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Best of Benjamin Spillman

Gaming Guru

Benjamin Spillman
 

Downtown casinos: Race was pits

11 June 2007

LAS VEGAS, Nevada -- The Vegas Grand Prix attracted tens of thousands of fans and a global television audience to downtown, but it didn't do much to revive the stagnant Fremont Street-based gambling market.

According to the Nevada Gaming Control Board, downtown win was up 8 percent to $56.5 million, which would mark the end of 10 consecutive months of decline. But an analyst looking closer at the numbers credited the increase to a revenue reporting anomaly and estimated that the downtown casino win was actually down 3.3 percent.

The adjusted numbers jibe with anecdotal reports that closing streets around the Fremont Street Experience for the Easter weekend race prevented customers from getting to casinos and losing money.

Casino operators say that if the race returns in 2008, organizers should make it easier for race fans to walk around downtown.

"You couldn't get people in or out of downtown," said Larry Woolf of the Navegante Group, a company that operates the Plaza, Gold Spike, Las Vegas Club and Western casinos in the downtown area. "Obviously, they have to fix the access issues."

The downtown win of 8 percent was considered misleading because money deposited in slot machines in the final days of March probably wasn't counted until early April, said Justin Sebastiano, an analyst for Nollenberger Capital Partners.

Sebastiano said casinos typically don't deposit money from slot machines over the weekends. That means cash that went into machines from the evening of Friday, March 30, through Sunday, April 1, wasn't counted until Monday, April 2.

He based his argument on the fact that the hold percentage of downtown slot machines was 7.28 percent in the April reports, a figure well above the typical downtown hold of 6.3 percent.

The difference was enough to sway the figures dramatically, Sebastiano said.

"Even small numbers can give you big swings in the percentage," he said.

There was some good news downtown. Blackjack win increased nearly 22 percent to about $5.2 million.

"They beat up on the players in blackjack," Sebastiano said before noting that table games aren't as reliable as slot machines for producing revenue. "But table games are much more volatile."

Downtown operators were reluctant to discuss the performance of individual casinos for the month. But they did say the layout of the race hindered business and would welcome its return only if organizers improve the setup.

The major complaint was that the Fremont Street Experience was in the middle of the race route, making it difficult for pedestrians to move freely downtown.

"We cannot afford to do the island concept again and cut off access like that," said Rob Stillwell of Boyd Gaming, a company with three downtown casinos including one, the Fremont, that was inside the race loop. "The freedom of the Fremont Street Experience is what drives traffic there."

Jim Freudenberg, president and CEO of Vegas Grand Prix, defended the race. He said the event attracted 120,000 people downtown over three days, but he couldn't verify that figure with ticket sales or any other attendance tracking methods.

"We brought the people down, which is what we promised to do," Freudenberg said. "We don't know what drives people to gamble. That is their expertise, not ours."

He said he will visit Las Vegas later this month and discuss improvements for the 2008 event with Mayor Oscar Goodman. He acknowledged criticism of the distribution of foot traffic but stopped short of promising changes beyond increasing accessibility for handicapped people.

"It is a race track on city streets," Freudenberg said, explaining the necessity to block some foot and car traffic. "If the place was empty, I'd say it wasn't accessible. The people were there."

Freudenberg wouldn't elaborate on other problems that he said would be part of the discussion with Goodman.

"They are issues we have with other people. I don't think the right thing to do is airing them in public," he said. A spokeswoman for Goodman said the mayor was unavailable for comment Friday.