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Best of Liz Benston

Gaming Guru

Liz Benston
 

Lanni steps down from gaming lobby's board

19 June 2008

LAS VEGAS, Nevada -- MGM Mirage boss Terry Lanni has resigned from the board of the American Gaming Association, the federal lobby that is headed by Harrah's Entertainment Chief Executive Gary Loveman.

The two chieftains are at odds over a proposal by the Nevada teachers union to raise by 3 percentage points the state room tax paid by tourists, with the money going specifically to education. Harrah's backs the plan, but Lanni this week told the Sun he'd rather raise money for the state general fund with a room tax increase plus an increase in Nevada's business payroll tax.

"Why education should only be paid for by visitors I've never quite understood. Businesses that operate here should be willing to fund education," Lanni said.

Lanni said he quit the gaming trade group because of time commitments, not personality or political conflicts.

"I needed time from the AGA to focus on trying to find a solution to the bigger problems of this state," said Lanni, whose company will remain a member of the association and participate in various other committees, such as one on corporate diversity. "We need to find some better answers than the one on the table. It's going to take a lot of my time."

He's also busy stumping for Republican presidential nominee John McCain as one of the Republican Party's fundraising chairmen in Nevada.

Lanni isn't afraid to flex his company's leadership muscle.

MGM Mirage gave up its membership in the Las Vegas Chamber of Commerce after the tax debacle in 2003, when a gross receipts tax plan supported by a broad coalition of gaming companies failed to win legislative support because of opposition from nongaming interests and the chamber.

• • •

When gas prices hit record highs of more than $3 a gallon in the aftermath of Hurricane Katrina in September 2005, a Las Vegas market research company released a controversial survey of Southern California drivers revealing that up to half of visitors would stop driving to Las Vegas if gas prices hit $3.50 a gallon.

The survey, conducted by researcher Jim Medick of Precision Opinion, revealed a direct relationship between rising gas prices and fewer trips. Extrapolating further, 80 percent of drivers said they would stop driving to Las Vegas once prices hit $4.33 per gallon and 90 percent would stop at $4.97 per gallon. About half of all drivers reaching their theoretical limits said they would seek other transportation rather than cancel their trips.

The survey was done when few people could conceive of $4 gas. The consumer's threshold for pain at the pump is no doubt higher today.

Other factors to consider: Respondents were less likely to cut back on trips to California casinos, and drivers older than 60 were more sensitive to high prices than younger drivers, with ages 21 to 30 being the most flexible.

• • •

Shares of Boyd Gaming Corp. have been among the hardest hit among the big gaming companies.

The slowdown isn't entirely to blame. Some Wall Street analysts lack confidence in Echelon, the company's grandiose, multiproperty Strip resort set to open in the third quarter of 2010. Boyd hit a home run with the upscale Borgata resort in Atlantic City but has yet to prove itself with a luxury property in Las Vegas.

Others worry about financing under way for the Mondrian and Delano hotels, which will be built by Echelon partner Morgans Hotel Group. Some analysts speculate that Boyd may bring in another equity partner on Echelon or even ditch Morgans altogether. Boyd spokesman Rob Stillwell declined to comment on additional partners, saying the company is committed to Morgans. Boyd locked up financing for its portion of the $5 billion project before the economy soured.

The rising outline of Boyd's three attached hotel towers, called The Enclave, Hotel Echelon and Shangri-La Las Vegas, is now visible on the 65-acre site.

Lanni steps down from gaming lobby's board is republished from iGamingSuppliers.com.