Analysts skeptical of Caesars’ riverboat project

Monday, Aug. 10, 1998 | 10:08 a.m.

Caesars World is gearing up to launch what's touted as the world's largest riverboat casino, but some analysts believe the Ohio River project won't live up to expectations.

The Harrison County, Ind., development, plagued by delays over environmental concerns, has the ambitious goal of creating a riverboat casino that does more than just cater to local gamblers.

"No other riverboat is a regional destination resort. This one will be," Michael Walsh, the chief operating officer of Caesars Indiana, told The Courier-Journal of Louisville, Ky., in Sunday's editions. "This will be a defining moment in the history of the casino industry."

Caesars World, a $1.5-billion-a-year casino company owned by Starwood Resorts, plans to open the Glory of Rome in November 15 miles downriver from Louisville. Caesars owns 71 percent of the $300 million project, which will include a 500-room hotel and a golf course.

Just as Caesars Palace in Las Vegas broke new ground with its Roman theme and special attention to high rollers, the Glory of Rome will set a new standard for riverboat casinos, company executives say.

But Wall Street analysts and other industry observers doubt the casino will really represent a substantial advance in riverboat marketing.

"These are markets that cater to the local residents. They do not attract tourism, although many thought they would," said Bruce Turner, a gaming analyst with Salomon Smith Barney in Tampa, Fla. "Caesars knows how to run casinos, and I'm sure they'll provide a good experience. I don't think they have any special recipe, though."

Some big casino resort companies have ignored riverboats as a relatively risky and unglamorous corner of the business.

Riverboats are "perceived to be a low-end product with little old ladies putting quarters into slot machines, having one drink and going to the salad bar," said Paul Coomes, an economist at the University of Louisville.

This disdain for riverboat gambling is such that Caesars Indiana's Walsh forbids employees from even using the word "riverboat" in his presence. Instead, they're told to call the Glory of Rome a "gaming vessel."

Walsh said the Glory of Rome will have higher ceilings and more elbow room between slot machines than other riverboats, giving it more of the flavor of a land-based casino.

Caesars wants to maintain its standards, even when entering a much less competitive market than Las Vegas or Atlantic City, N.J., Walsh said.

"Caesars has a very strong brand value. It stands for something. Opulence, ambiance, a certain superior level of service. We have said we don't want to get into something that will tarnish that brand value."

Caesars Chief Executive Peter Boynton acknowledges the company will have a tough job luring tourists to Harrison County.

"It isn't going to happen by itself. It's going to require a lot of management attention and cross-marketing to get it to that level," he said.

Boynton said Caesars was attracted to the southern Indiana site by its picturesque location and state gaming laws that limit competition among riverboats.

Indiana will issue no more than five Ohio River licenses, and only one more could be located near Louisville, in Crawford County, the western neighbor of Harrison County. The state gaming commission has yet to issue a license for Crawford.

Other states have no cap on the number of licenses available.

"It was perceived as somewhat monopolistic since it would be one of the few riverboats close to Louisville," Boynton said. "Therefore, we wouldn't have to worry about putting a riverboat in and having two or three others crop up. That's important to us."

Another factor, he said, is that Louisville is a city of proven gamblers, partly because of the longstanding popularity of horse racing.

"There have been a lot of gamblers to come out of Louisville over the years."