LAS VEGAS -- Downtown Las Vegas casinos are losing money and customers thanks to a new generation of tribal casinos in Southern California.
Gambling revenues at the downtown casinos are expected to close the year down 5 percent from $683.2 million in 2001, Bear, Stearns & Co. projections show.
Downtown casinos have struggled for a decade, with projected gambling revenues for 2002 down 8 percent from $703 million in 1992. The trend is accelerating in the wake of California voters' approval of the spread of American Indian casinos.
"We continue to believe this mature market will be challenged going forward," Bear, Stearns analyst Jason Ader told the Las Vegas Review-Journal.
The threat from California to Reno-area casinos has been better recognized than the danger in Southern Nevada, but the reality is starting to sink in.
"Historically, expanding markets in the U.S., including California, have not had a negative impact on Nevada," American Gaming Association President Frank Fahrenkopf said. "Now, the caveat is they could have an impact on northern Nevada and even off-Strip properties."
California casino operators' winnings have soared from $1.4 billion to more than $4.3 billion since the passage of Proposition 1A authorized the wave of Indian gambling, surpassing New Jersey and making the state second only to Nevada's $9.3 billion.
That trend is forecast to escalate, hitting northern Nevada particularly hard in snowy, winter months and Southern Nevada in the hot, summer months.
But there are plans in the works that could help downtown Las Vegas' future.
Barrick Gaming Corp. recently announced the acquisition of the Plaza, Western, Gold Spike and the Las Vegas Club from Jackie Gaughan for $82 million.
The company has said it will redevelop the properties, but declined to disclose details. But Barrick Chief Gambling Officer Phil Flaherty said downtown is more in need of marketing programs than capital investments.
"Walk through McCarran (International Airport) and find something that represents downtown," he said. "You can't. Most visitors don't even know downtown exists. We need an awareness campaign that will be done with marketing dollars, not capital dollars."