Detroit casinos wagering on locals

Tuesday, Dec. 9, 1997 | 11:29 a.m.

Backers of gambling in Detroit are betting an untapped market of high-end blue-collar workers will make three casinos to open in 2000 profitable despite a 24 percent tax on gross receipts.

In an update on the Detroit gaming scene on the opening day of the American Gaming and Lodging Summit Monday at the Las Vegas Hilton, panelists acknowledged they'll have to develop other markets as well as depend on the high-salaried United Auto Workers employees that heavily populate the Detroit area.

The analysis is important to two Las Vegas companies -- Circus Circus Enterprises and MGM Grand Inc. -- that had winning proposals and were selected to build two of the casinos officials now expect will open in a little over two years.

Phil Linsalata, director of public affairs for the Greektown casino, a Detroit-based operation that was the third company chosen to build, said in addition to the local market, Detroit must get players from Ontario, the Chicago metropolitan area and from fans of sports teams that will play in new arenas being built near downtown.

New stadiums for the Detroit Tigers and Lions are expected to be completed around the time the new casinos come on line. The downtown area, which suffers an image problem of crime and street violence, also is home to a thriving theater district.

Linsalata said he is optimistic Detroit can attract customers from abroad, since it's a hub for international air carrier Northwest Airlines.

Still, the local demographic is heartening to the casino executives: There are 1.5 million households within 75 miles of Detroit that have an annual income of at least $35,000. Linsalata also said there are 1 million that have a $50,000 income, 500,000 with a $75,000 income and 250,000 with a $100,000 income within that same radius. Within 150 miles, the number at those income levels doubles.

"But we know that there are people like a couple that were on my plane coming in to Las Vegas," Linsalata said. "They say they will keep coming to Las Vegas and won't even give Detroit a chance. They worry about their safety on the streets in downtown and they're looking for something to go wrong.

"All we want is that one chance."

Provided that Detroit locals give the downtown properties that one chance, Linsalata said it is imperative that Detroit's casinos offer a quality visit with top-notch service. Otherwise, he said, "Mr. and Mrs. Warren, Mich., will never return."

Some analysts have suggested that the high tax rate -- more than three times the rate paid by resorts in Nevada -- could lead to higher operating costs that would force casinos to offer tighter slot machines and table games than those in other jurisdictions. Linsalata downplayed the suggestion.

"We can't squeeze the odds," Linsalata said. "We'd be shooting ourselves in the foot. We have to have respect for the customer if we're going to be successful."

Most of the other panelists either talked up the promise of Detroit or explained the status of vendor regulations. Nelson Westrin, executive director of the Michigan Gaming Control Board, said new regulations are being finalized frequently and Detroit will need every day of the two years leading up to opening day to become prepared.

Panelists also noted that Detroit's gaming backers are working in the face of a movement to repeal the casino-enabling legislation.

The Coalition to Repeal Proposal E hopes to gather 247,127 signatures by May 27 in a statewide petition drive to overturn the 1996 referendum that authorized the casinos.