Wednesday, Sept. 18, 2002 | 11:08 a.m.
A U.S. military strike against Iraq would surely rattle the Las Vegas economy, just as effects of the Gulf War damaged visitor volume in 1991, gaming experts say.
Veteran White House watcher Sam Donaldson, an ABC television and radio commentator, told gaming industry professionals they need to be wary of "the CNN effect" on Las Vegas if President Bush's heated war of words escalates into military action.
Donaldson was the keynote speaker Tuesday for the opening day of the Global Gaming Expo at the Las Vegas Convention Center. More than 10,000 gaming industry professionals from around the world are gathered for the four-day event that will be highlighted today by a state-of-the-industry address by Frank Fahrenkopf, president and chief executive officer of the American Gaming Association.
Fahrenkopf and Donaldson have had a long-time friendship dating back to when Fahrenkopf was national head of the Republican Party and Donaldson was covering the likes of President Ronald Reagan.
In Donaldson's speech, which was heavy on current events but light on casino industry information, the newsman predicted that Iraqi President Saddam Hussein would break his promise to allow nuclear weapons inspectors into the country, which ultimately would result in President Bush ordering military action as he has threatened.
"If that happens, Vegas would again be subject to the CNN effect," Donaldson said.
He explained that after the United States confronted Hussein after his invasion of Kuwait in 1990, the U.S. air strikes of Baghdad were captured live on Cable News Network. Travel was curtailed and trips to Las Vegas were canceled as nervous Americans parked in front of their televisions as the war unfolded before them.
"It was just like the way things were on 9-11," added Shannon Bybee, a University of Nevada, Las Vegas, professor who will be inducted into the Gaming Hall of Fame in a convention dinner tonight.
"We went through it in '91," Bybee said. "People were busy watching things happen on television."
Bybee said if the United States attacks Iraq, he wouldn't expect a Las Vegas downturn would last long.
"People can only watch television for so long," Bybee said. "Eventually, they'll look for an escape."
Marc Falcone, a gaming analyst with Deutsche Bank attending the convention, said casino-watchers have been keeping an eye on Bush's actions regarding Iraq.
"We pay attention to it and we're cognizant of what a war with Iraq would have on any leisure destination," Falcone said.
He said the locals' market would be hurt more than Strip properties if a confrontation occurred because he expects action would be swift.
When the United States bombed Baghdad in 1991, the aftershocks had a significant effect on the Las Vegas economy.
Visitation increased by about 1 million people a year from 1984 to 1989 and then made a jump by about 2 million visitors from 1989 to 1990 to 21 million. But then, the numbers flattened out.
In 1991, there were 21.2 million visitors and 21.9 million in 1992.
Other indicators showed a similar flattening. From 1990 to 1991, hotel and motel occupancy fell 4.4 points to 80.3 percent while inventory went up 4.1 percent to 76,879 rooms.
Room tax revenue leveled off at $49.4 million in 1991 and gross gaming revenue for Clark County was flat at $4.1 billion.
Fahrenkopf said in a news conference Tuesday that Las Vegas suffered more than most gaming destinations following the Sept. 11 terrorist attacks, primarily because Southern Nevada is so dependent on air traffic for its visitors. The Las Vegas Convention and Visitors Authority said about 46 percent of the city's visitors come by way of McCarran International Airport.
Other gaming markets, like Atlantic City, the Midwest and the Mississippi Gulf Coast, are more dependent on drive-in traffic that didn't fall as dramatically and rebounded faster than Las Vegas.
Fahrenkopf said the industry has rebounded stronger and many states will have elections to consider new gaming initiatives. The reason: Economic downturns in many states following Sept. 11 and an earlier recession have left governments strapped for cash and many see taxing gambling ventures as an easy way fill their coffers.
Fahrenkopf noted Tennessee voters will consider a lottery initiative while 10 counties in Iowa will have voters go to the polls to consider extending existing gaming.
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