Hard luck puts cloud over casino group

By Scott Van Voorhis
Friday, August 29, 2008

The superstar gambling investors backing the Mashpee Wampanoag tribe are feeling the sting of the economic downturn.

Waterford Group LLC Chief Executive Len Wolman and Kerzner International’s Sol Kerzner, the South African business tycoons who built Mohegan Sun, are part of a team of developers backing the Mashpee Wampanoag in the tribe’s quest to build a $1 billion resort casino in Middleboro.

Moody’s Investors Service has placed the debt ratings of Waterford Gaming on review for a possible downgrade. Waterford is a partner in Trading Cove Associates, which receives a 5 percent cut of Mohegan’s revenues. Moody’s took similar action earlier this spring against Mohegan, which has seen slot revenue decline in a tougher economy.

Moody’s threatened downgrade was expected, said Wolman, given Moody’s earlier action against Mohegan. The Waterford CEO voiced confidence in the ability of Mohegan’s management team to work through difficult times.

“There is an economic and a credit crunch going on right now and it’s all related,” Wolman said. “However, we have all the confidence in the world in the Mohegan tribe and their management.”

A spokeswoman for the Mashpee Wampanoag tribe said Moody’s threatened downgrade of Waterford’s debt has not shaken the tribe’s confidence in its deal with firm and its fellow developers.

“The partnership that the tribe has with the investors remains solid,” said Amy Lambiaso, a spokeswoman for the tribe. “Each investment stands on its own.”

Meanwhile, Wolman and Kerzner are also grappling with other difficulties in a sprawling gambling empire that now ranges from New England to Colorado. The downturn for the first time has hit gambling operators everywhere, and hit them hard, from Connecticut’s giant Indian casinos to the gilded gambling palaces that tower over the Las Vegas Strip.

“We are dealing with a very unique time,” Wolman said. “I don’t think there is anyone who is not challenged now.”

In Rhode Island, Twin River is preparing to announce, as soon as today, an agreement with state officials that could further boost the race track and gambling hall’s revenues.

The BLB Group - made up of Waterford, Kerzner International and Starwood Capital Group - acquired Twin River in 2005. It ran into trouble with its lenders this spring after revenue growth failed to meet expectations.

Since then, the racino has been on the comeback trail, having boosted revenue after winning state approval to offer expanded hours and free slots promotions.

BLB Group is also weighing its options in Colorado, where it owns three dog tracks and one horse track. The group is examining whether to take a pass on next year’s live racing season at one of the greyhound tracks; it is also considering pushing for state permission to install slot machines at some of its venues.

This email address is being protected from spam bots, you need Javascript enabled to view it