People: Faces in the spotlight
People: Faces in the spotlight
These gaming industry figures were among the leading movers and shakers in 2005
Has there ever been a year in which the casino industry was more in the news than 2005? From the mega-mergers of corporate gaming giants to political scandals that rocked Washington to the TV prominence of poker, The Palms and a certain oddly-coiffed gaming executive; from the debut of America's most costly hotel to the devastation of the nation's third-largest casino jurisdiction, the gaming industry was never far from the front pages throughout the year.
Behind each earthshaking news event was a gaming executive stirring things up, putting out fires and boosting their company's profile. Here are a few of the executives that caused the most noise in 2005.
Harrah's Entertainment Inc.
To borrow from Charles Dickens, 2005 was the best of times and the worst of times for Harrah's Entertainment Inc. and its chairman and chief executive, Gary Loveman.
In the spring, the company completed its historic merger with Caesars Entertainment, establishing Harrah's as the single largest gaming company in the world. The stats speak for themselves. Today Harrah's controls more than 40 properties in twelve states and three countries. That represents 4 million square feet of casino space, more than 40,000 hotel rooms and nearly 100,000 employees. The purchase nearly doubled Harrah's revenues to $8.75 billion.
But if things have never been brighter for the 67-year-old company, things were never more grim for nearly 8,000 Harrah's employees in September when Hurricane Katrina overturned their lives.
Rising admirably to the challenge Mother Nature wrought on the gaming industry in the Gulf Coast region, the company launched the Harrah's Gulf Coast Region Assistance Center in Gulfport, Miss. as a resource for employees of Harrah's three Gulf region properties destroyed by Hurricane Katrina.
The company provided on-site primary health care services, flew in shipments of emergency medical supplies on the Harrah's corporate jet, assisted with compensation and benefits for displaced workers and even made up the difference between military pay and regular pay to employees whose National Guard or reserve units were activated for Hurricane Katrina relief efforts.
At a time when their lives were so full of darkness, Harrah's-and Loveman-provided a little hope for their employees.
Loveman also gave succor to the Mississippi gaming industry as a whole by being an early-and very vocal-voice calling for shoreside operation for vulnerable Gulf Coast casinos.
"Absolutely no one has benefited from the laws that require casinos operate on water," Loveman said at Global Gaming Expo in September. He added that history will look back on this rule and determine that everyone who agreed to the measure, "must have been on ether."
Last year marked the fruition of two long-term goals Terry Lani, chairman and CEO for MGM Mirage, had for his company. The first was the finalization of MGM Mirage's purchase of Mandalay Resort Group, and thereby becoming one of the largest casino entities in the United States. The second was notable progress in the company's laudable initiative to increase diversity throughout its enterprise.
Last April, MGM Mirage and Mandalay Resort Group completed its acquisition of Mandalay, creating a company with about $7 billion in revenues and 70,000 employees.
MGM Mirage now controls 24 properties representing a majority of the hotel rooms and about 40 percent of the slot machines on the Vegas Strip.
With that massive growth, the company re-asserted its ongoing move toward greater corporate diversity. "We thought there was an opportunity to look at the larger picture, where we've been on our diversity journey as we look toward our next significant chapter," Punam Mathur, senior vice president of corporate diversity and community affairs, told the Web site HotelInteractive.com. "By all the gauges, whether human resources or purchasing, we've got lots of reason to be optimistic."
The company reported that, at the close of 2004, minorities accounted for 54.4 percent of MGM Mirage's workforce, up from 50.5 percent in 2001. Positions at the managerial level and higher held by minorities increased from 26.3 percent in 2001 to 31.2 percent in 2004, according to the company. And women account for some 50.3 percent of MGM Mirage's workforce.
"The crowning accomplishment is very much more about how we've managed to weave the values of diversity throughout the fiber of our corporate culture, because ultimately that by far is the most important thing that you can do," Mathur told HotelInteractive. "It's the difference between a value and program. A program is something people participate in when someone's watching, but if I have a value around a priority, I'm going to demonstrate that all the time."
Lanni also took time last year to launch a new, ambitious initiative for MGM Mirage: Project CityCenter, a $5 billion, 66-acre Las Vegas development featuring gaming and nongaming hotels, high-rise condos, shops and restaurants scheduled to open in 2009.
