Inside Asian Gaming

November 2009 | INSIDE ASIAN GAMING 51 Briefs 30th September 2009. The company continued the previous quarter’s trend of building margin. Operating margin in first quarter fiscal 2010 improved to a record 26% from 23% in the equivalent period last year. That margin was driven in part by a 15% quarter-on-quarter increase in revenues from the high value systems segment. Gaming operations revenues reached US$71 million during the reporting period. “Despite the challenging economy, our strong product portfolio and diversified business model drove yet another very profitable quarter,” said Richard M. Haddrill, the company`s Chief Executive Officer in a prepared statement. The company said its success in building recurring revenues was an important factor in sustaining success. They amounted to 51% of all revenues versus 40% in the same period last year. The company also strengthened its balance sheet in the first quarter, reducing debt by US$6 million, repurchasing US$15 million of its stock and increasing its cash balances by US$20 million. Long pause for Echelon Boyd Gaming Corp said it does not expect to restart construction of the US$4.8 billion Echelon project for at least three to five years. The company suspended construction of the Strip development on the site of the former Stardust more than a year ago. “We continue to believe in the long-termviability of the Las Vegas market,” Boyd Gaming Chief Executive Officer Keith Smith said. “But given the ongoing weak economic conditions, the significant new supply coming online and a difficult capital-market environment for projects of this nature, resuming construction in the near term is not an option.” The recession reduced Boyd Gaming’s third quarter profits by about 27%. Boyd said revenue fell 6.6% in the quarter to US$398.2 million. The company blamed the slump on reduced consumer spending, especially in Las Vegas. CityCenter licensing gets own hearings The casino licensing for CityCenter haswarranted its own separate hearing from Nevada gaming regulators, according to a report in the Las Vegas Gaming Wire . The Gaming Control Board tentatively plans to discuss the US$8.5 billion project, which is a 50-50 joint venture between MGM Mirage and Dubai World, the investment arm of the Persian Gulf emirate, on November 13th in Las Vegas. Nevada Gaming Commission would then take up the CityCenter issue on November 19th in Las Vegas. The control board makes recommendations to the five-member commission, which has the final say on licensing matters. Control board Chairman Dennis Neilander said agents are still going over material for the hearing, including documents that need to be translated into English from Arabic. Attorney Ellen Whittimore, who represents MGM Mirage, said CityCenter, the largest privately funded construction project ever undertaken in the US, deserves a separate hearing. The Strip development, which has taken more than five years of planning and construction and covers 67 acres between Bellagio and Monte Carlo, will have roughly 6,000 hotel rooms and 2,400 high-rise residential condominiums within five towers and 500,000-square- foot retail, dining and entertainment district. CityCenter opens in phases starting in December. Whittimore said it was unclear who will attend the hearing from Dubai World, which spent almost US$6 billion in 2007 to buy half of CityCenter and 9.4% of MGM Mirage’s outstanding shares. Dubai World’s investment has decreased dramatically in value. The entity paid US$80 a share for MGM Mirage’s stock, which was trading at around US$10 at the end of last month. In a filing with the Securities and Exchange Commission earlier this month, MGM Mirage said the value of its half of the CityCenter joint venture was worth US$2.44 billion, meaning the project is now worth a little more than half the construction costs. Dubai World needs to be licensed to share in the gaming revenues from the casino inside Aria, CityCenter’s 4,004-room centerpiece. Vdara, a 1,500-room hotel and condominium tower, and the Madarian Oriental, are both non-gaming boutique hotels. In March, Dubai World filed a surprise lawsuit against MGM Mirage in Delaware, saying its joint-venture partner hadmismanaged the CityCenter’s development costs. Dubai World also refused to make its half of monthly payments that were due to keep CityCenter construction moving forward. MGM Mirage was able to gain approval to pay both its portion and Dubai World’s portion of the payments, keeping CityCenter from shutting down and ending up in bankruptcy. A month later, MGM Mirage and Dubai World ended their feud by agreeing to a comprehensive plan to fully fund and complete CityCenter. Dubai World dropped the lawsuit. Construction on the Echelon CityCenter