It’s time to ante up, and 15 groups have.  As of last week, theMissouri Gaming Commission has received letters from 15 parties interest in the highly anticipated 13th gaming license in Missouri.  Most letters came from real estate developers, but 4 came from cities and one came from a casino operator.

This is only the first step in the process of adding a new casino in Missouri.  The next step should come later this month when the Commission is expected to call a public meeting to outline the application process for these 15 interested parties and start collecting more specific proposals.

Interestingly enough, Pinnacle Entertainment (NYSE:PNK), current holder of the license at the President Casino which will be returned to the Commission in a few weeks, did not express interest at this time.

The 15 parties that have expressed interest are (in no particular order):

• Isle of Capri Casinos.  This is the only casino company that submitted a letter of interest.  Based in Creve Coeur, MO, the company currently has no casinos in Missouri, but has publicly stated that they are investigating several options in several areas.  The company has allegedly been in discussions with Cape Girardeau concerning a location there.
• St. Louis Capital Partners, LLC.  Joe Uram, who is the former CFO of Argosy Gaming is included in this group.  Their letter indicated an interest in a Cape Girardeau casino.
• North County Development LLC group.  Received zoning approval for a casino complex near the Columbia River Bottoms despite opposition from local residents and environmentalists.
• Coastal Capital Management, LLC, a New York-based casino developer.  The group is led by Kenneth Shea, who led gaming operations for an investment fund.
• Blue Sky Development, owned by John Parker.  Blue Sky Development also owns the French Lick Resort and casino in French Lick, Indiana.
• A group including Jim Koman, (owner of the Casino Queen in East St. Louis) expressed interest in a riverboat project south of the Chain of Rocks Bridge.
• West Alton Partners, LLC.  Tried to obtain a license in 1996 for a casino to be located in North County.
• Unbridled Entertainment.  Also expressed interest in a casino to be located in Cape Girardeau.
• The City of Sugar Creek, MO.  Located near Kansas City, the city tried to get a license in 2008 when the 13-license cap was implemented.
• Louisiana, MO.  Located about 35 miles southeast of Hannibal, MO, on the Mississippi and just south of the Ted Shanks Wildlife Management Area.
• Ingenus Management.  This gaming consulting firm from Minnesota is also pursuing a license for a casino in Iowa.
• Dream Big LLC, a small group businessmen from Cape Girardeau
• A company called Railroad Casino Train, lead by a former transportation planner for St. Louis Metro transit agency, reportedly proposing a casino license for a train that would travel from St. Louis to Kansas City, making limited stops between, which would share revenues with cities along the way.
• The City of Cape Girardeau, submitted by City Manager Scott Meyer.
• Paradox Investments, LLC (dba: Casino Celebration) submitted by Gregory Smith proposes a casino in St. Louis.

Does it have to be all or nothing with wind energy?  Senator Chuck Schumer (D-NY) seems to think so.  He and several others, including Sens. Sherrod Brown (D-OH), Bob Casey (D-PA) and Jon Tester (D-MT), are sponsoring a bill currently that could deny tax payer subsidies and grants for renewable energy projects that use less than 100% U.S. made components.  The bill seems to come in response to a number of renewable energy projects that have been run by foreign companies.

This may be a question of whether half a loaf is better than no loaf.  Regardless of where the components come from, or where the company heading up the project is based, the fact remains that renewable energy projects still create American jobs, reduce American dependency on foreign oil, and help out with environmental issues related to burning fossil fuels.

Still, maybe this gambit will pay off.  Maybe such a law will only keep foreign interests away, making more room for U.S. companies. It all depends on the ability of US companies to make components quickly and cheaply enough.  If US manufacturers cannot meet the demand for components, the lack of availability could drive up the cost of renewable energy even higher.  In turn, driving up the costs could delay the implementation of renewable energy in the US, or could halt such initiatives altogether.

However, if the US manufacturers can meet the demand, my personal preference (as a tax-paying American) would be to see the U.S. dollars (and some jobs) be exported.

