Tuesday, May 13, 2008

MotorCity Casino officials concerned Michigan Smoking Ban will hurt revenue

As published 5.13.08 in Online Gambling Paper:

Detroit casinos threatened by the smoking ban

The smoking ban passed by the Michigan Senate on Thursday now heads to the House and likely a signature by the Gov. Jennifer Granholm, who backs the smoking prohibition. Unlike the bill passed by the House initially, the Senate is also banning smoking at the casinos in Michigan, which in fact would affect only the three Detroit casinos, as the remaining 18 Indian casinos would not be affected by the legislation, because they are on tribal lands.

"We're not in favor of the smoking ban. We are very concerned it will create an unleveled playing field in regard to the tribal casinos," MotorCity Casino spokeswoman Jacci Woods was quoted.

The Michigan bill that passed the House five months ago would have exempted casinos, bingo halls, horse tracks, cigar bars and smoke shops from the ban, but the Senate stripped those provisions in favor of banning smoking in all workplaces. The House could send the bill as early as next week to the Governor.

The casino smoking ban in Michigan would certainly affect the bottom line of the three Detroit casinos, as gamblers would hardly go outside to smoke, especially during the harsh Michigan winters.

Similar ban already in effect at the 11 Atlantic City casinos is blamed for the ever declining gambling profits in New Jersey, as gamblers take the short drive to neighboring states' casinos which allow smoking on the gaming floors.

The closest casino outside of Detroit is the Canadian Casino Windsor, which also prohibits smoking, thus gamblers would have to either drive 150 miles to the Mount Pleasant's Soaring Eagle Casino and Resort or decide to gamble online from their homes, where smoking has not been regulated...yet.

MGCB may force Greektown Casino owners to sell gaming hall


Greektown Casino given until June 10 to avoid forced sale

Nathan Hurst / The Detroit News

DETROIT -- Just days after announcing a $100 million cash infusion from a new Metro Detroit investment group, Greektown Casino was told it has until June 10 to come up with a convincing argument why the Michigan Gaming Control Board should not force casino owners to sell the gaming hall.

The board's demands could threaten a deal announced last week by Entertainment Interests Group to invest some much-needed cash into Greektown. The group agreed to buy a 40 percent stake in the casino for $79 million, and invest another $21 million to pay off former minority investors. Sault Tribe of Chippewa would have a 60 percent stake in Greektown.

At the monthly meeting of the board Tuesday, Greektown officials requested that the board waive enforcement of requirements that the casino maintain a certain debt-to-earnings ratio. The casino hasn't met that requirement since November, and that failure allows the gaming board to force the casino's sale.

The board denied the waiver request, with Chairman Damian Kassab suggesting that Greektown revisit its deal with Entertainment Interests Group. Kassab noted the $100 million would satisfy the debt-to-equity requirements only through part of 2008.

Richard Zussman, a lawyer for Entertainment Interests Group, told the board that a denial of the waiver could jeopardize the transaction. The investment group is headed by Jerry D. Campbell, former chairman of Republic Bancorp and developer of Pinnacle Race Course in Huron Township.

"We are hesitant to continue spending time and money to close this deal," Zussman said. "We'd have to think seriously about moving forward."

The gaming board requires Greektown to maintain a debt-to-earnings ratio of 6.25 to 1 -- meaning that for every $6.25 in debt the casino must show $1 in equity. The casino has been in violation of that ratio late last year and had until April 30 to shore up their finances.

Zussman wouldn't elaborate on his comments following the close of the board's meeting, but Aaron Payment, chairman of the Sault Tribe, said Zussman's comments caught him off guard and shouldn't be taken as an indication that Campbell and his partners intend to pull their offer from the table.

"I am very confident that this deal will move forward," Payment said.

You can reach Nathan Hurst at (313) 222-2293 or nhurst@detnews.com.

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