Steve Gallaway

Changing the Face of the Industry

Posted on July 25, 2017

In this, our second in a series of discussions about the role of non-gaming amenities in both destination and regional gaming markets, we focus on the extraordinary and ongoing evolution of hotels, and how to assess, strategize and implement change.

The “lens” we use is comprised of five attributes that, when integrated, provide operators with a framework to create a comprehensive strategy for developing a new hotel or rebranding and refurbishing an existing one: the strategic assessment lens. This approach has helped several operators create new development and rebranding strategies for successful restaurants, bars, nightlife, entertainment and retail venues, casinos and hotels.

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The 5 Ps of F&B Success

Posted on June 20, 2017

In today’s business environment, casino operators must find ways to enhance and maximize the appeal and gross operating income of their food and beverage venues. An effective food and beverage strategy should not only attract and retain gamers, but generate profit through proper pricing and planning.

Las Vegas Strip operators have clearly demonstrated how profit can be gleaned from F&B operations. Bars and restaurants today are a significant generator of EBITDA (earnings before interest, taxes, depreciation and amortization) for many Vegas resorts. Outside Vegas, many operators have discovered how well-run restaurants and bars with quality food offerings can benefit the bottom line.

While regional casinos differ substantially from those on the Strip, they can apply the same practices to turn a profit from dining.

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History and Current Status of Gaming in Taiwan: A White Paper

Posted on June 16, 2016

Taiwan has long been a venue of interest among foreign casino investors, originally because of the importance of Taiwan as a source of customers and more recently because of the potential to reach Chinese customers through the ever-increasing transportation and tourism links between Taiwan and China. The effort to bring casino gaming to Taiwan, however, has been a journey of stops and starts over the past 25-plus years, though there has been fairly steady progress since 2009.

In 2009, the Taiwanese island of Penghu held a public referendum on the establishment of casino-based tourist zones. The referendum was the culmination of nearly twenty years of advocacy on the part of politicians, gaming companies, university professors and professional advisors. The referendum failed. However, in 2012, Matsu held a referendum that passed. While the success of Matsu’s referendum was supposed to politically incentivize the Taiwanese government to pass gaming legislation regulating casino operations, and the government did retain a law firm to draft the Tourism Casino Administration Act (the “Act”), the Act has been stalled in Taiwan’s legislature since 2013.

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Strategies to Grow International Tourism into Las Vegas and Stimulate Economic Activity

Posted on November 16, 2015

Few would argue that sustained growth in air passenger volume into Las Vegas is a critical factor in the health and vibrancy of the Southern Nevada tourism industry. While McCarran International Airport (“LAS”) continues to enjoy steady growth in domestic passenger volume, growth in international traffic has experienced a far higher rate in the last five years, fueled by the opening of the new international terminal and marketing initiatives by the Clark County Department of Aviation. International visitation grew from 14% of total visitor volume in 2009 to 20% in 2013.1 International tourism continues to represent the greatest opportunity for new market growth, particularly visitors from Asian countries.

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Casinos and the City – A White Paper

Posted on April 16, 2015

Casinos and the places where they can be found have increased dramatically over the last twenty five years. Where at one time there were only a few places on the planet where one could go to participate in legal gambling activities, today casinos are a fairly common enterprise. In the United States alone, there are over 900 commercial and Indian gaming establishments. Casinos can be found not only in North America but also throughout Europe, Central and South America, Oceana and Asia.

Since the passage of the Casino Control Act in 1976, legalizing casino gaming in Atlantic City, NJ, casinos have been narrowly viewed as a tool for urban redevelopment, providing tax revenues to state and local governments and jobs to its citizens. Their success in providing those benefits cannot be disputed. Collectively, the casinos in Atlantic City, the riverboat and barge casinos in the Midwest and southeast United States, Indian casinos, and the land-based commercial casinos in a number of US cities as well as those on the Macau Peninsula and Singapore have contributed billions of dollars to government coffers and created hundreds of thousands of jobs. However, their success as a tool for stimulating commercial activity within the neighborhoods that they are located in has produced less dramatic results.

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New Kid in Town: Can Vietnam emerge as an international gaming-resort destination?

Posted on January 13, 2015

Despite the recent downturn in gaming revenue in Macau, Asia remains the region of the world with the greatest opportunities for casino development. While Japan and Taiwan remain the most enticing markets, if only enabling legislation were to be passed, other markets are attracting the interest of casino developers. Unfortunately, most of those opportunities are in markets that are loosely regulated, difficult to get to, surrounded by poor infrastructure or require border crossings that can best be described as challenging.

One market that continues to interest investors is Vietnam. With 92 million citizens, a burgeoning middle class, good airport infrastructure and airlift to a number of nearby countries, Vietnam appears poised to emerge as a regional gaming market that is capable of producing a prodigious amount of gaming revenue. Nevertheless, a number of issues must be resolved before the country can live up to its potential.

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Killing the Gaming Experience

Posted on July 16, 2014

Regional U.S. gaming markets continue to see month-over-month declines in gaming revenues. Analysts tend to blame the weather, the economy, market saturation, increased competition in neighboring states, and of course, Obama for this decline.

What has yet to be cited is that the gaming entertainment experience has fundamentally changed over the past few years, and many casinos no longer deliver the experiences that players have been used to historically.

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Legislative Dynamite: State failures the exception to the rule

Posted on November 16, 2012

As state budget crises continue to sweep across the nation due to the effects of the Great Recession, more and more states are making foolhardy decisions in an attempt to plug part of a budget deficit that may benefit them in the short term but will ultimately hurt them in the long run. Many investors in the gaming world have historically been gun-shy of investing in many international destinations due to legislative risk, viewing the United States as a stable jurisdiction in which the future is predictable. However, events of recent years have shown this premise of legislative stability in the United States as false.

New Jersey, feeling the pressure to expand gaming outside of Atlantic City to help reduce its deficit, has an opportunity to do it the right way that will benefit all stakeholders. Hopefully, they follow sage advice and set the example to how to responsibly expand gaming while simultaneously benefiting companies that have invested billions in their state.

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Russian Roulette: Is Vladivostok Russia the Next Important Gaming Destination in Asia?

Posted on September 16, 2012

Vladivostok, Russia, a city much closer to Beijing than Macau and bordering northern China; a city in which President Vladimir Putin has spent over $18 billion over the past four years improving and building; the incredibly strategic southernmost port city in Russia, has opened its doors to the world to develop the integrated entertainment destined to be a world-class casino-resort destination serving northeastern Asia, and in particular, northern China.

All you have to do to understand its potential is look on a map. However, there is no buzz in the industry, and operators are quickly missing the next new gaming destination in Asia.

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Swapping Out Debt: Solving the riddle of debt-asset swaps and triangular deal structures

Posted on April 16, 2009

The riddle of “debt-asset swaps” is currently befuddling CFOs, public debt analysts, casino buyers and hedge funds.

All look to profit from discounted gaming company debt and the sale of distressed assets. Right now, there is a disconnect between a gaming company and its debt. On the one hand, the gaming company’s debt—whether $5 billion of publicly traded bonds or $50 million in privately held notes—is trading at prices that may be 10 cents to 70 cents on the dollar. On the other hand, the gaming company may be willing to retire that debt at face value, as part of its de-leveraging process.

The theory of a debt-asset swap is to take advantage of that disconnect. If one could purchase the gaming company debt at today’s steeply discounted price, and then present it to the gaming company for retirement at face value, then one should be able to profit greatly.

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