Merger no threat to competitors

Jun 22, 2004 6:45 AM

The merger of MGM Mirage and Mandalay Resorts shouldn’t pose a monopoly threat to competitors, unless the new conglomerate seeks to manipulate market conditions or engages in "predatory practices."

That’s the assessment of UNLV Professor Bill Thompson, a nationally recognized expert on casinos and gambling.

Thompson, a professor of public administration who has been teaching at UNLV since 1980, said the merger is not necessarily in itself a bad thing for Las Vegas or the people who gamble or stay at those properties. "There’s nothing bad in being big. It’s the American dream (to) acquire other companies," he said.

What would be damaging, however, would be for the new company to engage in what Thompson calls "predatory practices," such as insisting that vendors do business only with the new giant conglomerate at the risk of losing that trade if the vendor tried to deal with other casinos. "That’s bad," he said, but "it’s not a monopoly until they do something" that alters the marketplace.

Thompson added that, from a national perspective, there’s not enough of a concentration of casinos in Las Vegas to make MGM-Mandalay a dominant, monopolistic company. He said Southern Nevada accounts for only 25 percent of all the casinos in the country and only about 15 percent of the nation’s legalized casino gambling.

He contrasted those numbers with the automobile industry in Detroit, where virtually all of the domestic automakers produce cars for the entire country.

Thompson said a peripheral concern of the merger is that the federal government "is going to look closely at anything the giants do to hurt the independents."

One of the government concerns is "collusion," in which the biggest casino chains try to coordinate their prices, in essence fixing them at higher than market rates.

Despite the increasing number of casinos now controlled by a few conglomerates, Thompson said there will be more mergers on the horizon.

But, he added, "there’s still going to be room for competition (so) if the companies are wise, they’ll keep the room rates where they are."

Thompson’s personal fear out of all the recent casino mergers (Boyd last week won approval for its purchase or Coast Resorts) is that the Las Vegas giants "will dump core properties in Reno because they’re not making enough money."

He said the closing of casinos in Reno would be devastating initially, but that northern Nevada in the long run would survive by attracting other businesses.

"They’ve got trees, they’re close to San Francisco, they’ve got yuppies, and they’ve got a sense of community we don’t have," he said.

Meanwhile, back in Las Vegas, Thompson said he expected the Strip to "fill in" over the next 10 years.

"I don’t look for many empty lots," he said. "I would like to see the land from Sahara Avenue to the Stratosphere belted. Rip everything out and make it a park and extend the Strip to the Stratosphere."

Overall, he said the future of Las Vegas is a bright one.

"Las Vegas is golden. Everything is on a roll," he said.

Thompson said the only way that the city’s economy could collapse would be through a catastrophic strike by terrorists. Aside from that, "we can grow, grow and grow (but) hey, if it falls apart, we can go somewhere else."