Online Casinos Directory

For years now the horseracing industry has been in serious trouble. The recession was hard on all markets. One thing people cut back on drastically was gambling. Casinos—both online and land based—felt the repercussion with dwindling numbers and lowered customer bases. Remember at the height of the recession the unemployment numbers were high. This left people with diminishing nest eggs and little to no discretionary funds left over. People were more concerned with making their house payments and bills, rather than gaming at the newest online or land based casino. Although the recession was over, racetrack activities have not returned to normal. They are still down and this is making it even more difficult for them to stay open. Another problem is the new casinos cropping up in the market. This is creating competition that racetracks are not yet ready to shoulder. One location that knows this all too well is New Jersey. The state has long been struggling to reinvigorate its gaming and racing industries but it isn’t happening as readily as hoped.

Now the state released an editorial with a statement that the racing industry is in need of approximately $200-million in revenue from tax payers to keep their businesses up and running. This editorial came out during a difficult time in the market. Although people are recovering, they are not yet bringing their hard-earned money to the racetracks. This is causing more and more problems for the industry. If they can get a huge amount of cash, they can continue to create bonuses to bring in more customers and hopefully turn their businesses around. In a lot of ways this editorial outlined a mini-stimulus for the industry. Just like financial institutions received economic assistance from the government, so the racing industry is asking for the same thing. WHether or not this will reasonably happen has yet to be answered. Will tax payers agree to contributing to a flailing market? Will tax payers see this as important enough a cause? Or, will they just look at racing as an out-of-date activity that should be evolved out of the market? Only time will tell what happens, but this is an issue that the state of New Jersey will definitely be debating for some time to come.

Things are changing in the market for New Jersey. The latest news is from Trump Entertainment Resorts—the company recently filed for bankruptcy and that is causing issues for area residents. For a few months now the casino has been the target of a bidding war. The two companies fighting over it are Avenue Capital Management and Carl Icahn, a field investor in gambling. Avenue Capital Management is a company that is famous for buying dying companies and turning them around for profit. The company has enough capital of its own to take on the weight of a struggling company and turn things around. It has become an expert at doing so with various other companies in the recent past. It also has the business acumen to make the changes necessary for stressed organizations to quickly regain a footing in the market. Overall it is one of the best companies for revival of a struggling market. Avenue Capital and Icahn were fighting it out over the formerly Trump-owned casino and Avenue Capital ended up winning. It was to no one’s surprise that the company won and eventually got the final approval from the New Jersey Casino Control Commission.

In the future Avenue Capital will own a majority stake of the company with 21.7% of the stocks. Trump will hold on to just 10% and the final 80%, which is debt, will be cut from $1.8 billion down to just $334 million. This is another example of how bankruptcy protection allows companies with huge debt to overcome by restructuring. The deal is a lucrative one for all parties involved. Trump stands to remain 10% owner and take on the revenue from that even though his time and efforts in growing the company are solely “up to him” according to an Avenue Capital spokesperson. Once gambling turns around again in the market, the Trump Entertainment Resorts should once again climb in prosperity through the ranks of neighboring casinos. It is no secret that the New Jersey market has been suffering for some time now and this is just the first of needed changes to help it revive its revenues. Hopefully it will make the necessary changes to the market.

The company that owns Green Valley Ranch resort in Henderson filed for bankruptcy protection last week. The company is owned by the Station Casinos Inc. It wasn’t the Green Valley Ranch that filed, but rather a decision made by its parent company. The filing was made by GV Ranch Station Inc. and listed assets of $100 million to $500 million against liabilities of $10 million to $50 million.

Though the casino company is huge, it’s no secret that the gambling industry as a whole has suffered greatly as a result of the recession. People are out of work all over the nation. The average unemployment rate is 10% but in some hardest-hit cities it is as high as 40%. The lack of jobs caused people to cut back on all discretionary spending and that includes gambling and vacations. This is why places like Las Vegas and Atlantic City have seen huge declines in their revenues over the past 18-month period.

