We’ve got an outstanding new podcast up over at the UNLV Center for Gaming Research. You’ve really got to hear it to believe it:

07-April 30, 2009

Steve Cyr, "From Hotel School to the Celebrity Suite: My Career in the Casino Industry”

Cyr, a legendary Las Vegas casino host, shoots from the hip as only he can in this dynamic, highly-informative talk. Learn how a casino host climbs the career ladder, see behind the scenes of high rollers suites, and much more.

Download audio file (mp3)

Download flyer (pdf)

Whale Hunt in the Desert: Secrets of a Vegas Superhost from Huntington Press

UNLV Center for Gaming Research: Podcasts.

Cyr really cuts loose, as I’m told he usually does in his talks. Did he kick Starlight Express’s ass when he was at the Hilton? Yep. Does he care whether his players win or lose? Yep. If you like going to casinos and are curious about what it’s like to host high rollers, or just want an insight into the business, this one is for you.

The Press reports that the Tropicana Atlantic City is almost ready to go on the block:

After a 16-month saga, Tropicana Casino and Resort is one step closer to being sold. New Jersey gaming regulators today authorized the property to be auctioned off in bankruptcy.

Gary S. Stein, the state-appointed conservator overseeing the sale, said he would file a Chapter 11 bankruptcy petition later today to begin the auction process and designate a group of lenders headed by billionaire financier Carl C. Icahn as the leading bidder. Icahn and his fellow lenders have offered $200 million.

The auction is expected to occur in June. Although the Icahn group has been named the so-called "stalking horse," or front-runner, other bidders will have an opportunity to submit higher offers.

Press of Atlantic City, – pressofatlanticcity.com.

Wow, they sure work quickly, don’t they? The Tropicana saga is certainly not the brightest moment for New Jersey casino regulation.

Yes, we’ve got another hugely interesting talk tomorrow at UNLV: casino superhost Steve Cyr, currently of the Hard Rock, who is the subject of Deke Castleman’s Whale Hunt in the Desert.

The talk begins at 2. You can find more information here. Cyr is a UNLV alum and always has something interesting to say.

Other news from Harmon Avenue: I’ve posted a new resource. a pdf of the top 20 US metro areas and the status of casinos in and around them.

As a former casino security officer, I take a greater concern than some with people keeping themselves safe while on vacation at a casino resort. Often, carelessness and lack of vigilance can lead to burglaries or worse. Since most crimes committed in casinos are crimes of opportunity, you can be proactive and prevent most, but not all of them.

Take, for example, one of the most common hotel crimes: burglary of a hotel room whose door was left slightly ajar. This happens quite often, because people often assume that the door closes behind them. It is, indeed, designed to do that, but air pressure often keeps it from fully closing, so it remains unlocked. There are teams of “push door thieves” who work the Strip, simply walking down corridors and pushing on doors. If one opens, they enter and steal what they can.

I don’t know anything about how this high-profile attempted burglary happened, but it sounds a great deal like a push door operation. From the LVRJ:

An intruder who entered a Las Vegas penthouse suite while "General Hospital" star Kelly Monaco was sleeping was quickly apprehended by police, a source said.

Monaco, who won the first season of "Dancing With the Stars" and co-stars with Spice Girl Mel B in "Peepshow" at Planet Hollywood Resort, was asleep but then heard someone rummaging in her living room area at the hotel.

NORM: Actress suffers unwanted visitor – News – ReviewJournal.com.

This isn’t the first time something like this has happened at the property. Back in 2003, when it was the Aladdin, there was a spate of similar burglaries during the 2003 Radio Music Awards:

Some Las Vegas thief hit the jackpot last night, swiping $1.2 million in jewelry from the hotel room of the rap star Nelly, who was in Sin City performing at an awards show. The burglar also boosted $4500 in cash and electronics equipment from the Aladdin Hotel room of pop singer Michelle Branch, also in town for the 2003 Radio Music Awards. Police said the two rooms, located a floor apart, appeared randomly selected by the crook.
The Smoking Gun: Archive

Again, not knowing exactly what happened, it’s impossible to say, but this could be a standard push door burglary. And it can happen to you.

