Casino Boat Review
The casino vessel market continues to ride a wave of optimism and orders, and state legislators are in the driver seat to take the market even higher. There have been several high-profile deliveries and openings recently, including the Trinitybuilt Queen of New Orleans and the Service Marine-built Shreveport Rose, and the log book for orders and deliveries remains full.
As shipyards churn out the casino vessels, the news of new licenses awarded and of states which are very close to legalizing riverboat gaming—including Texas and Ohio—have yards, suppliers and owner/operators alike showing confidence in the growing market.
There have been recent setbacks, however, namely an ongoing Missouri Court battle. The legal case revolves around the Missouri State Constitution and its ban on games of chance. The situation, which at press time remained unresolved, may require a state constitutional amendment to get casino vessels up and operating full-tilt in the state (see story, page 58 for details). Nevertheless, the proliferation of casino riverboats is quickly spreading, a reality even the staunchest critics and skeptics cannot deny.
MARKET OUTLOOK "The industry has a tremendous opportunity," said Jack Pratt, president and chairman of Hollywood Casino Corp. (Dallas), noting the many states which are currently considering riverboat gaming legislation, and, in general, the proliferation of gaming across the country.
Hollywood currently operates two vessels in Aurora, 111., adockside facility in Tunica, Miss, and landbased casinos.
Bernard Goldstein, chairman of Biloxi, Miss.-based Casino America, predicts his organization will build one or two vessels a year. Casino America, which effectively started the industry with the opening of t heDiamond Lady on April 1, 1991 in Iowa, currently has a vessel under construction at Service Marine for operation in Bossier City, La., a vessel which Mr. Goldstein hopes will open in April. Mr.
Goldstein currently has his eyes and plans, as do many others, on the Missouri and Indiana markets, with a watchful eye on Pennsylvania and Texas, just two of the states rumored to be close to riverboat gaming legislation.
While the prospects of new boat builds remains good for the next few years, both Mr. Goldstein and Mr. Pratt believe that as more states legalize, and the waterways become more clogged, dockside facilities will eventually become more widely accepted. Summing up his company's riverboat gaming expansion plans as "our interests lie in anyplace that has or is contemplating gaming," Scott Cooper, executive vice president, corporate operations at Lake Charles, La.-based Players Riverboat Casinos, said that, based on the company's initial experience as a casino boat owner, the prospects for future expansion are good.
Players opened its Metropolis, 111. facility in February of 1993, and its Lake Charles, La. operation in December of 1993; to date both have exceeded budgets, said Mr. Coo- per. Both Players vessels were built by Leevac. In part, he attributes the success to location, as Players is the only holder of a riverboat license in Southwest Louisiana, and the vessel draws nearly 70 percent of its business from Texas.
Contrary to reports of owners worried about the status of gaming in Missouri due to the recent legal battle, Mr. Cooper said "It won't affect (our Maryland Heights) project one bit," an operation which is projected for a first quarter 1995 opening. To date, the company has not yet ordered a vessel for the site, but he said once the company gets a feeling for "what will happen and when, we will order a vessel. It's not a matter of if we go forward, it's a matter of how and how fast." On the overall state of the industry and Players' role in, Mr. Cooper said, "The way I look at the industry is only a handful of states have legalized, and there are about two or three handfuls which are considering it. I think the industry has a long way to go...the industry is just in its infancy." While many in the industry are quick to point out the alleged downfalls of the cruising portion of riverboat casinos, Mr. Cooper sees it as a marketing advantage. "The riverboat portion does have some nostalgic appeal to our customers. Some of our business is through bus groups, older clientele who may not be big gamers but are into the overall experience." OWNERS DIFFER ON BUILD STRATEGIES The actual vessel procurement and purchase decision varies widely from one owner to the next. On one hand there are companies like Casino America, which is the offshoot of a barge line business in operation since 1960. On the other hand there are companies like Promus, a landbased organization, entirely new to the boat owner/operator role. Bernard Goldstein, who started Alter Barge Line Inc. in 1960, saw a tremendous expansion opportunity arise with the legalization of riverboat gaming in Iowa, and resulted in the formation of Casino America. "We were in operation in Iowa since 1960, and that's why when there was talk of riverboat casinos coming to Iowa, I said we have to be involved." Mr.Goldstein, who refers to the "new animal of riverboat casinos," said river experience is very important to ultimate success. Casino America is an unusual case, as it came to the riverboat gaming table with the marine experience— having its own pilots and engineers—and it had to recruit from the casino industry for its expertise. But whether marine experience— and personnel—is there to start or picked-up along the way, success as a casino vessel owner/operator is still very plausible. Promus Companies, whose Harrah's company has five vessels total—three delivered, two being built—started from ground zero regarding marine experience. Don Stroessner, director of design and construction, has been with Promus for roughly six months, coming from a background in architecture. Mr. Stroessner said Promus counts on the expertise of naval architects, designers and the boat builders to make the Harrah's vessels a reality. Harrah's has two Service Marine-built vessels, the Northern Star and the Southern Star, in operation in Joliet, 111.; at press time it took delivery of the Service Marine-built Shreveport Rose for Shreveport, La.; and it currently has two vessels under construction by Service Marine and Bender Shipbuilding & Repair, for Maryland Heights, Mo. and N. Kansas City, Mo. respectively. Mr.
Stroessner, who is charged with t h e t a s k o f h i r i n g t h e a r c h i t e c t s, designers and negotiating construction contracts, said the marine equipment specification is left up to the boatbuilder, and forwarded to him for comment and approval. Currently he uses marine specific consultants to review the specs, but he projects as the fleet grows, they may lean toward hiring a marine consultant for the staff.
Terming most of the riverboat vessel projects as "fast track," Mr. Stroessner said the key to a yard winning business is work schedule, past performance, price and people. Mr. Cooper said Players is very pleased with the quality and timing of its boats delivered from Leevac. He described his company's role in the building process as "hands-on," as Players retained the services of Rodney Lay & Associates and "sends people with construction experience in." Terming the competition for licenses in legalized areas as fierce, he stressed the need to provide a complete entertainment package with a community outlook to be successful Finally, Mr. Pratt said Hollywood Casino Corp. has "hired the best naval architects and brought in people who know how to operate the marine side of it." Regarding decisions on specific equipment, he defers to the decisions of the naval architects and the vessel builders. "We specify what we need from a casino standpoint, and leave it up to the marine experts to fit it all together."