Fast-Food Franchises: An Alternative Menu for Hotel/Casinos

In their discussion - Fast-Food Franchises: An Alternative Menu for Hotel/Casinos - by Skip Swerdlow, Assistant Professor of Finance, Larry Strate, Assistant Professor of Business Law, and Francis X. Brown, Assistant Professor of Hotel Administration at the University of Nevada, Las Vegas, their preview reads: Hotel/casino food service operations are adding some non-traditional fare to their daily offerings in the form of fast-food franchises. The authors review aspects of franchising and cite some new Las Vegas food ideas.” The authors offer that the statewide food and beverage figures, according to the Nevada Gaming Abstract of 1985, exceeded $1.24 billion. Most of that figure was generated in traditional coffee shops, gourmet dining rooms, and buffets. With that kind of food and beverage figure solidly on the table, it was inevitable that fast-food franchises would move into casinos to garner a share of the proceeds. In a March 1986 review of franchising, Restaurant Business reported the following statistics: “Over 60 percent of all restaurants are franchisee owned. This relationship is also paralleled in dollar sales, which has exceeded $53 billion.” “Restaurant franchising expansion has grown at an annual rate of 12 percent per year for the past five years.” The beginning of the article is dedicated to describing, in general, the franchise phenomenon; growth has been spectacular the authors inform you. “The franchise concept has provided an easy method of going into business for the entrepreneur with minimal business experience, but a desire to work hard to make a profit,” say professors Swerdlow, Strate, and Brown. Lured by tourist traffic, and the floundering Chapter 11 afflicted, Riviera Hotel and Casino in Las Vegas, Burger King saw an attractive opportunity for an experiment in non-traditional outlet placement, say the authors. Although innately transient, the tourist numbers were way too significant to ignore. That tourist traffic, the authors say, is ‘round-the-clock. Added to that figure is the 2000-3000 average employee count for many of the casinos on the ‘Vegas strip. Not surprisingly, the project began to look very appealing to both Burger King and the Riviera Hotel/Casino, the authors report. In the final analysis, the project did work out well; very well indeed. So it is written, “The successful operation of the Burger King in the Riviera has sparked interest by other existing hotel/casino operations and fast-food restaurant chains. Burger King's operation, like so many other industry leadership decisions, provides impetus for healthy competition in a market that is burgeoning not only because of expansion that recognizes traditional population growth, but because of bold moves that search for customers in non-traditional areas.” The authors provide an Appendix listing Las Vegas hotel/casino properties and the restaurants they contain.

Regulating Casino Gaming: A Checklist for States Considering It

In his essay - Regulating Casino Gaming: A Checklist for States Considering It – by Leonard E. Goodall, Professor of Management and Public Administration, College of Business and Econornics, University of Nevada, Las Vegas, Professor Goodall initially states: “Since various states are likely to continue to debate the issue of the establishment of legal casinos, and since states considering legal casinos must also decide how best to regulate them, the author discusses the similarities and contrasts in the regulatory systems already in operation.” Certainly not all states have solicited casino gaming, or what people generally refer to as gambling, but many have and the list is growing. If casinos are to be, and indications are that many more states will endorse gaming as a source of revenue, then regulating them must follow as a matter of due course says the author. Keep in mind this essay was written in 1988, and the actuality of casino gaming has indeed come to fruition in many states. “Nevada, having legalized casino gaming in 1931, has over a half-century of experience with the regulatory process,” Professor Goodall informs. “When New Jersey approved the establishment of casinos in Atlantic City in 1976, state officials studied the Nevada system carefully and adopted many of Nevada's procedures.” Professor Goodall bullet-points at least 7 key elements that states wanting to pursue gaming should, or in the cases of Nevada and New Jersey, have already addressed in regard to regulation of the industry. Goodall parses, in more detail, those essentials. The ultimate form of regulation is ownership Goodall says. Either state run, or private are the logical options. “The arguments for private ownership have been both pragmatic and political,” Goodall says. “Legislators, like the general public, are skeptical of the ability of state bureaucracies to run big businesses in an efficient manner. Many of them also believe regulation can be more effective if there is at least an arm's-length distance between regulation and ownership,” the professor opines. Additionally important to consider is the purpose of legalization, says Goodall. Are the proceeds earmarked for general funds, or to be used specifically? Geographic considerations are key, Goodall points out. “This decision will depend partly on a state's reasons for having casinos in the first place,” he expands. “New Jersey's policy, for example, is obviously consistent with its goal of using casinos to reinvigorate Atlantic City.” “In both states, one of the most important functions of the regulatory agencies is that of licensing, the process of investigating individuals or organizations and then authorizing them to participate in the gaming business,” Goodall provides. In closing, Goodall says there is no need for ensuing states to reinvent the wheel when it comes to casino gaming regulation. Nevada and New Jersey already provide two good designs from which to emulate and/or build upon.

