A contrarian's view of Indian casinos

You think that Indian casino along

Interstate 80 near Sacramento will spell

the doom of Reno's gaming business?

Meet Ferenc Szony, contrarian.

Szony, president and chief executive

officer of The Sands Regent in downtown

Reno, isn't exactly an uninterested observer.

But this is the case he made with analysts

and investors last week as The Sands

trotted out its financial results:

The casino under construction by the

Auburn tribe will be largely a locals casino.

It won't draw destination travelers,

not even those looking for a weekend getaway,

because it won't have much in the

way of lodging.

Further reducing the Indian casino's

competitive edge, he said, is the stateimposed

limit of 2,000 slots at the facility.

In the same breath, Szony acknowledged

that the Auburn facility will be overseen

by Station Casinos of Las Vegas, a firm

he praised as the nation's premier operator

of locals casinos.

But what about all the other Indian

casinos in northern California? Szony

contended many of those properties

undertook significant upgrades in

recent months and have succeeded in

drawing once-disenchanted

Californians back for a second look.

That means, he said, that the Reno

market already has felt most of the hit

that it will take from Indian gaming.

Indian gaming, he said, played a part in

his company's loss of $188,628 or 4

cents a share during is fiscal year that

ended on June 30.

But bigger problems, he said, were

posed by the lack of an American Bowling

Congress event in Reno this year (the

Sands big with bowlers, especially valueconscious

women bowlers) and the weakness

of the northern California economy.

The bowlers will be back next year, and

Szony also feels good that the economic

weakness means more folks are driving for

weekend getaways than flying for weeklong

vacations.

That's good news for the Sands, to be

sure, but it's even better news at the Gold

Ranch Casino and RV Park the company

purchased in June.

Gold Ranch, tucked against the

California border along I-80, has all the

benefits of any border facility: It sells cheap

gas to California residents headed home, it

sells California lottery tickets to Nevada

residents driving up from Reno, and it

markets a sports book to Truckee and

North Lake Tahoe residents who don't

want to drive an additional 10 miles to bet

on NFL games.

In fact, Gold Ranch pumps 600,000 to

700,000 gallons of gas a month. That's

about six times the amount pumped by a

typical gas station, and Gold Ranch typically

ranks as one of the best-selling

ARCO stations in the country.

And it ranks third among sellers of

California lottery tickets, said Rob

Medeiros, the former general manager of

Gold Ranch who now is chief operating

officer of The Sands Regent.

The trick, Szony said, is to get those gas

purchasers to stay long enough to play the

300 slots at Gold Ranch. A new RV park

at the facility, meanwhile, seeks to attract

visitors who want to spend time in the

casino rather than their camp units.

Because the company's acquisition of

Gold Ranch came so near the end of its

fiscal year, Gold Ranch didn't have much

effect on the year's financials for the

Sands Regent.

For the fourth quarter, the company

reported a loss of $26,000, or a penny a

share, on revenues of $9.99 million. That

compares with net income of $710,000, or

16 cents a share, on revenues of $9.77 million

in the same period a year earlier.

Szony told investors the company spent

about $4 million in the past year to renovate

the 850-room Sands. He said the

company expects to reduce its capital

expenditures at the downtown facility this

year. Instead, most of its focus for capital

improvements during this year will be at

the Gold Ranch property.