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After the Attacks: Some Old Rules Still Apply

30 September 2001

by Michael Pollock

ATLANTIC CITY, New Jersey — Terrorists flipped a deadly switch on American business, ending one world forever, while forcing executives to confront a new one where the rules have yet to be written.

In a flash, the world of orderly planning and proven business models crumbled. The New World remains a jumble of questions: What will consumers want? What is appropriate and what is tasteless? What will promote feelings of safety, and what will conjure up primeval fears?

Gaming is at the forefront of this new disorder, largely because casino executives -- like their counterparts in other entertainment arenas -- were so taken aback by the profound reaction to the attacks on the World Trade Center and the Pentagon. As stocks tumble, business trips are being canceled. Pleasure trips seem far less pleasurable, and activities that had never been questioned -- from flying in airplanes to jamming crowded buildings -- suddenly seem risky.

Securities analysts often looked to the past for signposts toward the future. How was gaming impacted by the Gulf War? Or by Hurricane Georges? Such analyses are important and even helpful, but are hardly reliable. Nothing in human history was quite as unsettling as the attacks of Sept. 11th, so nothing in human history offers a clear pathway to the future.

Gaming, like other forms of entertainment, needs to step back and examine a shaking society through a steady lens. First, executives must separate the temporary phenomena from the permanent.

McDonald's, for example, was absolutely justified in pulling its TV ads that relied on the slogan, "We love to see you smile." Consumers had very little to smile about, and nobody asks the grief-stricken to smile at funeral services. Movie studios were similarly justified in canceling the release of films that showed stars battling terrorists on back lots.

One action is temporary. McDonald's ads will be back in their full glory, since grief is a passing phenomenon. Hunger isn't. Neither are smiles. Hollywood movies, though, are another story. Arnold Schwarzenegger's escapist fare will never evoke the same thrills and chills. Fake terrorists are no match for the real thing when it comes to striking fear. So such films might remain forever shelved.

Casino executives similarly have to separate the temporary from the permanent. The economy will rebound, pumping some needed life into the stock market. That will eventually lead to consumer confidence and that most precious of economic commodities: disposable income.

Business trips will not go the way of three-martini lunches. Business people are very much like gamblers. They both enjoy the presence of like-minded people.

Similarly, the fear of flying will fade. Travelers will feel comforted by more visible security at airports, and the knowledge that all those planes in the sky at any one moment will land safely. They will come to the understanding that, whether they realized it or not, those who fly after Sept. 11th are far safer than those who flew before that fateful day.

Sweeping cutbacks in capital-spending plans by casino companies may soon seem a bit irrational. The market data that made sense on Sept. 10th will make just as much sense on Oct. 10th. Certain rules will remain intact. The potential of the Atlantic City market, for example, did not evaporate in that terrorist strike. Millions of affluent adults reside in the Northeast. Such facts are immutable and transferable from one world to the next.

The coming year is probably the best of times in which to give construction projects in gaming markets a green light. Unemployment in the construction trades and low interest rates are ingredients that can lower costs and raise the potential returns on investment.

Smarter casino companies will also leverage some of their long-standing strengths to counter something that may prove difficult to combat: Americans will have a lingering fear, and a sense of vulnerability.

That means casinos will look to previously neglected operations as sources of strength.

Surveillance rooms and surveillance cameras -- costly but required tools of the trade -- can be made more visible, with larger, better-trained staffs whose primary function could shift from spotting cheaters to protecting the public.

Similarly, security guards could use a significant boost in their numbers -- and in their morale. They can do more than look for an occasional underage gambler. They can help lend a sense of comfort and, well, security.

Casino patrons will not mind more cameras or guards any more than airline passengers will wind waiting a few extra minutes in line for metal detectors.

The world will never be the same, but some rules will never bend. People will want to be safe, and they will spend money to escape from reality now and then. All they ask for is a sense that life is returning to normal -- whatever that may be.

Michael Pollock publishes Gaming Industry Observer -- www.gamingobserver.com -- a newsletter that tracks trends in the casino industry.

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