Looking
in on gaming
By
Liz Benston, our partners from the Las Vegas Sun
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.