As far as the Green Valley Ranch goes, Station Casino’s spokeswoman Lori Nelson said, “The filing of this entity is part of the overall Station Casinos reorganization. Green Valley Ranch Resort, the property itself, is not in bankruptcy. Therefore, there will be no impact to the property, team members, guests and vendors.” Nelson said the company would not be commenting any further on the decision to file for bankruptcy.

The Green Valley Ranch hotel-casino is a joint venture between Station Casinos and affiliates of The Greenspun Corporation. The filing listed three unsecured creditors — all associated with Station — but didn’t say how much they were owed. They are Station Casinos Inc., Vista Holdings LLC and Green Valley Ranch Gaming LLC. Station has disclosed in regulatory filings that in addition to its 50-percent ownership stake in the 496-room resort, it receives as the managing partner a management fee of 2 percent of the property’s revenue and about 5 percent of its earnings before interest, taxes, depreciation and amortization. That’s the same arrangement Station has with The Greenspun Corporation for their Aliante Station joint-venture hotel-casino in North Las Vegas.

The Greenspun holdings also include the Las Vegas Sun and the District at Green Valley Ranch, an open-air shopping center east of the Green Valley Ranch hotel-casino at Interstate 215 and Green Valley Parkway.

Greektown Casino is located in the hard-hit city of Detroit, Michigan. The state as a whole suffered greatly due to the recession of 2008-2009. Much of the state’s economy was based on manufacturing and that took a huge dive during the economic downturn. That cause a housing market crisis and the nationwide credit crash didn’t make anything better. Detroit became a wasteland of sorts throughout the recession. One resident, Clyde Benton said, “Walking in my old neighborhood is depressing…home after home is empty and deteriorating…It’s like a ghost town due to all the foreclosures.” Benton is not alone in his thinking. Many people remember what the city once was and are saddened at its new state.

One business that’s suffered greatly is the Greektown Casino. The casino has had a difficult time throughout the recession and had to file bankruptcy protection in 2009. Now a second plan to get the casino out of its financial predicament is underway. US Bankruptcy Court Judge Walter Shapero told casino officials and creditors that he will sign an order to approve the disclosure statement. The statement would clear the way to start the plan later next week for creditor vote.  There is a meeting scheduled for January 12^th that should let all creditors decide what to ultimately do with the struggling casino. The goal is to have a tangible plan ready by the end of January 2010.

The new plan would ensure that bondholders receive 6% of all common stock during the reorganization and they have rights to the $185 million in new preferred stock. The plan is in place to buy out the secured lenders and give improved recovery options to unsecured lenders. After the restructure, MFC Global Investment Management, Oppenheimer Funds Inc., Brigade Capital Management and Sola Ltd. would own the other 94% of the casino. Hopefully, the restructuring will allow the company to regroup and start operating again post-recession. The casino was once a huge facility that brought in billions of dollars. It opened its doors back in November 11^th of 2000 and was operated at the time by Millennium Management Group. The casino has gone through many changes over the past year—including some development and expansion efforts as per investor request.

The union is studying Station Casino and what they are finding, isn’t good. The Culinary Local 226 is requesting the casino’s creditors demand funds from insiders who profited from their buyout earlier this year. The casino is seeking bankruptcy protection but the Union is focusing on investor funding as a means of managing debt. Station Casinos is not happy about the demand and reportedly called it “silly” and “just more of some corporate harassment by the union leadership that has been going on for years due to their frustration over not being able to persuade our employees to join the union.”

The union has been trying for years now to help the casino reorganize its assets. Those assets include 18 properties that employ about 13,000 people. The union has also sent letters to creditors requesting that they lean on the company’s insiders to return money they made individually from the buyout. In the statement the union wrote: “Station Casinos could have averted bankruptcy if not for the substantial debt it took on largely to enrich a small group of company insiders.” The union said the amount was close to $1 billion of the $5.4 billion buyout price. They also assert that the company’s debt tripled and reached $5.2 billion between 2005 and 2007 and most of the debt being used to buy back shares and fund the buyout. They believe that Station Casinos could have avoided bankruptcy if they had reworked their debt and buyout differently.