So next time you stay in any hotel, make absolutely sure the door is locked when you leave. Pull it closed behind you and throw the deadbolt when you’re in it. These are two small things that take only seconds but can save you a great deal of grief.

Alan Jay Zaremba. The Madness of March: Bonding and Betting with the Boys in Las Vegas. Lincoln: University of Nebraska Press, 2009. 228 pages.

Sports betting is one of the most popular, yet least studied, forms of gambling. Researchers have been trying to get inside the heads of slot players for years, and there’s been mathematical studies of card games since the 16th century. But sports betting flies under the radar, like bingo, which is odd for such a widespread betting form.

Alan Jay Zaremba’s The Madness of March is a welcome corrective to sports betting’s analytical oversight. Part participant observer-based ethnography, part academic study, The Madness of March gives a rare insight into sports betting by focusing on one week in one place: the opening round of the NCAA college basketball tournament on the Las Vegas Strip.

Setting his book here, Zaremba is at the epicenter of the year’s most frenzied burst of casual betting. Essentially, Zaremba spends six days in Las Vegas and writes about what he experiences. He correctly reaches the conclusion that most bettors are doing for the fun, not for profit, as nearly everyone he encounters is a 20-50 year old male who’s been coming to Vegas for years during the tournament to place bets, drink beer, watch games, and have fun–though the first three often make the last an elusive goal.

Zaremba is an excellent observer and a good writer; he knows enough to capture the inherent absurdity around him, but usually has a light enough hand to let the reader draw his own conclusions rather than explicitly making the point that most bettors who insist they have a sure thing are delusional. Part of what makes the book fun is the interaction between bettors: each wants to know what the other is betting, and many share their picks and their methodologies, which run from intricate to nonsensical. On almost every page, a bettor fatuously declares that his latest pick is a “lock,” a guaranteed sure thing. It gets monotonous, but it’s true. Towards the end of the book, one of Zaremba’s subjects declares, “Everyone here has a lock, and no one here has a lock.” As the author says, it’s probably the most accurate thing anyone’s said in days.

If you’ve ever wondered why scads of post-college guys spend the better part of a week living on beer and hot wings while feverishly analyzing their next wager, you’ll get an answer in Zaremba’s book. He captures the scene in all of its frat boy inanity, but reserves critical judgment (with a few exceptions). The Madness of March, then, is most valuable as an ethnographic survey of Strip sports betting at its most frenetic: 48 games in 4 days make for a high pressure, drama-filled long weekend, with big bettors and small bettors winning and losing. It’s a fantastic look inside the psychology and sociology of the casual sports bettor, droves of whom descend on Las Vegas every March.

I found only two potential problems with the book. First, the action can get repetitive beyond monotony. At first, seeing Zaremba and his brothers in bets analyze, wager, then live or die with the results is exciting. After two days of this, the bloom comes off the rose. This, however, is much of the point, I suspect, and Zaremba’s weariness, which becomes overwhelming towards the end, is both true to the reality of his subject and his own experiences. Staying on the Strip for six days, drinking an untold number of beers, and betting is exhausting.

My second concern is that Zaremba would retreat to the comfortable cocoon of academic irony. It’s an approach that mars most would-be scholarly looks at the real world: the writer as cynical observer, watching those around him blundering into oblivion and making snide comments that only he, and his oh-so-insightful readers, can appreciate. There’s a good deal of buffoonery in evidence throughout the book, and this would be an easy and safe route for the author to take.

He does not, however. By sharing his own picks, he shows us that he is just as prone to making bad picks as everyone else, because in retrospect no amount of analysis can determine who will beat or cover the spread. It’s a crapshoot that makes a mockery of reason. He doesn’t consider himself to be above the rest of the crowd, and as a mildly self-deprecating narrator, he doesn’t try to lord it over the reader, either.

Best of all, Zaremba follows his main narrative with an epilogue that brilliantly captures the allures of fanhood, and caps the book with as spirited and eloquent a defense of becoming emotionally invested in kids’ games being played by adults as I’ve ever seen.

