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Changing Tides In Riverboat Gaming: The Ebb and Flow Marketplace by Bridget Ann Murphy, assistant editor "I think there will be an overbuild in the beginning, followed by a natural fallout or shakedown that will stabilize things. In the long haul\ it will even out, and good quality will prevail." — Buddy McCormick rate operations at Players International, ex- pressed a similar sentiment: "I don't think oversaturation will occur if the states that legal- ize gaming are cautious about how gaming devel- ops." Mr. Grossman of Hilton said that licenses should be given to only a few companies in each market in order to "let the operations that are there succeed." Several states were mentioned by industry executives as future hotbeds for gaming, among them Pennsylvania, Virginia, West Virginia, Texas, Alabama, and Maryland. Additionally, expansion of gaming in 1995 is predicted in Illinois, Iowa, Missouri, Louisiana and Indiana. Since its inception in 1991, the riverboat gam- ing market has ridden a wave of prosperity, although in recent months there has been an ebbing of the financial high tide. The future of riverboat gaming is being monitored carefully, with one eye being kept on state legislatures and another on the state of the American economy. The current marketplace is erring on the side of caution, and while gaming still appears to ex- hibit qualities of a growth industry, the rules of the game are constantly evolving. Buyers are getting smarter, and competition seems to be stimulating industry consolidation. It is nearly impossible to forecast the future of the riverboat casinos, but an examination of current trends in the gaming market and consequently how the industry is being effected by these changes can offer clues. Growth Slowing: A Natural Evolution Riverboat gaming is exhibiting the signs of a soft marketplace, as Mark Grossman, senior vice president of corporate affairs at Hilton Ho- tels, stated. "It has slowed down, but it's not necessarily a bad thing," he said. "It gives the industry a chance to settle. We're not going to jump into anything. You have to look at the long- term return potential." There are several reasons for the temporary lull that appears to be occuring. The question of constitutionality of gaming in Indiana and the legislation concerning games of chance in Mis- souri, both issues resolved in favor of the indus- try, did a lot to shake the confidence of both investors and builders, nevertheless. There was also the defeat of referendums in Florida, Rhode Island and West Virginia, the delay of state legisla- tures in Texas and Pennsylvania in ad- dressing the passage of gaming, as well as the boat failures in Missis- sippi due to the oversaturation of a lo- cality. According to Ed Doherty, president of Atlantic Marine, "The demand for new boats has slowed. The pace will not return to the pace of two years ago. Although activity is picking up, the pace is slower than it has been." However, after hurdling numerous obstacles, and readying itself to withstand potential blows from the newly elected government and the influence of the Christian Coalition, riverboat gaming is still growing at a rapid rate. "Realis- tically, I think you're looking at two things: new markets and the expansion of existing markets," said Larry Hairston, senior vice president of marketing at Service Marine Industries, Inc. — although the trend toward expansion is tending on the side of caution. "Nobody is going to build anything unless they The Bender-built, Guido Perla-designed Grand Palais. have a license," said Ronald Babin, sales and marketing manager of Avondale Industries, Inc. "Some people are waiting to be licensed, and then they look for an existing vessel." "The question that everyone is asking is how much is enough?" according to Ed Doherty, president of Atlantic Marine. Oversaturation is an issue, but the industry seems to be taking a lesson from the failures in Mississippi, as pointed out by Buddy McCormick, vice president of Alabama Shipyards. "In a capitalistic environ- ment, there's a tendency to act like sheep, that is, everyone wanting to do what everyone else is doing. I think there will be an overbuild in the beginning, followed by a natural fallout or shake- down that will stabilize things. In the long haul, it will even out, and good quality will prevail." Scott Cooper, executive vice president of corpo- The Atlantic Marine built Empress III. 84 Tracking New Trends As stated by Gary Lipely, sales and market- ing, Trinity Marine, "Without a crystal ball, it is impossible to say where the market is going." While this may be true, the face of riverboat gaming will undoubtedly change as a result of Maritime Reporter/Engineering News
