasaBlanca and Oasis casinos in Mesquite are seen along Interstate 15. Late last year, Black Gaming, which owns the CasaBlanca, Oasis and Virgin River casinos in Mesquite, began working to fight the economic downturn by eliminating departments, reducing management salaries and laying off staff.
Photo by Clint Karlsen/Review-Journal file photo

If you think the slowing economy has hit casino operators in Las Vegas hard, travel 80 miles northeast to Mesquite.

Black Gaming, operator of three hotel-casinos in the town, reported an operational loss of $15 million for the quarter ended June 30, driving the company to a net loss of $20.3 million.

Newsvine Digg Fark Technorati reddit StumbleUpon del.icio.us Slashdot Propeller Mixx Furl Twitter MySpace Facebook Google Bookmarks Yahoo! Bookmarks Windows Live Favorites Ask MyStuff myAOL Favorites

Most Popular Stories
  • Permits sought to build world's largest hotel in Las Vegas
  • INSIDE GAMING: Uncles and ain'ts: Rec bettor sours on Vegas
  • ECONOMIC WOES: Airport official outlines cutbacks
  • INTERNATIONAL CONSUMER ELECTRONICS SHOW 2009: High tech in low spirit
  • Australian billionaire moves closer to Cannery purchase
  • Casino in Sparks sold
  • LV Sands, Elad deny report of New Frontier land deal
  • USA Capital investors blame courts
  • What shows here, stays here
  • Ex-Station exec named to gaming center post



    • The latest loss is wider than the $2.6 million net loss posted for the same quarter last year. For the year, the company has posted a loss of $24.3 million.

    Chairman and Chief Executive Randy Black Sr. said the company has been put in a "defensive position" and "at some point you just can't cut your way to profitability."

    Late last year, Black Gaming, which owns the CasaBlanca, Virgin River and Oasis casinos along Interstate 15, began an aggressive campaign to combat the economic downturn by eliminating departments, reducing management salaries and conducting layoffs.

    Black told investors the company cut more than $10.5 million in operating expenses in the first six months of the year, but it hasn't been enough.

    "The combination of reduced spending by customers and price reductions we have implemented to remain competitive has impacted our profitability and continued to decrease our (cash flow)," Black said last week in a conference call with investors.

    On Aug. 5, Moody's Investors Service downgraded Black Gaming's bond ratings for the second time in three months based on declining market revenues.

    Black told investors that he believes an infusion of funds will be necessary next year for the company to meet "liquidity needs." However, enough money should be available to meet working capital requirements, capital expenditures and scheduled interest payments through the end of this year.

    In a move to increase revenue, Black Gaming and casino industry veteran Michael Gaughan, owner of South Point, merged their sports book operations Aug. 21, in time for the start of the lucrative football season.

    Anthony Toti, an executive who joined Black Gaming late last year after 28 years at Coast Casinos, said combining the operations will let the Mesquite properties increase their limits to $5,000 for college sports and $10,000 for professional sports.

    "It's so we can increase our handle and our drop, take bigger bets without so much exposure," said Toti, whose father, Frank Toti, is Gaughan's business partner. "If we're linked between three or four books, it's just easier to take higher limit bets."

    The merger will link the sports-book operations, but not the race books, of the three Mesquite properties, South Point and the El Cortez in downtown Las Vegas.

    Although Black Gaming continues to adopt changes to help curtail the economic slide, second-quarter net revenues fell 16.2 percent to $36 million for the three months ended June 30, from $43 million a year earlier.

    Revenues for the first six months of the year fell 16.2 percent to $74 million from $88.3 million, an Aug. 14 filing with the Securities and Exchange Commission shows.

    Casino revenues decreased between April and June, dropping 22.1 percent to $21.2 million from $27.2 million, and 19.6 percent to $45.6 million from $56.7 million. Gaming revenue in Mesquite slid 12.2 percent to $37.2 million for the quarter, state gaming regulators report.

    Black said in May the "other guy" -- the privately owned Eureka casino in Mesquite -- controls approximately 30 percent of the local market and his company needs to "cut into" that share.