I’m not being ironic when I say that The Madness of March is a lock. It’s an essential read for anyone who wants to get a better window on one of the more interesting gambling and sports subcultures.

Shaun Priest. Decisions. Lakeland, Florida: Small Dogma Publishing, 2008. 233 pages.

Often, fiction does a better job of capturing reality than statistics and figures. Sometimes, there are no reliable numbers out there. Sports betting is a perfect example. There are not even solid estimates of the total amount bet illegally on sports each year because, by definition, such betting isn’t documented by regulators.

But in Decisions, Shaun Priest gives the reader a look at the life of one illegal gambler in a way that brings home the reality of the world of bookies and their customers. Priest’s main character, Jack Fitzgerald, is a hotshot ex-jock and salesman for CM Solutions, a Boston-area company that specializes in selling software systems to hospitals. “Fitzy” is married, with a young son, plays basketball in an adult amateur league, and seems to have it all. But he’s got a secret: he’s a compulsive gambler.

Running up debts at Nevada casinos and Foxwoods is bad enough, but when Fitzy starts placing $10,000 bets with Justin Bunar, an up-and-coming Boston bookie, he gets in over his head. He finds himself in debt to Bunar, under investigation by the FBI, and in trouble at work.

Priest does two things very well: he builds the action towards a climax, bringing several plot-lines to a head at the same time, and he creates complex, though not necessarily deep, characters. Take, for example, the bookie Bunar. A lesser author would make him a cunning, manipulative evil genius who takes advantage of Fitzgerald’s weakness for gambling. But Priest shows a bookie who is manipulative and occasionally brutal, but also principled and sometimes compassionate. One of the most interesting aspects of Decisions is that, consciously or not, much of CM Solutions is mirrored by the underworld structure of Boston organized crime. Bunar is a big man in his field, but he’s subordinate to “Skinny,” a major mob boss, who negotiates deals with out-of-town criminals without consulting Bunar. Similarly, Fitzgerald is a glib super-salesman, but he’s under the thumb of his executive vice president, Kevin.

Another thing I found interesting about Decisions is that is opens up the reader to the world of high-pressure sales. This isn’t as interesting to most people as the mob, or hardcore gambling, but I found Priest’s rendering of Jack Fitzgerald fascinating–a guy who thinks in terms of management-training manuals when threatened by a mobbed-up bookie might seem like a caricature, but it actually makes sense once you get into the character.

Fitzgerald falls so hard for gambling because, as a dominating, athlete, he’s used to winning. The reader sees how, with success at home and work, he just assumes that he’ll win at betting as well. Of course, that’s where he’s wrong, since betting against the spread is pretty much a coin flip. But he’s not just an innocent who falls victim to his own hubris: throughout the novel, he makes some decisions that show he’s no boy scout. This gives Fitzgerald complexity and makes Decisions that much more compelling.

At it’s heart, Decisions is a page-turner. It’s not a cerebral or contemplative tome, but it will keep you reading. This book would make a great movie.

You can order Decisions here: www.shaunpriest.com.

We were lucky to host an outstanding Gaming Research Colloquium talk today: Dr. Nicholas Tosney spoke about some parallels between early modern British gambling and 20th century Las Vegas gambling. Great stuff that I highly recommend.

Nick Tosney: Commercialization, Crime, and Casinos – Center for Gaming Research.

Subscribe to the UNLV Gaming Podcast in iTunes, or just listen to the mp3 yourself here.

Problem gambling is classified as an impulse control disorder, and it looks like it may have company. An Iowa State study says that many children suffer from addictive video gaming. From USA Today:

Nearly one in 10 children and teens who play video games show behavioral signs that may indicate addiction, a new study reports.

The study found 8.5% of those who played had at least six of 11 addictive symptoms, including skipping chores and homework for video games, poor test or homework performance and playing games to escape problems. The research, which is published in the May issue of the journal Psychological Science, is based on a 2007 Harris poll of 1,179 U.S. youngsters, the first nationally representative poll on the subject.

Exhibiting six of 11 symptoms can lead to a diagnosis of addiction, such as pathological gambling. Iowa State University researcher Douglas Gentile adopted the addiction criteria for gambling because there is no current medical diagnosis of video-game addiction.