The most pressing question now is, “Who will get the coveted 13th license?”  Several groups have been cited as having an interest in opening a new casino.   The Gaming Commission Chairman James L. Mathewson has been quoted as saying that he would welcome a bid from Pinnacle to purchase the license, so could there possibly be another suitor now?

I’m also intrigued that the spokesperson for this announcement has been Mathewson, and not Executive Director of the Missouri Gaming Commission, Gene McNary.  McNary has been rumored to have political ties with the North St. Louis County government and the development company which has expressed interest in building a casino near the Columbia Riverbottom conservation area, so I wonder if the commission is trying to distance McNary from the process until the license is awarded.

I’m also curious why Pinnacle decided to give up the license.  It seemed, following the recent court decsion, that the fate of the President was far from sealed.  I’ll be interested to see if Pinnacle and the Commission have made any other agreements.

I also find it humorous to read comments on other blogs applauding the closing of the President and at the same time expressing hope that the Admiral riverboat will be converted into a cruising vessel.  I’m curious who would be willing to underwrite such a venture.  Certainly Pinnacle will have no interest in the boat, will they?  If they didn’t want it as a casino, why would they want it at all?  Are there investors out there who would be willing to buy the boat and then pay to fix it up?  That cannot be an inexpensive proposition.  The hull still isn’t expected to pass inspection this summer, so it’s not like it would be a quick fix to convert the boat into another business.

Still, it will all be interesting to watch.

The White House recently announced a $1.1 billion award in stimulus money for a high-speed rail corridor providing three round trips daily between St. Louis and Chicago at 110 miles per hour along most of the route. This is one of 13 new large-scale, high-speed rail corridors across the country proposed by the President.

Initially, I think high-speed rail makes sense as an alternative to air travel.  Door-to-door travel time could be reduced, when you factor in time to get to the airport, check in, pass through security, etc.  Travel costs could be reduced, since rail transportation is usually much less than airfare and railroads do not charge baggage fees.  Rail travel also offers additional comforts that air travel cannot match, such as larger seats, more leg room, and the ability to use cell phones during travel.  Rail should suffer from fewer weather delays than air travel, making it more reliable.  And of course, the greenhouse emissions of a high-speed train are expected to be much less than the emissions of an airplane, so the environment benefits too (as well as the green policies of corporations with traveling employees).

The travel market seems to support this idea as well.  A study released on January 14, 2010, by the Midwest High Speed Rail Association, demonstrates that the high speed rail train is expected to carry between 2.0 and 3.9 million passengers a year.  With gross revenue projections between between $76 million and $144 million per year, I wonder if the industry can be self-sustaining.

(Let me offer a brief and rudimentary economic analysis at this point.  Amtrack, by way of comparison, incurred approximately $3.38 billion in expense for 28.7 million passengers in FY 2008.  That equates to an average cost of roughly $120 per passenger.  Using this estimate and the projected ridership for the Chicago-St. Louis high speed rail line, moving 2.0-3.9 million passengers would cost between $240 – $468 million, which is about 3 times the expected revenue.  In 2008, Amtrack earned $2.45 billion, which is more than 70% of its operating expenses.  Based on these assumptions, the Chicago-St. Louis high speed rail may need to find a more efficient way to operate or may require government funding.  But to be fair, the Interstate highway system is funded entirely by federal and state dollars, Amtrac receives government assistance, and according to Amtrac, no country in the world operates a passenger rail system without some form of public support.  Still, these questions about revenue, costs and funding need to be answered.)

To be sure, there are downsides too.  While the White House plans propose 13 high-speed rail corridors, the proposed rail system is not as expansive as the airline system; in other words, railroads don’t connect all destinations where travelers want/need  to go the way airlines do.  Airlines also have time advantages on longer trips.  If passengers don’t like connecting flights between destinations, imagine the time it will take to make a trip on connecting trains.  Airlines also have perks that railroads don’t have, such as frequent flyer mile programs and airport lounges (features which could easily be replicated by railroads, but with which the railroads do not yet have experience).

