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Wednesday February 9, 2000
Casino operators roll the dice on future
By Sarah Tippit
LAS VEGAS, Feb 9 (Reuters) - As a glut of new casino megaresorts and the spread
of Native American casinos make the U.S. gaming business more of a gamble,
scores of casino operators, analysts and regulators gathered in Las Vegas on
Wednesday to see what the future holds for the industry.
``People are going to talk about the current conditions in Las Vegas, what a
strong year they had last year, and their expectations for the future,'' said
Jason Ader, an analyst at Bear Stearns, which is one of the hosts of the
American Gaming Lodging and Leisure Summit which runs through Thursday.
Particularly, analysts said, attendees will discuss how Las Vegas plans to keep
itself interesting and exciting enough to fill the 20,000 new hotel rooms that
have been added to the city's famed, neon-lit Strip in the last two years.
``Entertainment is the future of Las Vegas,'' said Roger Gros, a vice president
and senior editor of Casino Journal, one of the sponsors of the conference.
``Right now you can gamble anywhere in the country,' Gros said. ''A casino is
within 90 percent of the people who live in the U.S. Las Vegas has to offer a
different experience to remain competitive. That's why now we have food as
entertainment with celebrity chefs opening up here. We have shopping as
entertainment."
So far, the new Las Vegas resorts have drawn curious crowds anxious to see art
exhibits, top-notch entertainers such as Barbra Streisand and Elton John, fine
restaurants and, of course, spacious, glitzy casinos.
The new resorts include Mirage Resorts Inc. (NYSE:MIR - news) Bellagio, Mandalay
Resort Group's (NYSE:MBG - news) Mandalay Bay, Park Place Entertainment's
(NYSE:PPE - news) Paris Las Vegas and The Venetian, built by billionaire Sheldon
Adelson's privately held Las Vegas Sands Inc.
Despite the best efforts by the big name casino companies, however, it remains
to be seen how fast the industry can continue to grow after the unprecedented
nationwide expansion over the last decade -- most notably during the last three
years -- and who the winners and losers will be.
WILL CALIFORNIA INDIAN CASINOS HURT LAS VEGAS?
Nevada casino operators also are particularly worried about a move to expand
gambling on California Indian reservations that comes on the heels of the most
expensive building boom Las Vegas has ever seen.
California voters are poised to approve Las Vegas-style gambling on Indian
reservations in the state on March 7 when they vote on an amendment to the state
constitution. The amendment, known as Proposition 1A is widely expected to pass.
That is expected to hurt Nevada casinos, which draw about 35 percent of their
business from Californians who drive across the border to gamble, Ader said.
``While new gaming jurisdictions have historically had minimal impact on Nevada
operations, the potential expansion of gaming into California poses more of a
threat to the continued growth of Las Vegas,'' Ader said.
The Las Vegas casinos are likely to feel the sting of the new competition even
though several big operators, including Station Casinos Inc. (NYSE:STN - news)
and Harrah's Entertainment Inc. (NYSE:HET - news) have management deals with
some tribes, analysts said.
The passage of Proposition 1A could increase the number of slot machines in
California from 17,000 to 43,000 at more than 57 tribal casinos poised to open
or expand, Ader said.
A similar proposition passed overwhelmingly in 1998 but was declared
unconstitutional by the California Supreme Court in August, when the state's top
judges, voting 6-1, struck down Proposition 5, which would have allowed Indian
tribes to offer video slot machines and card games.
As Nevada sighed with relief, California Indians vowed to turn again to voters
to win approval to run full-scale gambling palaces. At issue is tribes' desire
to protect their sovereignty and bring their people the high revenues that
gambling provides to remote reservations.
The measure's likely passage is expected to have minimum impact on Las Vegas
Strip properties because they are so unique and over-the-top compared to other
U.S. casinos. Tribal gaming, however, could hurt top casino operators that cater
to Californians, such as Mandalay Resort Group, and MGM Grand Inc., (NYSE:MGG -
news), which owns properties along the California-Nevada border.
Mirage, which owns properties in Laughlin, and Boyd Gaming Inc., (NYSE:BYD -
news) which operates casinos in downtown Las Vegas, also could feel a pinch.
Downtown and North Las Vegas properties might see declines of about 23 percent
and 10 percent in revenues respectively, Ader said, and the Reno/Lake Tahoe area
might lose nearly 22 percent in gaming revenues.
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Missouri Senator Opposes Tribal Smoke Shop
RENO, Nev. (June 8, 1999)
Senate subcommittee chairman Christopher Bond (R-Mo.) claims a federal grant designated for an American Indian tribe's discount smoke shop is an example of the Clinton administration's undercutting efforts to curb teen smoking.
"These smoke shops, which are selling discounted cigarettes and other tobacco products, will, in all likelihood, encourage teen smoking," Bond said.
Bond, chairman of the Senate Appropriations subcommittee, addressed his concerns in a recent letter to Housing Secretary Andrew Cuomo.
At issue is the Department of Housing and Urban Development's (HUD) 1997 $450,000 community development grant to the Reno Sparks Indian Colony. The tribe reportedly plans to build a smoke shop on reservation land in Verdi, Nev. that would sell primarily cigarettes and other tobacco products at tax-free, bargain prices.
Bond, chairman of the Senate Appropriations subcommittee that oversees HUD's budget, wants a list of all tribal smoke shops that have received federal money over the past five years.
He also wants the "rationale justifying" approval of the grants by HUD and the Bureau of Indian Affairs.
"HUD-financed construction of smoke shops selling discounted cigarettes is, in my mind, completely at odds with the federal government's efforts to discourage teen smoking by increasing the price of cigarettes," Bond told Cuomo.
HUD spokesman Peter Ragone reportedly said the smoke shop falls within the provisions of the community development grant and a change in the law would be needed to block the funds from being used for a particular project.
"If any member of Congress has concerns with its functions, they have the authority to change the law," Ragone said.
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