Nevadans hopeful despite California Indian gambling threat
CARSON CITY, Nev. – Californians’ likely approval next month of expanded Indian gambling will mean a rapid expansion of slot machines and other games in northern Nevada’s most important feeder market.
But Proposition 1A won’t cripple the Reno-Lake Tahoe area, casino analysts and operators say. They say California might even help to develop more gamblers in the long run.
”Will Reno take a hit? Sure, short-term that will happen, but in the long-term, nobody is going to replace Reno, Las Vegas or Atlantic City (N.J.),” says Larry Buck, senior vice president and general manager of Harrah’s Reno.
Harrah’s is among four public gambling companies with eight clubs in Reno and Stateline that, according to analysts at Robertson Stephens in New York, could face a combined 18-percent loss in cash flow in 2001 from Proposition 1A.
But Robertson Stephens also says the large population in the Sacramento and San Francisco Bay areas should rapidly absorb the new gambling, and Reno-Tahoe should recover from the initial impact in 2002 and beyond.
”We don’t see it as like an enormous, detrimental, put-people-out-of-business kind of thing,” said Smedes Rose, a Robertson Stephens analyst.
Rose adds that the more gambling proliferates, the more gamblers it creates.
”It just does,” he said, adding that many of those new gamblers are going to want the Nevada experience.
Robertson Stephens estimates that the number of slots in a swath of California critical to Reno-Tahoe will increase by 6,000 to 8,000, with 3,000 to 5,000 located at tribal casinos likely to intercept Reno-Tahoe visitors.
That could include a 2,000-slot facility that Station Casinos Inc. of Las Vegas wants to help the United Auburn Indian Community build off Interstate 80 near Roseville.
But the tribe faces the difficult task of placing its land in trust for a casino and is likely to face serious opposition, the report notes.
”Three of the potential new developments (in the Reno-Tahoe feeder market) will require at least 24 months to construct competitive facilities, which gives operators in Reno-Tahoe time to market to less penetrated segments of Northern California,” the report said. ”The impact is likely to be seasonal, with the greatest impact in the winter months when inclement weather reduces travel through the Sierra Nevada.”
Boomtown Hotel Casino just west of Reno could take the largest individual hit on cash flow, about $7 million, the report estimated.
”It will be a significant impact initially,” said Jack Fisher, general manager at Boomtown. But he says a few new casinos can only handle so much of California’s large population and the Reno market should recover.
Reno has been diversifying its marketing message to appeal to a broader audience than gamblers – in part to prepare for the California onslaught. That includes a stronger push for conventions and planned improvement projects downtown.
”This gives us additional motivation to work together (as a community) more than ever in marketing the area … to broaden our base of business,” said Kim Stoll, corporate director of advertising and publicity at the Peppermill Hotel Casino.
Peppermill just completed one expansion and plans two others as it tries to keep ahead of the competition and stoke visitor interest, whether from California, other states or within Reno.
Bill Eadington, an economics professor at the University of Nevada, Reno, and head of UNR’s Institute for the Study of Gambling and Commercial Gaming, said Proposition 1A, with its limits on slots, appears less threatening than the now-nullified Proposition 5 Indian gambling initiative.
A Station Casinos property on Interstate 80 is ”going to siphon off a good portion of business that otherwise would have come here,” Eadington said. But ”it is just one property (and) Reno can rebound from it,” he added.