10/03/2002 11:00PM

Lanni: Racing must change


If the gaming industry were to cast the lead for an E.F. Hutton-like commercial, it need look no further than Terry Lanni, chairman of MGM Mirage. In Las Vegas, when Lanni speaks, people stop and listen.

Under that pretext, Lanni was the keynote speaker last Monday at the NTRA Marketing Summit luncheon.

Lanni knows his way around horse racing too. He and his good friend Bernie Schiappa, a Las Vegas executive with Fletcher Jones Imports, co-owned 1999 Breeders' Cup Mile winner Silic and Ladies Din.

In fact Lanni was formerly on the board of directors of Magna Entertainment and was offered by Frank Stronach the job of running Magna's racetrack operations. Instead, Lanni stayed in Las Vegas to complete the biggest transaction in gaming industry history, the MGM Grand's $6.4-billion acquisition of Mirage Resorts Inc.

Lanni told the more than 200 Summit attendees Monday: "The business model has to be changed for the racing industry if it wants to ever grow."

He compared the transformation of Las Vegas to what racing has to do today.

"When I joined the gaming industry 26 years ago," said Lanni, "I was at Caesars World, and 85 percent of our revenues came directly from gaming and 15 percent from other sources. It had always been the thought process that the casino paid for everything. That's fine when you paid $15 million to build a casino."

During his 18 years at Caesars World, Lanni originated the concept of a retail mall on the Strip. The hugely successful Forum Shops at Caesars rejuvenated the property. Now every new casino built on the Strip has high-end retail shops.

"What gaming has done in Las Vegas the last 10 years is move from being purely gaming to be a tourist entertainment attraction center," he said. "In the last 10 years, the number of visitors to Las Vegas has doubled. And much of that came from these other factors, the rooms, the food, the beverage, the entertainment, the retail, conventions, and conference centers."

To demonstrate the industry turnaround, Lanni said, "MGM Mirage will do about $4.3 billion in revenues, about 51 percent of that non-gaming revenues.

"What's inevitable was we had to change to grow. And that's really what needs to be done in horse racing.

"If racing wants to provide a broad-based entertainment process to attract new people, you have to reach out to retailers, restaurateurs, and entertainment groups to broaden the product."

Lanni said that racing should look to "deep-pocketed partners" willing to invest in retail, restaurants, and entertainment at the racetracks. He stressed diversity because it's risky to depend solely on the racing product or slots.

"I honestly believe that slot machines at racetracks are a short-term benefit," he said. "Once politicians allow the expansion of slots at racetracks, it's pretty easy to allow them to expand everywhere, in bars, restaurants, anywhere they want to get more revenue for the state."

Lanni then agreed with Daily Racing Form publisher Steven Crist, who on a panel at the recent Global Gaming Expo said there was no crossover between horseplayer and slot player.

"Right now where you have slot machines at the racetracks, there is no crossover," Lanni said. "There is a dichotomy. You get the value from it but not the crossover."

In common-sense terms, Lanni said the steep learning curve of racing works against it.

"Any new customer coming to a racetrack for the first time feels so disadvantaged," he said. "What chance do they have to win? If you walk into a casino in Las Vegas and pull a slot machine handle . . . you have an equal chance with everyone else. So there's a big disadvantage to attracting new people when you rely upon racing as the only product that's sold."

Lanni did not slam racing so much as hold a mirror up to the sport and it was important a speech like his does not slip under the radar screen.

Richard Eng is the turf editor for the Las Vegas Review-Journal and host of the Race Day Las Vegas Wrap Up Show.