"It will change [downtown Las Vegas] like it's never been changed before," Lanni said. "What it will really do, in my opinion, is it's going to define the center of Las Vegas."
Penn National Gaming
In a year made memorable by mergers between gaming giants, one merger between two medium-sized companies received comparatively little coverage. Nonetheless it was significant enough to create the third-largest gaming company in terms of revenue and operating earnings, just behind the aforementioned MGM Mirage and Harrah's.
It was the purchase of Argosy by Penn National Gaming, a move that put Peter Carlino among the ranks of gaming's most powerful executives.
Carlino's leadership of Penn National has brought the company to remarkable new heights. Originally a small Pennsylvania-based track operator, Penn National is now in the enviable position of being a major player in the racino business in several jurisdictions.
Take Pennsylvania, for instance. There the state Supreme Court finally ruled in favor of legalizing slot machines in 2005, supporting legislation already in place. The ruling sets the stage for Penn to complete plans to build a new gaming facility at Penn National Race Course near Harrisburg, the state capital.
And then there's Illinois, where the state Legislature agreed to roll back a previous tax-rate hike on gaming facilities in the state. The rollback will give a big boost to Penn National's operations in that state. And in Maine, Penn recently purchased an off-track betting facility in Bangor, allowing it to build the first gaming facility in that state.
It's not surprising, therefore, that Penn National has the buzz of a company on the move. "What Peter's done with Penn National over the last 10 years is a testament to his ability to create value strategically, smartly and successfully," Deutsche Bank Gaming Analyst Marc Falcone said in an article on Penn National that ran in last January's Casino Journal. "As a gaming executive, I think Peter really flies below the radar screen. He's not as visible as other gaming executives, yet he's taken a very small racetrack operator and created the industry's third-largest gaming company."
In his typical self-effacing management style, Carlino deflects all credit for Penn National growth to his company's board and employees.
"[To step] outside our racing roots…was a courageous move for our board and all of us because, at that time, there was not a single gaming operative in the company," Carlino told Casino Journal. "But I felt pretty strongly that that was where our future lay and that we'd buy these properties and figure out a way to run them well. That all came to pass and then with a core of good properties, we were able to attract the kind of executive talent we would need to carry on further."
Monarch Casino & Resort Inc./Atlantis Hotel & Casino
How do you top a year in which your company's stock skyrockets 400 percent over the pervious 12 months? How about another 28 percent surge in third quarter 2005? That is the astounding record of John Farahi's Monarch Gaming, owner-operator of the Atlantis Hotel & Casino in Reno, a jurisdiction-badly impacted by the growth of Indian gaming in California-not known for massive growth in recent years.
In October, the company reported net income for the 2005 third quarter at a record $7.1 million, a 27.6 percent increase from net income of $5.6 million for the same period a year earlier.
Farahi, Monarch's CEO and co-chairman, said his company's third quarter performance was the result of "a confluence of favorable factors. The vitality of our market manifested by the area's strong economy and continuing population growth combined with our great
location and product."
Indeed, things seem to be looking up in the Reno market despite damage done by the tribal properties across the border. Along with Farahi's Monarch Casino & Resort Inc., Ferenc Szony's Sands Regent has brought a kind of enthusiasm and optimism not seen in the market since, perhaps, the glory days of the 1970s.
Since joining the company as chief executive officer and member of the board of directors in December 1997, Szony and his management team have reinvigorated the Sands, growing it from a single property in downtown Reno to five properties throughout the region. Sands revenues have grown from $57.5 million for fiscal 1997 to $81.1 million for fiscal 2005.
The keys to Sands Regent's recent success, according to Szony, can be summed up in a few words: reinvestment and customer service. "As a company, we heavily reinvest in each of our operations and focus on knowing what our patrons want as opposed to copying from our competitors," he said.
Was there a splashier or more heavily anticipated casino opening in 2005 than the debut of Wynn Las Vegas? Steve Wynn, once again demonstrating remarkable vision and incredibly savvy marketing instincts, created the most talked about property in Las Vegas since, well, the opening of his last casino reinvention, the Bellagio in 1998.
