Indian gaming a boon, threat to Nevada

September 23, 2002 - More than a decade ago, the gaming supplier pie was split between Atlantic City and Nevada.

As Indian gaming grows around the country, gaming suppliers are enjoying expanded market potential, while others in the industry are still evaluating the consequences of Indian gaming's advances on Nevada's casino market.

"I think that what we've seen with regard to Native American gaming in the past 18 months to two years is an evolution, most specifically in California, of these facilities going from first generation to second generation gaming centers," said Jeremy Aguero, principal for Applied Analysis, a local economic research group.

Aguero also added that while the prospering of Indian gaming facilities, especially in the San Diego area is "definitely on the radar" for Las Vegas, the bigger concerns are for the smaller markets of Reno and Laughlin.

"The development and expansion of casino gaming in California can be patterned almost directly against the declines in the early 90s and throughout most of 90s in Laughlin and Reno.

"What has happened is that (Indian gaming) has decreased the cost to participate in gaming activities by bringing it closer to home. It gives people additional opportunities to participate in those kinds of activities," he said.

A common view among gaming analysts these days is that Indian casinos merely wet the appetite for gamblers, in turn increasing visitors' desire to visit Las Vegas.

While Aguero said the popular perception is probably justified, he reiterated that Sept. 11's impact on travel could have dampened some of that enthusiasm.

"The events over the last year have changed people's attitudes about travel and a number of other consumer behaviors. The total ramification, the ripple effect of those behavioral changes, are yet to be seen," he said.

The boom in Indian gaming has been a boon for gaming suppliers, and has forced many of them to create subsidiaries or open offices that deal specifically with Indian gaming entities around the country.

Marcus Prater, vice president of marketing for Bally Gaming and Systems, said the expansion of Indian gaming has allowed the company to diversify its market grasp and sees in the future continued revenue growth primarily in the Connecticut and California markets not only because of expansion, but because of revenues from updating existing machines.

Like Las Vegas operators, Indian casinos track their current supply of slots and inform the game producer of which machines are not performing as well as the "house average" of all the slot machines on the floor. Bally can then sell conversion kits to suppliers that gives the game a technological as well as physical facelift for a fraction of the cost of a new machine.

"We have our jobs to provide titles and varieties to all the markets," said Prater. "I think in California the numbers seem to be growing. Furthermore, some of (the older casinos) are still operating with older games that will be replaced in the coming months or year."

Prater, like Aguero, also said that it is difficult to tell if Indian gaming in California hurt the Las Vegas market.

"I don't think we know the California effect until all the construction is completed. It's one thing to compete against a temporary facility, but you have major resort construction taking place now," he said.

Indian gaming has also opened the door for other types of technology companies that hover under the gaming radar.

Mike Marriott, an executive vice president for IT Strategies International, a locally-based technology consulting firm that contracts out computer trainers for Fortune 500 companies needing high level training, recently completed a computer training deal with Viejas Casino in San Diego.

In July the company conducted workshops for employees on high level computer training subjects, work it has also done for local casino operators like MGM Mirage and George Maloof's The Palms.

"What we've found on the Indian gaming side was that they seemed to have pretty good internal staffs but they're in the process of developing procedures according to internal and industry best practice," he said.

Marriott said his company is currently talking with about a dozen other Indian casinos about providing services, and has also found them easier to deal with than some of the large local operators.

"Our entrance into the Las Vegas casino industry hasn't been all we expected," he said. "They're not real open to new businesses. We've had a hard time getting in there in various places. Everybody tells us you've got to know people in casinos."

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