Trump's dive into online gambling comes with warnings
0 Reply | 694 ViewsOn 10/27/2011 01:01 AM in Other Sports
Trump’s company, Trump Entertainment Resorts Inc., reports that it is now in bed with wealthy hedge funds manager Mark Lasry. Trump and Lasry want to be locked and loaded when the federal government calls off its army of Dobermans and once again makes it legal to run an online gambling company.
The Trump/Lasry nuptials seem to comprise a perfect union. Trump has declared bankruptcy several times on his way to a television gig and fraudulent presidential candidacy. And, back in the go-go 1980s, Lasry cut his teeth by running the bankruptcy division of a New York-based financial securities company. But if you figure that Lasry would be more than a little nervous being the money man for anything Trump is involved with, you would think wrong.
Lasry’s Avenue Capital, which reportedly has $12 billion in cash on hand, reportedly would supply the up-front money for the online company and Trump would supply, well, Trump. TER Inc., which is actually controlled by Avenue, has no exposure and apparently can walk away relatively unscathed if things go south.
And make no mistake about it, Trump has no problem walking away from bad deals - be it hotels, casinos or other shaky investments. In fact, that’s his modus operandi: Borrow money on his name and build on speculation. If the business tanks, as it often does, make a clean getaway and let the bank deal with the consequences. Banks settle for dimes on the dollar and make up the difference by hiking fees on its normal (non-rich) customers. It’s a classic win (Trump), lose (consumer), draw (bank) situation.
Trump is extending his paws into the world of online gambling even as the ink has yet to dry on a multitude of bankruptcies and lawsuits stemming from his unsuccessful casino businesses in Atlantic City and his signature 65-story Trump Hotel/Condominium off the Vegas Strip.
The hotel, which was built so his Vegas archrival Steve Wynn could wake up in the morning and see it from across the Strip, rests smack dab in the middle of other failed projects, complete with abandoned cranes and lots and lots of desert sand. The building is nowhere near sold out, and Trump’s suits have been busy in court fending off litigation by angry buyers who said they were misled by Trump’s salesmen.
But it’s in Atlantic City that Trump made a name for himself. With three properties in the East Coast gambling Mecca, Trump couldn’t find his way out the recession in the late 1980s and had nothing but trouble, especially at the Trump Taj Mahal.
The Taj had been financed with high-interest junk bonds, and when he couldn’t make the interest payment, he did what he always does – go to the bathroom just as the waiter brings the bill. Banks and bond holders wound up picking up a heavy chunk of the debt, and in 1991 Trump gave up 50 percent ownership.
Similar problems at two other casinos in AC pushed Trump into business bankruptcy and almost into personal bankruptcy. His AC footprint is much smaller than what it once was.
The Donald’s penchant for backing away from bad investments isn’t limited to Atlantic City. Five years ago, Trump backed with his good name a luxury hotel-condo project in San Diego, selling units to gullible buyers on the basis of an artist’s rendering and before front-end loaders even arrived on the scene. Not hard to see what happened next.
A total of $32.2 million vanished before the first shovelful of dirt was turned over, and purchasers, who had apparently not ever heard of caveat emptor, lost it all. A simple Google search by any of the saps would have shown that right around that same time, Trump was engaged in another string of bankruptcy protection filings, and had his lawyer in a Chicago courtroom so he wouldn’t have to pick up the tab on a hotel project of his in that city.
Trump isn’t always wrong. He did correctly predict that Manny Pacquiao would defeat Henry Cotto, although that didn’t put him too far out on a limb. And he was right on the money in forecasting that 50 Cent’s reality show would fail.
But Trump seems to have problems any time he can’t shoot fish in a barrel. The big fella bit off more than he could chew when he vaulted into the Republican snakepit last spring and actually led in some GOP polls when he claimed that President Obama was not a natural-born citizen. Obama produced the document, beat a chastened Trump at the White House correspondent dinner and the exposed real estate flim flam man sheepishly withdrew from the race. Turns out the race was apparently more about TV ratings than carrying the torch for ill-informed voters.
“Part of the beauty of me,” said Trump before he spit the bit and dropped out, “is that I’m very rich. So if I need $600 million [for a presidential run], I could put [it] up myself. That’s a huge advantage.” In fact, his total expenditure was $0.
As Trump and his sugar daddy press forward with their online gambling venture, Lasry should keep in mind those whom Trump has left in his wake and recall the old line about one gambler talking to another: “I hope I break even today. I need the money.”