Finally a little common sense


horseshoe.jpg

Rendering of Cleveland casino, Cleveland Plain Dealer, 4-19-12

Yesterday, I expressed my thoughts and frustrations with the regulatory process that controls the casino gaming industry.  The Massachusetts gaming commission is so outspoken about making the process slow and taking every precaution at each step, it makes one want to scream.  Casino licensing can be very, very frustrating for every prospective licensee.  In the case of states embarking into casino gaming for the first time, for the host communities and the state lawmakers eager to bank the license fees and tax revenues, it is doubly so, because it is all new.  However, as Ohio proved today, Massachusetts is not the only potential model for first time licensing and the development of a casino industry from the ground up.

Ohio, recognized the difficulty of doing everything on its own.  It is hard to start from scratch without any local experts in any of the fields, corporate finance, gaming regulation and casino operations, that form the core of gaming and gaming regulation.  Instead of trying to grow their own expertise, Ohio hired experts.  It hired Spectrum Gaming Corp to guide the state through the entire process; including vetting the prospective licensees.  For the Cleveland casino, the one that will open first, the applicants are Dan Gilbert, owner of the Cleveland Cavaliers, and Caesars, the largest gaming company  in the United States.  Caesars was also the first publicly traded gaming company, under its original name, Harrah’s, in the country.  Spectrum in a very timely fashion, provided a 340-page report on the two entities.  It recommended licensing for both, finding Gilbert to be an exceptionally qualified business man; Caesars on the other hand was found to have $22 billion in debt and is lacking an adequate cash-flow to make the interest payments.  Still, because Gilbert is the majority owner, Spectrum thought both should be licensed and their Horseshoe Casino in Cleveland be allowed to open.  I can imagine many people in Ohio, the mayor of Cleveland, the governor, the casino employees and  the people eagerly awaiting a chance to place a bet are thanking the powers to be for a little common sense.

 A consultant hired to complete background checks on Dan Gilbert and his business partners as they prepare to open a casino in Cleveland next month recommended that the Ohio Casino Control Commission grant Gilbert’s group its gambling license. “In our opinion, the applicant is qualified to be approved for a casino operator license,” Theodore Grove of Spectrum Gaming Group reported to the commission…Grove said Spectrum conducted its investigation against the backdrop of three primary criteria: financial stability, integrity and responsibility; personal character, honesty and integrity; and business ability, reputation and experience…Spectrum consultant Steve Ingis then told the commission that Caesars currently has $22.6 billion in outstanding debt and that its cash flow is only enough to cover interest payments. Still, Spectrum recommended the company receive a gambling license. Reginald

 

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