If you haven’t read it yet, here’s a link to my latest from the LVBP:

But craps players and conventioneers both, even if they know of the efforts made by designers to craft a green building, are more likely to care about other things: How easy is it to get around this building? Does it make me want to enjoy myself?

via Las Vegas Business Press :: David G. Schwartz : Even amid severe slump for Las Vegas, casino operators can guide destiny.

This dovetails nicely with Chuck’s meditations on the artistry of Aria. The architecture doesn’t mean anything if the resort–and the people in it–can’t consistently get that kind of reaction from visitors.

In essence, I’m saying that they’ve built a lot of hotel rooms on the Strip, and now they have to find ways to keep them full. It’s not going to be easy. And just waiting for better times to return is clearly not going to move things forward.

The point I’m trying to make is that I’ve seen a lot of thinking along the Strip that’s reminiscent of students and gamblers. Here’s what you usually hear when grades come out:
“I got an A in the class.”
“The professor gave me a C.”
In other words, we’re responsible for our successes but not our failures. You don’t have to walk very far through a casino to hear this same mentality at work among gamblers. And these days, you can even hear it upstairs in executive offices.

Back in 2006, I didn’t see any annual reports saying, “Because of rising consumer credit and escalating personal wealth, we’re doing a bang-up business this year.” Instead, it was the bold leadership of the management team that was responsible for all the big rise in shareholder value.

Fast forward a few years, and we hear that “Due to a sagging economy, we’ve had lower than expected earnings.” Well, by now they’re usually expected to be pretty low, but you get the point.

I understand that no manager’s going to come out and say that they’ve done a lousy job of marketing and staffing their property, but it’s important to be more honest internally. Maybe it’s just semantics, but I think what people say reveals a lot about what they’re thinking. In this case, it’s very important for people to accept that the bad economy didn’t do anything to them: the choices they made, whether it was taking on too much debt or not maintaining service standards and the perception of value, put them into the predicament they are in today. They are fully capable of finding a way out of it.

James McCommons. Waiting on a Train: The Embattled Future of Passenger Rail Service. White River Junction, Vermont: Chelsea Green Publishing Company, 285 pages.

Transportation is a big part of the American national character. We’ve all learned how canals helped to tie the fledgling United States together in the ante-bellum period and railroads did the same in the post-Civil War years. In the 1950s, the interstate highway system facilitated the development of suburbs, and over the past thirty years affordable air travel has made cross-country and even trans-global trips possible for much of the population.

The big problem is, and always has been, how to pay for it. From Whigs and Democrats arguing over “internal improvements” to the recent uproar over federal stimulus money for rail construction, the devil has always been in the details.

In WAITING ON A TRAIN, James McCommons takes a long look at the state of passenger rail service in the United States and finds it lacking. The passenger notices the inconveniences: substandard dining cars, surly employees, trains that are hours late. But beneath these surface problems are fundamental issues, such as AMTRAK trains often being shunted aside for freight trains and the lack of investment in stations, track, and train technology. In addition to conducting research and interviewing key railroad figures, McCommons brings a human element to the story by sharing his numerous trips across the country via rail. This gives the reader a far better feel for the difference between service in Northern California and the Midwest than any statistics could.

It can be argued that trains built America. Why, then, did Americans turn away from rails in the 1950s? That’s the big question that rail advocates have to answer before they can build a train system that will attract riders.

Like anything else, it comes down to cost, both in money and in time. Long-haul trips are simply more convenient by air: few working people have the luxury of spending four days to get their destination when they can be there in four hours. Within a metro area, cars may be both more convenient and cheaper than rail travel. If this is the case, travelers can’t be blamed for not taking the train. But when personal auto travel becomes more expensive–or more hampered by parking issues–than train travel, more people will take the train.

The problem is that trains require significant investment, and funding them is a political minefield. As a result, much of the book is about politics. Whether it means failing to invest in new tracks and trains or keeping unprofitable services operating, much of the current national rail system has more to do with politics than rational economic choice. It doesn’t help that even rail boosters now concede the passenger service will never be profitable. Despite the fact that all forms of transit in the United States enjoy some sort of government subsidy, this will doubtless continue to be a deal-breaker in many states.

It’s difficult to see an easy solution here. Even if gas prices rise to $5 a gallon and stay there, a car that burns 25 miles per gallon can travel 200 miles for about $40 in about 3 hours. Can trains compete with that, and the added convenience of not having to adhere to someone else’s timetable? Not in most areas, and not with the kinds of trains we have. A bullet train that makes the trip in a hour might, but if it’s too expensive and had limited trips would be the third option after air travel. Trains have a steep grade to climb.

