Exec speaks; Binion's rumors fly - Business

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Jun. 01, 2007
Copyright © Las Vegas Review-Journal

Exec speaks; Binion's rumors fly

MTR Gaming boss identifies hotel-casino as 'investment property' but says no more

By BENJAMIN SPILLMAN
REVIEW-JOURNAL

Poker players square off Wednesday in the poker room at Binion's. The hotel-casino has been the subject of sale speculation for months.
Photo by Craig L. Moran.

The place that made poker famous is awash in rumors of a possible sale, but its owners still aren't showing their hand.

Binion's in downtown Las Vegas has been the subject of sale speculation for months and a recent remark by the chief executive officer of the West Virginia company that owns the historic casino added fuel to the rumors.

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But so far neither Edson Arneault nor anyone else in the Chester, W.Va., headquarters of MTR Gaming Group is willing to elaborate on plans for the struggling casino, the former home of the World Series of Poker, an event that's reaped millions of dollars and raised poker's profile worldwide.

That leaves the casino's 850 employees, investors and downtown enthusiasts to wonder about the future of what was once among the most successful and notorious casinos in Las Vegas.

"I've heard rumors ever since I have been here. And companies have expressed interest in this property," said Bill Robinson, Binion's chief operating officer since May 2006. "Nobody from corporate has talked to me about this."

Robinson was responding to remarks by Arneault, president, chief executive officer and chairman of the board for MTR Gaming, during a conference call in May to discuss the company's earnings.

"We view it as an investment property rather than one of our strategic properties," Arneault told investors, which suggested MTR Gaming would like to unload Binion's, which posted a negative cash flow of $3.3 million last year.

MTR Gaming has already agreed to sell its other Las Vegas property, Speedway Casino in North Las Vegas, for $18.2 million, and investor conference calls focus more on its racetrack and casino operations in West Virginia, Pennsylvania and Ohio than problems in Nevada.

"You don't invest in MTR for Binion's," said Justin Sebastiano, a senior gaming analyst for Nollenberger Capital Partners, who follows the company.

Sebastiano said MTR Gaming's future is in slot machines and racetracks in Pennsylvania and the potential approval of table games in West Virginia.

Binion's, Sebastiano said, has been a drag on MTR Gaming's stock since the company bought it from Harrah's Entertainment in 2004 for about $20 million.

"I don't really see it getting better for them anytime soon," Sebastiano said. "I'm estimating negative cash flows over the next few years."

Neither Arneault nor Steven Overly, MTR Gaming's vice president of business and legal affairs, returned several calls to comment or elaborate on the remarks.

Robinson said as far as he knows, the company plans to continue to invest in Binion's in an attempt to right the listing operation.

Recent improvements include a club that operates at night on the 24th floor of the hotel tower in space Binion's Ranch Steakhouse uses earlier in the evening.

Casino renovations include new carpeting and decor and 200 new slot machines. And there are plans to upgrade at least one floor of hotel rooms in an attempt "to see what the price resistance is" and attract higher-spending customers, Robinson said.

Binion's isn't the only casino in downtown Las Vegas operating in an air of uncertainty.

The Tamares Group recently listed the Gold Spike for sale at a price of $15 million. The smoky, down-market property has reportedly piqued the interest of a number of potential buyers, including operators of the Sapphire gentleman's club near the Strip.

Tamares also recently parted ways with the Navegante Group, the company that had been managing the Gold Spike, Plaza, Las Vegas Club and Western Hotel. Company officials, through representatives, have hinted they intend to make changes but so far have declined requests to elaborate on their plans.

Owners of the Golden Nugget and El Cortez are investing about $100 million and $20 million, respectively, in their properties.

Gaming revenue continues to decline at downtown casinos. Gaming win in March was $55.3 million, a 7 percent decrease compared with $59.5 million a year ago. It was the 10th consecutive month of decline for the market.

"It is not the Vegas Strip," said Sebastiano of Binion's and its downtown location. "I just don't think it is that great of an asset."

MTR Gaming Group shares fell 8 cents, or 0.51 percent, Thursday to close at $15.76 on the Nasdaq National Market.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. David wrote on June 06, 2007 12:34 PM: Ahaaa, for the good 'ole days! The "boss", me and select family will visit downtown on Father's day - plus 3 days. Main St. Station and Vegas Club for hotels; Binion's, Fitzgerald's and Plaza for Poker; El Cortez, Golden Gate and Golden Nugget for Blackjack; Fremont, Gold Spike, California and (maybe) Four Queens for Video Poker. When we get bored (?), take the "free" shuttle from Fremont/California to good 'ole Sam's Town, which will also get you to the strip (Harrah's). I'm not associated with any of the foregoing establishment - just a loyal and satisfied customer. MY FINAL WORDS: To revitalize "Downtown" and its Casino properties in particular, GET RID IF ALL Accounts and under 30 "B.A. in management" wanna-be's, restore Pit Bosses that have authority, get rid of "plastic player cards", and regenerate the live lounge acts of yesterday. Ciao and good luck! Donna wrote on June 06, 2007 11:04 AM: Please don't even consider tearing down Fremont Street!! We were in LV in November of 2006 and the light show was one of the highlights of our trip. It is one of a kind. You could still make the area like the "old" Vegas but do it under the canopy of lights. I personally think that is one of the biggest attractions that get people to go there and then they find all these great eating establishments and fun casinos with great staff and stay longer. We met nothing but friendly, happy people when we were there so all the negative comments in the reviews make me wonder about the way these reviewers handled themselves while there. Were they negative because they didn't win at the slots or tables and portrayed that image to the rest and got it right back? We had a wonderful time while there (stayed at the Fitz for 5 days) and felt safe while roaming around at 3 in the morning, just us girls! Too many people on the strip. I had my camera almost knocked out of my hands twice while on the strip. Not everyone goes to LV for the crowds nor the cleavage, as mentioned. Leave Fremont Street up and running. Just clean up some of the casinos and add more lighting inside. Thank you for allowing me to voice my opinion/concerns. Donna from Alberta, Canada David Huntington wrote on June 01, 2007 12:51 PM: They should market downtown as 'how Vegas used to be.' Tear down the Fremont Experience, bring traffic back to the core and bring back the cheap buffets and lounge acts to give reason to go downtown. With big corporations gobbling up most of the Strip and pushing to gouge customers on every aspect of their operations, 'Old Vegas' could be the comeback for downtown. DWIF wrote on June 01, 2007 12:02 PM: What they are not telling you is that the same corperation that owns the Golden Nugget bought Binions last week. I can not believe that it still has not come out yet. DownTown Blues wrote on June 01, 2007 11:42 AM: El Cotez is a Dump, The CEO changed the uniforms for the cocktail staff to look like a bunch of mormons...no more cleavage! Staff will tell you income is down, The they raised their prices in the restaurant and the service is still bad.. I would go their.. for the price and expect bad service... now both.. and the pretty girls.. all left.. The Horse Shoe... walk onto the gaming floor try to find a floor manager... what a joke.. then you have free rent ... commercial properties, still closing they can't even make a profit with free rent.. Then You have the Mayor, .... I mean talk about an idiot.. tryting to play tycoon... Paula wrote on June 01, 2007 07:45 AM: keep it it is a part of Las Vegas history, everything else has been torn down. we need to be reminded of the Good "ole" days.