Pinnacle also has some leadership opportunities to address. The company is still actively pursuing candidates to replace their former CEO, Dan Lee. I wonder what this means for Kim Townsend. Back in October, Pinnacle tapped her to be the general manager of Lumiere Place, but then in November announced she would be staying in Atlantic City to focus on that property. Will she move to another Pinnacle property? The company has announced plans to add a casino to their resort in Lake Charles, La., and to build a casino in Baton Rouge, La. Might either of these properties be a home for Townsend?

What does all this mean for shareholders? On the one hand, Pinnacle seems to be undergoing some very big changes. There are some additions in the form of new properties, new jobs and new leadership. They are also going to be shedding some properties (Atlantic City and possibly the President Casino). On the other hand, the properties they’ll be left with could be some of their most productive assets, which might make the stock more valuable. All of this comes against the backdrop of an ailing economy, which many (including Pinnacle) blame for some of the industry’s performance. It will remain to be seen whether these cuts are enough to maintain long-term viability and shareholder value.

One of his most interesting arguments come from the seemingly suddenness of the decision. As he points out, “the Gaming Commission staff has not directly communicated with the the home dock city about this recommendation.” Why wouldn’t the Commission at least contact the Mayor’s office, if only out of courtesy? Mayor Slay also brings up a very valid concern regarding the impact of removing $2 million from the City’s budget. Surely, this cut would be a concern and impact the City. Why not address it first before contemplating closing the casino? As he points out in his letter, this process is “the kind of action that makes taxpayers mad at government.”

Slay also calls into question the same concern I voiced in an earlier blog: is Pinnacle being treated fairly? The Mayor pointed out that Pinnacle has offered up plans and alternatives to remedy the President Casino’s declining revenues, but all have been shot down. As the Mayor says, “it would be like your local government rejecting a legitimate building permit to repair your house, then condemning your house because you didn’t repair it.”

I question the strength of some of the arguments, though. While closing the casino would cost St. Louis more than 240 jobs in an economy where unemployment is a major concern, any new casino that opens up would certainly employ at least that many people. Those 240 jobs might not be lost, but just be relocated elsewhere in Missouri. Indeed, the new casino could even be located in St. Louis and the City would get those jobs back. Similarly, the argument regarding cutting $2 million from the St. Louis budget could be offset if the state revenues increase by more than $2 million. Mayor Slay is right to defend those jobs and tax dollars – as Mayor of St. Louis, it’s his job. But the Gaming Commission could argue that it’s looking out for the whole state of Missouri, not just St. Louis.

I wonder if the City, the Commission and Pinnacle could all work together to come up with a plan that would satisfy everyone.

I’m concerned about the potential conflict of interest in this conflict. McNary cited a “decline in performance” as justification for the decision.  And to be fair, his statement is correct.  Revenues at The President Casino have declined steadily since 2005, with a significant drop in 2008.  So the Commission has a valid point in wanting the license to go to a property that produce more tax revenue for the state.   But does the Commission bring in more revenue by revoking the license and putting it up for bid rather than letting Pinnacle keep and renew the license at another location?   Why take the license away a year early (Pinnacle Entertainment bought the license as part of its acquisition of the President Casino in 2006, and that license is supposed to be good through 2011) and force Pinnacle to bid for it against other suitors?  Could the fact that the Commission knows there are several other parties interested in the license influence their decision to revoke and resell the existing license?

Why not give Pinnacle a chance to earn that revenue?  Pinnacle has already expressed interest in using the license for another casino in the hotly contested North County area – one of three speculated locations for a new casino.   Pinnacle also has a proven record of success, with Lumière Place Casino earning some of the highest revenues in the St. Louis gaming market, even in a down economy.  Pinnacle has employed more than 1000 people at Lumière and is currently hiring more than 1000 more employees for the new River City Casino, due to open in March.  Pinnacle offers a compelling record of success.   Why would the Commission not give them another chance to do more of the same?

From an investment standpoint, it seems much more risky to give the license to another entity, which may or may not have the same record of success in the St. Louis market.  Does the potential, one-time revenue boost from reselling the license offset this risk?   Does it make sense to trust a company that has 2 successful operations in the St Louis are to try for a third?  In the long run, what’s the best option for the people of Missouri?

