Marnell predicts continued growth of Indian casinos

Wednesday, Oct. 15, 2003 | 11:05 a.m.

Budget problems nationwide will likely spur the continued expansion of casinos nationwide and especially Indian casinos, a powerful trend that will boost skilled operators but hurt those who aren't prepared for stiff competition, a leading casino developer said Tuesday.

"We're a tax hungry nation," Anthony Marnell II of Marnell Corrao Associates said at a casino design conference at the Hyatt Regency Lake Las Vegas Tuesday. Marnell, founder of the design and development company and former owner and operator of the Rio resort in Las Vegas, appeared as part of an executive panel discussing the future of casino development.

Indian casinos will make up the bulk of new properties and will evolve from small operations into luxury resorts on par with Las Vegas, he said.

In the next three to four years, Indian casino projects are expected to top the $1 billion mark, he said.

In California, where growth is hottest, Marnell predicted that every city will have its own version of a casino.

"This is not a small market anymore," he said. "You are going to see casinos in this country like you see Safeway stores."

Marnell Corrao has built some of the most lavish gambling resorts in the nation, including the Bellagio and the Mirage in Las Vegas. But its latest efforts are concentrated in Indian country. The company has negotiated deals with Indian tribes in California and Maine to develop casinos in those states. The specifics of those deals, including whether the company would also manage the resorts for a fee, haven't yet been disclosed.

The Maine casino proposal faces a statewide referendum vote Nov. 4.

Tribes are becoming increasingly sophisticated about casinos and will be less likely to hand over management contracts to outside companies in the future, instead hiring or developing top talent themselves, Marnell said.

"They're going to go about it themselves," he said. "They're going to become very big competitors."

The casinos of the future must compete by offering games and environments that are more interactive and welcoming, Bill Hornbuckle, executive vice president of MGM MIRAGE, said at the conference.

"We basically build 100,000 square-foot boxes with machines in them and entertainment around it," Hornbuckle said.

Casinos face the challenge of appealing to young adults raised on interactive video games as well as creating more inviting spaces in cavernous buildings, he added,

The Starbucks chain, for example, has created a "comfort zone" that draws loyal customers to its stores, he said.

"I go to Starbucks (for) the community they have created," he said. "There's a trick to that and a mystery to that."

Decisions about a casino's design and scope will vary widely as the competitive landscape changes, said Dan Lee, chief executive officer of Pinnacle Entertainment Inc.

The company is building a $325 million destination resort in Lake Charles, La. only because it believes that legalized casino gambling is several years off in Texas, where it hopes to draw a significant number of customers, he said.

The proliferation of Indian casinos may eventually lead to the legalization of non-Indian casinos in the same states, he said.

Competition will be fought on a property by property basis with a variety of tactics, said Lee, who noted that competition from Northern California Indian casinos has cut revenue by at least 12 percent at Pinnacle's Boomtown Casino in Reno.

Boomtown, located on the outskirts of the city, promises appealing bathrooms that are among the first travelers will pass west of the Sierras, for example, Lee said.

When Las Vegas faced the onslaught of new casinos in Atlantic City in the late 1970s, the competition was well-defined and easy to understand, he said.

That's not the case anymore, he said.

On the flip side, he said, gambling is becoming a part of American consumer culture.

"We're building more casinos and we're convincing more and more people to come out of churches and play slot machines," he said.