This massively informative book blends railroading, politics, and industrial policy into a readable, personal narrative thanks to McCommons’ cross-country trekking. While strenuously advocating a more prominent role for trains in the future, it pulls no punches when discussing the problems with rail travel as it now is. The author starts out believing that more rail is good; someone who feels passionately that the opposite is true might not be swayed by WAITING ON A TRAIN, but they might have a better appreciation for why some feel so strongly about improving the country’s train service.

To show the timeliness of the book, a thread over at Two Way Hard Three about the future of Las Vegas has sparked some lively debate in the comments about the possibility of an LA to Vegas train. WAITING ON A TRAIN makes it clear that this train won’t be built (or not) in a vacuum, but will be part of a larger national move towards or away from the rails.

Here’s a holiday update on the status of Pinnacle’s much-ballyhooed Atlantic City project. Remember the billboards? From the AC Press:

The site has become yet another vacant city lot, a prominent symbol of broken promises and the weak economy.Fences line the gravel lot dotted with weeds and a few scattered slabs of old concrete. Local government has no power to change the situation.”They put 3,000 people out of work, they took away valuable ratables and we let it happen,” said Councilman Dennis Mason, head of the council's Planning and Development Committee, of Pinnacle's decision to demolish the Sands. “We just kicked ourselves in the butt again.”The collapse of Pinnacle's bold plans affect more than just the 20-acre property.The 74-year-old city post office across the street has been shuttered since the Sands demolition. It is scheduled to be demolished as part of project to widen Martin Luther King Boulevard, plans made in anticipation of Pinnacle's arrival. Businesses around the site on Pacific Avenue, like Fischer's Flowers and a multicultural store called Wada International Store, have either moved or closed.Other Boardwalk businesses moved out after Pinnacle raised the lease costs on storefronts they now own. They replaced some stores with new tenants, but the facades have been damaged after store signs were torn down and replaced with cost-saving banners.”If you look at that area, it would be fair to compare it to Berlin after the war,” Police Chief John J. Mooney III said. “That whole neighborhood has been decimated by the demolition.”

via Empty Pinnacle site, symbol of broken promises and opportunity for crime – pressofAtlanticCity.com : Today’s Top Headlines.

I always thought that if they had an All-American Exposition that celebrated the unique architectural contributions of different American cities (New York brownstones, Philadelphia rowhouses, etc), Atlantic City would be represented by a vacant lot. I guess it’s ingrained into my mentality, having grown up in post urban-redevelopment Atlantic City, seeing plenty of empty lots all over.

The worst news about this story is that Pinnacle’s bottom line in Atlantic City–even with the costs of maintaining the “hole” thrown in–are better than those of three real casinos with thousands of slot machines and hundreds of hotel rooms. From January 1 to Sept 30, 2009, the Atlantic City Hilton lost nearly $20 million, Resorts and the Tropciana lost about $18 million, and Trump Plaza lost almost $5 million from their operations. So if Pinnacle’s only flushing two or three million a year down the hole in the middle of the Boardwalk, they’re actually coming out ahead, and that’s not even factoring in the costs of building, interest on bonds, and such.

Yesterday while doing some unrelated research I found the Lewis Hotel Training Course, circa 1935, in the collections at UNLV. It seems to be a guide to working in hotels that explains the duties and obligations of every position. I’ve scanned in the first few pages of the “chambermaid” volume to give you an idea of what it’s like.

page 1

page 2

You’ve got to click through twice to see them full-size. Make the effort–the trip back in time is definitely worth it. My favorite part is the bottom of page 2, which warns against allowing chambermaids to go to dance halls, “movies,” and other “places of amusement that may be dangerous for them.” That certainly was an era of different social mores.

Here’s some breaking news: things don’t look so hot for 2010, at least if you’re in the casino business. From the LVRJ:

The impact the recession had on the casino industry in 2009 has not been completely accounted for, but by all measures the year will go down as the worst on record.

Through October, gaming revenues have declined more than 12 percent both on the Strip and throughout Nevada. Monthly revenue figures statewide have fallen to 2003 levels.

Get ready — 2010 may not be any better according to one casino industry analyst.

Fitch Ratings Service, which follows the high-yield bond markets, believes gaming revenues nationwide will continue to be pressured by the economy. Spending trends remain weak and unemployment will continue to reduce how consumers dole out their discretionary dollars.

via CASINO INDUSTRY: Outlook: Unfavorable – Business – ReviewJournal.com.

This is where the casino executives earn their keep. It’s easy to run a profitable resort when the market’s expanding by five percent each year. When it’s shrinking, it’s another story.

I’m of two minds about the continuing economic gloom. On one hand, we won’t just wish our way out of it. On the other, it seems that this is just a continuation of the long-standing predicting trend of extrapolating the present into the future indefinitely.

