Layoffs here help Tropicana elsewhere looking in on: gaming

Saturday, Sept. 1, 2007 | 10 p.m.

The unenviable job of paying down big debts while squeezing even a little more profit out of moderately performing casinos in competitive markets has fallen to Tropicana Entertainment, a company that isn't getting much love these days from investors or the public.

Tropicana Entertainment, an arm of the Marriott franchise giant Columbia Sussex Corp., is the new holding company for casinos picked up from Aztar Corp. and other casino giants that are shedding lesser performers in favor of bigger, glitzier properties.

At least one bond rating agency downgraded Tropicana's debt, and the company isn't getting much credit from Wall Street analysts, who remain skeptical that it can reduce enough debt from its casino buying binge to generate better returns.

The company continues to draw fire from unions and casino employees for having cut hundreds of jobs across the country.

Ironically, the cuts at the Las Vegas Tropicana -- though angering many longtime employees -- haven't been as controversial as those in smaller markets. They appear to be giving the company the most bang for its buck, improving operating profit by 54 percent in the second quarter while company profit elsewhere is shrinking because of new Pennsylvania casinos, a smoking ban in Atlantic City and competitors in Indiana and the Gulf Coast.

And yet, the company plans to spend most of its money on improvements in Atlantic City, Indiana and Lake Tahoe in the coming months while it waits for a better time to finance its multibillion-dollar Tropicana expansion.

The Tropicana's rocky turnaround has left many workers less certain about not only their current employer but about the strength of the Strip's future as a gold-plated resort destination. Indeed, not every company will be guaranteed a piece of the action or have a job at the ready for every deserving worker.

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There's some evidence that the private gaming salons approved in 2001 and implemented in 2002 -- only to flop with high rollers in Nevada -- are getting some action at Wynn Las Vegas and The Venetian.

In fact, they are the only casinos among the five that made the costly changes needed to create and win approval for private gaming salons that are even using them. The salons are designed to mimic those available in Macau and even some high-end tribal casinos in the United States -- plush gambling rooms with access to private kitchens, lounges and other amenities to cater to high rollers' every whim.

The real costs are for the rooms' extensive surveillance technology, which allows the Gaming Control Board to monitor wagers in the hundreds to millions of dollars while the salons are in use.

Although regulators wouldn't disclose any figures for The Venetian, gambling revenue won at Wynn Las Vegas' private salon doubled in the fiscal year ended June 30 -- yet another sign that both properties are seeing the benefit of customers cultivated from their Macau casinos. But the number of people using the rooms, which are requested just about every month, has actually declined from last year.

“They may not have generated as much revenue as we thought, but they still generate pretty good revenue” for the state, Gaming Control Board Chairman Dennis Neilander said.

To increase salon traffic, regulators are considering lowering the minimum bet (which now starts at $500) and making it easier for others to be in the room with players.

At least for now, more money from fewer demanding high rollers seems like a good tradeoff.

Liz Benston can be reached at 259-4077 or at benston@lasvegassun.com.