Between last month’s Southern Gaming Summit and chatting around the industry the past few weeks, there is plenty to report. Here’s a sampling:
Not out of the woods yet: The financial roundtable session at Southern Gaming Summit featured some bearish commentary by Christopher Jones, director, Telsey Advisory Group, who confirmed that the rich have gotten richer and the rest of the consumer market is struggling.
“The upper end of the market is a force; luxury retail is back,” said Jones. “They fell the most and recovered the strongest.”
Jones said gaming spend has been slow to recover compared with other forms of discretionary spending, such as food and apparel. “The pace of recovery in gaming relative to other sectors is what we’re concerned with.” He would put a moratorium on all market expansion with the exception of the southern tip of Florida. As for Mojito Pointe, the 400-room, $400 million project that was approved by a landslide vote in Lake Charles, La., in late April, getting funding is “not going to be a cakewalk. It’s one that makes you scratch your head a little bit.”
Gas prices: Most executives when questioned said the rise in gas prices really hasn’t had much of an impact. The one fairly measured exception was Steve Ditchkus, senior vice president and general manager, Grand Biloxi Casino Hotel & Spa, who said, “it will affect regional markets.” He’s hoping analysts who say that that the “real price” of oil should is around $90 a barrel are correct. Just within the month of May, futures fell from over $110 per barrel in the early potion of the month to under $100 prior to Memorial Day. Fingers crossed.
Slot machines: The price of slot machines came in for discussion at the executive roundtable session, with Bally Technology’s president and chief operating officer Ramesh Srinivasan explaining that the challenge for manufacturers is controlling the cost of supporting technologies that customers are demanding, and that the cost to produce such value-added items as the iDeck touch screen interface among many other examples, is rising. “The content has to keep pace with the technology so that the prices are justified.”
Thomas Burke, senior vice president regional operations, Penn National Gaming, said that the “disparity between win-per-unit and price has to be addressed.” He added that Penn National is working to tie marketing to the slot experience via game systems. Ditchkus added that “the future is real-time marketing to slot players.” Srinivasan said operators need to “define their dreams,” and that the technology to support those dreams is already in place.
New York State of mind: There’s still plenty of slack in the New York City area. Aqueduct, scheduled to open this summer, and any eventual casino opened by the Shinnecock Nation will both pencil out, said Steve Rittvo, chairman, The Innovation Group. “Aqueduct to a large degree is Queens and Brooklyn, which has a huge population,” he said. “Shinnecock is looking at the Nassau/Suffolk border. They will have Suffolk exclusively and the predominance of Nassau County. They’ll share a little of western Nassau and there will be people who go to Shinnecock because they’ll have table games. That population base is 11 million-plus between Queens, Brooklyn, Nassau and Suffolk. Two casinos; I’d like to own either one of them.”
VLT’s aren’t leaving much money on the table: “At this stage, the nuances between VLT’s and the standard Class III are getting smaller and smaller,” said Rittvo. “There’s a little bit of money being left on the table but not much. Where the money is left on the table is not moving to table games.”
“The only reason I call them VLT’s is because the law dictates that’s what they have to be called,” said Tim Shortall, vice president, eastern region, International Game Technologies. “New York is a little different story because of central determination. But even there, you really can’t tell the difference between a Cleopatra game or a Wolf Run game at Yonkers Raceway or the same product at Twin River or Mohegan Sun or Foxwoods. In New York, our engineers have done a terrific job of reverse-mapping the games so that they look and feel just like tradition casino-style games.”
Ron Sultemeier, vice president of strategic development, Delaware North Companies Gaming & Entertainment, agreed, but only to a point: “The VLT product in New York is not as competitive,” he said. “You’d certainly have more revenues in New York if you had a full slot product. It is the best true VLT product out there in the U.S. The main limitation in New York is just having four vendors.”