17 states looking for a (bigger) cut of casino dollars

Even as Las Vegas‘ biggest gaming companies dismiss the earnings potential of smaller U.S. casino markets as they tap Asia’s potential gold mine, no fewer than 17 states are considering regulations to install or expand casino gambling.

That’s more activity than in recent memory despite the fact that some of these states shot down casinos in years past.

Bills to allow slot machines or similar devices are afoot in Maryland, New Hampshire and Texas, while less formal discussions are under way in Kansas, Kentucky and Massachusetts. Other bills to add slots or ease regulations are up for debate in Florida, Illinois, Indiana, Iowa and Missouri. Some California tribes are seeking permission to operate more slot machines, a Massachusetts tribe wants to build a major resort and Delaware is considering sports wagering.

The flurry of activity is a mixed bag for casino operators and slot machine manufacturers.

As gaming expands in the United States, competition for customers intensifies and markets are cannibalized. And the demand for new machines and replacing existing ones slows, with fewer casinos opening than in years past. The best prospects are on foreign shores like Mexico and Japan, which are considering Las Vegas-style casinos.

Poker advocates are hoping for a bill to repeal last year’s legislation further criminalizing Internet gambling – a move that looks at least possible given that the new chairman of the House Financial Services Committee, Rep. Barney Frank, D-Mass., has become the most outspoken opponent of the on line poker ban.

The legislation has not slowed the growth of the multi billion-dollar Internet gambling industry, but has shut down several public companies‘ online gambling operations in this country – businesses that were illegal before the legislation because the Justice Department says accepting online wagers from Americans violates multiple, though outdated, federal laws.

One company that hasn’t been discussed much in the context of the Unlawful Internet Gambling Enforcement Act is Harrah’s Entertainment, the world’s largest gaming company and owner of one of the world’s biggest poker brands. Harrah’s had contemplated taking its World Series of Poker brand to the Internet until U.S. lawmakers chilled efforts to explore online wagering even abroad, where it is legal in some countries. Even basing an online gambling company in the United Kingdom, where Harrah’s recently purchased casino chain London Clubs International, would be problematic now, given how willingly state and federal law enforcement officials have been about throwing online gambling operators into handcuffs.

The New York hotelier that bought the Hard Rock hotel and casino last month has unveiled plans for a 550-room hotel tower, a 400-suite tower, a convention center, a larger Joint music venue, more casino space, retail shops, restaurants, a new spa and health club , and a larger pool by mid-2009. Analysts say the upgrades are necessary for the Hard Rock to compete with bigger casinos that have spent millions to lure younger customers with hip nightlife.

Beyond 2009 owners are contemplating as many as four other towers.

But don’t expect Morgans Hotel Group and business partner DLJ Merchant Banking Partners to assimilate the look of Morgans‘ legendary (and much pricier) Delano, Mondrian or Royalton hotels.

Morgans will continue to honor the property’s rock ’n‘ roll theme and merchandise. Zeff Design, which crafted eclectic interiors for New York’s Dream and Night hotels, and various „celebrity designers“ will design new spaces while „keeping what has been our mainstay as well as our heart and soul,“ Hard Rock President and Chief Operating Officer Randy Kwasniewski said.

Rooms in the all-suite tower will be at least 750 square feet and offer pool-facing villas of up to 1,200 square feet, with their own plunge pools and other deluxe offerings. The Hard Rock will renovate existing rooms within a year and will add a handful of specialty suites to its original tower.