    Black Gaming's other quarterly revenues dropped, too, including 16 percent in the hotel, 17.2 percent in food and beverage and 14.3 percent in other departments.

    The company's aggressive room rate cuts led to a six-month revenue decrease of 19.2 percent to $16 million from $19.8 million.

    The company released neither occupancy rates nor daily room rate averages for the quarter. However, a check of room rates on Monday for the upcoming Labor Day weekend found rates ranging from $59 per night to $119 per night.

    Prices drop to as low as $29 per night by the middle of next week and $49 per night on Friday, Sept. 5.

    "We still see that people are coming to our properties, just not as many people," Black said. "People are spending money, just not as much."

    Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.



    Leave Your Comment 8 Reader Comments
    Terms & Conditions
    The following comments are provided by readers and are the sole responsiblity of the authors. The reviewjournal.com does not review comments before publication nor guarantee their accuracy. By publishing a comment here you agree to abide by the comment policy. If you see a comment that violates the policy, please notify the web editor.

    Some comments may not display immediately due to an automatic filter. These comments will be reviewed within 48 hours. Please do not submit a comment more than once.
    Current Word Count:

    Mauna loa wrote on August 30, 2008 05:54 PM: Memo to Jimmy H.: I know you went to public school, maybe the 10th grade?. Yes it is the CEO pay ok, they sometimes make a 1000times the avg.joe blow worker, and when your talking about the avg.casino hack, they make MIM wage DUDE. The sports book is a dream come true, as in booking horses, who cares who wins you already took your 17 cents out of every dollar the sucker bets. Wake up Jimmy, and if you have any children work a 2nd job at the local 7 eleven, and send them to private school so they don't end up being a schmuck like their Papi.


    bloooowjay wrote on August 29, 2008 10:34 AM: hopefully the economic downturn continues, it makes the top 1% feel even richer when the bottom 99% has less money than ever.


    judy wrote on August 27, 2008 05:54 PM: The housing market and extreme fuel cost is going to continue driving the market down. Our country is in the worst mess that I have ever seen, there is just to many odds against the working man. It is pretty sad that our own government does not know what to do to correct the problems. But do not fear they have sold us away so many times and put plenty of money in their pockets that they personally will not feel the anguish that most people are dealing with. This is one scary situation I do not see a quick fix or our country ever being the same again. When all the countries that dislike us so badly see the decline, they will come in and take us over without even a shot being fired. Greed has destroyed this great country and it is sad to witness.


    b-man wrote on August 27, 2008 09:51 AM: I think he should continue to cut departments and staff. Since it is a small town and those employees are his customers the other 18 hours a day. That should help him gain market share! Or maybe he should try putting out a better product...nah, thats stupid. What was I thinking?


    Jimmy H wrote on August 26, 2008 06:36 PM: mauna loa
    You don't make any sense, what are you trying to say? You would not last long as a casino owner. Your brilliant 10% vig formula may work for some gangster working out of his cadilac (even though mathmatically it doesn't work out), but you forget all the variables that come into play when you have a casino, hotel, golf course, restraunts etc.. Oh and lets not forget that the guys in the Cady have the ability to collect a little more agressively than a casino owner that is left with an unpaid marker.


    mauna loa wrote on August 26, 2008 04:12 PM: It's called BS. I wouldn't believe that on a stack of Bibles. Higher wheels and their weekly pay checks are the answer. As far as the book is concern, their hasn't been a book to lose money unless you are cheating the books. Seems the Italians in NY,NJ,and Ct have it down to a science. GO after the 10% vig, equal out the bets and you never lose. Wtf you guys are worse than the Demorats who run the country.


    casinocon wrote on August 26, 2008 02:16 PM: Someone could scoop up Herbst and Black Gaming for a song . . . Greed is coming around to bite the big bad gaming companys in the ass.


    Joe Q. Public wrote on August 26, 2008 11:05 AM: How the helll do you lose $20 million owning 3 casinos? Are you kidding me? Cut your expenses back Black, you frigging moron.