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September 21, 2019

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Boyd chief: Recession forcing Vegas back to roots

G2E keynote

Amanda Finnegan

Gaming executives discuss the state of the industry Wednesday at the Global Gaming Expo at the Las Vegas Convention Center. From left to right: American Gaming Association President and CEO Frank Fahrenkopf, Jr., Boyd Gaming President and CEO Keith Smith, Aristocrat Technologies Americas Division President Nick Khin, Isle of Capri Casinos President and Chief Operating Officer Virginia McDowell, Boldt S.A. Director Guillermo Gabella and his interpreter.

The recession is forcing Las Vegas to return to its roots as a more value-oriented destination, and that’s not a bad thing, Boyd Gaming President and Chief Executive Keith Smith said.

“The town has now evolved back to its original roots,” Smith said Wednesday at the Global Gaming Expo. “I think the industry will continue to evolve and refine itself and eventually find a norm between value and high-end.”

And Smith, whose company scuttled its Echelon resort project in August 2008, said he foresees little new construction on the Las Vegas Strip in the near future.

Isle of Capri Casinos President and Chief Operating Officer Virginia McDowell said Isle of Capri has fared better than other operators because of cost reductions the company put in place in 2007.

“We had to react relatively quickly to reduce our overhead and become leaner and meaner and more flexible,” McDowell said.

Like other regional operators have pointed out during this year’s conference, McDowell said Isle of Capri’s diverse locations benefited the company. The Missouri-based casino company operates 14 casinos across the country. Some regions were more insulated than others, McDowell said.

Unlike most casino operators, most of the major suppliers entered the recession with fairly strong balance sheets, said Nick Khin, president of Aristocrat Technologies’ Americas division. To help operators weather the storm, Aristocrat has been offering more leases, payment services and financing options.

Khin also touched on emerging trends in gaming, including network gaming, products that remember their customers and games that reward players for their loyalty, he said.

But with the addition of new technology, costs have increased and operators aren’t buying. Khin said slots stay on casino floors for an average of 25 years without replacement.

“As long as prices continue to stay high, it will elongate the replacement cycle,” Smith said.

McDowell and Smith both said that when the capital is available, most operators would rather put it back into the customer experience with renovations or expansions.

“Aristocrat is not predicting a significant improvement in 2010. Unfortunately, the third quarter of this calendar year was probably the weakest quarter for operators and suppliers for quite some years,” Khin said. “We are taking a very captious approach in regards to 2010.”

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