Yesterday, Brian Gorman noted that riverboat casino operator Isle of Capri
It wasn't so much the price. It wasn't even that the Illinois Gaming Board found the proposal more attractive than Harrah's
Consider this: In the 12 months ending Jan. 2004, the two revenue leaders by far in the nine-boat market were Mandalay Resort Group's
Now, as Brian pointed out yesterday, one of the attractions to Isle's bid was a promising location near O'Hare International Airport and Rosemont's convention center. According to Reuters, one board member even tabbed the site a "destination location." I don't doubt it, but there are some other interesting factors to consider.
First, the casino at this destination location will be a miniature 40,000-sq. ft. affair with the same 1,200-gaming position limit imposed on all casino riverboats in Illinois. Second, while Isle is a quality operator, it has clearly been a niche player that has thrived by putting riverboats in places where no competition exists. Finally, in markets where it faces competition -- including Vicksburg, Shreveport/Bossier City, and Kansas City -- Isle plays second, third, and fourth fiddle to the likes of Ameristar
Isle of Capri will likely succeed at this location with virtually unlimited opportunity for growth and limited potential for additional competition. I'd also tend to believe that Isle has some other factors baked into its $2.6 billion promise, including a potential increase in the gaming position limit, as well as a rollback in the top tax rate somewhere below the investment-prohibitive 50% figure.
But no matter how you slice it, Isle of Capri's $2.6 billion prediction is a bold one, especially for a company not known as a lead player.
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Fool contributor Jeff Hwang owns shares of Ameristar Casinos.