The quoted phrase in the question is taken from a July 26 entry in "Today's News" on this Web site, concerning Boyd Gaming selling South Coast back to its former owner, the founder of Coast Casinos, Michael Gaughan. Boyd acquired South Coast as part of a $1.3 billion merger with Coast Casinos in 2004, but Gaughan is now personally bailing out of the deal.
We wrote, "While Gaughan cites his motives for the move as a dissatisfaction with corporate life and a desire to run his own show again, Boyd may also be happy to divest itself of the property, which has under-performed since opening -- a factor that some analysts are attributing to a general slowdown in the locals gaming market."
While it's true that "some analysts" is a small sample of opinion, it's also true that the general slowdown in the locals market is part of a larger picture. As we reported in the current issue of the Las Vegas Advisor: "For the first time in nearly two years, Nevada’s statewide win decreased in a monthly year-to-year comparison. The June decrease of 3.5% was the first decline since July 2004. Analysts say that high fuel costs are finally showing up in the numbers, including recent visitor counts. Visitation declined by 2% in June. Visitor counts are up a mere .4% for the first six months of 2006."
Gambling is extremely sensitive to economic cycles and vagaries. And by some measures, the greater economy seems to be faltering a bit. Seventeen interest-rate raises in a row by the Fed. Oil at $70 a barrel. Gold at $620 an ounce. The real-estate bubble hard-landing (especially in Las Vegas, where the latest figures show 20,000 houses on the market). Stagnant employment growth. Inflation up. Consumer confidence down...
But back to the locals market, there's also the specter, lurking in the ever-widening shadows, that there are simply too many neighborhood casinos for too few local gamblers. In 1989, there were six locals casinos: Palace Station, Sam's Town, the Continental (now Terrible's), Arizona Charlie's (Decatur), the Gold Coast, and the King 8 (now Wild Wild West). Since then, 21 have opened: Arizona Charlie's Boulder, Boulder Station, Cannery, Ellis Island, Fiesta Rancho, Fiesta Henderson, Green Valley Ranch, Hyatt, MonteLago, Orleans, Palms, Rampart, Red Rock, Santa Fe, Silverton, South Coast, Suncoast, Sunset Station, Texas Station, and Tuscany.
Sure, the number of locals casinos has simply kept pace with the explosion of the population base. But at some point, if you build too many, they (locals) won't be able to come to all of them.
Finally, of course, there's also the possibility that this is a short-term aberration and the locals market is poised to come back like gangbusters now that the hot summer is winding down. The old gambler's expression applies here: You can never be sure that you're in a streak, one way or the other, until it's over.
