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Rod Smith

Inside Gaming Column: Strip Flip In The Offing, Industry Sources Say

31 July 2006

LAS VEGAS, NEVADA -- Harrah's Entertainment recently picked up options on the former Westward Ho site, adjacent to the Stardust, industry sources say. It then used the options as leverage to open talks with Boyd Gaming Corp. Boyd owns the Barbary Coast, which is in the middle of the two Strip blocks owned by Harrah's. The theory is that Boyd should be willing to swap the Barbary Coast for the Westward Ho site plus some cash. Boyd could then expand its planned $4 billion Echelon Place development on the Stardust site and Harrah's could master plan its two blocks without a Boyd property sitting in its midst. Negotiations are said to be under way, but so far Boyd is unenthusiastic.

Industry insiders last week said Michael Gaughan's deal to buy back the South Coast from Boyd Gaming Corp. was a clear sign competition is alive and well in the gaming industry, even the Las Vegas locals market. One top executive, not wanting to be named talking about competitors, said new entrants are knocking at the door and Wall Street financial types are lined up to back the right kind of deals. "Michael proves there are even old-timers panting to get back in to one of the hottest industries in the country," another said, also not wanting to be named.

There's a new mutual fund to watch, focused as it is on the politically incorrect territory of casino, gaming and lottery companies. The fund is managed by Dan Ahrens, author of "Investing in Vice," and was set up to exploit the "dark side of human nature," which some say is a natural for Wall Street, especially during economic doldrums. Ahrens wrote in his book that no matter what the stock market is doing, individuals indulge in vices such as gambling, drinking and smoking. With gaming stocks up more than 25 percent year-to-date, Ahrens and a lot of investors see his new "socially irresponsible" fund as a good bet. Only one other fund fits the mold, the Vice Fund, which Ahrens previously managed.

Surveys nationwide are now showing it may take $4 a gallon to get people to significantly change their driving habits. But they confirm there is a price point out there somewhere. And they also find the decision isn't strictly between gasoline prices and driving. It's between their discretionary spending and lifestyles they can realistically afford. At some point, those surveyed say they realize they'll have to give up something and decide what that is. Hospitality industry insiders still believe Americans will yield on a lot of other luxuries before they give up vacations, which they see as a God-given right.

Gaming Wire Editor Rod Smith can be reached by phone at 477-3893 or by e-mail at

Inside Gaming Column: Strip Flip In The Offing, Industry Sources Say is republished from