Casino giant MGM MIRAGE buys California lottery outlet

David Strow

Thursday, May 3, 2001 | 10:59 a.m.

MGM MIRAGE, a big casino operator on the Las Vegas Strip, is getting into the one type of gambling it can't offer in Nevada -- the lottery business.

The Las Vegas-based gaming giant announced Tuesday that subsidiary Primm Valley Resorts has purchased the Dry Lakes Lotto Store, located just 100 feet from Primm over the California border on Interstate 15. MGM MIRAGE purchased the store from Gary Primm, former chairman of Primadonna Resorts Inc. The price was not disclosed.

The 3,200-square-foot convenience store represented Primm's last gaming holding in the Primm market, and gives MGM MIRAGE total control of gaming operations in the area, said Mike Temme, marketing manager for Primm Valley Resorts. The property, 35 miles south of Las Vegas, will be refurbished and renamed the Primm Valley Lotto Store.

Primadonna was acquired by MGM Grand Inc. in 1999 for $590 million. This purchase included Buffalo Bill's, Primm Valley Resort, Whiskey Pete's and the Primm Valley Golf Club, but not the lottery store. MGM Grand also received Primadonna's 50 percent of the equity in the New York-New York resort on the Las Vegas Strip as part of this purchase -- MGM already owned the other half.

The store is California's leading lottery outlet, with more than $6.2 million in ticket sales in 2000. That's $1.2 million more than its nearest competitor, a Los Angeles-area liquor store that's sold three jackpot tickets since the lottery began in the 1980s.

Most of those buying tickets near Primm are Nevadans, not Californians, Temme said. While California players have a wealth of opportunities to buy lottery tickets at home, the nearest lottery tickets available to Las Vegas residents are in the Primm Valley, or miles down I-15 in Baker.

While Nevada has the most permissive gambling laws in the country, the state's constitution specifically forbids a state lottery.

And so Las Vegans make the trek to Primm or Baker, even though the lottery regularly holds about one-half of the money wagered, a vastly larger percentage than casino games like video poker or blackjack.

"I've seen the lines clear around the outlet (in Baker)," said Shannon Bybee, executive director of the International Gaming Institute at UNLV. "You have a better chance of getting killed in an accident driving out there than you do of winning."

High-rollers at MGM MIRAGE casinos such as the Bellagio and MGM Grand regularly gamble more than the $6.1 million in lottery tickets sold at the lotto store last year, and only 6.9 percent of ticket sales are paid back to California retailers as a commission. But the store presents an opportunity to market MGM MIRAGE's properties through signage and special offers, Temme said.

"(The promotional campaigns) can be as far-reaching as all the MGM properties or focused on the Primm properties," Temme said, adding that a decision on the scope of the cross-marketing campaign hasn't been decided yet.

Casinos selling lottery tickets are not unusual outside of Nevada, Bybee said. Atlantic City casinos, for example, sell lottery tickets through their gift shops. But MGM MIRAGE isn't in Atlantic City yet, and its MGM Grand Detroit casino doesn't sell Michigan State lottery tickets.

"It's whatever nickel they can pick up," Bybee said. "If people are interested in going there (to Primm to buy lottery tickets), it's a good way to steer them into their casinos.

"It's like anything else. Some players come to play bingo, others to play poker. If it's something that helps draw people into your casino, it makes sense as a marketing tool."