Vol. 4, No. 2, February 2008
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Joe Magliarditi
COO and Executive Vice President, M Resort, Colorado Belle and Edgewater casinos
Columbia Sussex took over the Ramada Inn Express—now the Tropicana Express—American Casino and Entertainment Properties, headed by Carl Icahn, bought the Flamingo Laughlin from Harrah’s and have rebranded the property the Aquarius. And the Marnell-Sher joint operation added the Colorado Belle and Edgewater casinos to its portfolio.
The new operators are, for the most part, putting money into their properties and working together to make Laughlin an attractive alternative market to Las Vegas. Joe Magliarditi, who was featured as one of our “10 People to Watch” for 2008, believes things are going well, and that the Laughlin market is coming on strong. The chief operating officer and executive vice president of the Colorado Belle and Edgewater casinos recently spoke with Managing Editor Greg Jones.
Casino Connection: Now over the past couple of years, there were a lot of transactions, a lot of transitions in ownership in Laughlin. You had the Marnell-Sher takeover of Colorado Belle and Edgewater, ACEP taking over the Aquarius, and Columbia Sussex with the Ramada Express. Why do you think there was so much interest in Laughlin at the time?
Magliarditi: I think that there was a trend in private equity firms and gaming. Private gaming firms like ours were looking for opportunities to get back into gaming. And one of the things that we looked at in Laughlin was, although the market took a hit from the Native American casinos when they came online five, six, seven years ago, the other side of that coin is that the fact that there are pretty significant barriers in Laughlin. You can’t go down there and build a mega resort and expect to get any type of return on your money. So there’s a certain, finite number of properties available there and I think that was one of the reasons.
And there was some excitement with all these new owners, that there would be a new influx of cash with people renovating and refreshing the properties. Have you seen that? Is that something that’s underway now?
I do. You’ve definitely seen that with our company. You’ve seen that with American Gaming Corp, the group that owns the Stratosphere, Arizona Charlie’s, and the Aquarius. And now, I believe that’s being purchased by Whitehall.
So obviously, they renovated when the group came in. The number they used was about $40 million or $50 million, and the casino floor was remodeled as well as slot machines and such.
Columbia Sussex, on the other hand—now I don’t really know their business model so it’d be unfair for me to judge—but they really haven’t put any money into the place. Anything that is going on was already going on with prior regime there. Again, I don’t know much about that company other than what I’ve read. My guess is that they’re not going to put any money into any of those places. That’s just not what they do. And you’ve seen what happened with them in Atlantic City, obviously.
But I think what you’ll see is, and we have a good working relationship with most of the operators down there, you’ll see from the Icahn group, they’re going to continue to invest in similar things that we’re going to invest in, and I think that the effect there is positive.
With the capital investment that we put into our properties, we saw an instant return on it from the slot machines and now to the public areas. We’re getting ready to do some more things with food and beverage, and then the next step is the rooms.
What are some of the things that you’re doing at those properties? I remember reading that you went to ticket-in ticket-out and some room renovations. What needed to be done to get those properties to the state where you felt comfortable?
Well, the gaming floor, specifically the slots, were an old antiquated product, which now you see with our slot floor—and I’ll give the Aquarius, the Icahn group credit—our casinos have by far the most updated slot floor in this market.
A lot of the assets down here were second-tier assets for the gaming companies like MGM, and at the time Harrah’s owned the Flamingo before the Icahn group. There hasn’t been any capital investment put into any of those projects. Aside from us and the Aquarius, and Harrah’s, which has actually put some money into some food and beverage outlets, there’s really not much money being spent down there.
Can you talk about the partnership with Ed Sher? How does that benefit you overall, and what does he bring to the table?
He’s actually a very, very good businessman. He and his group of people that work for him. One of our partners actually had a relationship with someone who works for Ed and it’s a very good relationship in that there’s great, open communication. It was the Sher Group’s first venture into gaming and they’re a smart bunch of guys and they like to do things the right way. They’ve got a great track record in business and we’ve had a great partnership with them. We couldn’t ask for a better partner.
Does he have any role in the day-to-day operations in Laughlin?
No, no role in the day-to-day operations.
You mentioned the Saddle West in Pahrump as the other Marnell-Sher property. That property is being sold to Golden Gaming. Is that so you can focus more on M Resort, that and your Laughlin properties, or was it something that you saw in the Pahrump market that sort of made you want to get out?
It’s obviously not a done deal. We haven’t closed the transaction yet; but yes, we’ve entered into an agreement for them to purchase it.
Actually, we like the Pahrump market. We’ve done well there. We think it’s a great market. Just more, like you said, just more focusing on where we have more of our dollars invested, if you will.
In Laughlin, the various casino operators work together through the Laughlin Tourism Committee. Have you actually seen that benefiting the market? Are you able to draw in new players and customers and guests to the Laughlin area through that?
I think that’s a good forum to start those processes. We’re going to need some support from the Las Vegas Convention and Visitors Authority to help us out there. But it is a good forum for the first step for the operators that are out here.
At the end of the day, if we can make Laughlin successful, we’re all going to be successful. If we do our own events, we’re really fighting over the same piece of pie. The LTC gives you that forum and with the help of the LVCVA to make that pie bigger, everyone wins.
And, quite honestly, the repeatable events, things that give people a chance to come down to Laughlin—as an example, in January we have the Score Race—we need more of those types of events to help the city of Laughlin overall. And I think ‘08 is going to be a great transition year to see where that really goes now.
Where do you ultimately see the Laughlin market heading? What do you see Laughlin looking like five to 10 years from now? And how does the Colorado Belle and Edgewater fit into that picture?
Well, it’s our company’s feeling that the Colorado Belle is an icon in the Laughlin market. It always has been. The Edgewater, as you know from our remodel, some of the things we’ve done, we’re reinventing the Edgewater. And quite frankly, when you think about Laughlin in the state of Nevada, obviously, we feel good about Nevada gaming in general, hence our investment in the M Resort. We think Laughlin’s similar to a Mesquite market, a different type of alternative to the Las Vegas visitor, and you have the advantage of having the river down there as well.
Laughlin is sort of an alternative to Las Vegas and M Resort will be the alternative to the Strip experience. What’s going on with that project right now?
We’re under construction. We’ve been under construction now since August. We’re shooting for a spring of ’09 opening. And you’re right; it’s an alternative to the Strip customer. We think the end will be a hybrid, if you will—we’ll have both a local customer and, as you said, an alternative for the Strip customer.
Will there be any way to cross-promote that with your Laughlin properties? Or are those customers too different?
We’re having discussions about that and we’re looking at that. There’s a portion of the Laughlin customers that go to Laughlin for a reason, instead of Las Vegas. But I also think there’s a portion of the Laughlin customer that absolutely visits Vegas as well. So, I think there’s an opportunity there.
