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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 Before Building Your Next Vessel, We Becommend Using This Cost Saving Device. The most effective cost and quality control device you could use on your next vessel is already sitting on your desk. Just pick it up, call Sea-Fab and ask for Mickey Cook. He'll tell you how Sea-Fab will research your project from top to bottom and work with your design to build in superior quality at unusual cost savings. They've done it for clients in the past, and they'll do it for you in the future. You see, with Sea-Fab you don't just get what you order. You get innovative know-how that adds value to every project that sails from Sea-Fab. Make the call today and let Sea-Fab bid on your next project. You'll see for yourself how Sea-Fab is redefining cost- effective quality. Specialty Vessels, Oil Skimmers, All Work Boats Aluminum, Mild Steel, Stainless & Exotic Alloys 2 Drydocks Available Year-Round Mississippi Coast Drydocking, Fabrication And Construction For The Offshore Marine Industry Sea-Fab, Inc. • P.O. Box 1651 4111 Cedar Street • Pascagoula, MS 39567 601/769-2500 • FAX 601/769-1947 Redefining Cost Effective Quality. Circle 236 on Reader Service Card new challenges and create new op- portunities in riverboat gaming. 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
