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Best of Howard Stutz
Howard Stutz

Small casinos see recession as real adversary

4 January 2010

LAS VEGAS, Nevada -- Brad Fredella, general manager of the Stetson's Saloon and Casino on the Boulder Highway, doesn't consider neighboring large casinos such as Sunset Station, Green Valley Ranch Resort and the Fiesta Henderson as his competition.

With 69 slot machines and an eight-seat race-and-sports book, Fredella said, Stetson's doesn't worry either about the 15-slot machine bars and taverns that populate the areas around downtown Henderson.

The recession is his main adversary.

Like many small businesses that depend on the depleted discretionary spending of consumers, Fredella tries to find ways to keep his customers returning.

Value in Stetson's gaming and nongaming offerings continue to be the key.

"I'm not in the position to give away $20,000 in a cash drawing or cars or boats or trips like the big casinos," Fredella said. "We'll give you a good and fair gamble. We'll set our pay tables looser than the big casinos."

Like most customers in the big casinos, Fredella said his patrons visit with a set gambling budget. If they play unlucky and their bankroll is gone early, that could be additional business out the door.

Stetson's 69 slot machines are operated by route operator United Coin Machine, which has its own player-tracking system, Gamblers Bonus, which was upgraded in 2009. Company officials have worked with its tavern operators, such as Fredella, to implement various gaming and marketing programs.

United Coin Sales and Marketing Vice President Charlie Skinner said the route operator is trying to help its locations do what the big casinos have done over the past 12 months -- better target their message to potential customers.

The company works with a tavern operator to train a location's bartenders and other staff to serve almost as casino hosts.

Even with the advice, Stetson's revenue suffered in 2009.

"Whether you're a locals or a tourist place, the amount of spend per customer is down," Fredella said. "You need to do what you can to keep your customers. Eventually, the market will grow again."

Personal service is one way Fredella and other tavern operators say their locations differ from large casinos.

The Big Dog's Hospitality Group has three locations in Las Vegas, each with 35 slot machines. The machines are linked through United Coin's system, allowing the tavern operator to offer a gambling experience similar to large casino slot machine floors.

"The tavern industry finally has some tools available that allows us to compete with the casinos on a more level playing field," said Robert Snyder, Big Dog's chief financial officer. "We can reward players at the machine and that's big advantage for us. It's all about personal service."

As tavern operators fight casinos for customers, United Coin and other slot machine route operators often find themselves in the middle. United Coin has more than 600 locations statewide, operating about 6,500 slot machines.

United Coin Chief Operating Officer Steve Arntzen said his company must make sure the tavern operators it services are not competing with one another.

"We have to make sure than in a particular market, we don't have two similar customers and make one superior to the other," Arntzen said.

The economy has slowed tavern expansions. Nowadays, a developer with multiple land sites may only get the financing to build one location. Arntzen said this has led United Coin to spend more time training bar and tavern operators on serving their gaming clientele.

"There is not a lot of new development going on, which is good for our existing locations," Arntzen said. "We can have a profound effect if we're able to better train employees on how to use the system."

The taverns need a hook outside of the slot machines to stand out.

Big Dog's has been operating in Las Vegas for more than two decades and is known more as a microbrewery and restaurant chain, offering Midwestern fare from Wisconsin. Snyder said the gaming side helps support the restaurant.

"We're able to used the slot machine system to help drive restaurant side promotions," Snyder said. "We're very well- known in the valley and that works in our favor."

Stetson's, which also operates a restaurant, added a small race-and-sports book earlier this year that is operated by the Cal-Neva Club. The casino is licensed for up to 199 slot machines and table games, but Fredella said such a move isn't in the casino's business plan.

"We focus on service the big casinos can't offer," he said.

Village Pubs, which has 12 locations in Las Vegas, has a business model similar to Stetson's and Big Dog's. Karen Dorsey, president of Ellis Island Casino, the parent company of Village Pubs, uses its slot machine business as an incentive for its restaurant customers.

"We can do anything a large casino does, only on a more personal level," Dorsey said. "It's no secret that people are staying closer to home right now. Given the fluctuating price of gas and a general return to hearth and home, local taverns are well positioned for the times."