Current Status of Collectibility of Gaming-Related Credit Dollars

In her piece entitled - Current Status Of Collectability Of Gaming-Related Credit Dollars - Ruth Lisa Wenof, Graduate Student at Florida International University initially states: “Credit is an important part of incentives used to lure gamblers to gaming establishments. However, a collection problem exists in casinos retrieving gaming-related credit losses of individuals living in states where gambling is illegal. The author discusses the history of this question, citing recent cases related to Atlantic City.” This author’s article is substantially laden with legal cases associated with casinos in New Jersey; Atlantic City to be exact. The piece is specific to the segment of the gaming industry that the title suggests, and as such is written in a decidedly technical style. “Legalized casino gaming, which was approved by the citizens of New Jersey on November 8, 1976, has been used as a unique tool of urban redevelopment for Atlantic City,” Wenof says in providing some background on this ‘Jersey shore municipality. “Since Resorts International opened its casino…revenues from gambling have increased rapidly. Resorts' gross win in 1978 was $134 million,” Wenof says. “Since then, the combined gross win of the city's 11 casinos has been just shy of $7.5 billion.” The author points out that the competition for casino business is fierce and that credit dollars play an integral role in soliciting such business. “Credit plays a most important part in every casino hotel. This type of gambler is given every incentive to come to a particular hotel,” says the author. “Airplanes, limousines, suites, free meals, and beverages all become a package for the person who can sign a marker. The credit department of a casino is similar to that of a bank. A banker who loans money knows that it must be paid back or his bank will fail. This is indeed true of a casino,” Wenof warns in outlining the potential problem that this article is fundamentally designed around. In providing further background on credit essentials and possible pitfalls, Wenof affords: “…on the Casino Control Act the State Commission of Investigation recommended to the legislature that casinos should not be allowed to extend credit at all, by reason of a concern for illicit diversion of revenues, which is popularly called skimming within the industry…” Although skimming is an after-the-fact problem, and is parenthetic to loan returns, it is an important element of the collective [sic] credit scheme. “A collection problem of prime importance is if a casino can get back gaming-related credit dollars advanced by the casino to a gambler who lives in a state where gambling is illegal,” is a central factor to consider, Wenof reveals. This is a primary focus of this article. Wenof touches on the social/societal implications of gambling, and then continues the discussion by citing a host of legal cases pertaining to debt collection.

The Nevada Gaming Debt Collection Experience

In the discussion - The Nevada Gaming Debt Collection Experience - by Larry D. Strate, Assistant Professor, College of Business and Economics at the University of Nevada, Las Vegas, Assistant Professor Strate initially outlines the article by saying: “Even though Nevada has had over a century of legalized gaming experience, the evolution of gaming debt collection has been a recent phenomenon. The author traces that history and discusses implications of the current law.” The discussion opens with a comparison between the gaming industries of New Jersey/Atlantic City, and Las Vegas, Nevada. This contrast serves to point out the disparities in debt handling between the two. “There are major differences in the development of legalized gaming for both Nevada and Atlantic City. Nevada has had over a century of legalized gambling; Atlantic City, New Jersey, has completed a decade of its operation,” Strate informs you. “Nevada's gaming industry has been its primary economic base for many years; Atlantic City's entry into gaming served as a possible solution to a social problem. Nevada's processes of legalized gaming, credit play, and the collection of gaming debts were developed over a period of 125 years; Atlantic City's new industry began with gaming, gaming credit, and gaming debt collection simultaneously in 1976 [via the New Jersey Casino Control Act] .” The irony here is that Atlantic City, being the younger venue, had or has a better system for handling debt collection than do the historic and traditional Las Vegas properties. Many of these properties were duplicated in New Jersey, so the dichotomy existed whereby New Jersey casinos could recoup debt while their Nevada counterparts could not. “It would seem logical that a "territory" which permitted gambling in the early 1800’s would have allowed the Nevada industry to collect its debts as any other legal enterprise. But it did not,” Strate says. Of course, this situation could not be allowed to continue and Strate outlines the evolution. New Jersey tactfully benefitted from Nevada’s experience. “The fundamental change in gaming debt collection came through the legislature as the judicial decisions had declared gaming debts uncollectable by either a patron or a casino,” Strate informs you. “Nevada enacted its gaming debt collection act in 1983, six years after New Jersey,” Strate points out. One of the most noteworthy paragraphs in the entire article is this: “The fundamental change in 1983, and probably the most significant change in the history of gaming in Nevada since the enactment of the Open Gaming Law of 1931, was to allow non-restricted gaming licensees* to recover gaming debts evidenced by a credit instrument. The new law incorporated previously litigated terms with a new one, credit instrument.” The term is legally definable and gives Nevada courts an avenue of due process.