Deutsche Bank Seeking To Exit Casino Business… In Las Vegas

Deutsche Bank Seeking To Exit Casino Business… In Las Vegas
By Deutsche Bank AG (GIF format logo) [Public domain], via Wikimedia Commons

A large bank is trying to sell its ownership in a casino.  No, not Goldman Sachs trying to shed its ownership of Sigma X, the bank’s dark pool exchange for stock trading.  Deutsche Bank AG (USA) (NYSE:DB) is trying to sell the Cosmopolitan of Las Vegas for $2 billion, according to a report in Bloomberg News, citing unnamed sources.

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Risque advertising to a hip crowd

The Casino, which engaged in risqué advertising with the slogan “just the right amount of wrong,” might have been the wrong company for Deutsche Bank to keep.  The casino cost $3.9 billion to build and has yet to turn a profit.

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InvestAs equity long/short hedge funds have struggled this year, managed futures funds have been able to capitalize on market volatility and generate some of the best returns in the hedge fund industry. The managed futures sector refers to funds known as commodity trading advisors, or CTAs, which generally use a proprietary trading system to trade Read More

“It’s a compelling asset, great rooms, great location, terrific restaurants and a great reputation among the younger, hipper crowd,” Rob Heller, chief executive officer of Spectrum Gaming Capital LLC, an investment bank in New York that isn’t involved in the sale, was quoted as saying in the report.

Casino owner be default

Deutsche Bank AG (USA) (NYSE:DB) didn’t ask to get into the Las Vegas casino business, it occurred as a result of a margin call that couldn’t be met.  Deutsche Bank loaned the money to the developer Eichner, who defaulted.  The bank then took possession with some very bad timing – just as Nevada property values sank and travel to Las Vegas dropped as well.

In order to complete the project, the budget almost doubled under the bank’s watch.  Among the many issues occurred when digging on the construction site bumped into an aquifer that now requires the Casino to pump groundwater from its subterranean parking garage 24 hours a day, the report said.

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Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)
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