July 1, 2008

Link to article on stltoday.com

By Beth Jinks
BLOOMBERG NEWS SERVICE
06/25/2008

LAS VEGAS — Ameristar Casinos Inc., the owner and manager of eight U.S. casino properties including one in St. Charles, expects regional gambling venues to weather the U.S. economic slowdown better than Las Vegas as airlines cut seats and rising fuel prices inflate travel costs.

“Las Vegas and some of the other destination-type markets with airlines, is probably a little dicier market than the drive-to markets,” Chief Executive Gordon Kanofsky said.

“The economic issues are ones that affect everybody,” said Kanofsky, 53, whose casinos are mostly in the Midwest. “That said, going forward for the next 12 to 18 months, I’m happier being in regional markets than in a Las Vegas market.”

Las Vegas Strip casino revenue fell for the fourth straight month in April as gamblers curbed spending because they have less for nonessential items, such as entertainment and travel.

A report from the Missouri Gaming Commission said the Ameristar in St. Charles saw a 0.5 percent increase in casino revenue in April to $25 million, but in May its casino revenue increase 8 percent to $27.3 million compared with May 2007.

Boosted by the recent opening of the Lumière Place casino in downtown, revenue from the six St. Louis-area casinos rose 12 percent in May to $93.8 million.

Casinos in Las Vegas, the biggest U.S. gambling center, will lose visitors and revenue as airlines cut flights to the city and increase prices to counter surging jet fuel costs, Moody’s Investors Service analyst Peggy Holloway said June 11.

U.S. airlines imposed surcharges, slashed seat capacity and dumped some flight destinations to cut expenses as jet fuel surged about 83 percent in the last year.

“Airlines are a difficult industry right now. They’ve certainly cut back seats, costs are going up,” Kanofsky said. “On the other hand, people that need to drive to our properties, as well as the increased money they’re spending on food and fuel just for their daily lives, is having an impact.”

In most of Ameristar’s markets, state regulators have reported that gambling revenue is “flat,” he said. The company has properties in Missouri, Colorado, Mississippi, Indiana and Iowa, within driving distance for local gamblers.

“It’s a little more challenging time, absolutely,” Kanofsky said. “We’re managing our business to sustain through the downturn.” The company is being “prudent” about using capital and is reviewing its costs and marketing, he said.

“We’re in a lot better position than some other companies that have gone through some restructuring and buyouts over the last year or two that have significantly higher leverage on their balance sheets than we do,” the CEO said.

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