This is one of the reasons that trying to predict the future, in any except the most rudimentary ways, is futile. Over the past few weeks, I’ve had several reporters ask me if 2010 will be better than 2009. I have told them all that I just don’t know. Of course, if I said, “Yes, it will get better” or “No, it will get worse,” I’d have about a coin flip’s chance either way. There are simply too many variables to try to forecast what’s going to happen except in the most basic terms.

Casino executives should prepare for a challenging year and focus on delivering a combination of value and favorable experience to their customers. Simply dropping room rates then cutting levels of service will be harmful in the long run. In order to compete with the mushrooming number of gaming options, destination casino resorts will have to offer both good deals and unique experiences. In the past, they’ve usually offered one or the other; now, they have to deliver both.

It’s not going to be easy, but battening down the hatches and waiting for the crisis to pass isn’t going to get the job done. That seems to have been the dominant industry paradigm for about two years now (with a few exceptions), and it’s not a viable long-term option.

It will be important for casinos to concentrate their resources where they can make the most favorable impact on customers, be it on the casino floor or off it.

As I was driving out of Aria last Wednesday, I saw something unusual at the corner of Harmon and the Strip. This was the best picture I could get:

You’ve got to click a twice to get the image big enough to see what’s going on, but it might be worth it.

I’ve been busy today getting the slot hold occasional paper finished up, so running the risk of CityCenter fatigue, here’s an excerpt from my last LVBP column about, you guessed it, CityCenter:

This might be the most novel thing visitors notice about CityCenter, at first. And its hard to believe that its not by design. One thing that sets CityCenter apart from other resorts on the Strip is that because of the density, you will never be far from the street when you’re in the public spaces. The third-floor pool, for example, faces a parking structure on the west. It’s not close enough to smell the exhaust, but it is in the field of vision of poolside loungers. This is a profoundly different sort of vibe than the usual “desert oasis” feel of most Las Vegas pools, where hotel towers or extensive setbacks remove visitors from traffic and, in a sense, reality

via Las Vegas Business Press :: David G. Schwartz : CityCenters pocket parks, traffic circles stand as symbol of Strips evolution.

Further down in the article, you’ll note my reference to plural “pocket parks.” When I wrote this I hadn’t seen the entire complex and was under the impression that there were more than one–I thought I heard someone calling the area outside Bar Vdara “one of the pocket parks,” but I either misheard or that was an error. Even though there’s just one, though, it’s still significant.

Of course, if you were Steve Wynn and you wanted to really rain on CityCenter’s parade (which he probably doesn’t) you could just say, “Twenty years before you unmasked Las Vegas’s first pocket park, I built its first pocket rain forest.” You got to say it in the “I’m Steve Wynn” voice, though.

I don’t have much time to write today, but I wanted to get this thought out there. I haven’t seen the new James Cameron movie Avatar yet, but from the commercials and the reviews, I think that it might be the best cinematic comparison to City Center. It’s worth noting that they’ve been “in production” for about the same time and both of them push the technical envelope in their field. Despite the positive reviews, there’s still skepticism about how both will do.

On a slightly related note, here’s another idea that might be thought-provoking. With all of the talk of how the Elvis Cirque show “isn’t ready,” I was wondering what whether it’s a good fit for Aria at all. I think it is, because you’ll get two groups of people: Elvis fans who want to see the show because it’s about a performer they love, and those who think that Elvis has a kitschy appeal. I don’t think we should ever underestimate the power of kitsch.

But I can think of something that might have been a better fit for Aria. With all of the attention paid to environmental stewardship and whatnot, imagine how cool a Cirque show based on Stravinsky’s Rite of Spring would be.

Here’s the London Symphony Orchestra performing Rite of Spring in 2007:

If you’ve got a short attention span, it really starts cooking at 3:38 or so. The modernistic music seems to be a good companion to the modern architecture. And if there are reservations about ballet music working on the Strip, it is about a pagan sacrifice, which might be fitting for Sin City.

But you didn’t need me to tell you that, you’ve probably seen pictures and more at ariaopening.com. And here’s a few words from the Sun about the opening:

The wait is over.

After a two-minute fireworks display, the Aria Resort & Casino opened its doors to the public late Wednesday night, giving tourists and Las Vegas residents a glimpse inside the centerpiece of CityCenter. It is an $8.5 billion project many have watched evolve since its inception five years ago.

That evolution has not been without adversity. Construction defects and a sharp downturn in the economy persuaded MGM Mirage, the world’s largest gaming company and the developer of the site, to top off the Harmon hotel to half its proposed size.

Six construction workers died during the building of CityCenter.