Study: Video-game-playing kids showing addiction symptoms – USATODAY.com.

This seems to be a rather casual study; the authors just substituted “video gaming” for “gambling” on a screening checklist. But it raises interesting questions about the nature of addiction for both video games and gambling. For example, is the addiction to the activity of gambling, as it appears to be with video gaming? In that case, it’s not really about the money, but about the activity. That’s got to have some implications for treatment.

Lauren Goldstein Crowe and Sagra Maceira De Rosen. The Towering World of Jimmy Choo: A Glamorous Story of Power, Profits, and the Pursuit of the Perfect Shoe. New York: Bloomsbury, 2009. 215 pages.

This is probably not the best book to read after American Rust. The transition from the gritty, downbeat novel to this superficial tale of an ultra-luxury brand was jarring, to say the least. Still, since the casino business has more than one parallel with high-end retail, I figured that I’d find something of value in The Towering World of Jimmy Choo. Unfortunately, I didn’t.

The Towering World of Jimmy Choo isn’t about Jimmy Choo, the man–he disappears around page 80–but the company Jimmy Choo, which was founded by London heiress and party girl Tamara Yeardye. Yeardye doesn’t come across as a very sympathetic character. With pronouncements like “If you live in LA and you haven’t been to rehab, you’re just not cool,” she sounds every bit the spoiled young socialite.

Choo, on the other hand, is a Chinese immigrant to the UK, via Malaysia, who followed his father into the profession of shoe-making but, after years of learning and work, became a sought-after couture shoemaker. In 1996, Yeardye convinced Choo to go into the mass-production shoe business; they formed a company called Jimmy Choo, Ltd., which produced a ready-to-wear collection and opened a London boutique.

The authors chiefly follow JC Ltd’s progress from start-up to success to acquisition, with no real explanation of what made Jimmy Choo’s shoes different from anyone else’s. There aren’t any descriptions of the shoes, which become tangential to the main story, the managerial and financial machinations at Jimmy Choo, Ltd.

It’s a shame, because there’s definitely a great story in there. It’s just not the story we get in the book, which plods from boardroom to red carpet, alternately bogged down in the financial reports and celebrity-obsessed. At times, the book has the feel of a press release, with celebrity name-drops and gushy adjectives substituting for real story-telling.

I did find something useful in the book for those who follow casinos: a concise description of private equity firms that, in retrospect, makes it clear that more questions should have been asked in the Great Going Private tent sale of 2007:

Undoubtedly the easiest way to generate great returns on investment for private equity is through financial engineering: using large quantities of debt (rather than equity) to finance the purchase of a company, and then paying back those loans with the profits generated by the companies themselves. This clearly adds risk to the now more heavily leveraged companies, as the margin of maneuver (and error) with highly indebted balance sheets is much smaller. (p. 97, emphasis mine)

I wish the rest of the book were that informative, or interesting.

The Towering World of Jimmy Choo feels superficial: it’s obviously cobbled together from interviews with some of the major players, with no real depth to it. More research might have added some more nuance and atmosphere, but the book really feels hastily-written and just doesn’t do a good job of creating empathy or even intrigue.

Cops in Royal Oak, Michigan, have gotten their digs renovated–thanks to bookies. From the Chicago Tribune:

The second floor of the citys police station has a new look thanks to money seized a decade ago from a sports gambling operation.

The department put up almost $34,000 for the $52,000 renovation completed Wednesday, most of it from money seized in 1999 when officers broke up a high-stakes football betting operation.

"It was a Super Bowl party on steroids," interim Chief Christopher Jahnke told The Daily Tribune. "We took a lot of money from the scene."

Vice forfeiture laws allow the department to keep and use money seized in gambling and prostitution cases.

"We were looking for the proper way to spend it," Jahnke said, and the upstairs area hadnt been updated since the building opened 46 years ago.

"We used to get complaint after complaint that this was a dirty, dingy place," he said.

Now it has upgrades, including new carpeting and tiling, updated lunchroom counters and secondhand but good-quality furniture, including 15 desks, two conference tables, 30 chairs and lockable file cabinets.

