River renaissance

Casino Journal March 2006

Written by: Fred A. Buro

Once thought of as a dying market, Laughlin, Nevada just might be a safe bet to hinge growth prospects on

Who's laughing at Laughlin? I think everyone did at one time or another-but no one is laughing now. For many years Laughlin was a mature, moderately growing gaming market, but one where few people aspired to work or visit. The summer heat was said to be so hot it would melt car tires. It must have cooled down quite a bit because seemingly overnight, Laughlin has become a boomtown again-a hot real estate play and an expanding gaming market.

Inflated California real estate is being cashed in and reinvested in the Laughlin renaissance. Residential and retail developments are everywhere. You can find condos along the Colorado River for $400,000 to $700,000, and thousands of new homes and gated communities are planned.

Laughlin, still a value play, may also be feeling the overflow from more costly gaming resort destinations. Lying in the shadows of Las Vegas, Laughlin is just over an hour away.

The 'value' demographic

Laughlin customers are far more than their less than flattering monikers. They may be the savviest of casino customers. For years they have been frequenting the casinos in the exotic desert valley reaping exceptionally high returns for the dollars they spend; unconsciously leveraging the sluggish demand and an abundance of product in the market.

As the weather grows colder in the north, the "snowbird" migration to Laughlin's warm, dry desert climate commences. Retirees? Yes, but not your typical peripatetic sightseer-these folks are on a four month winter vacation. Their mission is cash preservation as they dine, relax and swim-and they gamble a little. They roam the banks of the Colorado ducking in and out of casinos as heckles of $1.22 ham and egg breakfast specials, $5.99 lunch buffets consisting of all you can eat peeled shrimp, snow claws, beer and wine, which include a plethora of meats, cheeses and ethnocentric foods, vie for their patronage. After a robust meal, a dip in their "$19 per night" hotel pool and a short nap; they ready themselves for and evening of value packed entertainment and dinner, and oh yeah...bingo.

As spring arrives, marked by the annual "River Run" event in April, the snowbirds are abruptly displaced by forty thousand or so bikers.

Motorcycle aficionados from everywhere in the country converge upon the tiny resort town, temporarily turning it into a biker's Woodstock. For about five days, the hotels are sold out at premium rates, the restaurants are packed, and the days are filled with concerts, motorcycle rallies and parties. Complementing the music and the dust; the air is energized by the continual thunderous roar of freedom and liberation as thousands of bikers parade up and down the strip showing off their expensive rides. By Monday, the thrill is gone, and so are the bikers.

After the long weekend, Laughlin is so empty and immaculate, the silence is deafening and the sights in contrast to the weekend are surreal. But in a day, Laughlin is ready for the locals and the river enthusiasts to return and carry it through the summer.

Good bet for investment

Laughlin is approximately a $620 million gaming market, with an estimated 5 percent growth in 2005. To create a context against other jurisdictions; Atlantic City is a $5 billion market, and its 2005 growth was 4.4 percent. Missouri is a $1.5 billion market, and its 2005 growth was 4 percent. Illinois is a $1.8 billion market, with 2005 growth at 4 percent. Iowa is a $1.1 billion market, and 2005 growth was 3.9 percent. Although smaller and but seemingly in line with growth in other jurisdictions, it has a comparatively modest tax structure. Laughlin's gaming market will most likely enjoy an incremental lift in gaming revenues resulting from non gaming residential and retail developments as they come on line.

Laughlin is currently home to 10 casinos which are nestled in picturesque settings along the banks of the Colorado River where California, Arizona and Nevada meet: Avi Resort and Casino, Colorado Belle Hotel & Casino, Edgewater Hotel & Casino, Flamingo Laughlin, Golden Nugget Laughlin, Harrah's Laughlin, Pioneer Hotel & Gambling Hall, Ramada Express Hotel & Casino, Riverside Resort Hotel & Casino, and the River Palms Hotel & Casino.

Further validation of Laughlin's looming renaissance may be found on the short list of its newest players. Recent acquisitions by Carl Icahn's American Real Estate Partners, and Tilman Fertitta's Landry's Restaurants, with commitments to invest hundreds of millions in expansion and additional capital improvements for those properties would lead you to believe they have confirmed forecasts of a very bright future for that market.

And so the cycle goes. Having survived throughout the slower years, it looks like Laughlin is finally on a roll. Soon, the $19 room will be gone. More properties will likely turn over as some owners will sell into the forecast of Laughlin's robust future and cash out now. Larger, high-profile brands may exit to focus resources on expanding internationally.

Fred A. Buro is the chief marketing officer for Ft. Mitchell, Ky.-based Columbia Sussex Corp, where he is responsible for the performance of the company's 10 casinos. He has extensive gaming experience and has held top positions at Trump Entertainment Resorts and Penn National Gaming.