Caesars hopes to hit jackpot with Boston casino bid

Reuters
Loveman, chairman, president and chief executive of Caesars Entertainment Corp., takes part in a panel discussion titled "U.S. Overview: Is the Recovery Sustainable?" at the Milken Institute Global Conference in Beverly Hills
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Gary Loveman, chairman, president and chief executive of Caesars Entertainment Corp., takes part in a panel discussion titled "U.S. Overview: Is the Recovery Sustainable?" at the Milken Institute Global Conference in Beverly Hills, California May 1, 2012. REUTERS/Danny Moloshok

By Richard Valdmanis

BOSTON (Reuters) - Caesars Entertainment Corp's (CZR.O) proposed casino in Boston would draw elite international gamblers in the same way Las Vegas does, and marks one of the U.S. gaming industry's best cash-making opportunities, CEO Gary Loveman said on Friday.

The company, which is pursuing an aggressive expansion agenda in the United States while wrestling with a mountainous debt burden of over $20 billion, is among a handful of major casino operators vying for licenses in Massachusetts.

The state Gaming Commission expects to begin awarding the three available licenses by April 2014.

"We think Boston is one of the best opportunities in the United States," Loveman said at a panel discussion organized by the National Association for Business Economics, pointing to what he said was its status as a global destination city.

"The only city in North America that receives significant high-end international play is Las Vegas. And in Vegas it accounts for a significant portion of the total. I believe Boston will become the second such city," he said.

He said his proposed casino at Suffolk Downs in East Boston would initially draw about $1 billion in initial capital investment and provide some of the same amenities as his Las Vegas properties, "but not quite on the same scale."

Loveman said that his company was in good financial condition to follow through with the project if he won the license, despite concerns among analysts about its debt obligations and its impact on future cash flow.

"We have $1.9 billion of cash sitting on our balance sheet, which is a tremendous amount of available cash for projects as they come to us, along with a number of other sources of liquidity," he said.

He said Caesars' recent casino projects in Ohio and Maryland were proof of the company's ability to raise money. "No one has done more capital investment in the domestic casino industry than we have in the past few years," he said.

He said Caesar's had refinanced $4.5 billion in debt and had raised $200 million worth of equity, some of which would be used to service the remaining debt. "As we've done over the last several years, we'll continue to work on that as the conditions are appropriate."

Loveman said that the Las Vegas gaming industry, hard-hit by the 2008 financial crisis, had seen some improvement in recent years "but has not come back nearly to what it was at its peak."

Massachusetts became one of the most recent states to allow casinos, in 2011. The law permitting casinos carved the state up into three regions -- the east of the state, including the greater Boston area, the southeast including the Cape Cod beach area and the more mountainous west.

Seven projects, backed by big casino operators including Caears Entertainment Corp, Wynn Resorts Ltd, and MGM are currently pursuing the three licenses.

The Massachusetts Gaming Commission has undertaken a large, multi-million dollar survey of gambling in Massachusetts that is meant to track the social and economic costs of casinos in the state.

Loveman said that while he supported the research it annoyed him that other industries selling potentially unhealthy products - like junk food or alcohol - were often not subjected to intense scrutiny.

"It does irk me a bit that it is so specifically applied to the casino business when it could be applied elsewhere," he said.

(Writing by Richard Valdmanis; editing by Andrew Hay)

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