Royal Oak cops renovate station with seized cash — chicagotribune.com.

I don’t know exactly what about this story is funny, but I like the irony of the proceeds of an illegal gambling operation funding the police department’s renovations.

Philipp Meyer. American Rust. New York: Spiegel and Grau, 2009. 343.

This powerful novel is a case study in character development. Each chapter focuses on a single character. While the narrative remains in the 3rd person, the reader primarily sees the world through that character’s eyes for a few pages. This is an effective technique in building up empathy with characters who otherwise might seem opqaue or even unlikeably. Meyer does more than put the reader in his characters’ shoes: he puts them in their heads.

The story is a deceptively simple one. Two young men are drawn into committing a crime, and each faces the consequences in his own way. Along the way, the reader meets the mothers, fathers, siblings, and others who are likewise pulled under.

American Rust is set in Buell, Pennsylvania, a decaying steel town whose plants have mostly closed. Meyer frequently contrasts the post-industrial decay of the area with its natural beauty, which is quite effective. I’m reminded of a passage from Stillgoe’s Metropolitan Corridor in which he discusses New England farmland that, made unprofitable by the cheaper products brought by railroad, gradually returned to wilderness. It’s a phenomenon that Meyer captures before the readers’ eyes: reports of deer, bear, and coyotes growing bolder and nature encroaching on what were once steel mills underline the sense of decay and declension that pervades the book.

The book is more than sociology, though. It’s a solid novel with brilliant description and carefully-built characters that the reader won’t mind getting invested in. Initially, the reader’s sympathies may be with Issac, an under-sized, bookish young man who’s stayed n Buell to care for his father, but by the end of the novel no one seems to be a stranger.

That’s the key to what makes this a great novel: there’s not much action and only the slightest bit of suspense, but Meyer’s produced such complete, nuanced, and distinctive characters that American Rust is nonetheless a book that is put down only with difficulty.

I did a short radio interview with 94.9 in San Diego about, of all things, casinos and smells. Here’s a description and a link to the audio:

After reading an article in the Union-Tribune about new scents (that’s right, smells) being installed in a local casino to entice gamblers to stay and play longer, Hansen and Tommy thought they’d check in with one of the gentlemen quoted in the article about the use of scent, and other devices, in the gaming / gambling industry. Dr. David Schwartz is the Director of the Center for Gaming Research at the University of Nevada Las Vegas, and you may be surprised at the myth he debunks.
FM94/9 – Its About The Music.

I haven’t listened to the audio, but I think the myth I debunk is about oxygen being pumped into casinos to…make them more oxygen-rich.

I’ve got a new Las Vegas Business Press article up. I got the idea after coming across the quotation that I mention in Hayek’s The Road to Serfdom:

In the past 10 years, the national casino industry has become progressively more concentrated. Through buyouts, mergers, and acquisitions, effective control of the gambling business has been ceded to a select group of operators.

Theres nothing sinister about this; most American industries have evolved in a similar fashion. In fact, this is usually taken as a given. Whens the last time you took a drive in a Studebaker or paid an hourly fee to Compuserve to access the Internet?

Just because concentration has happened in many other industries, however, does not mean that it is an inevitable or necessarily good. Recent events in banking, at the very least, have shown that bigger is not always better.

Las Vegas Business Press :: David G. Schwartz : Despite claims to the contrary, bigger isnt necessarily better.

I think that there is still some debate on the optimal size for a Strip casino operator. Having only one casino means that you can concentrate on promoting one property and do it well, but also means that you’ll be neglecting some markets. Two seems to be working out well for Wynn, though they’re both at the high end of the market. Three might also make sense–high, middle, and low.

Anything past that, and you’ve got to wonder if diseconomies of scale start to kick in.

Or is owning ten plus casinos really the best way to operate, and it’s just that too many operators have taken on too much debt to get the most out of it.

Someone could write a great doctoral dissertation on this subject.

I’m in the middle of the website update, and in answering a question about the Flamingo I found out that they have a restaurant named “Voga.” It’s the ultimate evolution of taste, according to the folks who wrote the copy for the website.