And, it opens during the worst recession since the Depression, appealing to a shrunken class of high-end consumers.

But Wednesday was about celebration.

Welcome to CityCenter: New Strip casino opens its doors

I’m working on a few longer pieces to try to make sense of the new resort from a few different angles. Time will tell if City Center is truly transformational, but it’s certainly inspiring a lot of talk right now.

I can’t think of a time that I’ve seen someone put in their place this brilliantly. From NORM:

Donald Trump and MGM Mirage management won’t be exchanging Christmas cards.

The controversial New York real estate developer is raining on CityCenter’s parade, calling it “an absolute catastrophe.”

“The biggest problem is it costs so much,” Trump said. “It cost billions more than anticipated and its going to be hard to recover from that.”He added, “I love Kirk Kerkorian and I hope it works out for them.” Trump said he came away with reservations after seeing CityCenter….

Asked to comment, Alan Feldman, senior vice president of public affairs for MGM Mirage, e-mailed a terse, 11-words response:”I can hardly imagine anyone’s opinion that matters less than his,” Feldman said.

via NORM: The Donald slams new megaresort – News – ReviewJournal.com.

That’s funny. And it’s coming from one of the smartest people in the business. There’s just no answer to that.

On a sneak preview tour last week, I took a few photos of the carpet, with the promise that I’d hold them until the opening.

Here’s what you’ll see if you look down in the Aria casino:

I’ve also updated the carpet galleries to match the look of the rest of the site.

Check out all the Strip photos here. The galleries are due for a major update sometime soon.

I’ve been asked by more than one media outlet about City Center, and I thought that I’d just post some of my thoughts here for public consumption.

My single-sentence response to “what does it all mean” is that City Center is a gamble in ways that previous Strip projects haven’t been. There’s been skepticism about everything built on the Strip, probably going back to Thomas Hull’s El Rancho Vegas in 1941. In hindsight, some of this skepticism looks ridiculous: many people predicted Caesars Palace would fail, but today it’s the best-known casino in the world; others thought the Mirage would tank, but instead it kicked off massive expansion on the Strip; in 1997 and 1998, there was considerable doubt in the trade papers about the viability of Bellagio; and so on.

But sometimes the skepticism looks more sensible. Plenty of people scoffed at Bob Stupak’s attempts to build the Stratosphere. The casino’s open today, but Stupak never really got to run it, and the Strat spent a few years in bankruptcy before Icahn et al turned it around. There was skepticism about the new Aladdin, which is Planet Hollywood today.

It’s an exaggeration to say that City Center has the deck stacked against it, but anyone keeping track of the running count has to notice that there are fewer high-value cards left in the deck than there were in 2004 and 2005, when City Center was planned.

City Center is a gamble because we are finishing up our second straight year of declines in revenue and visitation numbers, and there’s no guarantee that the there will be many people lining up to fill the 2,190,000 or so room nights that the project is making available. Assuming a three-night stay, that’s an additional 730,000 trips to Vegas that will have to be sold, and that’s assuming one person per room. City Center is going to have to draw as many as 1.5 million more to Las Vegas in 2010, in the midst of a steady decline in visitation.

There has never been a slide in the two major indicators of Las Vegas’ economic health–visitation and revenues–as severe as the current one. The 1980-1982 period was three years of (inflation-adjusted) flat or downward revenue numbers, and 2001-02 was two years of the same. The 2008 drop in revenues, however, is about twice that of the worse previous year, 1981. If there’s not a reversal in 2010, this will be both the most severe and longest economic downturn Las Vegas’ casino economy has faced.

So the biggest project in the Strip’s history is opening in what is probably the worst economic climate in the city’s history. That’s why it’s a gamble.

To its credit, City Center is an ambitious project that looks beyond the current market in the same way that Caesars Palace, the International, the Mirage, and Bellagio (to name a few) did. It’s unfortunate that the economic and aesthetic strands of the “what is City Center” debate are so inextricably tangled: the fascinating thing about City Center for me is that it puts a new spin on how to organize spaces for visitors to Las Vegas to eat, gamble, shop, be entertained, and rest. Aria really uses things like interior volume and views of the outside in ways that I’ve yet to see any casino do. I doubt that there’s anyone better than Steve Wynn at wrapping the guest in a bubble of luxury and creating a resort that transports them out of the everyday world. City Center doesn’t try to do that: with its traffic circles and extensive views of the neighborhood, picturesque and not, it never pretends to take guests out of the surrounding streets. That’s notable.

The big question I keep getting asked is, “Will City Center be a success?” My short answer is that I don’t know, and I don’t think anyone knows. There are just too many variables beyond anyone’s control to forecast with any degree of certainty. My usual response is, “how do you define success?” No one seems to know.