Unless you've been living under a boulder for the past 12 months, you just might have heard that the property was built at cost of $2.7 billion; that it stretches over 192 acres, with 2,700 guest rooms and 110,000 square feet of casino space; that it features 76,000 square feet of retail, including a Ferrari-Maserati dealership; that it has an art gallery showcasing Wynn's world-famous art collection, two wedding chapels, and 18 restaurants and bars.
And perhaps you've heard about the two production shows, including Franco Dragone-produced Le Rêve, set in a 1-million-gallon, water-oriented theatre, and the Broadway import Avenue Q, a musical featuring satirical puppets. Coming soon: Broadway's biggest show-Spamalot-scheduled to open in 2007.
Asked to sum up his current casino development philosophy on the television show Face to Face with John Ralston, Wynn responded with the following statement:
"We ask ourselves, did people stay at the Mirage because they got to sleep next to a volcano? Of course you laugh. It is a ludicrous question. The answer is no…They are wonderful tourist attractions, but there is no franchise in a tourist attraction. There is a franchise and a guest is something that happens inside the building usually between the staff and the people of the building, and the building makes it possible.
"You design a hotel from the inside looking out. I had it 180 degrees off… Wynn Las Vegas is a completely different approach. The sidewalk is not the show. You have to go inside."
The 63-year-old Wynn, a fixture in America's biggest gaming jurisdiction since 1967, has never been hotter. And that's saying something, because he's been upping the ante in Las Vegas every few years at least since the early 1970s, developing one revolutionary new property after another and reinventing the casino business along the way.
The Palms Hotel & Casino
You know you've made your lifetime hip quotient when the E! cable channel-home to unending coverage of Paris Hilton and the Olsen twins-has built a whole show around you. This year, the "Party at the Palms" continues apace with the creation of what the property describes as "the ultimate suite for the basketball enthusiast," the only hotel room on earth with an indoor basketball court, one of several "mega-suites" in the property's new 347 room Fantasy Tower.
The $600 million expansion project includes a recording studio, a new pool, a 2,200-seat showroom and a 50-story condo-hotel and spa.
Palms owner George Maloof has made hipness a major selling point at his Las Vegas property, which continues to rake in millions from its largely 20- and 30-something clientele.
"I wanted a fun place," Maloof said about his property in an interview that ran last May in International Gaming & Wagering Business magazine. "If I was going to put my heart and soul into something, I wanted something that I liked myself. If I could hang out at a place, I'd want to hang out at the Palms. I built it for that lifestyle-the lifestyle that I was used to."
As a privately owned property, the Palms does not have to publicly disclose revenues and earnings, but according to Forbes.com, in 2003 Maloof earned about $50 million in operating profit from The Palms.
With very little debt on its balance sheet, the property that year generated a 20 percent pretax return on its initial $265 million investment. Not bad for a joint with less than 500 hotel rooms and built in 2001, practically a lifetime ago to an Olsen twin.
With this kind of success, Maloof is starting to turn his attention to gaming markets beyond Las Vegas. "You know, with the brand that we developed, there are going to be opportunities," he said. "As we expand, we'll use our brand in the right places and at the right time. But I definitely see lots of opportunities. I'm young and I have no intention of getting out of this business. I don't know what else I would do."
Trump Entertainment Resorts
He's had unprecedented success in Manhattan real estate, terminating employees on TV reality shows, and dating models less than half his age, but Donald Trump's gaming ventures have had a spotty record at best. In and out of bankruptcy for the last decade, the Trump casinos finally seem to be on steady footing with the appointment of Trump Entertainment Resorts, Inc. CEO Jim Perry in July and COO Mark Juliano in August.
While he relinquished majority control of his company to his bondholders, Donald Trump remains the largest individual stockholder in Trump Entertainment Resorts, previously known as Trump Hotels & Casino Resorts. And though critics in recent years used words like "shabby" and "threadbare" to describe the Trump casinos, Trump's new management team remains eternally optimistic.
"I wouldn't say the properties are shabby as much as they are dated," Perry told Casino Journal earlier this year. "That's really the issue: How do you freshen them up and make it a little more contemporary in style…This is a company with a lot of potential which, because of its debt load, has been forced to take some approaches that were short term in nature. Now with the new balance sheet, the refinanced balance sheet, the company has the potential to reinvest money and get nice returns for its shareholders."