The statement added, “You would think that in these difficult economic times, when thousands of union members have lost their jobs, that the Culinary union leadership would have something more productive to do with their members’ dues than to create and distribute this silly report concerning a bankruptcy proceeding in which they have absolutely no involvement.”  The report was released just prior to Station Casinos’ next bankruptcy date. They are scheduled to appear in front of the judge and answer question on their actions.  Boyd Gaming Corp will also be in attendance and request that a third-party examiner be allowed to review the gambling company’s financial records over the past five years. The casino is seeking a four-month extension from the November 25^th deadline to file a proposal.

More and more land-based casinos are having a difficult time managing in the economy. Although the recession is over, it has left a longstanding aftermath that has yet to be sorted out. Many casinos turned to bankruptcy protections as a means of regrouping and reorganizing debt to make it more manageable. Part of the problem is that almost all casinos are struggling under heavy debt structures and with the economy’s down fall, they were hard-pressed to find the cash to continue paying for debt.  Analysts at the Global Gaming Expo said that casino operators under a substantial amount of debt are choosing the bankruptcy option more and more.

Despite the negative connotation of bankruptcy, some casino operators are heralding the legal option for a restructure.  Tropicana Entertainment Chief Scott Butera stated, “You can have a viable business if you have the appropriate capital structure. Bankruptcy allows you to get a second chance. There’s a huge advantage in being able to reduce debt.”  Eric Browndorf, partner in the law form of Cooper and Levenson, stated that “The gaming world is painfully aware of the current economy and of operators becoming less hesitant to try to restructure their debts either in bankruptcy court or out of it.” He added, “Unemployment, foreclosures and bankruptcy filings have increased exponentially. Casinos operating all over the country are experiencing restructuring and Chapter 11. With supply increasing and demand waning, positive cash flow has been difficult to maintain.” The Tropicana recently filed for bankruptcy protection and eliminated about $3 billion in debt. Without the legal move, there were few options to save the company.

Although bankruptcy can save a casino’s operations, there is a downside. When lenders see the word, they can automatically have preconceived notions about the company’s financial viability. Financial adviser Alex Calderone stated, “[Bankruptcy] is not good for business. Market share slides 10%. It’s a terrible thing to have to do, but oftentimes these companies have so much leverage, debt and obligations that the only logical solution is to file for bankruptcy protection.” If a company is in the position of having to file bankruptcy, experts warn that the key ingredient to the mix is to play a good public relations campaign around it.  Butera said, “Play your public relations well. I have found it to be a very effective tool so long as you plan ahead.”

One thing the recession did was it made it difficult to expand.  Many casinos were in the midst of expansions and development when the economy first began going sour back in 2008.  Casino organizers are still struggling under debt and lenders are still tight-fisted with underwriting dollars. This is making it difficult, if not impossible, for the casino organizations to restructure or expand on the schedule they had hoped. Analysts are projecting that lenders are not going to change their tunes anytime soon either. They believe that lenders will continue to press casinos into making difficult decisions.

One casino that has worked its way through the difficult time, however, is the Tropicana. CEO Scott Butera said, “You can have a viable business if you have the appropriate capital structure. Bankruptcy allows you to get a second chance. There’s a huge advantage in being able to reduce debt.” The casino recently went through Chapter 11 bankruptcy and emerged successful. Initially through bankruptcy protection the Tropicana was able to eliminate almost $3 billion in debt and set itself up for positive cash flow once again.

A gaming analyst, Eric Browndorf, a partner in the law firm Cooper Levenson, said the gaming market is “painfully aware” of the current economy and of operators becoming less hesitant to try to restructure their debts either in bankruptcy court or out of it. He stated, “Unemployment, foreclosures and bankruptcy filings have increased exponentially. Casinos operating all over the country are experiencing restructuring and Chapter 11. With supply increasing and demand waning, positive cash flow has been difficult to maintain.”