I think that the physical space that MGM Mirage has created has the potential to attract people who haven’t come to Las Vegas before. Will it? That really depends on how well the company markets and runs the property and how the broader national economic picture develops.

City Center opening means more hotel rooms which, for the Vegas visitor, is a good thing. If you’re coming to Las Vegas for business or personal reasons, you’ve got more choices, and hotels will have to price themselves accordingly.

We’re seeing the first signs of what could be an unintended consequence of these lower rates: first Binion’s closed its hotel, now the Sahara is closing two of its towers. This is the result of the domino effect sparked by low room rates: with $150/night rates at the first tier and $80/night ones at second-tier properties, third and fourth-tier properties are hard pressed to offer anything to compete. If you can pay a little more–or even the same–to stay at a newer, better out-fitted hotel, why wouldn’t you? It’s like a game of musical chairs, and those at the bottom of the ladder are going to be left standing up when the music stops. But that’s how Las Vegas works: if you want people to stay at your hotel, you have to offer them either a great spectacle that they’re willing to pay for or a great value. When your competitors can offer both and you can only offer one, you are in trouble.

From my perspective, City Center is an incredible collection of properties that is facing a formidable challenge along with the rest of the market. As the newest kid on the block, City Center will be better positioned than properties that have been open for decades. With the first guest checking in tomorrow, I see plenty of potential for success. Whether the project realizes that potential is up to the people who work there and those who will be staying there.

All of which is a lengthy way of saying that City Center impresses me, and I don’t know what the future holds for it–or the rest of Las Vegas. In some ways, the debate around City Center resembles the talk in the movie world about James Cameron’s Avatar. They’re similarly big-budget, high-concept projects that are opening at around the same size, and there’s a great deal of speculation about how well they’ll do. Maybe it would be best if we just watched the movie (or visited the casino) to see if we like it ourselves.

Atlantic City has some new competition, or at least a refurbished version of old competition. From the AC Press:

While the atmosphere of the stylishly named Parx Casino may feature some European or Asian-inspired elegance, the crowd will have a distinctly Philly flavor. When this new $250 million slots parlor opens its doors Friday, it will replace the old Philadelphia Park Casino & Racetrack, better known to its legions of gamblers as Philly Park.Now that Pennsylvania lawmakers are on the verge of giving final approval for table games at the state’s slot parlors, Parx and its counterparts will be an even greater threat to the struggling Atlantic City market, industry officials predict.

“It just gets worse for Atlantic City. I truly believe Atlantic City is permanently disfigured,” said Justin T. Sebastiano, gaming analyst for Morgan Joseph & Co. Inc. “I certainly think table games will hurt Atlantic City.”

“Everyone is going to want to see what the little Philly Park casino has been transformed into,” spokeswoman Carrie Nork Minelli said during a tour of the new facility.Indeed, customers need only look across the parking lot to see the dramatic differences between Philly Park and Parx. Philadelphia Park’s temporary casino was a reincarnation of the warehouse-like horseracing grandstand from the 1970s.

The modernistic Parx represents the next generation of casinos in Pennsylvania’s fledgling gaming industry.Even the old Philly Park has been a formidable competitor for the Atlantic City casinos, about an hour’s drive away in good traffic. Located about 20 miles north of center-city Philadelphia, it is Pennsylvania’s top-grossing slots parlor and has been stealing customers from feeder markets once dominated by Atlantic City.

Parx lacks the soaring hotel towers that are a staple of the Atlantic City gaming resorts. But the casino floor itself is reminiscent of the glitzy Atlantic City properties. Parx also features new restaurants, bars and a nightclub to give customers more to do than just gamble.

via Pennsylvania’s Parx likely to steal Atlantic City’s gamblers – pressofAtlanticCity.com : Atlantic City.

Sebastiano might want to mix in a thesaurus. “Permanently disfigured” sounds way too graphic. It’s not like Philly Park came down and threw acid in the city’s face–the city just has more competition.

The thing is, everyone knew this was coming. Even if you continued to bank on slots not coming to Pennsylvania after it became a serious possibility in 2002/03, the legislation chartering slot gaming was signed in July 2004. Even the most skeptical Atlantic City casinos, then, have had five and a half years to get ready for “new competition.”

Las Vegas faced this same problem when California Class III Indian casinos became a reality on 2000. Las Vegas gets about a third of its visitors from California. But no one said Las Vegas was permanently disfigured: instead, most people realized if the city wanted to thrive, it had to give Californians a reason to drive past a half-dozen Indian casinos on their way to Nevada.