Mississippi Casino Operators Association
Mississippi Gaming Commission
Are there two other people more committed to the Mississippi Gulf Coast gaming industry than Beverly Martin, executive director of the Mississippi Casino Operators Association and Larry Gregory, executive director of the Mississippi Gaming Commission? If there are, we haven't found them. The two Hurricane Katrina survivors showed true dedication to the industry and its employees in the tragic days following one of America's worst national disasters.
Waking up the morning after Katrina hit, Gregory said, "was just devastating to any Mississippian. That's the word that comes to mind… To people on the Gulf Coast and in the casino industry, people like me it was personal. I flew over the devastation in a helicopter with emergency officials, and to see these casino barges on Highway 90 and some of them north of Highway 90-you know some of these casinos are as large a cruise ships.
"It affected all of the people who worked down there, not just casinos, not just business, not just brick and mortar spread across 90. It was personal to everyone."
True Mississippians to the end, Martin and Gregory continue to galvanize casino operators and employees. The rebirth of the Gulf Coast may be years away, but when it comes, Martin and Gregory will be two people to whom America's third-largest gaming jurisdiction will owe a great debt of thanks.
It's the hottest table game in the casino industry today, and the popularity of poker is largely attributable to cable TV shows like the Travel Channel's World Poker Tour, created by Lyle Berman's World Poker Tour Enterprises, Inc.
Berman, a renowned poker player himself, has seen his already vast fortunes climb dramatically as the World Poker Tour's popularity skyrocketed, spawning reams of imitators and attracting still more individuals to the game.
The founder of Grand Casinos, Berman made millions of dollars in the early days of tribal gaming by landing management contracts with some of the most successful gaming tribes in the country. Grand was eventually sold to Park Place Entertainment, after which Berman created Lakes Entertainment, Inc., a tribal casino management company, and the World Poker Tour, a Lakes subsidiary.
Today, World Poker Tour's series of high-stakes tournaments air on more than sixty markets globally and WPT Enterprises licenses its brand to companies in the business of poker equipment and instruction, apparel, publishing, electronic and wireless entertainment, DVD/home entertainment, casino games and giftware.
Frank Fahrenkopf Jr.
American Gaming Association
For a business that is blasted regularly by its critics as being greedy and soulless, the casino industry has, of late, spent an enormous amount of time and energy trying to help people.
Among two of the most laudable efforts by the industry are initiatives launched by the American gaming Association, the industry's largest lobbying group, under the guidance of its leader, Frank Fahrenkopf Jr. In the light of the devastating effects of Hurricane Katrina on the Gulf Coast, the AGA set up the Gaming Industry Katrina Relief Fund. The goal of the fund, according to a letter to the industry by Fahrenkopf, was to raise industry dollars to provide disaster relief and assistance to affected gaming employees in Mississippi and Louisiana.
Further, to help those afflicted with gaming addiction, the AGA launched its "Banding Together" responsible gaming campaign, featuring bright orange silicone wristbands that display the message "Keep it Fun." All proceeds from the sale of the wristbands will be donated to the National Center for Responsible Gaming, which funds research on disordered gambling.
Here are some additional individuals that graced the gaming industry spotlight in 2005:
Sheldon Adelson struck gold in December 2004 with a public offering of his Las Vegas Sands. The company's stock rose 61 percent on its first day of trading, pushing Adelson's net worth up a whopping 767 percent from the previous year… Ameristar Chairman and CEO Craig Neilsen's The Craig H. Neilsen Foundation, often working in conjunction with Ameristar, raises hundreds of thousands of dollars each year for people with spinal chord injuries… Bernie Goldstein, chairman of Isle of Capri, the only publicly traded casino company based in Mississippi, faced a large scale corporate crisis in the wake of Hurricane Katrina, as opposed to the regional crisis faced by some of his competitors... Treasure Bay Casino President and CEO Bernie Burkholder was in the Biloxi property's hotel when the second floor collapsed. Now he's among those leading the way in rebuilding on solid ground... Ernie Stevens, the always outspoken chairman of the National Indian Gaming Association, galvanized tribal leaders to help the victims of Hurricane Katrina… Pizza maven and sports team owner Marian Ilitch (Little Caesars, the Detroit Red Wings hockey team and baseball's Detroit Tigers) bought one of Detroit's three casino properties, the MotorCity Casino. CJ