LV firms await word on Detroit gaming

Thursday, Oct. 16, 1997 | 11:24 a.m.

Four Las Vegas casino companies are expected to learn Nov. 7 whether their proposals to enter the nation's newest gaming jurisdiction -- Detroit -- will be accepted.

Three casino licenses are being offered and two bidders, including one backed by Circus Circus Enterprises, have received "preferred status" in the process.

An update on the Detroit process was provided Wednesday at the World Gaming Congress and Expo at the Las Vegas Convention Center.

Circus Circus is a partner in a proposal submitted by Detroit Entertainment Co., a group whose investors include well-known Los Angeles lawyer Johnnie Cochran.

Other Las Vegas bidders that are finalists: MGM Grand Detroit, a limited liability company formed by MGM Grand Inc.; Rio Hotel & Casino-Detroit, a partnership between Paradise Valley Co. of Detroit and the Rio Hotel & Casino Co.; and Mirage Resorts Inc., which has not listed any Detroit-based investors.

The other finalists are Trump Motor City Casino, backed by Atlantic City, N.J., casino mogul Donald Trump; Barden Detroit Casino, backed by Don Barden, who owns and operates the Majestic Star riverboat casino in Gary, Ind.; and Greektown Casino, a partnership of Detroit businessmen and the Chippewa Indian Tribe that back the only other proposal to have "preferred status."

"Preferred status" was given to applicants that already had sizable investments in the process and that had already made guarantees to the city and state.

Other details from the Las Vegas companies' proposals:

* The Circus Circus-backed plan would offer a $600 million project with 801 hotel rooms. An estimated 3,800 jobs would be created.

* The MGM Grand project would cost $565 million to build. It would include an 800-room hotel, five restaurants, an 800-seat theater, a pool and a spa. MGM also promised a $250,000 community fund and recently increased its credit facility.

* The Rio is offering a $581 million project creating 3,100 jobs. There would be 1,056 rooms, six restaurants, three entertainment areas and $3 million for youth center employment programs. The company also promised a Motown Museum and said it would extend Detroit's people mover into the casino.

* The Mirage's proposal is by far the most expensive. It offers 800 hotel rooms, 12 restaurants and a 4,000-seat theater in the $800 million project. The company also has promised donations to charitable causes.

The Detroit venue is appealing to the Las Vegas companies because officials are projecting the three casinos to attract more than 32,500 visitors per day -- more than 11.9 million annually. Experts are projecting the three casinos to take in $1.5 billion annually within five years.

The casinos are planned to be key components in the proposed rejuvenation of downtown Detroit. Four districts have been identified for the possible casino locations: Greektown, Washington, Grand River and the northwestern Michigan region. The casinos' neighbors will be Detroit's office district, the Necklace and Campus Martius areas and an established theater district in which stadiums are being built for the Detroit Tigers baseball team and Detroit Lions football team.

Casino gaming already exists within a short drive of the city. Casinos operate in Windsor, Ontario, just across the Detroit River. Marketing surveys indicate 69 percent of those who gamble in Windsor would prefer playing in Detroit.

But the lucrative deal comes at a price: Some analysts say the Detroit venue will have some of the tightest restrictions in the industry.

Sen. Virgil Clark Smith, D-Detroit, was among the Gaming Congress panelists giving the Michigan update. He described some of the requirements of successful licensees in Detroit: full disclosure of personal background for owners of more than 1 percent interest in the property; prohibition of automated teller machines within 50 feet of a gaming device; and requirements to post compulsive gambling helpline numbers in several locations within each casino.

After initially telling companies they could have unlimited floor space for their casinos, the state is now clamping on a 100,000-square-foot maximum.

There are also some political trade-offs for the winning licensees. Panelists indicated there are political turf wars being waged between members of the Detroit City Council and its mayor. The state also is involved since it was a statewide vote that authorized the Detroit casinos in the first place.

The inexperienced Michigan gaming authorities are operating with regulations that are described as a mix of the rules in New Jersey, Indiana and Nevada. Panelist Bob Stocker, an attorney representing Circus Circus in Detroit, told gaming equipment suppliers in attendance that they should begin the licensing process as quickly as possible.

"The regulations were put together by people who have no experience in gaming licensing," Stocker said. "They're requiring an extensive amount of personal information because Michigan wants to say it has the cleanest games in the country."