Gaming operators at the American Gaming Summit in Las Vegas expressed optimism that the effects of Sept. 11 have nearly passed, and that the future of the industry looks “as good as it gets.”
“We’re having a superior first quarter to anything we ever expected a month or two ago,” said Glenn Schaeffer, president of Mandalay Resort Group.
Fueling Schaeffer’s optimism is the fact that virtually every U.S. gaming market is in a no-growth situation while demand for gaming should continue to increase.
“With the favorable demographics for gaming, this market is as good as it gets,” Schaeffer said.
Schaeffer was among a panel of gaming executives who opened the two-day Summit with a panel discussion of the state of the market. He was joined by Gary Loveman, president and CEO of Harrah’s Entertainment, Inc., and Glenn Christenson, CEO of Station Casinos. The Summit was held Monday and Tuesday at Bellagio.
Loveman agreed that the downturn following the Sept. 11 events has leveled and that business is returning to Harrah’s casinos, both in and outside of Nevada.
“The Sept. 11 effects were modest outside of Nevada, and mostly limited to Atlantic City,” Loveman said. “But Americans are a resilient people and are returning to the casinos.”
Loveman added that the gaming industry in general has fared better than many others in the wake of Sept. 11.
“We’re a cash business — cash in and cash out — and don’t have to worry about mis-priced inventories, off-shore subsidiaries or other problems,” Loveman said.
Harrah’s will continue to pursue gaming in other jurisdictions, Loveman said, despite relatively high taxation rates.
“We can be profitable in places such as Illinois, where the 35 percent gaming tax rate is almost usurious,” Loveman said. “Keep in mind that these jurisdictions often offer quid pro quo operating benefits, such as exclusive licenses to operate, which can be very lucrative for operators like ourselves.”
Nevertheless, Loveman said, the gaming industry needs to remove itself from the radar screen of politicians who are always looking for new sources of revenue.
“We need to normalize our business with the politicians so we’re not at the top of everyone’s list when their coffers run dry,” he said.
On the local front, Station Casinos’ Glenn Christenson said the Sept. 11 events forced the company to “re-examine how we do things.”
“We were fortunate we didn’t have to make wholesale cutbacks in personnel, but were able to save $1 million a month in labor expense through attrition and other measures,” Christenson said. “We also examined our customer acquisition cost, the cost to bring them to our property, and further implemented our Acres System, a customer friendly system for our Boarding Pass members.”
The result of fine tuning its operation, Christenson said, was increased operating margins in the third quarter.
Christenson agreed that a static market for new casinos in Southern Nevada will help Stations properties.
“There are no signs of significant expansion of the local market for at least two years,” Christenson said. “And we expect the local economy will rebound from its construction slowdown and high levels of employment as 5,000-8,000 new people relocate to Southern Nevada.
“There’s a great potential as the economy comes back,” he continued. “We’re optimistic about the long term turnaround.”