Multiplying Indian Casinos May Be Poised To Threaten Las Vegas

The rapid proliferation of Indian-operated casinos across the country, which has taken a toll on the secondary Nevada markets of Reno, Lake Tahoe and Laughlin, so far has had minimal impact on Las Vegas.

But while some industry insiders think Las Vegas is immune, others believe it will face growing competition as Indian casinos evolve.

Californians account for about a third of the Las Vegas Strip clientele and represented 43 percent of that state's 2002 visitations to Indian casinos, according to a report from Merrill Lynch.

About half the U.S. population now lives within 150 miles of a casino, and according to the Merrill Lynch report, the growth rate of Indian gaming exceeds all other sectors except Internet gaming.

Merrill Lynch estimates that Indian gaming revenues in 2003 will be approximately $15 billion — about a third of all national casino revenue — and could reach $18 billion by 2005 with a 40 percent market share.

"It's still incumbent upon Nevada casinos to differentiate themselves from tribal operations," said Alan Feldman, senior vice president for public affairs at MGM Mirage. "The one thing the Indian casinos don't have is the scope or scale of Las Vegas."

But John Marz, spokesman for Mandalay Bay Resorts, said, "We haven't seen any substantial impact. If all people want to do is gamble, they'll drive to a riverboat or an Indian casino. People come to Las Vegas for a variety of reasons. Las Vegas reinvented itself to be a destination vacation getaway, not a gambling getaway."

The emphasis on attractions other than gambling also could be a plus for meeting planners who sometimes need to balance the attraction of Las Vegas with its distractions.

Some believe the Indian casinos eventually will draw the low-budget or regional visitor, while Las Vegas will become more of a destination vacation.

But Bill Eadington, professor of economics at the University of Nevada, Reno, said things could change as Indian casinos evolve into travel destinations themselves. So far, Indian casinos have replicated off-Strip-style casinos, which are less expensive to build. Now they're moving into full-scale resorts.

Already, Foxwoods and Mohegan Sun in Connecticut and Pechanga in California are on the verge becoming destination resorts. And Eadington called the new Sacramento-area Station casino, Thunder Valley, a "substantial property" that is likely to divert more traffic from Reno and Lake Tahoe.

Florida's Seminole tribe is building resort destinations in Fort Lauderdale and Tampa to compete for the same business (Florida allows only limited gaming at its Indian casinos).

"If good-quality casinos continue to be built, especially in California, it could affect Las Vegas," Eadington said.

Marz disagreed. "They can become as big a destination as they like, but they will still be isolated," he said. "No one can duplicate Las Vegas."

Still, at least some concern is evident as gaming companies have tried to protect their interests and profit through partnerships with tribes to develop or manage casinos.

Harrah's, which manages four Indian casinos, including Harrah's Rincon Casino & Resort near San Diego, envisions Indian gaming as an opportunity to introduce casinos to new markets and customers, a spokesman said.

Station Casinos has focused on development and marketing partnerships, while Feldman said MGM Mirage has entered into only one small consulting role with a tribe. He said MGM might consider entering the Indian casino market "if it's a win-win for everyone."

Mandalay Resort Group so far has not pursued any relationship with tribal operations and has no current plans to do so, Marz said.

Contact Sandi Cain at scainado@ earthlink.net.