Page 36: of Maritime Reporter Magazine (August 1992)

gambling establishments pay no taxes to the state, their lucrative operations encourage and acceler- ate expansion of the tax-paying op- erations, waterborne and otherwise.

Latest riverboat gambling legis- lation efforts have been in states like Maryland, Pennsylvania, Indi- ana, Wisconsin, New York, Minne- sota and Texas. This will continue at a very rapid pace.

Major Players

The most powerful players in the riverboat gaming market currently include Bernie Goldstein, John

Connelly and Bob Kehl. They were pioneers in the industry, have been through the lobbying effort, are licensed, understand the eco- nomics of the industry, and have the cash flow. However, the "New

Wave" of operators to watch are the experienced gaming/hotel operators:

Harrahs (Promus), Hilton, Lady

Luck, Players International,

Fitzgeralds, John Q. Hamons, Grand

Casino Corp., Pratt/Sands, Horse- shoe/Binions, Barbary Coast, GMT

Management and others. These experienced hotel/casino operators, who have operated in the competi- tive environments of Las Vegas,

Atlantic City and Reno, will pose

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Market Speculators

In the late 70s and early 80s, shipyards were the group speculat- ing on the demand for vessels in the oil industry. Now, however, in the dinner/gambling boat industry, the people speculating on the demand are operators. Mr. Goldstein, the owner of Steamboat Casino River

Cruises (and Alter Barge Lines),

Mr. Connelly of The Connelly

Group (and Gateway Clipper Fleet),

Terry McRae, with Hornblower

Yachts, and most recently, Mr. Kehl with the Dubuque Casino Belle (and

Roberts River Rides), all have built vessels and have sold them or are currently offering one for sale. This tells something about how strong the dinner boat market was, or how strong the gambling boat market is.

The new vessels do not appear to be going for any discounts either.

Strong Rivalry

Interesting rivalries have devel- oped between various operators. It appears that when one camp makes a move, the other counters it. Some major operators have been attracted by the advantages of Mississippi's new dockside gaming. Since the floating casino can be on a perma- nently moored barge or vessel, it has fewer obvious concerns than a moving vessel and still offers the flexibility of relocation if things do not work out.

Market Potential

Market segment growth poten- tial over the next two to five years could include 20 to 30 vessels. Many operators are cash rich. They have large cash reserves in their existing operations, or large equities in their facilities that can be easily lever- aged, and they are looking for new arenas to expand into. Some have attracted new partners. In general, this is a lucrative cash business, with tremendous cash flow and high annual rates of return (50 to 60 percent).

The cost of these vessels can range between $5 million to $30 million.

Anyone venturing into this busi- ness should have from $2 million to $10 million liquid cash available for each location; this is not a business for the faint of heart or the weak of pocketbook.

Boats will be going into obscure land-locked areas—wherever there are navigable bodies of water. One operation currently being consid- ered will go on a 20-mile stretch of river that has a 15-foot bridge to the north and an 8-footbridge to the south and an average river depth of 10 feet. These remote sites will continue to attract investors. Ship- yards will have to find way of modularizing vessels and then ship- ping them to remote sites on the banks of rivers or land-locked lakes.

The engineering package will have to be well thought out and include provisions for on-site assembly and completion.

A number of shipyards are pres- ently involved in the construction of gambling vessels: Leevac, Service

Marine, Atlantic Marine, Bender, 38 Maritime Reporter/Engineering News