The U.S Department of Energy granted the Missouri Corn Merchandising Council $200,000 to help install 16 ethanol-gasoline blender pumps across the state.

This is great news on many fronts. First, the move to make more ethanol gasoline available will help local corn farmers, as the corn to make this ethanol is supposed to be coming from local farmers. Second, the increased availability of ethanol gas may help reduce the cost of the fuel and increase the demand for Flex Fuel Vehicles (FFVs). Third, an increase in the consumption of this kind of renewable fuel can create and keep jobs here in the U.S. to produce the fuel and maintain the industry’s infrastructure. Fourth, an increase in American-made ethanol fuels means a decrease in dependence on foreign oil. Some sources estimate that the pumps Missouri has planned will have the potential to displace as much as 10 to 15 million gallons of petroleum. And of course, more ethanol means cleaner burning fuel and less pollution.

Decisions and actions like the addition of these ethanol blend pumps are a necessary part of moving our switch from oil to corn. Missouri’s commitment to these pumps brings us closer to the tipping point where ethanol fuels become the standard and oil becomes the exception. The switching process is a classic chicken-and-egg paradox. People are reluctant to buy FFVs until more service stations offer high ethanol blend fuels, but stations are reluctant to offer high ethanol blend fuels until more customers have FFVs. Similarly, automakers are reluctant to build too many FFVs until people buy more of them, making the cost of the FFVs more expensive. But people are reluctant to buy FFVs at higher price points. The same scenario applies to the fuel itself. If the fuel is not widely consumed, the supply is low and the cost goes up. But the more people use high ethanol blend fuels, the more the supply will increase and the lower the price will go.

This price-point of fuel may be the next key to making the switch from oil to corn. The price of high ethanol fuel needs to come down to make it competitive with regular gasoline. Indeed, high ethanol blends need to be significantly lower because the fuel itself is less efficient. Thus, it takes more high ethanol fuel to drive a car the same distance than “regular” gasoline. Since it takes more fuel to do the same job, the cost needs to come down, or “regular” gas will win the battle of the wallet because it’s cheaper on a mileage basis.

With people in power making more moves like this, the US will continue its path to cleaner energy and independence from foreign oil. Congratulations, Missouri. You’re leading the way!

My questions are: 1) who is going to run the Lumiere Place casino?  Todd George, vice president and general manager at Lumiere Place was named vice president and general manager of the new River City Casino (scheduled to open in March).  At the time, Townsend was expected to take over at Lumiere, presumably  so that George could focus on River City.  Based on revenues, Lumiere is a top (possibly the most successful) casino in the St. Louis area.  So will George have the capacity to maintain Lumiere’s leading position while launching the area’s newest casino?  Will he be able to replicate his success from Lumiere to River City?  Or will the need to divide his attention cause both properties to suffer?

Question 2: How will this management decision affect shareholder confidence?  Lee resigned in November, leaving Pinnacle’s board without a chairman.  Townsend is no longer coming to help out at Lumiere.  The President casino is headed for troublesome times in summer of 2010 (when the Coast Guard inspection of the Admiral Riverboat, home to the President casino, is due).  Are these items causes for concern?

With so much attention on Pinnacle’s St. Louis properties, these casinos and the Pinnacle corporation have a fantastic opportunity.  There’s no such thing as bad publicity, right?  So the real question is what will Pinnacle do with all this attention?

President Obama addressed the nation earlier this week to talk about clean energy and its impact on the economy.  The President first focused on the state of the job market by commenting on the recent ups and downs of the unemployment rate.  Obama stated that “we have to continue to explore every avenue to accelerate  the return to hiring,” and went on to explain how the clean energy manufacturing initiative will help put more Americans back to work (with jobs that pay well and cannot be outsourced) and position America as a leader in clean energy production.  The President announced that the new initiative will award $2.3 billion in tax credits to companies and manufacturers of clean energy technologies.  Obama estimated that the initiative will lead to 17,000 jobs and a boost to America’s manufacturing sector.  He also cited that over 180 projects in 40 states will receive these tax credits.  The President also called on Congress to include another $5 billion as part of the jobs package under consideration.