Butera also cautioned however, that bankruptcy has its negative aspects. He stated that while some casino operators take advantage of other companies who file. They make stringent efforts to steal customers when the struggling casino is down. Because the casino filing bankruptcy has no promotional budget, there is little to nothing they can counteract with. Butera added that the key to a successful bankruptcy involves preparing properly for the filing. Communicating effectively with your employees and customers about what you’re doing and getting as many agreements with creditors as possible, are all key to a successful bankruptcy action.

Higgins said it is too early to release who new owners will be or what or what effect, if any, the change in ownership will have on the restructured Herbst Gaming. The company will continue normal operations throughout the restructure but definitely will have to keep on cutting costs. Higgins added, “”It’s really just business as usual for right now. Obviously, we’re in tough economic times and things continue to deteriorate, unfortunately, just like it does for everyone.”

The bankruptcy filing of Herbst Gaming is proof that the recession is heavily weighing upon the casino market, as well as all other industries. It was early last year that economically things began to crumble. The lending crash coupled with the manufacturing crash both worked together to bring the US and global economies to their knees. Now, despite huge moves by the government to reinvigorate the market with stimulus plans, things are still taking time to get back to normal. The natural result is attrition in businesses and that includes the casino market. Though there are huge players in the casino world, not all will remain or at minimum not all will remain in the same form they were in prior to the recession.

In the end Herbst hopes to reapportion its properties and assets out to lenders and hopes that they will be able to benefit from the changes. Timothy P. Herbst, Edward J. Herbst and Troy D. Herbst will have their equity wiped out by the reorganization. The brothers remain directors of the company with Troy Herbst as the company’s chief executive officer. Despite restructuring, the company is still adding to its business portfolio, however. Last week, the Gaming Control Board tentatively approved the company adding 75 more machines at five Clark County restaurants to its slot route.  This was a risky move to give them additional machines in a time when they are restructuring, but perhaps it was a sign that the Gaming Control Board still sees the value of Herbst and its brand. If it does continue to generate revenue throughout its restructure it can set itself in a better position of economic health once the restructure is done.

Herbst Gaming filed bankruptcy recently and has officially begun layoffs. Company lawyer Sean Higgins said, “We had some layoffs all over the company based on the economy. At this time we find ourselves in a position where it is necessary to conduct staff reductions to further reduce expenses. While these reductions are unfortunate, Herbst Gaming believes they are necessary to compete effectively.” 

In the end 200 workers were laid off as a result of the change. This is a testament to the struggling economy and how difficult it still is to maintain business in the aftermath of the 2008-2009 recession.  It was about two weeks ago that the company was approved for the bankruptcy plan in Reno, Nevada. The company will be given to its secured lenders on an as of yet undetermined date in 2010. When the company filed for Chapter 11 bankruptcy in late March, Herbst Gaming reported employing about 5,400 workers. That number was down from the 6,450 employees it reported having in a December 31 report to the Securities and Exchange Commission. Bankruptcy court Judge Gregg Zive approved the plan and gave lenders possession of the company’s fifteen casinos and 600-location, 6,400-machine slots facilities. The lenders hold $876.5 million in debt due to the gaming company and will recoup their losses with the new casino and its offshoots.

Although this is bad news for Herbst, it is not necessarily bad news for lenders. Although they are looking to recoup the $876.5 million, with the amount of gambling entities they are gaining they could have the upper financial hand as the market swings upward. Herbst owned 12 casinos in Nevada alone, 2 in Missouri and one in Iowa.

The company owns 12 casinos in Nevada, two in Missouri and one in Iowa. Locally, the company owns the 275-room Terrible’s hotel-casino. The lenders will receive 100 percent of the company’s casinos and slot routes once the company reorganizes. The new company will issue $350 million in new senior secured bank loans as part of the reorganization. Higgins added, “It’s good to get past the confirmation stage. The judge took into consideration the plan we put forth and he approved it. And now it’s really getting back to focusing on the business at hand while the parties weed out who’s going to be the owners and the directors.”

Part two coming next.