Can Atlantic City do the same? The city did a so-so job of reacting to the opening of Connecticut casinos in the early 1990s, but it doesn’t have a history of pro-active growth. The time to have this conversation was six years ago. Granted, some casinos–Harrah’s, Tropicana, Borgata, and the Trump Taj Mahal spring to mind–responded with expansions and adding other amenities, but the market as a whole should have stepped its game up by now.

At this point, the city’s in a position where two-thirds of its properties are playing catch-up with a slot parlor, despite a thirty-year head start.

Yes, the headline is a Fair Warning reference.

William R. Eadington and Meighan R. Doyle, editors. Integrated Resort Casinos: Implications for Economic Growth and Social Impacts. Reno: Institute for the Study of Gambling and Commercial Gaming, 2009. 309 pages.

In November 2005, Harrah’s Entertainment announced plans to partner with Slovenia’s Hit group to build what was described as a $1.5 billion destination casino resort in Nova Gorica. This was hailed as an unprecedented development for the area, and triggered considerable governmental and economic inquiry. Three years later, however, plans to build the “mega-casino” crumbled, because of a variety of factors, including an unworkable tax structure, ownership issues, and political and religious opposition to the resort.

Much like the British “Super Casino” debate, this might seem to Americans (and particularly Nevadans) like much ado over nothing. The British super casino, which was also derailed by political blundering, would have been about the size of downtown Las Vegas’s Golden Nugget. The Harrah’s/Hit integrated casino resort would have been a bit smaller than the average Las Vegas Strip casino, with a 1,200-room hotel, 50,000 square-foot casino with 1,500 slots and 70 table games 50,000 square-feet of convention space, 3,000-seat theater, spa facilities, and shopping and food and beverage outlets. It sounds a bit like Atlantic City’s Borgata with a smaller casino.

In any other market but Las Vegas, this would be a major project. In Slovenia, it became the subject of a national debate that sparked many of the essays collected in Integrated Resort Casinos. The is divided into five parts: a general overview of destination resorts that distinguishes how they are different from other forms of casino gaming; explorations of the social and economic impacts of Slovenian gaming; a he said/he said debate on the ethical and moral nature of casinos; a discussion of the legal nature of Slovenian gambling; and a consideration of problem gambling mitigation strategies.

Though many of the essays focus on Slovenia, the book has a wider appeal, since these type of casino resorts are being built or considered in places from Singapore to Kansas.

A few things become clear from reading the many articles: casinos are, in many parts of the world, still quite contentious. There’s a great deal of bad information about what casinos do and how they do it. There’s no real agreement on what the “social costs” of gambling are, let alone how to measure them. All of these things make it difficult to say with scientific certainty exactly what the impact of a new casino resort will be.

Despite the best efforts of social scientists, there is never likely to be the kind of foolproof forecasting of a casino’s impact that critics would like. In fact, asking for this kind of roadmap to the future is unrealistic. Who could have predicted what would happen when Ray Kroc decided to standardize and simplify elements in his burger restaurant, or Larry Page and Sergei Brin rolled out a new search engine? The nature of life–be it economic or otherwise–is inherently unpredictable. This one lesson that casinos should teach us.

For me, the highlight of the book was section 3, in which Peter Collins and Bogdan Vidmar debate the morality of casino gambling, the former taking a Millian, classical liberal, latitudinarian approach, and the latter arguing against on religious and moral grounds. Collins delivers the clear, logical approach that he used in Gambling and the Public Interest, while Vidmar pulls out every anti-gambling statement he can to buttress his argument, including a comment from the Slovenian Human-Rights Ombudsman that new casinos can threatened the enforcement of children’s rights.

If you are interested in the social science that informs (or, in the Slovenian case, doesn’t inform) gambling expansion, Integrated Resort Casinos is highly recommended.

The Nevada gaming revenue figures for October have been released, and they don’t look promising. From the LVRJ:

Nevada gaming revenues hit a new low in October. Statewide gaming revenues were $800.3 million, the lowest monthly figure in almost six years. The decline was 11.6 percent compared with $904.9 million reported a year ago.

October marked the 22nd straight month of declining gaming revenues.

On the Strip, gaming revenues were $426.3 million, a 10.3 percent decline compared with $475 million reported a year ago.

All but two areas of Clark County reported double-digit gaming declines; the Boulder Strip was down 6.3 percent while North Las Vegas casinos were up 3.3 percent.

Nevada gaming revenues decline 11.6 percent in October

Both the Boulder Strip (M) and North Las Vegas (Aliante Station) have added major new capacity since last year, so naturally those numbers are better than last October.

I wanted to take some time and really dig into these, but it looks like that’s not going to happen today. I’ve got a Vegas Gang podcast in about 15 minutes.

