Valley View Casino rolling dice: A hotel free for biggest gamblers
February 26, 2008

You won't be able to pay to stay at the 161-room hotel the Valley View Casino plans to build this year. All the rooms in the 12-story, $85 million building would be reserved as perks for the casino's biggest gamblers. Giving away hotel rooms to high rollers is an old idea, but experts couldn't think of another hotel that has taken it as far Valley View Casino is proposing. "It's pretty unique," said David Schwartz, director of the Center for Gaming Research at the University of Nevada Las Vegas.

But it makes sense for tribally owned Valley View Casino, which doesn't have room for a large resort, he said. Casino hotels in Las Vegas, which generally have about 3,000 rooms, typically give away, or "comp," about 450 of them, so a smaller casino such as Valley View can probably fill its "boutique" hotel entirely with gamblers. "They'd be more profitable if they could get people to spend the night," he said. "Driving around those roads isn't necessarily the thing you'd want to do after midnight." Casinos give away rooms to encourage people to stay longer because they expect them to gamble more.

And without a big hotel, Valley View can give away all its rooms, said Joe Navarro, head of the 292-member San Pasqual tribe's casino business arm. "It's just the most efficient way to do business because, at the end of the day, we're a casino that has a hotel, not a hotel with a casino," he said. Done right, giving away meals, concerts, slot pulls and hotel rooms is profitable, said Bill Eadington, a University of Nevada Reno professor who analyzes the economics of gambling.

A good rule of thumb is that the perks offered are worth about 10 percent to 25 percent of what a casino expects to make from a particular gambler, he said. Casinos keep track of how much people gamble with the use of player cards, which are inserted into slot machines and, in some cases, given to dealers at table games.

They then analyze a mountain of data to determine what games people like to play and which offers will be most likely to bring them in to gamble some more. "Whether you win or lose doesn't matter," said Randy Baker, who teaches Indian gaming at San Diego State University. "The house knows the odds are in its favor." Building a hotel just to give away rooms to gamblers "used to be pretty common in Las Vegas in the 1950s," he said.

Nevada casinos started giving away a smaller percentage of their rooms when they grew into fullfledged resorts and started looking at hotels as a way to make money directly. Gambling now accounts for only half of their profits, Baker said. The "all-comp" strategy also plays a part in considerations for the hotel's effect on the surrounding community. "Our studies determined there's no traffic impact," Navarro said. Gamblers won't be hitting the road after they play, but instead would stay the night, according to an environmental report. As a result, Navarro said, the tribe won't have to deal with traffic considerations on nearby roads.

The report also found that issues with aesthetics, air quality, noise, transportation and other issues are minor or can be adequately dealt with. Oliver Smith, chairman of the Valley Center Community Planning Group, speaking for himself and not the group, said: "I'd prefer not to see it myself. It's particularly inappropriate. All the other casinos are down in valleys; this is up on a hill." He said he is concerned about traffic, noise, light pollution and the way the hotel would look.

"We're putting a big hotel in the middle of what is generally a rural area," said Smith, who lives half a mile from the casino. County officials haven't had a chance to look at the studies in depth, but they are skeptical that giving away rooms means the hotel won't create more traffic. "That's not the way we normally assign trips to casino hotels," said John Snyder, county public works director.

Typically, hotels at casinos generate three daily car trips per room, estimated to be less than half of the eight trips noncasino hotel resorts draw, he said. "We assume (a hotel) does cause a few more people to go, not just stay there longer," Snyder said. Snyder heads the county's negotiations with Indian tribes over casino projects. In the past, such negotiations have led tribes to help pay for road improvements – including San Pasqual, which agreed to pay $6 million to widen several miles of Valley Center Road when it expanded its casino to 1,750 slot machines last year. Snyder expects this project to require such a negotiation as well.

Navarro, however, is sure that it doesn't. The tribe's agreement with the state allowing it to operate a Las Vegas-style casino ties such negotiations to gambling expansions. "There's no gaming in this hotel," he said. Even if the tribe had to make up for the effects of the expansion, such needs have already been met by a new traffic light it installed at Lake Wohlford Road at the base of the hill on which the casino sits, Navarro said.

The environmental report also considered the traffic effects of an outdoor concert series the tribe is beginning April 11 and found it to be "less than significant." People attending the concerts, which this year will include Bonnie Raitt, Bill Cosby and Randy Travis, will get coupons for free or discounted meals and gambling. That will keep up to a third of concert-goers in the casino after the show, preventing traffic jams, Navarro said.

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