May 14, 2011--Greektown Casino-Hotel is reaching for stability nearly a year after it emerged from insolvency.

The chief challenges for the casino's CEO-in-waiting will be to steady Detroit's third-place gaming hall, upgrade its facilities and make Greektown more competitive as new gambling venues open, analysts say.

The Michigan Gaming Control Board must sign off on 30-year casino veteran Michael Puggi before he can take over at Greektown, where revenues are bumpy but rebounding post-bankruptcy. The casino's board in March offered the job to Puggi, who has worked in management at companies including MGM Resorts International and Herbst Gaming.

Puggi and other Greektown officials declined comment until he is approved by state regulators as early as June 14. But he faces significant challenges in transforming Greektown's image into a more luxurious option among the city's casinos.

Jake Miklojcik, who served on Greektown's interim board when it was in Chapter 11, said the casino doubled down on discounts with cut-rate hotel stays, low-priced food and heavy comps to players to keep them at the slots and tables as the gaming hall went through bankruptcy. The concessions risked "a race to the bottom," he said.

"There was some reason for that, but it couldn't be sustained," said Miklojcik, president of Michigan Consultants in Lansing. "You're not really establishing yourself as a destination -- in fact, you may be turning people off. You want to go more upscale to attract more people in general."

Analysts say Puggi must:

-- Restore the reputation of the casino that, strangled by as much as $875 million in debt, filed for bankruptcy protection in 2008. From the start, Greektown was a straggler, the last of the city's casinos to start taking bets and the last to build its permanent facility with a 400-room hotel that opened in 2009.

-- Navigate through increasing competition, including a Toledo casino set to open in 2012 and the possibility of seven new casinos in Michigan if supporters can get enough signatures for a ballot measure. A new bridge across the Detroit River also could make it easier to get to Caesars Windsor.

-- Fend off a 3% casino tax increase that Mayor Dave Bing proposes as Detroit battles a budget crisis. The casinos say they borrowed heavily to build new hotels and gaming facilities and can't afford the extra taxes.

Greektown was the only casino to report a revenue decline, a 1.6% drop to $94 million, for the three months ending in April compared with the same period in 2010, according to figures state regulators reported this week.

Analyst Alex Picou, managing director of gaming, lodging, travel and leisure at FBR Capital Markets in New York, said Greektown should try to boost its image for quality and value but not aim too high against superior facilities at competitors MGM Grand Detroit, with its national sweep, and MotorCity Casino, with tie-ins to the Ilitch sports and entertainment empire.

"Everybody can't be up-market, and not everybody is," Picou said. "There's nothing wrong with the middle guy."

Gaming board executive director Rick Kalm said that with a new CEO, Greektown can proceed with a facilities upgrade, a fresh interior look and new effort to improve its brand name.

Contact Matt Helms: 313-222-1450 or [email protected].

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