The Kansas Star Casino has exceeded expectations, Boyd Gaming executives say.
And their Las Vegas-based company plans to pretty much leave it alone when Boyd’s purchase of Peninsula Gaming, the Kansas Star’s management company, becomes final in December.
“If it’s not broke, don’t fix it,” said Brian Larson, Boyd Gaming executive vice president, general counsel and secretary, who also leads the company’s development efforts.
“Generally speaking, we don’t go in and make wholesale changes. The fact is, this is just a well-run organization in our minds. Culturally and philosophically, we feel like we’re aligned with Peninsula, and they run extremely high margins, some of the best in the gaming industry,” Larson said during a visit to the Kansas Star last week.
Boyd’s $1.45 billion purchase of Peninsula’s five casinos, including the Kansas Star, was announced in May. The deal is expected to close in December, about the same time the Kansas Star’s permanent casino opens.
Larson said Boyd plans no changes in the casino’s management team, its plans for future development, its scholarship program or anything else stipulated in Peninsula’s contract with the state.
“In our view, the contract is the contract and we intend to abide by it,” Larson said.
Larson said the Kansas Star’s temporary operation inside its arena facility has been better than they had expected. Through August, the Kansas Star had generated $129.5 million in gambling revenue since it opened in mid-December, 2011, far more than analysts had anticipated.
And the new permanent facility, which Boyd officials toured this week, “looks fantastic,” Larson said.
The state of Kansas owns and operates the gaming at the Kansas Star, which was built and is managed by Peninsula under a contract with the state. Boyd will assume the contract with the purchase of Peninsula.
Larson said he expects background checks into Boyd Gaming by the Kansas Racing and Gaming Commission to go smoothly. Boyd owns 17 casinos in six states. Its key employees have been licensed in multiple jurisdictions and been through the approval process many times, he said.
Boyd also has a long history of regulatory compliance, he said.
“We do everything we can to comply with the law in every jurisdiction,” Larson said. “When we do make a mistake — and believe me, everybody makes a mistake at some point — we self-report. We take it extremely seriously.”
Las Vegas history
The company’s reputation for integrity was highlighted in 1984 when Nevada gaming regulators turned to Bill Boyd to clean up the storied Stardust casino after it was seized by the state. Mobsters had been caught skimming money from the Stardust in a scandal that served as the basis for the 1995 Martin Scorsese movie “Casino.”
Boyd converted what had been the last mobbed-up casino in Las Vegas into a legitimate enterprise. Larson called it a “very proud moment in our history.”
Boyd managed the Stardust for the state for a few years, then acquired it and ran it until 2006. It then imploded the Stardust to build the multibillion-dollar Echelon resort. Construction on the Echelon was suspended after a year because of the economic recession, and hasn’t resumed. The company intends to complete it, but has no specific plans for that yet, according to a Boyd spokesman.
The roots of the company date back to the early 1940s, when Sam Boyd went to Las Vegas with $80 in his pocket and started dealing penny roulette at a casino in downtown Vegas. His son, Bill Boyd, currently the company’s executive chairman, was 8.
Sam Boyd worked his way up in the business and became part-owner in several downtown Vegas casinos. He was one of the first casino operators to hire black people and women as dealers.
Sam and Bill Boyd founded Boyd Gaming in 1975 to develop and operate the California Hotel and Casino in downtown Las Vegas. Bill had been an attorney for 15 years, but he joined his father’s business to work full time at the California.
In 1979, Boyd Gaming became the first company to develop a full-scale casino resort aimed at local Vegas residents when it opened Sam’s Town along a highway southeast of the city between downtown and Henderson, Nev., where the family had owned the Eldorado Casino since 1962.
The Eldorado celebrated its 50th anniversary in July. Larson said that is the longest consistent ownership of a single casino in the U.S.
Not all Boyd casinos were successful. The company opened the Sam’s Town Casino Kansas City riverboat in 1995 but sold it to Harrah’s three years later, citing restrictive regulatory and legislative environments in a competitive market. It didn’t help that the Missouri Supreme Court ruled a year after it opened that a constitutional amendment approved by voters in 1994 required riverboats to be on the river, not anchored in artificial basins, to conduct gambling.
‘The right time’
David G. Schwartz, director of the University of Nevada Las Vegas Center for Gaming Research, said Boyd Gaming has a good reputation and is a family-oriented company, which could benefit Kansas.
“They’re a national operator and they have pretty broad reach, so that could be good,” he said.
Boyd was looking to expand its regional casino operations when it hooked up with Iowa-based Peninsula Gaming. The deal will put Boyd, which owns casinos in New Jersey, Mississippi, Illinois, Indiana and Louisiana as well as Nevada, into the Kansas and Iowa markets for the first time.
Larson said the purchase grew out of discussions between executives of the two companies.
“When they approached us with the idea, it seemed like the right buyer at the right time,” said Jonathan Swain, Peninsula’s chief operating officer. “It wasn’t something we were aggressively looking for. Everyone’s life was at a certain point where this was a good thing for us.”
Boyd, he said, has looked at Peninsula’s plans for the Kansas Star and likes what it sees.
“They’ve signed off on them, and we’re moving forward,” Swain said.