To celebrate the occasion of Mississippi’s 25th anniversary as a gaming jurisdiction, the Mississippi Gaming & Hospitality Association, our partners in the event, produced a session featuring the pioneers of riverboat gaming, which included such visionaries as Lyle Berman and Jack Binion. Headliners also included Jim Allen of Hard Rock (whose tenure at the Trump Organization in the 1980s is the topic of newfound fascination) as the opening keynote speaker, and Felix Rappaport, now the top executive at Foxwoods. Here’s a sampling of what they had to say:
Lyle Berman, president, Berman Consulting Corporation
Since we first started in Mississippi, the industry has matured. In many of these markets, and the East Coast as well, it’s a zero-sum game. Somebody opens a new casino, in most cases, it hurts the other casinos. There’s not a need in most places for another casino. There is a need for the casinos to mature themselves. When we first started all you needed was slot machines, table games and good food. But today you have to add more amenities. I think on the Mississippi Gulf Coast and Tunica… they have to add more amenities, as Las Vegas did, in order to stay ahead of the other states that will be adding gaming as well.
Jack Binion, founder, Horseshoe Gaming Corporation
I’m like Lyle; you need drivers, things that are going to drive people into your place, and I’ll give you a good example: South Point. When they built it, Mike Gaughan’s wife liked horses, so they ended up putting in an equestrian center. And people said, “That won’t do much.” Well, it’s been the savior. They’ve added another equestrian center, and they also have a 64-lane bowling alley that does nothing but have tournaments. All these drivers really help. I’m a little prejudiced this way, too, but another thing is good service. Gambling house owners used to spend all their time on the floor. Now, they’re just managing the balance sheet, and they bring in people who don’t know anything about gambling or service. One thing that’s unique about the gambling business: If I sell a pen to somebody, whether Bill Gates buys it or somebody on welfare, the profit is the same. In the gambling business, everybody is unique in terms of the profit they can produce, and that’s what you really need to be able to take care of.
Jim Allen, chairman, Hard Rock International and CEO, Seminole Gaming
Mr. Trump, at one particular point, was very active in the business, and under the leadership of a gentleman by the name of Steve Hyde, the company was incredibly successful. I truly mean that… like the number one company in the industry; the first casino in the industry to ever surpass $30 million in gross gaming revenue; the first four-star, four-diamond gaming facility. There clearly were some difficult times and the media focuses on the negative side, the bankruptcies. Why did that occur, and how does that relate to this conference and Seminole Hard Rock Entertainment? It’s extremely simple: It’s not that the business didn’t do well from a gross revenue standpoint. It’s not that the products weren’t world class because truly they were. It’s because the company was incredibly over-levered. When you are paying over $180 million a year in interest, at anywhere from 14 to 17 percent, that is the recipe for disaster. As we look at the industry today, I am hopeful we have learned our lesson. Does anybody think that Caesars and Harrah’s and all their brands are not a great company? Clearly they are, and there are some amazing people that work there. But when you have $20 billion in debt and the company is spending the greatest percentage of its time with lawyers and dealing with Wall Street, it’s very, very difficult to run a business.
Felix Rappaport, president and CEO, Foxwoods Resort Casino
We’re really in a transformation. My view of the future is that we need to become more of an integrated resort. So when you talk about the future of gaming, we are really in the entertainment business. We are still about 78 percent gaming when it comes to revenue. In my time at Foxwoods, we’ve spent a lot of time opening non-gaming opportunities; new restaurants and a planned adventure park with a 305-foot-high, 3,700-foot-long zipline. If you look at the Las Vegas model, which is 65 percent non-gaming revenue/35 percent gaming, I believe the future of Foxwoods is to move in that direction, though probably not in the same proportion.