What I would have done, if I had the time, was to correlate the revenues with news that visitation is up over last year’s. I don’t have the time to do a comprehensive quantatative analysis, but here’s the gist of it:

Room rates have fallen precipitously (nearly 14 percent) from last year’s. Assuming an average stay of three days, the average guest should save $48 on their hotel. Add in taxes, etc, and you can round to $50.

The problem is that they’re not spending that extra $50 on gambling. People are just spending less overall, and lowering room rates doesn’t seem to be doing the trick of increasing gaming revenue.

This suggests that there is no magic bullet solution (“cheap rooms! cheap food!”) that the operators are too clueless to figure out that will boost gaming revenue. Instead, they will just have to wait until the people who’ve been coming here have more money, or find a previously-untapped group to compensate.

There isn’t a shortcut. The only way out is delivering value and service to those who are still coming. Easier said than done, I know, but it’s better than the alternative.

If you missed my brief appearance on Issues with Jane Velez-Mitchell last night, I’ll give you a quick recap. I was part of a panel that talked about the Terence Watanabe case, which was news because his attorney talked to Good Morning America.

I’d prepared some factoids about a previous high-profile attempt to use “the intoxication defense” to get out of paying a marker, the Leonard Tose case. You can follow the link to read his obituary which has what I think is the most germane element of the case to this discussion–he lost.

I also reviewed my research into the proportion of bad credit decisions that casinos make. I’ll excerpt the appropriate blog post here:

For fiscal year 2008, gamblers wagered about $232.4 billion dollars in Nevada casinos. For the sake of argument, let’s assume that the correct credit number is ten percent of all money wagered in Nevada casinos. In that case, we can say that Nevada casinos extended about $23.2 billion in credit during fiscal year 2008.

According to the Nevada Gaming Abstract, in that year casinos statewide reported a total of $132.1 million as “bad debt expense,” i.e., uncollected markers. That seems like a lot of money, and it is. Compared to annual gaming revenues of about $12 billion for that period, though, it doesn’t look so big (”only” 1.1 percent). Next to the estimated total credit play, $23.2 billion, it’s tiny: 0.56 percent. Just over one-half of one percent of casino markers end up as bad debts…. Only a small percentage of markers end up unpaid, and it seems that casinos do a pretty good job of due diligence before letting players sign markers. Of course, a few high-profile cases gives a much different impression.

I thought I was prepared to offer an intelligent contribution to the discussion. As it turns out, the conversation was more about feelings that facts. I got the first word–Jane asked me what I thought of the case. After acknowledging that problem gambling was a serious issue for many people, I offered that in this case, because of the amount of money lost and the length of time over which it was squandered, there was an element of personal responsibility involved.

I’d barely gotten the words out of my mouth when one of the other guests interjected, “I don’t agree with that at all! The casinos were pouring him booze! He was an addict!” and continued an emotional tirade. Then someone interrupted him with a screed for personal responsibility, while Jane chimed in that we’re “a nation of addicts.” It was more about expressing our emotions and a priori assumptions than talking about the legal merit of the case or the bigger economic and social questions it raises. There were a few good callers, though, including one who asked a sensible question: if Watanabe had won, would he have given the money back since he wasn’t responsible for his actions?

Anyway, I’m glad that the Internet provides a forum where someone like me who doesn’t like to argue can just put some research out there and let people use it as they see fit. I’d really like to see that bad debt estimate become more widely known, because it puts the whole issue into perspective. Unfortunately, we only hear about the most sensational cases, and usually without any context.

I recently recorded an interview with the crew at the Gambling Tales podcast, and it is up. Here are the details:

The Poker Hall of Fame episode: James “Wild Bill” Hickok, Dr. David Schwartz, and Hall of Fame chat. Gambling Tales Podcast Show 003. .Falstaff and Special K discuss the induction of Mike Sexton to the Poker Hall of Fame and make some World Series of Poker final table observations. The Falstaff and Special K have a fun and informative interview with Dr. David Schwartz, the author of Roll the Bones: The History of Gambling. We finish with some well known and not-so-well known tales about “Wild Bill” Hickok.

via Show 003 « Gambling Tales Podcast.

Doing the interview was a lot of fun, and I hope that I made a little bit of sense.

If you want to hear me talking more and are near a TV this afternoon/evening, I’m supposed to be on the Jane-Velez Mitchell show on HLN News at around 4:40 pacific time this afternoon to discuss the state of the gaming industry. I wouldn’t be totally surprised if it was pre-empted by something more important, but if it’s not I’ll be there.

As some of you know, I participated in the Las Vegas Rock and Roll Marathon this year, and I had a ball. But I’d like to share something that happened before the race that, hopefully, can make a point about what not to do with a Strip casino.

