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Best of Liz Benston

Gaming Guru

Liz Benston

Small casinos keep it simple, friendly

22 August 2008

LAS VEGAS, Nevada -- With its mirrored ceiling, black acrylic walls and hot pink neon accent lighting, the Rainbow Club & Casino in downtown Henderson resembles a 1980s-era nightclub, only with modern slot machines.

Many of its gamblers, retirees with fixed incomes, remember the days when casinos, for the most part, were budget businesses.

The Rainbow's only restaurant ("Our meals are deals!" the menu declares) offers $7.95 prime rib and a $7.75 porterhouse steak — prices abandoned long ago on the Strip.

The casino's determination to cling to the past is paying off at a time when bigger and fancier casinos are hurting in the economic downturn. And it's not the only one.

A few small casinos across the Las Vegas Valley say they have not experienced the downturn that has affected larger properties such as those of Station Casinos and Boyd Gaming Corp., which owns the Coast chain.

Part of the upswing experienced by some smaller properties is a function of the peculiarities of the business they are in rather than the discovery of a miraculous secret. Small casinos don't have hotel rooms — first required for new casinos by Clark County in 1991 — and therefore cater to a narrower customer base of gamblers than bigger properties, which have more amenities.

Many bigger suburban casinos were doing well as recently as a year and a half ago, making any decline in earnings appear more dramatic. Relatively speaking, smaller casinos typically experience smaller, if any, improvement over time.

And yet, the increase in business reported by some operators this year stands in direct contrast to the decline in gaming revenue among suburban casinos as reported by the Gaming Control Board — a sign that the downturn is largely passing by those casinos that depend almost entirely on regular gamblers.

One of the Rainbow's regulars is retired casino worker Jessie Mancha, who has been eating breakfast, lunch and dinner there since his wife passed away three years ago.

In any month, Mancha, 76, might drop hundreds of dollars into the Rainbow's video poker machines — losing more than he wins, of course.

But he's happy to do it.

"It's the nature of the business. I don't mind giving my money to these people," he said. "This is the real deal — a locals casino where they know you personally."

Mancha calls the Rainbow staff a second family.

"I've known some of these girls since they were in high school," he says, pointing to cocktail servers in their 40s and 50s. "I know their children and their grandchildren."

Casino employees visited his wife in the hospital and attended her funeral. Two employees named their children after him.

Just about all locals casinos claim to get to know their regulars and offer more personalized service than tourist-focused properties. But smaller joints claim to be better purveyors of a "Cheers" atmosphere — where customers are greeted by name.

Jeff Fine, managing partner of the Opera House and Silver Nugget casinos in North Las Vegas, says a personal touch is key for keeping players who have many choices.

"The bigger places are more impersonal, so it's easier for them to give it up if they have to cut back to four times a month from five," said Fine, whose casinos are also doing better than last year. "People may have less money to spend but they still want to see all their friends at the smaller casino. Someone's going to know their name and their drink, and they're going to share stories."

Fine, who bought the properties in January 2007, says part of the recent increase might be due to more efficient operating practices and upgrades put into place last year.

Keeping prices low — a strategy that makes maintaining profit margins more difficult, especially during boom times — also appears to be working in small operators' favor during these leaner times.

Gambling and food deals are keeping regulars happy while attracting new customers, operators say. The Rainbow, for example, has kept menu prices stable while many other properties have raised prices to keep pace with food costs.

"Our restaurant gets people in the door. Service is prompt and the portions aren't skimpy," General Manager John Awalt said.

And word has spread: The restaurant now seats about 8,000 people a week.

In May, at a time when Nevada casinos reported their worst decline in gaming revenue in more than a decade, the Rainbow's business was up 19 percent compared with the same month last year.

Jerry's Nugget in North Las Vegas has been seeing "quite a few new faces" in recent months, General Manager Jerry DeMangus says.

Profit is slightly up this year, partly because of an upgraded casino floor with new slot machines and walk-up kiosks where gamblers can receive coupons on demand. The casino also started a gambling promotion for senior citizens in July and is offering gas cards to some patrons.

"We're being aggressive with our marketing. But we haven't seen the impact" the bigger casinos have, he said.

DeMangus also credits some of that business success to the property's two restaurants. The cafe, for example, offers a steak and shrimp special for $7.85.

Business is also up at the Skyline casino on Boulder Highway, one of a few casinos that still have slot machines that accept and dispense coins. (The 99-cent shrimp cocktail is another blast from the past.)

These machines aren't made anymore but the Skyline keeps them by buying replacement slots or components from casinos that go out of business or upgrade their machines.

"Our machines are the most competitive in town. We still see our same regulars," owner Jim Marsh said.

The Eureka casino on Sahara Avenue has seen business drop from its customers who are Strip casino workers and are making less from tips these days. That's partially offset by business from others on fixed incomes, owner Greg Lee said.

"We're doing a better job getting more repeat visits and being the preferred place than before," partly because the casino invested in new slots and a player tracking system like those offered at bigger properties, he said. Business is up overall, he added.

"We didn't have the greatest variety before" but now that the Eureka has the slots a bigger casino would offer, there's little reason why gamblers would go to a bigger place when they can patronize a mom-and-pop property, Lee said.

The Eureka has invested in other upgrades, including a new interior design and a few chandeliers.

As bigger properties upgrade with fancy restaurants and lounges and equally grand prices, the Eureka — like many other small joints — hasn't lost its Cheers-style ambience.

That's important to folks like Mancha, who like things just as they are.

"This is a meat-and-potatoes kind of place," he said of the Rainbow. "You walk into some of these big places and you feel like you're walking through your mother-in-law's living room, where you can't touch anything. This place is just right."