Looking in on: Gaming

By Liz Benston (contact)

Sunday, Oct. 7, 2007 | 7:23 a.m.

Chinese customers at the newly-opened 3,000-room Venetian Macau are experiencing a taste of Las Vegas-style gambling, glitz and luxury on a massive scale.

If they were paying attention, customers also witnessed some behind-the-scenes Las Vegas-style service.

Las Vegas maids and valet parkers flew to Macau, China , to help train the local workforce, which isn't yet accustomed to the speed demanded by the average Strip resort.

It wasn't difficult for visitors to spot the non-Asian faces, which included blacks and Hispanics, regular parts of the global melting pot of casino workers on the Las Vegas Strip.

Locals casinos have ramped up their gambling promotions in the wake of the housing slump .

That's good news for those who may get such deals only during the dog days of summer - or after spending a fortune.

Many casinos are offering double and triple points for slot club members as well as drawings for cash prizes. Regulars often belong to multiple slot clubs and shop around for the best freebies, upping the ante for casinos.

"I think gas prices hit the casinos more than they admitted," said Jeffrey Compton, a Las Vegas casino consultant. "And all the talk about the housing market doesn't help."

A recent analysis by Deutsche Bank reveals that locals casinos, in this decade, have improved operating profit and return on investment even as they have multiplied and, in some cases, stolen business from one another.

Even so, the good old days of the first big locals casinos - and little competition for operators - are gone forever.

Profit margins rose from 16percent in fiscal 2001 to 25percent in fiscal 2006, roughly what casinos generated in the early 1990s.

Returns on investment are also up, reaching 21 percent in fiscal 2006 from a 16-year low of 14 percent in fiscal 2001.

"We think it will be virtually impossible to reach (the returns) seen in the early 1990s, especially considering the price of admission to the locals market is high and not likely to subside," Deutsche Bank stock analyst Bill Lerner said.

On a total revenue basis, growth has slowed significantly, to 12 percent from fiscal 2003 to fiscal 2006 versus 19 percent from fiscal 1990 to fiscal 2006, according to data gleaned from the Nevada Gaming Control Board.

Gambling revenue for locals casinos has represented from 67 percent to 69 percent of total revenue for the past 16 years, Deutsche Bank says. .