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LAUGHLIN, Nevada -- Cherie Smeltzer, a Realtor from Helendale, Calif., has been coming to Laughlin at least four times a year for the past 15 years, always staying at the Flamingo.
So when Stratosphere owner American Casino and Entertainment Properties completed its purchase of the 16-year-old casino from Harrah's Entertainment in May for $170 million and renamed the resort Aquarius, Smeltzer worried about the transformation.
"What I always enjoyed about Laughlin is that it wasn't Las Vegas," Smeltzer said on a recent weekday morning, enjoying a champagne brunch in the Aquarius coffee shop with her two traveling companions.
"Laughlin has always been more to my liking and, while I've been to some of the other casinos, I was always loyal to the Flamingo. I was afraid of some of the changes. I didn't want them to mess with my dollar slots."
Change is an experience Laughlin casino operators, employees and visitors have been enduring and will continue to tolerate well into next year.
By the time Anthony Marnell III and Sher Gaming complete a $200 million purchase of the Edgewater and Colorado Belle from MGM Mirage sometime in the spring, six of Laughlin's nine casinos will have changed ownership since 2005.
Longtime Laughlin veterans and gaming analysts believe the deals may be the perfect tonic to jump-start the sagging casino market, which has seen its visitation numbers decline steadily since 2002 while gaming revenues have posted modest gains. In the past four months, however, Laughlin's casino win collectively has dropped more than 14 percent.
John Piet, senior research analyst for the Las Vegas Convention and Visitors Authority, said Laughlin casino operators changed their approach toward attracting customers over the past few years. Rather than market to the single-day-trip audience, the casinos want players who will stay longer and spend more money.
"They are sacrificing some occupancy and focusing on better visitors," Piet said.
Laughlin has withstood emerging competition from American Indian casinos in California and Arizona over the past 10 years. Piet said research has shown that hard-core gamblers who came to Laughlin multiple times a year might have sacrificed one trip to gamble at a Southern California tribal casino.
Meanwhile, at the same time Indian gaming was growing, the Colorado River casinos were left behind as their corporate owners focused attention and capital investments on high-profile resorts in Las Vegas and new gaming opportunities in the Midwest and South.
"In a way, we've kind of been like the red-headed stepchild," Aquarius General Manager John Lind said. "The real beauty of these ownership changes is the properties are going to get the capital they need to compete. There's a great feeling about the new blood coming into the market with ownership who will invest money into the casinos."
Lind spent more than a decade running the Ramada Express across Casino Drive before switching jobs during the summer.
American Casino and Entertainment Properties, a subsidiary of the Carl Icahn-controlled American Real Estate Partners, spent $40 million this summer to convert the Flamingo into the Aquarius, including new signs, a casino remodel, more than 1,000 new slot machines, renovated restaurants, a new hotel lobby and enhanced entertainment venues.
Lind said additional dollars will be spent in 2007 to refurbish Aquarius' 1,900 hotel rooms.
"In Las Vegas casino terms, $40 million may not seem like a lot of money," Lind said. "But what we're doing down here is to upgrade the product to show customers Laughlin is still a terrific, reasonably priced, three-day, two-night getaway."
For former Flamingo customers such as Smeltzer, the changes kept her business at Aquarius.
"I'm still trying to get used to cashless gaming," she said of the casino's new coinless slot machines. "They didn't get away from what Laughlin had before. They just made it better."
Deutsche Bank gaming analyst Bill Lerner said that if new casino owners follow the Aquarius model, Laughlin revenues could pick up.
The major casino companies that owned casinos in Laughlin viewed those properties as a second-tier market, Lerner said. Any capital expenditures directed toward Laughlin casinos in the past decade were considered maintenance dollars.
Lerner said new ownerships, such as the Marnell group; Landry's Restaurants, which bought the Golden Nugget Laughlin last year; and American Casino and Entertainment Properties; will treat the casinos like core investments.
Even Kentucky-based Columbia Sussex Corp., which is buying Aztar Corp. for $2.75 billion, will look at Laughlin as a key market. In the deal, the company is picking up the Ramada Express, its second Laughlin casino.
"The money spent to refurbish and remodel the properties won't be the price of just a fresh coat of paint," Lerner said. "Laughlin is an attractive market and, based on the prices these guys are spending to acquire and operate the casinos, the rebranding and reinvestments will include additional amenities. It really comes as a breath of fresh air to the market."
