Monday, April 8, 1996 | 11:59 a.m.
Growth in the number of slot machines at Strip casinos this year will cause recent declines in gaming win at competing downtown and Laughlin resorts to worsen, a bank research study predicts.
The report, authored by Comstock Bank Chairman Robert Barone, says opening of new resorts and expansions of others will add 5,000 to 7,000 slot machines to the Strip in 1996, sparking increased efforts "to attract new customers from other markets to improve its slot margins and continue to expand its gaming win."
"This has ominous implications for proximate locations -- downtown and Laughlin -- that have already borne the brunt of the Strip's voracious appetite for other markets' clientele and business," Barone says.
While the report notes there was a resurgence of overall gaming-win growth rates in late 1995, the play per slot at Strip casinos actually declined throughout the year. Play per table game at Strip resorts rose.
"These effects characterize a gaming market which has effectively reached its limits of spreading its slot-play activity over its existing customer base," Barone says.
Excluding bars, convenience stores, supermarkets and the like, there were 162,682 slot machines in Nevada casinos at the end of the year. Statewide, slots accounted for 61.3 percent of total gaming win, though the percentages varied from a high of 85.3 percent in the Carson Valley to just 47.7 percent on the Strip.
Significantly, though, the report says the Strip "expanded its overall (slot) gaming win largely due to changes in the number of devices, with little improvement in win per device." And it's win per device, the report says, that indicates whether the market is growing -- attracting more players to each machine.
The number of table games at Nevada casinos climbed 1.9 percent, to 5,752, in 1995, while table-game win rose 5.5 percent. The increase was due to increased play and win per game, the report says.
"With slot devices, the opposite was true. Of the $210 million increase in total state slot-machine win, almost 94 percent was due to increased capacity," the report says.
"Unlike its seemingly easy absorption of new table games at the end of 1995, the Las Vegas Strip market had yet to absorb its last expansion in late 1993 and early 1994, when slot-machine capacity increased by 9,358 devices, or 23 percent."
As a result, says Barone, slot machine win "will come under additional pressure and show further declines as a limited number of players becomes spread over ever more gaming devices."
Nevada's total gaming win rose 5.1 percent in 1995, to $7.4 billion, with Las Vegas accounting for 78.4 percent of the total. The growth was unexpected because Strip properties added only 3,000 new rooms, "a relatively subdued performance ... compared to recent years," the report says.
"We expect gaming-win growth rates to firm in 1996 as several major properties -- Stratosphere Resort, Monte Carlo, New York-New York, and expansions at Luxor and Circus Circus -- bring on new gaming capacity and increase room counts by nearly 9,600," Barone says.
But that growth will continue to come at the expense of casinos in Laughlin and downtown Las Vegas, he warns.
Noting downtown casinos experienced their 10th quarterly decline and fourth annual decline in the past five years as the year ended, Barone says, "Total gaming win for this market in 1995 was actually below 1990 win levels."
Laughlin, which experienced its sixth consecutive quarterly drop in gaming win, faces special problems.
"At one time, this market's strategic location between potential Phoenix gamblers and tourists and the Las Vegas Strip casinos was its greatest asset," the report says. "Now, by contrast, its relative isolation between these two growing casino markets is its greatest liability."
Barone says Laughlin will have to develop "a clear and convincing strategy to make visitors want to come to this now-secluded market."
Last year, Strip gaming win totaled $3.5 billion, up 3.5 percent from 1994, but downtown casinos saw win drop 5.9 percent, to $642 million, while Laughlin gaming win declined 3.6 percent, to $516 million.
On the other hand, Boulder Highway properties boasted a 37.8 percent jump in gaming win, to $301 million, while Washoe County results rose 7.3 percent to $985 million -- its best year since 1990 -- due primarily to the addition of the Silver Legacy in Reno.
Since 1990, Strip gaming win has jumped nearly 40 percent, Boulder Highway win has soared 140 percent and off-Strip properties, including North Las Vegas, have posted a 112 percent increase.
Since 1992, though, downtown Las Vegas gaming win has dropped $60 million, while Laughlin win has fallen $25 million since 1993.
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