Reshuffling at M Resort not hurting business

In the casino world, tomorrow is never certain. That’s become clear at the M Resort, where, despite some uncertainty about the future, the present is looking extremely bright.

Last month, Penn National Gaming of Wyomissing, Pa., announced that it had acquired all of the M’s outstanding bank debt, as well as a loan formerly held by MGM Resorts International, for $230.5 million.

At present, Penn doesn’t plan to be anything more than a lender to the casino run by Anthony Marnell III. “We think that we can in the foreseeable future get this property to a point where it’s a very nice return for our investment,” Penn National’s Chief Financial Officer Bill Clifford said in a recent conference call.

Penn National is something of an unknown for many of the M’s players and front-line staff. Even though the company is, by domestic gross gaming revenues, the third-largest casino operator in the country (behind MGM Resorts International and Harrah’s Entertainment), it remains a mystery to many Las Vegans.

“I’ve never heard of them,” says one woman who frequents the M “just about every day.” Though that isn’t going to slow her down. “They’ll have a good customer in me, I guess.”

Penn National actually has a long history in the gambling business. Penn National Race Course opened in Grantville, Pa., in 1972, and the company went public in 1994. Three years later, it entered the casino business with the purchase of Charles Town Races in West Virginia. Since slots at racetracks were permitted by this time in the Mountain State, the company got into the “racino” business—a cautious step into the casino sector.

In 2000, Penn National bought its first casinos—Casino Magic in Bay St. Louis, Miss., and the Boomtown, a few miles down U.S. 90 in Biloxi. Since then, the company has expanded, mostly by adding slot machines at tracks it owns and acquiring casinos. Its most notable purchases have been Hollywood Casinos in 2003 and Argosy Gaming in 2005, which gave Penn a sizeable regional casino empire in the middle part of the country.

On a recent Saturday afternoon, there was no sign that any change was imminent on the M’s casino floor. Gamblers were playing more than half of the resort’s 1,900 or so slot machines—good business for an average weekend—and the tables were doing a similar business, with an energetic crowd circled around a $5 craps table, and the blackjack and pai gow poker tables similarly jumping.

“They seem to be doing a pretty good business,” one video poker player said. Marnell agrees with him, adding that results in the fourth quarter have been better than expected, and still improving.

Yet there were signs that all was not cherries and kiwis for the casino. The in-house pharmacy, touted as a major innovation at the property’s March 2009 opening, has been closed since April, with a sign informing customers where they could retrieve their pharmaceutical records. Free soft-drink stations, another much-ballyhooed innovation, are gone. The Vice Shop, the casino’s sundries store, is having a sale: 30 percent off a variety of M-themed items.

Compared to the bargain that Penn National got for the casino itself—$230.5 million for a property that cost $1 billion to build—30 percent off is hardly a steal.

Yet for Marnell, the future is what matters.

“Right now I’m 100 percent focused on operating this business, and having some good discussions with Penn,” he says. “From what I can see now, I don’t see many changes for the guests and employees. I don’t have a full picture yet, but we’ve had a lot of unbelievably positive discussions about how to make the M a better asset within Penn National. I see a lot of synergies there.”

Although Marnell wouldn’t elaborate on his role in the property moving forward, he is optimistic.

“Thus far I’ve thoroughly enjoyed working with Penn National,” he says. “This will turn out to be a good thing for all team members, and over the long run the property will be even better.”

For now, don’t expect to see too many changes. Until something—anything—happens, for most employees, the attitude is wait and see.

Addressing concerns about a possible regime change, one philosophically minded dealer (who prefers to remain anonymous) says, “When something happens, then there will be plenty to worry about. Until then, why worry?”



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