Unperturbed Gaming Executives Say Industry Going Strong

13 October 2004

The state of the gaming industry is good -- despite growing pains from the spread of racinos and tribal casinos, political bias against casinos and the threat of terror attacks, top gaming executives said Wednesday at the Global Gaming Expo.

Larry King, who moderated the "State of the Industry" session at the Las Vegas Convention Center, set the tone with a question for five industry leaders about their preference in the presidential election.

That was the only question they shied away from. Only MGM Mirage Chairman Terry Lanni laid claim to being an outspoken supporter of one of the candidates -- President Bush.

King reflected a major concern voiced by some of the 26,000 attendees at G2E when he suggested Pennsylvania's legalizing slots at tracks or racinos would shake up the industry.

But American Gaming Association President Frank Fahrenkopf, who lumped the growth of racinos in with the spread of tribal gaming, told the standing-room-only crowd of about 1,500 that any expanded gambling is good for the industry.

Gary Loveman, president of Harrah's Entertainment, which operates two casinos in nearby Atlantic City, said racinos in Pennsylvania will have no noticeable negative effect in New Jersey.

"Gambling is a fundamental right that should be spread across the country and everybody should have access to it," Loveman said.

Paulus Karstens, president of IGT International, said the question was out of his territory, but that manufacturers' hearts flutter any time they hear any jurisdiction is likely to add 60,000 slots, as will be allowed in Pennsylvania racinos.

He pointed out that proliferation overseas is also accelerating, especially in England -- which he said is expected to relax its gaming regulations in 2006 -- and Macau and other areas of China.

Karstens said the international developments are going to open up new types of gaming, but Lanni said they represent more promise than threat for Las Vegas.

"It's like the riverboats (in the early 1990s). They created a lot of new customers. They said the riverboats are great, but let's go to nirvana and see what that's really all about," Lanni said.

Ernie Stevens, chairman of the National Indian Gaming Association, said the added slots likely to come out of the renegotiation of compacts with American Indian tribes in California will have a similar effect on Las Vegas and the industry.

"We actually promote the industry. People get a taste of it in our casinos and they all want to come out here to Las Vegas," he said.

The executives said the biggest problem for the gaming industry is not added competition, but unstable political environments in many states. They said that leads to unpredictable tax policies and a political bias against the business.

Lanni said there is a uniform tendency of politicians to blame gaming companies for society's ills, a problem he said has dogged the industry for many years.

The executives also said the danger of terrorist attacks and managing security are posing new challenges for the industry, with Loveman underscoring those concerns by saying Las Vegas "is in the top handful of potential targets."

The issue of whether casino companies have been forthcoming about specific terrorist threats has generated a great deal of controversy in the industry and with the public, Fahrenkopf said.

Lanni said the industry is ready to cooperate with federal agencies and local police, and that systems are now in place to ensure people know how to respond to elevated alert levels.

"If it's specific and credible, we will give notice. The problem is (the government) raises the alert from yellow to orange, and what do you do?" he said.

Lanni said it is essential to address concerns about terrorism because the basic problem is here to stay.

"The war on terror will never be over and we have to live like the people in Israel live. Life goes on and if you crawl into a bunker, that's a very big mistake," he said.

Related Links
American Gambling
Global Gaming Expo (G2E) 2004

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