Parking at the race is always an issue. Even if you can get into Mandalay Bay (the host hotel), it’s not always easy to get out with all of the lane closures. So I usually park somewhere else. This year, a big chunk of the race was down Hacienda, and I didn’t want to chance circling around the west side of the Strip trying to find a place to park that wasn’t too far away. Last year I parked at the Tropicana and it worked out pretty well, so I figured I’d try it again. I suggested the same to my running group, adding that the casino had recently changed hands and might be a fun place to stop after the race. I haven’t been inside the hotel since the new regime took over, but I’ve read about the money and effort they’ve been sinking into it, and I think they deserve the benefit of the doubt.

Around 4:30 AM, I pulled up and parked, and was stopped by a bike security officer who said that I’d have to move, that parking was for “Tropicana guests only.” The officer was completely reasonable and polite, and said exactly what I’d say if I was in his situation. He said that it wasn’t his idea, that the management had insisted that no one going to the race be allowed to park on the lot. I told him that whoever drafted that policy was an idiot, since the property could use all of the exposure and foot traffic it could get.

(The officer actually used one of my favorite lines–”It’s really not up to me, but they’ve got me on camera and I’ve got to do this.” It worked for me and, this time, it worked on me. It’s nice to see that it’s still effective.)

I made it over to MGM Grand where I parked, passed a bunch of runners in the lobby, and headed over the Mandalay Bay. I got there about ten minutes later than I would have liked and wasn’t shy about letting people know what the Tropicana thought of us runners.

This isn’t just about sour grapes or personal inconvenience. Booting the runners from the parking lot was actually bad business, in my opinion. Here’s why:

The parking lot is already built. It represents a sunk cost. Whether someone parks on it or not, it’s going to cost the same to pay off the construction and maintain it.

That being said, having a full parking lot is a more effective use of the asset than an empty one.

At most, a few dozen runners would have parked in the lot. With acres of open spaces, that wouldn’t have prevented any guests from accessing the hotel. Most of them would be gone by noon. It’s extremely unlikely that hundreds of new guests would be arriving between 5 AM and noon on Sunday morning.

Even if only a few of the runners who parked patronized the restaurants at the Tropicana, isn’t that better than none? Particularly at a property that’s trying desperately to rebuild its image?

This is the kind of thing that irks me because it doesn’t seem to make sense. If I was running the Trop I’d not only encourage runners to park on my lot, I’d offer them a 10% discount on their buffet if they showed their finisher’s medal. The marathon’s already happening; why not capitalize on the fact that it’s happening on your doorstep? The property doesn’t boast the best rooms in Las Vegas or, from what reviews on TripAdvisor say, the best service. It’s best asset is its geography. If you’re not going to use that to your advantage, you’re not thinking about your property strategically.

Maybe the hotel had 100% occupancy that weekend and all of the restaurants were slammed and they didn’t need the business, maybe not. But this is a case study, I think, of management not seeing the forest for the trees.

This policy might have effectively ensured that the Tropicana had a few dozen more empty spaces than they usually do. Unfortunately, it might convince some people to let them stay empty.

Can anyone think of any other policies that, in the end, do more harm than good?

I don’t have much to post today–I’m just getting a few things taken care of before I head down to the Rock and Roll Las Vegas Marathon Expo to work the Las Vegas in Motion booth for a while. If you want to run the race but haven’t signed up yet, come on down! There’s also a cowboy expo next door if that’s your thing.

Also, it’s time for my yearly reminder that Las Vegas gets cold in the winter. It was about 30 when I went out for my run this morning, with real ice on the street. So if you’re planning on walking the Strip in nothing but your Ed Hardy t-shirt and jeans this weekend, you’re going to be pretty cold.

Seriously, if you’re coming out to the Aria opening from SoCal, bring a jacket or a sweater (though it doesn’t have to be cashmere). We’re at the point now where, if you stop off in Baker for gas, you say, “Wow, it wasn’t this cold back home” when you get out of the car.

And if you’re running in the marathon, pick up a layer or two at Goodwill that you can strip off as you get warmer. We’re going to be outside for about a half hour before the gun goes off, and at best it’ll be in the upper 30s.

Concluding a really good run of podcasts in 2009, over at UNLV we’ve posted the Colloquium talk that Rob Bone, VP of Marketing for WMS Gaming, gave today. The UNLV alum talks about his career path, the behind-the-scenes of slot development and marketing, and the challenges ahead for slot manufacturers.

Listen to the audio file

View the flyer (pdf)

Got to the UNLV Gaming Podcast page

It should be available in iTunes as well.

I’m working on a few interviews for the next couple of podcasts, then we’ve got a few more traditional academic speakers in the spring. Stay posted.