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The tribal impact on Nevada casinos

LAS VEGAS - When the Global Gaming Expo - the Super Bowl event of the casino industry - rolled into its temple city of Las Vegas there was a lot of talk about the expansion of tribal gaming and how it might affect Nevada.

The general consensus expressed at the three-day conference was that gaming is alive and well, can handle additional growth nationwide and may in fact be good for business as more Nevada-based operators get involved in Indian-run projects and the demand for gaming equipment helps boost revenue for slot machine manufacturers here in the state.

"It helps introduce our product," says University of Nevada, Las Vegas professor Bill Thompson, a gaming expert and author of several books on the subject including "Gambling in America: An Encyclopedia." "It doesn't hurt us to have 50 casinos in California yelling 'come gamble here' in newspaper and television ads. It helps us pick up new business."

Where it will sting a bit, Thompson said, is in primarily drive-in markets like Primm, Laughlin and Reno which will likely see less traffic as a result of California competition. Downtown Las Vegas may also feel the pinch, he says.

Thompson said roughly 20 percent of Vegas visitors travel up Interstate 15 from Southern California and as casinos pop up in San Diego and more are planned along that desert route. Nevada's state line towns like Primm and Jean will ultimately suffer losing that you-can-now-gamble novelty they once held.

Reno relies even more heavily on driving Californians, the figure stands at nearly 40 percent Thompson said, and now many who want to gamble can find alternatives closer to home.

In the past couple months the number of slot machines operating in Northern California has doubled adding more than 5,000 slots to the region. Reno has already seen its visitor count decline a few percentage points to 4.9 million a year, but perhaps more important its 2002 gaming revenue dropped to $534.8 million, down 9 percent from 2001 when revenues fell 3.9 percent.

"They dread this winter," said American Gaming Association President Frank Fahrenkopf. "They wonder how many people will put the chains on the tires and drive over Donner Pass into Reno or Lake Tahoe."

Reno is trying to wean itself off a total dependence on gaming and instead attract new businesses and promote its mountain lifestyle. The Reno-Sparks tourism office has started a new $3 million ad campaign to market the area as "America's Adventure Place" in an effort to attract a younger outdoor-loving crowd by promoting activities such as hiking, fishing and whitewater kayaking.

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And as gaming spreads, new opportunities arise within the industry as well. Slot manufacturers are increasing their workload and some Nevada gaming companies are helping run tribal-owned properties.

The $215 million Thunder Valley casino, owned by the United Auburn Indian Community is managed by Station Casinos, a Las Vegas local gaming group, and Park Place Entertainment Corp., the parent company of Caesars Palace, is negotiating with the Pauma Tribe to develop a $250 million resort near Temecula, Calif.

In 2002, the National Indian Gaming Commission reported that its 330 tribal casinos brought in almost $14.5 billion. Nevada casinos reportedly won a total of $9.4 billion and the California tribal take was about $5 billion.

So while Indian casinos are slowly nibbling away at Nevada's gaming profits mainly in the state's smaller gambling markets, Las Vegas continues to prosper and grow. Largely because, experts say, Vegas offers things tribal casinos can't in the form of entertainment, nightclubs, first-class restaurants and just atmosphere in general.

"No matter how glorious a tribal casino is, it will lack the 'walk and gawk' factor of the Las Vegas Strip," said Thompson.

In the past few years Las Vegas' annual visitation has remained steady at 35 million despite a downturn in the economy, concerns with terrorism and a decrease in airline travel.

Look around Las Vegas and the number of huge cranes that dot the Strip skyline don't indicate a slow down in growth there anytime soon. Mandalay Bay, Bellagio, Caesars Palace and the Venetian are all in the process of building new towers and adding more hotel rooms.

In fact, the Aladdin is really the only Strip property that experienced problems in recent years. The casino filed for bankruptcy 13 months after it opened in Aug. 2000. The property was recently sold to a group of investors for an estimated $635 million and will undergo an extreme makeover under the Planet Hollywood theme.

"It's doubtful anyone will ever compare with the Las Vegas Strip," said Greg Bortolin, press secretary for Gov. Kenny Guinn. "The Nevada monopoly ended when New Jersey legalized gambling. The growth has only made Las Vegas more popular. Everyone needs to come to Mecca to get a fix. There is just no place on Earth like the Las Vegas Strip."