Gambling operators lukewarm for a Vegas address

Jan 12, 2010 5:04 PM

Who’d have imagined there would come a time when so many companies would serve notice with their spending decisions that success in the U.S. casino business does not require a Las Vegas address?

Used to be Nevada was the only place to be for wannabe casino owners hoping to strike it rich. Atlantic City made a nice start in the right direction but its big thinkers are still working to get it right and compensate for early errors.

Newer approaches have publicly traded companies such as Pinnacle (PNK), Penn National (PENN) and Isle of Capri (ISLE) enjoying successes in a variety of Middle America locales, and they do not have a single Las Vegas property among them. Their spokesmen continue to say, yes, they are interested in Las Vegas … but only if the time and price are right.

Isle might eventually manage several Station properties but that depends on what happens in a Reno bankruptcy court.

Even biggies such as Harrah’s and Boyd have not been reluctant to spend on regional properties.

It’s an example of what one senior official termed "a tendency to take expressions of ego from the investment equation."

The consequences of 9/11 and the impact of the "Big Freeze" over the last couple years combined to put a dent in the Las Vegas-is-the-place-to-be thinking. Even without these dark moments, the spiraling price of government-sponsored services has had policy architects struggling to find answers, a struggle that has often led them to consider some form of legal gambling.

There’s no arguing the global appeal of projects created by Steve Wynn's Wynn Resorts (WYNN), MGM MIRAGE (MGM) and Sheldon Adelson's Las Vegas Sands (LVS), people who have poured billions into their respective Think Big creations.

Make the experience appealing enough and they will come … it’s probably true if they are also rich enough.

But what about the rest of us?

The truth is that much of the country can find a casino owned by Penn, Pinnacle, Isle or even Boyd and Harrah’s within a reasonable distance of wherever they happen to live. And as the business evolves more of them have at least some of the non-gaming attractions that would get attention in even the biggest markets.

Now we’ve got Pennsylvania adding table games in the next six months, Indiana lawmakers eyeing the possibility of turning dockside casinos into land-based casinos and Ohio residents edging ever closer to casinos in their major cities.

And the beat goes on and on. The next year or two will see more activity.

This "think regional" approach to creating casinos is not all that unique. In even small ways it has been going on for years as developers romanced customers with satisfying experiences that also involved large measures of convenience: come play slots or 21 at our place and be home in time for dinner.

They may not make architectural statements with a wow factor, but like retailers such as Wal-Mart and Costco, the price is right and you certainly can’t beat the locations. And the returns can lift entrepreneurs into the upper levels of their industry.

I remember the late Andy Tompkins, creator of the late Lady Luck, and a very creative thinker, telling me in the early 1980s as he was opening a small Mississippi riverboat casino, "I want to be the next Steve Wynn and I’m hoping this will give me a nudge in that direction."

It didn’t, but he did not do all that badly either.

The importance of geographic diversification got big attention after 9/11 as regional casinos showed greater resilience than Las Vegas.

This appetite appeared to fade – Harrah’s and Boyd being exceptions – as the good times returned during the middle part of the decade and Wynn, Adelson and MGM were stretching the envelope wide in Las Vegas.

There was significant money spent on unfinished, abandoned or never started plans – monuments to failed dreams or visions.

But with the recessionary chill lingering across the business landscape, there have never been so many companies happy to take gaming and entertainment ventures closer to where their customers live.

As they say to Las Vegas: Later …maybe later, if the price is right.

Question? Comment? E-mail me at: Phil Hevener