Meet Virginia McDowell, Part I

What are your plans for Nemacolin Woodlands Resort, in Pennsylvania? We’re still waiting for the appeal process to wind its way through the courts. The original plan called for to build on an existing facility on the Nemacolin property, which was originally built as a Cabelas-type and which the Hardy family had turned into kind of a Dave & Buster’s. It was the perfect size and layout for a gaming facility. It would give us the ability, upon approval, to go in there and relatively quickly do a build-out because it’s in an existing building. Our timetable is about nine months once we start construction and we’re really just waiting for the go-ahead from the state.

So Isle is not going to be getting into resort operations? No, the reason why it’s a wonderful opportunity for both parties is the Hardy family, in addition to operating Nemacolin, also own and operate 84 Lumber across the United States. they are an entrepreneurial family who, traditionally, has done these type of projects themselves. I believe we are the first outside company they’ve ever actually partnered with and it was because they realize they did not have the very specific expertise to do a gaming project. So when they were looking for a partner that looked at the world the same way they did, both ethically and culturally, it was a great coming together. The Hardys will continue to operate the Nemacolin Resort. We would operate the casino. We get to build a flagship Lady Luck [and] in addition, it gives us the ability to send our database – and we have over a million customers that are active – to this magnificent, five-diamond resort. So it’s a great strategic partnership.

What are the criteria for reentering the Las Vegas market? We don’t talk specifically about what we’ve looked at. We were selected to [potentially] manage the PropCo assets [during the Station Casinos bankruptcy], a couple of years ago, and became licensed in the state, so we do have the ability to enter the market, if we see the right opportunity. We see that we are more a locals operator than a Strip operator, so we would be looking more for opportunities off the Strip and it could be where we could add value. If it was a property that we felt our customers want to visit, if it was for the right price or something we may manage, we say, ‘Do we believe that we could add value, not only in terms of potentially improving operations but the value-add that you get from bringing a database that likes to travel?’ When we were doing our research for PropCo, we did survey our database and close to 80% indicated that they travel to visit and gaming resort and most often Las Vegas. So we’re keeping our eyes open.

Did the current owners of the Lady Luck (above) have the opportunity to sublicense that brand and why didn’t they? When we transacted the property, we sold them the right to use the name in the state of Nevada. I believe that returned to us at the point that they did not reopen the property. But that is still in the process of being worked out between the two companies.

So it still might reopen as Lady Luck? I believe that will not occur but would have to check with our legal staff.

Wall Street has high expectations for Cape Girardeau. How quickly do you expect to break even? In the conversations that we have had with the investment community, we have likened the market in Cape Girardeau to Boonville [$82 million last year] and Waterloo [” “]. If you look at our operating results, that gives you a pretty good expectation of what the market is. In terms of ramp-up, it takes you six months to find your way and should get on a pretty good run rate in the first year.

What’s Isle’s position on gaming legislation in Florida, where you own Pompano Park (right)? Very active. There were some revisions to the Senate bill that were announced [Jan. 6], so it’s kind of a moving target. Nobody knows what any legislation might look like. One of the dangers when you have as many lobbyists working on this and as many different viewpoints, you get in the same situation Florida was in prior to gaming being legalized and Texas is in right now: If there’s not something very specific that you’re asking people to vote on, the likelihood of anything happening diminishes. We have this moving target with what the tax rate is, how many casinos it’s going to be,  where they’re located, what the impact upon the parimutuels is going to be.

The state is struggling within itself with how to deal with the existing agreement with the Seminoles and with the whole idea of the expansion of gaming. There’s going to be a lot of work that is done in this legislative session before you see anything coalesce. What we have been working on is, as the state looks for opportunities to expand, we get to participate in that with parity. So if there is a reduction in the tax rate, we get the same. To the extent that table games are allowed — which of course they would be if you’re building resorts that have a minimum investment criteria of $2 billion — we will get table games as well. Everything that we have seen thus far, we are encouraged that we do have parity. But it’s really way too early to call this one.

In your most recent quarter, promotional expenses were down at Isle. What are some of the ways you’ve been trimming promos and comps, and why? We’ve been very careful during the tough economic times to make certain that we created experiences of value for our customers. But in the process of doing that you really have to look at profitability. We look at our database and, in some instances, had to make some very hard decisions about who we were marketing to. What we were looking to do, because it’s easy for our technology platform, [is]  identify who our most profitable customers are, make certain we are reinvesting in them, whether it be the marketing-incentive offers we give them or the type of entertainment we bring. If there is a marginal customer in the database, we probably are not talking to them as frequently as we used to and, in some cases, not at all. That’s one of the tough decisions you have to make because of the economic issues right now.

Are social media and e-mail and their ilk reducing the cost of marketing? I would say absolutely and our company in particular does a good job with our social-media platform. We’re very active on Twitter. We have Facebook pages for most of our properties at this point, plus some internal Facebook pages that we do for our “See, Say, Smile” program, for example. Most of our properties tweet specific offers [plus] our Jester’s Jam concert series. It’s hard to quantify. We can see, based on the number of hits we get, the number of people responding, that we have ability to interact very promptly with a segment of customers that are choosing to interact with us through social media. We believe there’s a direct correlation between tweeting a restaurant offer and what those covers or selling concert tickets for Jester’s Jam.

There’s a consensus that the casino industry was late to the social-media party. Any theories? Yeah, it’s because of the average age of our database. For the most part, the backbone of our database is Baby Boomers. That’s a sweeping statement but if you actually go in and look at the age of most of our customers, I would say that they’re over the age of 40. Social media certainly started out as something that the younger generation was more comfortable with, much more facile with in terms of being able to communicate. When I was a keynote speaker at G2E, one of the things that I mentioned was I’m very active on Facebook. I love it and the amount of people who are my age or older who play “Farmville” certainly would indicate there is a growing market for certain pieces of this for folks who are my age. When I look at who my Facebook friends are, who is following me on Twitter or who I follow, I see the same thing. It is just that the Baby Boomer generation was slower to adapt to this and, because of this, we as businesses were probably slower in terms of thinking that this is an arrow in the marketing toolkit that gave you the ability to move the needle.

(Next: Is the Isle turnaround complete yet … and what about that “Pile of Debris” image problem?)