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Gaming Industry Shares Positive Outlook on Economy

LAS VEGAS --Construction will resume this month on the nation's fourth-largest convention center at Las Vegas' Mandalay Bay hotel-casino, another indication that the gaming industry has confidence the nation's economic recovery is on track.

Glenn Schaeffer, president and chief financial officer of the Mandalay Resort Group, said he expects it would take about a year for his company to fully recover from the effects of the Sept. 11 terrorist attacks, but when that occurs, the company wants to be ready to serve the public with its 1.8 million-square-foot convention center.

Construction shut down in September. The resumption of the $235 million project this month would put it on track to open by January.

"We've had a successful Super Bowl and Winter Olympics and the other guys (Taliban fighters) are on the run. We've had a superior first quarter," Schaeffer said. "We're very confident in what the market will look like in a year. Since Sept. 11, we did not go to the bank one time to borrow money. We deposited money."

Schaeffer and two other panelists at an American Gaming Summit session at the Bellagio hotel-casino shared similar optimism in a discussion on the state of the industry. The two-day conference concludes today.

Last week's announcement that companies controlled by Steve Wynn and Sheldon Adelson have won bids to be licensed in Macau in Southeast Asia shows some key players are seeing potential in the high-roller market that dropped dramatically after the terrorist attacks.

"Our research told us people weren't afraid to fly as much as they feared the hassle factor," Schaeffer said. "The traffic returned three weeks after Sept. 11, but the traffic from farther away didn't want to have to deal with waiting around in hub airports."

Other companies see growth and opportunity in new jurisdictions and partnerships. Station Casinos Inc., for example, is focusing most of its attention on the Las Vegas locals market, but has an interest in the United Auburn Indian Community casino project outside Sacramento.

Harrah's Entertainment Inc. also has numerous Indian gaming partners and is looking into the prospect of diversifying further, into New York.

"For a Bostonian like me to say he likes New York is a hard thing to get out of my mouth, but I'm loving New York more each day," said Gary Loveman, president and chief operating officer of Harrah's.

He explained there are opportunities with tribal governments in New York as well as race tracks that want to expand their gaming interests. Loveman said about half of Harrah's Las Vegas property revenues are generated by customers who first gambled at other Harrah's properties and were tracked with the company's Total Rewards card.

But Loveman also pointed out the gaming industry needs to do a better job of convincing state governments they shouldn't look to casino companies and propose a higher tax every time the government is faced with a new financial crisis.

"We're at the top of everyone's lists (of who to tax more)," Loveman said. "They need to know that if they slay the goose that laid the golden egg, they'll run into trouble the next day."

Station Casinos Chief Financial Officer Glenn Christenson said although gaming companies are looking forward to opportunities in other jurisdictions, there are plenty to be found in Las Vegas. He said Mandalay's resumption of the convention center, Park Place Entertainment's development of its Colosseum-inspired performance venue and Wynn's plans to break ground soon on his Le Reve project are indicative of a healthy future for the city.

Christenson said a healthy Las Vegas provides employment and keeps people moving to the city for opportunity. Ultimately, Las Vegas' spectacular growth and international recognition will lead Fortune 500 companies to develop a greater presence here and help diversify the local economy.

He said the city continues to be unrivaled in its growth and that will lead high-profile companies to take advantage of the exposure and international clientele the city draws.

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