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Best of Liz Benston

Gaming Guru

Liz Benston
 

Looking in on: Gaming

9 January 2007

Those free beers and buffet passes down on the Strip can really add up.

A state-sponsored statistical survey of the gaming industry includes what we think may be the most interesting factoid of all: Strip casinos dished out about $1.3 billion worth of comps - free meals, drinks and rooms - during the fiscal year that ended June 30.

The giveaways increased by 34 percent compared with the previous year .

But still, casinos made nearly as much profit last year - 8 percent, compared with 9 percent the previous year.

While overall resort revenue went through the roof - $14.9 billion, 16 percent more than the previous year - casino floors on the Strip were slightly less profitable than they were the year before. Hotel rooms earned about the same percentage of profit, and food and beverage departments were a bit more profitable, according to the Gaming Control Board's annual Gaming Abstract, a report released last week based on casino surveys and tax figures.

Slots still generate the lion's share of casino revenue (53 percent), although table game revenue, helped by baccarat, grew at a faster rate. There were five more poker rooms in fiscal 2006 even after the closure of two properties - slightly boosting poker's percentage of the pot.

Favored by Asian high rollers, baccarat generated 35 percent more revenue than the prior year, helped by the proliferation of luxury casinos such as the Wynn Las Vegas, Gaming Control Board Senior research analyst Frank Streshley said.

The weak U.S. dollar means foreign gamblers have more to spend while they're here, he said.

• • •

Testimony by casino workers about smoky working conditions and related health problems heavily influenced the Atlantic City Council when members voted unanimously last month - over the objections of casino bosses - to ban smoking by April 15 in the city's casinos. Emotional appeals, observers say, apparently overshadowed the industry's economic interest in accommodating gamblers who smoke.

The wife of nonsmoker Vincent Rennich, a floor supervisor at the Atlantic City Tropicana who sued the casino after he developed lung cancer, was among those testifying.

"We will not let you down," a council member told workers who packed the meeting room the day of the vote, which amended an initial 30-day time frame for the ban to go into effect to give casinos more time to adjust.

Stephanie Steinberg, chairwoman of Smoke-Free Gaming of Colorado, helped mobilize workers in New Jersey to press for the ban and is pushing for similar legislation in Colorado. She also has Nevada in her sights.

"This is how we're going to win this fight," Steinberg said.

• • •

When MGM Mirage began selling the first of its 2,700 CityCenter condos, the competition got a little tougher for other condo projects in town.

Buyers who have been spooked by canceled and delayed condo towers aren't so gun-shy when they have a chance to live directly on Las Vegas Boulevard, where they'll pay more but where price appreciation is more assured.

That's why the opening of MGM Mirage's condo sales has the potential to hurt projects such as the W hotel and condo complex on Harmon Avenue. That project has been delayed while partners review offers by private equity funds and a couple of casino giants to buy into the project.

"W is a beautiful brand, but there's strong competition with CityCenter," luxury residential broker Bruce Hiatt said. "Buyers are very reluctant to put money down or reserve something that's not under construction."

W's partners have sold 750 condos but are holding off on the rest of the 3,700 units as they field investment offers. Adding a partner to the project would allow developers to build the resort with fewer condos and more hotel rooms. (Selling units is a way for developers to help finance big construction projects. But what developers get in the short run they sacrifice in hotel revenue long term.)

Better that the project be delayed than developers not take advantage of more abundant investment dollars available, W partner Reagan Silber said.

"We've had no trouble selling condos," Silber said. "If you have a good product in a good location, there's plenty of demand." Condo development isn't as easy these days. Some banks financing them want at least 70 percent of units sold before they take the plunge.