How much territory does the big guy need to survive?


Nevada’s gaming control agency releases its monthly figures about 45 days after the end of the period covered; a full month behind the other jurisdictions.  That makes comparing results between Nevada and other states more complicated; besides the time difference there is another variable that confuses comparisons, Nevada has numerous and varied  jurisdictions and each is subject to different forces and produces different results.   In the national press, especially for Wall Street only the Las Vegas Strip is important and they may be right, but every jurisdiction in Nevada has its own story and sometimes one of those stories is really more important than the “big” story in illuminating the trends or predicting the future. The local press in each jurisdiction in Nevada covers the state results, but really zeroes in on the specifics of the local casinos.  This month the Record Courier from Gardnerville in Douglas County, Nevada, which includes the South Shore of Lake Tahoe, did an excellent job of putting the local results in context by looking a longer period of time and the underlying causes.  The article said the South Shore casinos were down 40 percent in the last two years and the cause was not the economy, but the Indian casinos in California, particularly Red Hawk casinos that sits on the highway that feeds Lake Tahoe from California. Simple, Red Hawk is standing on Lake Tahoe’s air-hose and as long as it is there, there is no hope of a recovery or a return to times of booming business in the Lake’s casinos.

There is a story from Minnesota that appears to be the opposite side of that same coin; the Minneapolis Star Tribune reported today that a new movement is gaining a foothold to introduce slot machines into bars, restaurants, hotels and social clubs – if it happens those slot machines are sure to do to the Indian casinos in Minnesota what the Indian casinos in California are doing to Lake Tahoe and Reno – stand on their air-hose.

Both stories illustrate another principle of evolution that the research of the last 20 years or so has revealed about extinction; the big are the most vulnerable in times of stress.  So after the big meteorite hit the earth 65 million years ago the big dinosaurs were the main species to disappear; the same trend can be seen in larger mammals in subsequent eras.  The reason is simple, the big guys got big by eating lots, but to get all of that food they had to increasing acquire larger territories.  Anything that disturbs that reduces the available territory threaten their existence.  The bigger the animal the larger territory it needs to feed – the same is true of casinos; as a casino grows and expands it requires larger and larger territory from which to draw customers – Las Vegas need a planet and a planet filled with people living in healthy economies who can afford to travel and gamble.  The casinos in northern Nevada have always relied on California, Oregon, Washington and Canada.  As those states filled with their own casinos things became more difficult, but the most severe blows to Reno and Lake Tahoe were the casino placed directly into the California markets where people could still just drive up on a whim; Thunder Valley and Red Hawk have really reduce those impulse trips.

Slot machines all over the state would do the same to casinos in Minnesota, reduce the available territory and put serious competition directly into the customer base.  The large casinos in locations faced with a significant loss of territory are going to have to find a way to gracefully shrink in size or be threatened with extinction. All over the country that process is beginning to play itself out, in Atlantic City, in Connecticut, in West Virginia and in time in Pennsylvania and every other state with casinos.

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