It’s apparently the name of an Italian wine, but it makes me think of one thing: the Vogon Constructor Fleets from The Hitchhiker’s Guide to the Galaxy.

It’s probably a great place, as long as they don’t try to read their poetry to you.

We’ve got two great talks scheduled for the Center for Gaming Research later this month.

The first, “Commercialization, Crime, and Casinos: Legacies of 18th Century Gambling,” is by Dr. Nicholas Tosney, our April visiting fellow and a really cool guy to boot. You can see the flyer here. Dr. Tosney is speaking in Special Collections at Lied Library on Wednesday, April 22 at 12:15. If you’re on campus, I strongly urge you to stop by.

A mere eight days later, we’re having casino superhost Steve Cyr, currently senior director of player development at the Hard Rock Las Vegas, give a talk called “From Hotel School to the Celebrity Suite: My Career in the Casino Industry.” You can see the flyer here. Cyr is speaking at 2 PM on Thursday, April 30, in the Extended Study Area, which is on the first floor of Lied Library.

Lied Library is, of course, on UNLV’s campus, on the Swenson/Paradise side of Harmon.

Both events will be podcasted for the benefit of those who are unable to attend.

Read more about CGR events right here.

The February gaming revenue numbers are in for Nevada, and the news is not good. From the LVRJ:

Casino revenue statewide continued a 14-month downward spiral in February. But there was one bright spot in the avalanche of negative numbers — gaming tax collections increased for the first time in seven months.

Throughout Nevada, gaming revenue fell more than 18 percent during February and more than 23 percent on the Strip, figures released Tuesday by the Gaming Control Board show. The raw numbers — $839.5 million statewide and $427.4 million on the Strip — were the lowest single-month gaming revenue totals since 2004.

For the first two months of 2009, gaming revenue statewide is off 16.3 percent compared with 2008 while Strip gaming revenue is down almost 19 percent.

NEVADA ECONOMY: Casino revenue falls – Business – ReviewJournal.com.

I took a look at the Gaming Revenue Report for February 2009 myself, and if anything I think the RJ article downplays the bad news. On the Las Vegas Strip, table games were off by more than 35%. Baccarat was down by over 50%; pai gow took in just under 60% money this February.

Part of this is probably due to the Chinese New Year falling in January rather than February. But it’s not just a calendar issue: for the past 3 months, those games are off 32%, 35%, and 41%, respectively. To me, this suggests a serious weakening in high-end play, particularly from Asian high rollers (if you’ve got an alternate theory, I’d love to hear it).

I don’t see much compensation at the low end. Penny slot revenues are up 18%, it is true, but the installed base of penny slots grew by about 25%, from 8,003 to 10,006. The win percentage also increased by about 1 percentage point, which ultimately translates into less time on machine and less player satisfaction. Good news for the remaining high-denom players, though: $5, $25, and $100 machines all had lower hold percentages this February. $100 machines held only 2.61%, compared to 6.85% a year ago. Yet total win fell by more than 75%, despite having nearly the same installed machine base.

All told, slot win on the Strip was down by over 9%, which is in line with a drop in visitors of about the same percentage.

This suggests that the middle-market gamblers who are coming to Las Vegas are still playing their share; the high end, though, is either staying away or playing appreciably less.

The best parallel is to the early 1980s, when a recession and international economic turmoil kept previously big-spending players away from Vegas. In response, casinos began courting the “middle-class” gambler with a little more fervor. This meant coupon books, cheap rooms, and cheap food. It was remarkably successful, until in the 1990s operators became convinced that if they could make money off of middle-market gamblers, they’d clean house with masses of free-spending upmarket visitors. That worked pretty well, too, until our current difficulties.

The answer simply isn’t to burn all the baccarat tables and install penny slots, though. Reno is the best counter-argument. The casinos there didn’t go upscale or substantially re-invest in their facilities, and by every measure the industry there is smaller than it was ten years ago. If it was just about offering people free and cheap stuff, Primm, Laughlin, and Jean would be the most successful markets in the country. They’re not, so there’s got to be more to it.

