Majestic Research

Casper Star Tribune

Sin City Encroaches on Garden of Eden

By Ryan Nakashima
Published: February 28, 2006

LAS VEGAS—Scott Beach didn’t come to Las Vegas to gamble. The 35-year-old truck driver from Cincinnati came to escape the cold, raise a family and buy a home.

“I find no thrill from sitting in front of that thing and putting money in it,” he said, nodding at the slot machines in Suncoast Hotel and Casino, while holding his 6-month-old daughter. But he does come with his wife and three children for the budget-friendly buffet and an occasional movie.

For years, companies like Station Casinos Inc. and Boyd Gaming Corp. have taken advantage of the booming southern Nevada economy and the steady influx of new residents by building megaplex casinos that target locals with bowling alleys, shopping malls, even day-care centers every five miles or so throughout the Las Vegas Valley.

Lately though, some residents are getting a serious case of NIMBY: They are glad casinos eliminate the need for state income taxes, but wish they were Not In My Back Yard.

Newer, so-called “locals casinos” are larger than ever, and they also appeal to a tourist audience that some residents don’t want so close to home.

“I think they’re building too many casinos out where people live,” Beach said. “It’s like where you want to live, you don’t want to gamble. ... There’s a lot of traffic.”

Some who have purposefully moved to suburbia worry about motorists leaving casinos after having a few drinks, said Lisa Mayo-DeRiso, a consultant who drives her 14-year-old daughter to school near Red Rock, Station’s $925 million, 850-room hotel casino set to open in April in the western suburbs.

Mayo-DeRiso pointed to a Red Rock ad that features a nude woman with arms crossed over her chest with the tag line: “the Garden of Eden meets Sin City.” There’s also a nightclub called “Cherry” in the resort that Station touts for its “sinfully sweet surroundings.”

“If I am coming to Red Rock and that’s the ad I respond to, what am I expecting when I get to Red Rock?” she asked. “I don’t think this is a message you want in your neighborhood.”

Residents fought to shrink the project, successfully forcing developers to cut the height of the hotel tower from 300 feet to 198.

Gabriel Lither, a lawyer who moved to the western suburb of Summerlin for its parks and good schools and then led the fight against Red Rock, said he’s still bothered by the development, especially because it obstructs his view of the Red Rock mountains to the west.

“If you’re going to live next to a casino, it’s nice to live next to one that is done as nicely as Red Rock,” said Lither, 34. “Having said that, there is something slightly strange and surreal about driving out to Red Rock Canyon National Conservation Area and passing the fairly large blinking neon sign advertising the buffet.”

Red Rock, like its predecessor, Green Valley Ranch built in December 2001, has separate entrances for its movie theaters so residents can avoid the cigarette smoke and clang of the casino floor.

Most come to the casino hotels to dine, said Station Casinos chief financial officer Glenn Christenson, then stay to gamble. Some 90 percent of the company’s revenues come from slot machines, he said. Station owns or has a stake in 10 Las Vegas locals-oriented casinos; Boyd has seven, while a wide range of others are owned by a smattering of private operators.

“People come, they have a very good meal, for very good value for their dollar, they grab a couple rolls of quarters, play ‘till they’re gone and then go home,” Christenson said.

Christenson said most Las Vegans tolerate if not embrace gambling, which extends from slot machines at the airport to video poker at pharmacies, gas stations and supermarkets.

“If they were against gaming, more likely than not, they probably wouldn’t live here,” he said.

Christenson pointed out the local market in gambling alone is worth about $2.4 billion a year, some $1,350 for every man, woman and child in Clark County, which encompasses Las Vegas. For its population of about 1.75 million, there are 152,014 slot machines, 187 nonrestricted casinos and 1,443 restricted places to gamble with 15 slot machines or fewer. Only 41 nonrestricted casinos are on the Strip.

And the market is growing. Station and Boyd plan to keep building, especially in the burgeoning city of North Las Vegas, the nation’s third-fastest growing city among those with populations of 100,000 or more.

Some analysts and even North Las Vegas Mayor Mike Montandon are concerned about the pace.

Four casino sites have been zoned in an 8- by 2-mile strip along Interstate 215 that runs across the north end of his city of 190,000. Boyd and Station have earmarked one each for development.

Montandon is fighting a fifth casino site from being zoned along the same stretch, despite being re-elected to a third term in June on a platform of economic growth.

“What I don’t want to do is cannibalize the markets that already exist,” Montandon said. “I’m not opposed to new casinos. What I’m opposed to is shooting too high.”

Analyst Steve Kent of Goldman, Sachs and Co. in New York said in a research note last month that local gamblers would have to bet 10 percent more this year to keep revenue at existing casinos from falling while absorbing new casino capacity. The rate is double that for the past 10 years and even assumes consistent population growth of 5 percent, he said.

“We still have short-term concerns about the impact of new supply opening in the locals Las Vegas market,” Kent said.

Analyst Matthew Jacob with Majestic Research, a research firm that tracks gambling revenues on casino floors before quarterly earnings are released, said the opening of Boyd’s South Coast casino in December already has cut into the share of all other local casino operators.

“There is some cannibalization at the Boyd properties and some of the Station properties are being impacted,” he said.

Still, most agree that long-term growth looks healthy.

A steady arrival of new residents, about 7,000 a month, low unemployment around 4 percent and homeowners’ feeling of wealth from still-rising home prices will keep gambling revenue flowing, analysts said.

Boyd spokesman Rob Stillwell said the close proximity of some Boyd and Station casinos does not worry the company because each property has a different character. South Coast, for example, houses a 4,400-seat indoor equestrian arena, he said.

“There is a battleground in some ZIP codes. But it is not as if we are competing against one another directly,” he said.

Beach has seen two casinos go up within several miles of his home in the past six years and said he hopes he doesn’t see any more.

“I think that (Red Rock) should be the last one,” he said. “We’re almost to the edge of the mountains anyway, so there’s nothing else going to go out there.”