Jeff Simpson on why Binion’s is likely to go on the block - or worse, close

Sunday, Feb. 18, 2007 | 7:32 a.m.

A minor casino news story last week has big implications for a landmark Las Vegas casino.

West Virginia-based MTR Gaming on Tuesday announced its plans to sell the Speedway Casino in North Las Vegas to Mandekic Cos. for $18.2 million.

The Speedway makes a little money, a million or two a year, but it is no landmark - in fact, it is one of the ugliest casinos in the market.

But the big story behind the sale may be bad news for Binion's, the former Binion's Horseshoe.

MTR Gaming also owns Binion's, which it bought from Becky Binion Behnen for $20 million in March 2004. Harrah's Entertainment ran the property for one year under a joint operating agreement with MTR, and MTR took over operating the property in March 2005.

The once-proud Horseshoe was bleeding money before MTR bought it, and it has continued losing money since MTR took over the property.

Revenues are dropping, administrative and maintenance expenses are rising and MTR's most recent quarterly Securities and Exchange Commission filing noted that the property had an operating loss of $2.5 million for the three months that ended Sept. 30, and a loss of $3.4 million for the most recent nine-month period.

The entire company reported operating income of only $6.4 million for the quarter, so it is easy to see Binion's as a significant drag on MTR's earnings.

MTR's SEC filing noted: "Binion's continues to make improvements to the facility's appearance and gaming products in an effort to grow market share within the downtown Las Vegas gaming and entertainment market. However, there is no guarantee that these efforts will enhance revenue growth and/or improve operating performance."

I've visited Binion's a few times in the past year and have noticed a significant decrease in casino action, even compared with the troubled casino's last days under Behnen's control. The trademark giant craps pit has been reduced and hundreds of slot machines removed, and many of the machines that remain seem out of date.

MTR Gaming Chief Executive Ted Arnault didn't return phone calls and neither did Bill Robinson, MTR's Chief Operating Officer in Nevada, the man in charge of Binion's and the Speedway.

I wanted to ask them about Binion's future. Apparently they've clammed up.

I wouldn't be surprised - in fact, I would expect it - if MTR were to unload Binion's. That could be a good thing, if an experienced buyer with capital can be found. But I worry that another inexperienced operator will be the buyer. Or, even worse, the casino will be closed.

It is possible to make money in downtown Las Vegas, as Bill Boyd has done at the California, Fremont and Main Street Station, and as Steve Wynn and his successors have proved at the Golden Nugget. But it's not easy, or cheap.

One intriguing below-the-radar story in this year's Culinary negotiations will be the stance taken by new Tropicana owner Columbia Sussex Corp. The Kentucky-based hotel operator has recently expanded into the casino business in a big way, and the Tropicana contract will be the private company's first chance to demonstrate its Las Vegas union labor philosophy.

And from what I hear from Tropicana workers, the signs are not good. The company has slashed many of its union employees, including its Teamsters, operating engineers and electricians.

I've been told that the number of Teamsters on staff was cut from eight to one, and that the label on the Teamsters bulletin board in the employees' break room was changed to "Teamster."

Nonunion dealer positions were also cut, but a few were rehired when the remaining dealers were not able to cover all shifts.

"The only thing management hates more than employees is overtime," one wise guy told me.