For now, though, it seems clear that any company relying heavily on high-end table play is going to be running against the wind for quite some time unless they figure some way to attract high rollers when the rest of the market can’t.

Having picked up this personality study from Marginal Revolution, I followed it through to a handy interactive map that will help me share with you the aggregate personality of Nevadans.

The United States of Mind – WSJ.com.

Here is where Nevada ranks:
Extraversion: 37
Agreeableness: 48
Conscientiousness: 24
Neuroticism:42
Openness:9

So your typical Nevadan is withdrawn, surly, willing to do his job but not go the extra mile, relaxed, and open to new things. I can live with that. I found it interesting that our scores closely paralleled California’s (but not for agreeableness).

Do you think this accurately reflects Nevadans’ composite personality?

The original article is here (pdf).

Also, you can take the Big Five Test for yourself, then see which state you are most like. Fun stuff.

Hey, it was either this or an analysis of the February gaming revenue numbers, and I don’t want to make Nevada any more neurotic. At least not today. I’ll have the analysis of the revenue numbers by Thursday, for the Vegas Gang. For now, I’ll just share that penny slots are up, everything else is down, and baccarat is really, really down. I’m talking more than 50% down. Expect to hear analysts use the phrase “weakening high-end play” in the next media cycle.

Gaming law expert I. Nelson Rose apparently got misquoted in the LV Sun yesterday, so he sent out an unmediated version of his comments on the Las Vegas economy, which I posted to the UNLV Gaming Reading Room:

Economic depressions have immediate impacts on gaming law. I have had more than one large U.S. investor hire me to advise them about bankruptcy procedures – in Macau. Gaming companies are so international that bond-holders of American casino companies want to know about loans secured by property in Asia.

A depression is marked by deflation. Sellers become desperate; prices drop below cost. Casino hotel rooms in Las Vegas are now going for $22.00 a day – free, for local residents.

In a depression, virtually all business dries up. Atlantic City casino revenue fell 18.7% in December 2008; Las Vegas Strip dropped 23%. In fact, by every measure, this is the worst downturn since gaming was made legal in Nevada in 1931: average room rates, visitor volume, convention attendance and total revenue have plummeted.

Whether or not gaming ever was recession proof is somewhat irrelevant. In a depression nearly everyone loses. Plus, a company that makes a majority of its revenue from non-gaming sources, such as expensive restaurants, designer shops and overpriced Cirque du Soliel shows, is more susceptible to cutbacks in disposable income.

Rose: Of Course Its a Depression – Center for Gaming Research.

It’s provocative stuff. Interesting that investors are afraid of casino assets in Macau declaring bankruptcy, though, isn’t it?

On a related note, it seems that bearishness is in vogue. A lot of people are now saying that they expected, and even predicted, a downturn years ago.

Since history isn’t a predictive science, I never try to predict the future. I’ve got real philosophical problems with predicting the future anyway. If we knew what was going to happen, there wouldn’t be much sense in anything, would there? We wouldn’t have free will. But I’ve been asked several times when or whether the economy will improve, and my answer’s always been that there are too many variables to give any kind of prediction. Does anyone really understand how the economy works? I don’t think so, because if they did, we wouldn’t be in this mess.

Gambling should condition people to accept that, while there are things that it’s possible to know, there are also many things that we can never know. Sure, the past can be a guide, but it’s never a predictor. Pull three aces out of a fresh deck of cards, then shuffle them. Will the next card you pick up off the top of the deck be an ace? Probably not–there’s only a 2% or so chance–but it’s impossible to say absolutely. Unless, of course, you remove all the aces from the deck. Even then, I wouldn’t be on it, though, because I take to heart the advice of Sky Masterson’s father:

When I was a young man about to go out into the world, my father says to me a very valuable thing. He says to me like this… “Son,” the old guy says, “I am sorry that I am not able to bank roll you to a very large start, but not having any potatoes which to give you, I am now going to stake you to some very valuable advice. One of these days in your travels, a guy is going to come to you and show you a nice, brand new deck of cards on which the seal has not yet been broken. This man is going to offer to bet you that he can make the jack of spades jump out of the deck and squirt cider in your ear. Now son, do not bet this man, for as sure as you stand there, you are going to wind up with an earful of cider.”

