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Coast Looking at Further Expansion

LAS VEGAS , Nevada --With the thunderous roar of an $80,000 fireworks show still echoing in the Summerlin night, the Suncoast hotel-casino opened Tuesday evening.

The $200 million Coast Resorts Inc. property -- the first true locals casino in the Summerlin area -- appeared to receive an enthusiastic reception from local residents. An estimated 6,000 to 7,000 people poured in to Suncoast's three entrances at the 7:30 p.m. opening, and quickly filled most of Suncoast's 2,100 slots and 48 table games.

Opening night crowds aside, will the Suncoast find success so far from its traditional base on and near the Strip? Bear Stearns gaming analyst Jason Ader is taking a wait-and-see approach, particularly in light of the struggles of such new neighborhood casinos as the Regent Las Vegas and the Reserve.

"A lot of people who have tried to get the locals business have failed," Ader said. "The company that obviously knows the local business is Station Casinos ... they're a very difficult competitor. (Coast) has their work cut out for them.

"Michael Gaughan (Coast's chairman and chief executive) is no slouch, and Station takes them very seriously. But I do think this is one of those situations where development is a bit ahead of the population."

Other analysts, however, are more bullish on Suncoast's prospects.

"We believe that market is significantly underpenetrated compared to the rest of the Las Vegas market," said Andrew Zarnett, gaming analyst with Deutsche Banc Alex. Brown. "Station has no presence there. It's a great opportunity for Coast to gain and grow its market share in the Las Vegas locals market."

Despite the upscale nature of the nearby neighborhoods, Las Vegas Advisor Publisher Anthony Curtis believes many residents will be drawn to the Suncoast's emphasis on value gambling and amenities.

"I think there will be a great demand for it, because the demand is for value," Curtis said. "I think it's going to work. This is how the (locals casino) model works, and it's no different there. People aren't snobbish when it comes to a good gambling deal."

Suncoast officials seemed to emphasize the value model on opening night, as $5 minimum blackjack tables and $2 minimum craps tables abounded. The casino even had a sprinkling of $3 minimum blackjack available, something almost unheard of on an opening night.

"We're here for the long term," Ross said when asked about the low limits. "This is what we are. This is how we operate."

Slot players, meanwhile, received their first taste of ticket-pay slot machines. All payouts above 200 coins were made with tickets, rather than coins. The tickets could then be redeemed at cashier's cages, though resort officials hope to allow customers to use the tickets in bill acceptors within a few days. In the first 2 1/2 hours of operation, Suncoast redeemed 7,200 tickets, with few problems reported.

It's the first big test of such a system in the Las Vegas area, one the gaming industry is watching intently. And despite some initial confusion about how the tickets worked, customers didn't seem to have any problems giving up coins.

For Coast, the Suncoast puts a fourth property in its portfolio, increasing its ability to compete with locals giant Station in Las Vegas. Station is considering various ways to take advantage of that, possibly through the introduction of a slot club card that covers all of its casinos, much as Station has done with its "Boarding Pass." Multiple properties also mean more efficiency with advertising dollars.

"Obviously, when you have successful properties, your financial strength improves," said Harlan Braaten, president of Coast Resorts. "As we grow financially, it gives us more strength to compete and lowers our cost of capital. When you have multiple properties, you're touching more people ... and can build upon word-of-mouth advertising."

Though it's devoting its energies to Suncoast, Coast isn't finished with its expansion plans. Suncoast's 200 rooms will be quickly expanded to 400 rooms sometime next year, while master planned expansions are also slated in the future for the Gold Coast and the Orleans.

But Coast is also looking at building its brand with entirely new properties down the road. Currently, the company holds a 30-acre site on Rancho Road near the Fiesta and Texas Station -- a property that if acted on would put Coast and Station into their most direct competition yet. Because of restrictions under Senate Bill 208, the site must be developed by the end of 2002, or its gaming entitlements will expire.

"We'll be totally concentrated on the Suncoast to ensure it's successful before we move on to the next jurisdiction in the city," Braaten said. "We'll look to see if we want to develop on Rancho. There are other sites we could look at as well.

"(Expansion in Las Vegas) is certainly something we'd love to do. It just needs to be the right site at the right time. We aren't going to do that just for the sake of having a fourth location."

Expansion outside of Las Vegas also remains possible. Braaten said the company is still studying the possibility of developing a casino near Biloxi, Miss. But this decision will be delayed while the Army Corps of Engineers reviews the site to study its environmental impact.

"If it works out sometime in the future that that site gets approved by the federal and Mississippi governments, and it still looks promising, we'll pursue it at that point," Braaten said. "But it's a couple of years off before that decision is necessary."

Braaten also said Coast is looking at other sites around the country for possible development, but said he couldn't reveal these sites because of confidentiality agreements.

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