Inside Gaming Column: Could MGM be Suitor for Hard Rock?

1 May 2006

Sources say MGM Mirage is taking a serious look at buying the Hard Rock Hotel and the Hard Rock Café at the corner of Harmon Avenue and Paradise Road. The idea is that MGM Mirage would operate the hotel-casino, build the adjacent $1 billion condominium project that owner Peter Morton canceled and relocate the curbside restaurant to the area around Showcase mall on the Strip. It would be premature, however, to say actual negotiations are under way with Morton and the Rank Group, owner of the Hard Rock Café, to complete a sale and operating deal.

Wall Street is bullish on Harrah's Entertainment's Total Rewards network. As the program is expanded over the next two years, Deutsche Bank predicts it will generate added interest for Las Vegas as a destination. Until Harrah's buyout of Caesars Entertainment, the company was hamstrung by its limited offerings in Las Vegas. With Caesars Palace, Paris Las Vegas, Bally's and the Flamingo, it has the added rooms to reward its 40 million Total Rewards customers for playing in other jurisdictions and has room to grow cross-market play between other regions and Las Vegas.

Britons line up. All the hoo-ha over developing Las Vegas-style casinos in Great Britain may be warranted. Industry insiders say it's become the fastest-growing gaming market in the world, with 90 percent of all Britons placing bets in the past year. What's changed is the demolition of social and legal restrictions on gambling. There is nowhere in the Western world where gambling is freer than in Great Britain. Combine this freedom with the increased popularity of soccer and the spread of gambling to poorer and female Britons, and gambling's become epidemic. This is even before this summer's World Cup, which likely will be the biggest betting event ever.

More sticker shock. Energy experts say oil prices could jump to $90 a barrel. Supply disruptions from hurricanes, terrorism or political turmoil overseas could also disrupt production and drive prices up further, industry insiders say. Some experts are even warning that these disruptions could mean gasoline at the pump will cost more than $4 a gallon in Southern California before summer's end.

Meanwhile, new surveys suggest Southern Californians are locked into travel plans for this year and are not taking dire warnings of gasoline price spikes terribly seriously. Supposedly, they'll stop driving -- here, there and everywhere -- if gasoline prices hit $4 a gallon, or even if they stay higher than $3 a gallon, where they are now. But Southern Californians won't stop driving this year, and they don't trust projections. They're taking a wait-and-see approach and vacationing as they have been.

Gaming Wire Editor Rod Smith can be reached by phone at 477-3893 or by e-mail at rsmith@reviewjournal.com.

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