Laughlin casino operators agreed with Lerner.
"It's actually a pretty exciting time down here because we really haven't seen a lot of reinvestment into the market since 1990s," said Wade Fall, general manager of Harrah's Laughlin. "When you have these ownership changes, and you see the improvements, such as what's being done down at the Aquarius, it makes the whole market much stronger."
Harrah's has operated Harrah's Laughlin for almost two decades. The company acquired the Flamingo as part of its $9 billion buyout of Caesars Entertainment in June 2005, agreeing to sell the casino five months later.
Fall, who has worked at different Harrah's properties for 23 years and took over the 1,560-room Laughlin casino 14 months ago, said the company was the only major operator to continually reinvest in the market.
"We've always had a continual rotation for upgrading our rooms and areas of our casino," Fall said. "It seemed that Harrah's was the only company reinvesting in the product. I think that's obviously going to change."
Houston-based Landry's Restaurants entered the gaming business last year when it spent $325 million to pick up the 300-room Golden Nugget and the downtown Las Vegas casino of the same name.
Immediately, the company added two of its signature restaurants, Joe's Crab Shack and Saltgrass Steakhouse to the Laughlin property, while enhancing the casino floor.
Frank Toddre, who was the Golden Nugget's general manager from 1996 to 1999 and returned this year to run the casino again, said Laughlin hasn't changed much in his absence. In the winter, he said, the market still attracts retirees from colder climates who move south for a few months in their motor homes. In the summer, it still attracts a young audience.
"This market has a resiliency and I think the new ownership will go out and find new customers," Toddre said. "I don't think we'll change much in terms of seasonality, but what's great is that we're creating competition."
What overnight visitor volume was lost has been made up from a local customer base, but not from the Laughlin, which has just 8,315 residents. Across the river in Bullhead City, Ariz., a population boom has occurred. The city's most recent statistics list 38,960 residents.
Meanwhile, Mohave County, Ariz., is on the verge of a population explosion. The county, which includes Kingman, 33 miles from Laughlin, had a population of 170,800 in 2003, a 10 percent increase from 2000. Homebuilders, including Las Vegas-based Rhodes Homes, have plans for three separate master-planned developments with 55,000 new homes .
Those potential residents could view Laughlin much in the same manner as Las Vegas residents treat the locals casino market.
"We're getting a lot of local business, especially from Bullhead City," Fall said. "Frankly, that's part of the reason why the gaming numbers have done well. There's a growing population across the river."
Kingman, Ariz., resident Sharon Wass views the ownership changes at the Laughlin casinos with caution. The five-year resident was a customer at the Gold River, which became River Palms in 2005 when Columbia Sussex bought it. She went over the Ramada Express and then followed her casino host to Aquarius.
Although she thinks some of the changes, such as modern slot machines and enhanced restaurant options, are helpful, Wass said she doesn't want Laughlin to turn into Las Vegas.
"I really enjoy the style in Laughlin," Wass said. "You can dress up if you want to go out to a nice place to eat, or just be casual. It's a much more friendlier place for the customers."
THE CHANGING LAUGHLIN MARKET
Casino Former Owner New Owner
Edgewater MGM Mirage Anthony Marnell III*
Colorado Belle MGM Mirage Anthony Marnell III*
Ramada Express Aztar Corp. Columbia Sussex Corp.*
Golden Nugget Poster Financial Group Landry's Restaurants
Flamingo Laughlin** Harrah's Entertainment American Casino & Entertainment Properties
River Palms Goldriver Operating Corp. Columbia Sussex Corp.
*Pending regulatory approval
Year Visitor Volume Change Gaming Revenue Change
2006*** 2.61 million n/a $477.5 million n/a
2005 3.88 million -4% $621.2 million +4.4%
2004 4.04 million -3.5% $595.3 million +7.8%
2003 4.19 million -1.6% $553.2 million +0.4%
2002 4.26 million -4.4 % $551.4 million +1.1%
***Through September 2006
LAUGHLIN GAMING REVENUE TREND - 2006
Month Revenue Change from 2005
January $58.2 million +6.4%
February $57.6 million +4.7%
March $61.8 million +0.4%
April $53.7 million -0.6%
May $55.1 million +7.3%
June $45.8 million - 6.5%
July $50.5 million -1.6%
August $47.6 million -1.4%
September $47.2 million -4.9%
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