In other words, never bet on a sure thing, because if it was a sure thing, no one would give you action on it.

That was quite a digression, but actually probably decent investing advice.

No one ever said that Atlantic City was recession-proof, and now we have the numbers to back it up. Revenues fell 7.1% in 2008, with profits down by 25%. From the AC Press:

The casinos can still make money, but the industry is far from recession-proof.

While gross operating profits fell significantly in 2008 and the fourth quarter, they managed to remain in positive territory, according to figures released Thursday by the state Casino Control Commission. Profits dropped by nearly 25 percent to $940.9 million last year, down from $1.25 billion in 2007.

Fourth-quarter profits fell by almost 46 percent to $131.9 million, down from $243.5 million in the prior-year period. The numbers are not surprising, said casino analyst Cory H. Morowitz, of Morowitz Gaming Advisors LLC.

The resort’s 11 casinos contended with competition from Pennsylvania slot parlors, temporary smoking restrictions on the gaming floors and a drop in consumer spending linked to the nation’s worsening economy.

“I think consumer spending will not improve until at least the fourth quarter this year, maybe beyond that,” Morowitz said. “It really is dependent on employment and consumer confidence. Consumers are not going to feel flushed for quite a while.”

The impact of less spending in the casinos is evident by declining revenues and income — only Harrah’s Atlantic City managed to improve its revenue in 2008.

But combined, the casinos posted a net loss of $900 million in the fourth quarter, compared to a net loss of $235 million in the same period a year earlier.

The larger income decline includes more than $890 million in non-cash write-downs required in the fourth quarter under certain accounting rules, said Linda M. Kassekert, the commission’s chair.

Atlantic City casinos made nearly 25 percent less in 2008.

I’m surprised that gross gaming revenues fell by only 7.1%. For all of the belly-aching about the partial smoking ban and competition from Pennsylvania, Atlantic City’s gaming win actually declined less than Nevada’s, which shrank by about 10%. People are still willing to come to Atlantic City; they are just gambling less.

Of course, those fourth quarter numbers were awful, which suggests that, barring some miraculous turnaround, 2009 will be an even more challenging year.

The NCAA believes that legal betting on college games is antithetical to the purity of its student athletes, yet allows colleges to accept advertising money from casinos. Hypocrisy? You be the judge. From USA Today:

From the $591 million in TV and marketing revenue generated this season to the masses awaiting Saturdays semifinals and Mondays championship game at Detroits Ford Field, the mens tournament and its Final Four have grown into a mega-event on the order of footballs Super Bowl. This year, the NCAA altered its Final Four seating plan to accommodate tens of thousands more ticket buyers, swelling the capacity to a record 70,000-plus and bumping gate receipts by $7 million from the 40,000- to 50,000-seat setups of the past.

Its an apt backdrop for a sometimes contentious debate within the NCAA and its more than 300 Division I schools: How far should the NCAA and its members go to boost revenue at a time when the nations fiscal crisis is weighing on college athletics?

Many schools, with the blessing of NCAA President Myles Brand, are courting an increasingly varied array of sponsors and advertisers and creating some discomfort in the process.

Several schools and conferences allow advertising and promotions by casinos in their arenas or game programs, a practice the NCAA once frowned upon because of gamblings potential threat to the integrity of its sports.

College athletes, in the name of amateurism, are strictly forbidden from cashing in on their renown beyond the scholarships they receive.

But today — as part of arrangements that can bring millions of dollars to their schools — theyre featured in game footage that increasingly shows up on the Internet alongside sponsors logos and products. And in basketball and football video games, the computer-generated likenesses of real-life, still-in-school stars are unmistakable.

NCAA, colleges pushing the envelope with sports marketing – USATODAY.com.

College basketball has become a big business, obviously. And there’s clearly plenty of betting on it. If you allow one association with gambling, such as advertising, you’re already giving the message that gambling is legitimate. So if it’s OK for followers of your program who are watching at home to shoot craps with your sponsor, what’s wrong about them putting $20 on your team to beat the spread?