THE BACK PAGE: A dose of reality and vision
by Charles Anderer
June 1, 2010
Casinos
and bingo represent an interesting combination of sectors that have distinct
personalities and challenges but also have more in common all the time, a
phenomenon fueled in no small part by the development of Class II tribal gaming
as a national and increasingly global brand. If you weren’t able to make it to
the sunny South in early May this time, don’t worry, we’ll do it again next
year.
One of the informational highlights of the
event was an executive roundtable discussion. Here was the line-up: Paul Alanis,
principal and chief executive officer, Silver Slipper Gaming; R. Scott Barber,
regional president, Mid-South Operations, Harrah’s Entertainment; Virginia
McDowell, president and chief operating officer, Isle of Capri Casinos; Anthony
Sanfilippo, president and chief executive officer, Pinnacle
Entertainment.
So you can hear more from them than from me, here are the
highlights:
The economy:
Alanis said he’s seen an uptick this year, but it’s too early to say it’s a
trend. Barber said Harrah’s is seeing renewed strength in the non-gaming side.
“The light at the end of the tunnel is a light and not an oncoming train,” said
McDowell. Sanfilippo offered some useful context for why things will remain
quite challenging for years to come: “Our industry is in a much different
place. Corporations that were extremely healthy became overleveraged, and we
have so much more supply now than we had 10 years ago.”
Markets: Missouri performed best for Isle of Capri because of
changes in the loss-limit law, but almost all of its markets continue to be
plagued by double-digit unemployment. Barber said Harrah’s is seeing its
steepest declines in Louisiana and Mississippi. McDowell said any new projects
in Mississippi would be a zero-sum game, not least because of competition from
Florida and Alabama. “Governments are so needy that they are squeezing all the
juice out of the lemon,” said Alanis. McDowell worries that debt pressures on
state governments are leading to an inability to invest in the kinds of
infrastructure and amenities that end up supporting the gaming
industry.
Credit markets:
Maybe there’s hope, but it might depend on the day. Sanfilippo reported that
Pinnacle was
able to secure $350 million in a bond offering prior to the show when it had
originally sought only $250 million. And this on very good terms: 10 years at
8.75 percent. However, he questioned whether he would have been able to get
anything had Pinnacle done the offering two days later, after the Greek debt
crisis exploded.
Slot machines: Lots of animation from the panelists on
this front. “The machines have become very expensive, well above the inflation
level,” said Alanis. “We spend on conversions, a couple of thousand dollars
apiece, rather than on new machines.” Alanis, along with the other panelists,
is also looking for more of a wow factor. “We need a James Cameron or a George
Lucas to get in this business. There’s no interactivity with the games.” Slots
are “ripe for innovation and thinking outside the box,” added Barber. He said
Harrah’s recently pulled bar-area slots from one of its properties in favor of
darts and billiards, and revenue per square foot went up. Wii games, bowling
tournaments, all of these things are on Harrah’s radar right now.
Of course, the one black cloud at the event
was water-borne — the oil spill off the Gulf Coast that was growing at an
estimated 5,000 barrels per day. “We’ve had hurricanes and now oil slicks,”
said Alanis. “We don’t have locusts yet to worry about, but you never know.”
At the outset, operators on the Gulf were
battling a perception problem more than anything: that the Mississippi Coast
was closed, waiting for a massive oil slick. But of course things were wide
open. Fears of a blackened coast and oil-fouled air needed to be counteracted
with a coordinated communications campaign, and BP eventually came up with
$500,000 to run a handful of tourism damage-control ads in three coastal
states. As this disastrous story continues to unfold, and as storm season
approaches, the industry and its supporting associations on the tourism side
shouldn’t be bashful about asking for help to reassure customers. BP’s
first-quarter profits alone were $6 billion. They can afford to do much more.
Charles Anderer
is executive editor of BNP Media Gaming Group and also oversees content development, sales and marketing for the company’s trade shows and conferences, which include Bingo World, Southern Gaming Summit, Gaming Technology Summit, New York Gaming Summit and Casino Marketing. He can be contacted at andererc@bnpmedia.com.
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