But there is this separate yet equally compelling story about an imminent state monitoring of the city:

State intervention in Atlantic City government could become a reality if the city doesn’t “get its act together” within two to three months, a state senator said Monday.State Sen. Kevin O’Toole, R-Bergen, Passaic, Essex, said he would be willing to push for a state monitor with veto power over City Council minutes if the local government doesnt return to the Senate State Government, Wagering, Tourism & Historic Preservation Committee with a good-faith response to a recent state audit report.State Comptroller Matthew Boxer answered questions and described some of the findings in his offices report on Atlantic City’s fiscal management, which outlined more than $23 million in waste and inefficiency .

via Atlantic City warned to “get its act together” or face state intervention – pressofAtlanticCity.com : Latest News.

This isn’t directly linked to the Division of Gaming Enforcement’s decision re: Pansy Ho, but it shows the heavy hand that state government has in the city itself, not just its biggest industry. And with $23 million in tax money apparently being flushed down the toilet, it’s hard to say that there’s no justification there.

The irony is that, if Pansy Ho had been suitable, MGM Mirage might have found itself doing business in two “Special Administrative Regions.”

I’d guess that, on the strength of the $60 million a year MGM Mirage gets from the Borgata and the value of the real estate the company controls (which I assume would be part of the sale), the company might fetch something $200-$500 million. I haven’t run any numbers to confirm this; that’s just my first impression based on about 6X EBITDA, which is right in the middle of those numbers, with some degree of flexibility for the value of the real estate (on the high side) and the depressed state of the general market (on the low side).

The problem, of course, is finding someone willing to pay big bucks for an asset (albeit the top-performing one) in a regressing market, particularly when the seller is very publicly identified as “motivated.”

Most people are assuming that Boyd will be the suitor, which makes sense, though this wouldn’t necessarily be a bad buy for an equity firm if they went into it with realistic expectations.

It likely wouldn’t be anyone else already in the market, since Harrah’s is already far too exposed in AC, Trump has its hands full with its existing casinos (though 1/2 of Borgata would actually be better than 100% of the Marina right now), Colony Capital has lost one casino to its lenders already, and Carl Icahn’s plate is presumably full with turning around Tropicana Entertainment and the Fontainebleau.

Anyone not in the market would have to do some serious soul-searching about their licensing, since the state has made it clear that they consider no company too big to show the door to. Even if Borgata can retain its market share (which might be difficult when Revel opens), it’s still piece, though a big one, of a nonetheless shrinking pie.

Charlie Huston. Sleepless: A Novel. New York: Ballantine Books, 2010. 368 pages.

Charlie Huston’s latest novel is a thought-provoking mix of several strands: noirish mystery, police procedural, hard medical science fiction (think ANDROMEDA STRAIN), dystopian near-future Los Angeles, narco-thriller, zombie horror-fest, and philosophical love story. It’s a credit to the author that all of these genres not only work together, but actually complement each other.

The plot is simple: a newly-mutated disease is causing an epidemic of sleeplessness that takes about a year to kill, painfully disintegrating its victims’ minds. One of the two lead characters is Parker Haas, a young detective with a wife afflicted with the disease and an infant daughter who may be. The other is a “problem solver” who becomes involved, at first obliquely, with the detective’s investigation into possibly bootlegged supplies of a drug that can provide relief, but not a cure, for the disease.

The story is more complex. Both of the leads are acutely self-aware (perhaps sometimes straining the point of credulity, but once you’ve accepted you’re reading a dystopian noir sci-fi zombie story, the odd narc with a philosophy Ph.D. or hitman connoisseur with OCD isn’t asking much more in the way of suspension of disbelief), which adds a layer of meaning to the action, and the portrait of Parker, his sleepless wife Rose, and their infant daughter is realistic and nuanced. What makes it powerful is that Huston has used the core of the new-parent experience–sleeplessness, anxiety, disconnection from the outside world–as the model for the entire world. It’s an intriguing concept that will probably grab you–I read this book in a sitting-and-a-half over a sleepless night on a cross-country flight and the next day’s aftermath. You don’t have to be at that slightly dreamy stage of sleep deprivation to get into this book, but it probably helps you get the story on a more emotional level.

Huston does some interesting things with structure, too. There are three different kinds of narrative: Third person, based on Park’s experiences; first person, as told by Park; and first person, as told by the problem solver. There’s a little bit of a learning curve over the first few pages, but once you grok what’s going on, it works brilliantly.

SLEEPLESS works so well because Huston builds a realistic world. His insights into video gaming, as related through the in-book game Chasm Tide, a World of Warcraft-style immersive multi-player game, would make for interesting sociology, but they really help create a universe in which his plot–and his characters–make sense.

It’s a credit to Huston’s skill that he’s able to build a solid world out of such disparate elements, and it’s refreshing to read a writer who’s not afraid to take chances with his storytelling. This is the second Huston novel I’ve read, and it won’t be the last. Highly recommend.

It’s the first in a weekly column series that I’m writing called “Green Felt Journal.” My beat is gaming and tourism generally, with a mix of current issues, historical perspective, and coming trends. It’s different from the column I write for the Business Press every two weeks, because the LVBP column is more reflective and observational, while Green Felt Journal is drawn more on statistical research and interviews.

The best way I’ve found to read the resort fee article is to go to the digital version of the magazine and flip ahead to page 34, where you’ll see the inaugural edition of the Green Felt Journal in all its glory. Vegastripping.com forum members will be glad to see that I used the topic thread on resort fees in the article, with users rockchickx51 and donnymac66 getting quoted in print. Thanks, guys!

But that’s not all. I’ve also got an essay in today’s issue about how the Wonder Pets can save Las Vegas. Yes, in all seriousness I wax philosophical on how Las Vegas should take some tips from a toddler TV show. Here’s a sample:

In a recent episode, the Pets fly to Las Vegas to aid the Rat Pack, a trio of bumbling performing rodents named Blue Eyes, Dino and Sammy who can’t get their act together. In honor of this mission, the heroes replace the mast and sail on their intrepid vehicle of choice, the Fly Boat, with a construction inspired by neon signs and showgirls’ headdresses. Just like that, the Fly Boat is reborn as the “Vegas Boat.” After departing the schoolhouse to a slot machine’s jangle, the Vegas Boat zooms past the Wynn and down into a pint-size re-creation of the Strip. There, in a makeshift rehearsal space, the Pets give the Rat Pack a lesson on working together when they dance. This works like a charm. To celebrate, they join Dino for some pasta and, though their work is done, Blue Eyes refuses to let them leave without having some fun.

Can the Wonder Pets Save Las Vegas?

Maybe I’ve been watching toddler TV for too long, but the show really says a lot about how most people view Vegas.

If you’re in Vegas, look for a copy of Vegas Seven on the street–I believe you’ll find them where 944 is distributed. [UPDATE: You can find them at 7-Eleven, Albertsons, Fresh N Easy, Whole Foods, Golds Gym, Hard Rock Hotel, the Palms, Lee’s Discount Liquor and Blockbuster]

If you don’t live in Vegas, you’ll have to content yourself with browsing the contents online. There are several great articles in there, including one about how Las Vegas is courting China.

For those of you who want to keep up with the rest of my work, I’m still writing a monthly historical column for Casino Connection, and have occasional longer pieces in Global Gaming Business–one about the mainstreaming of gambling should be out soon. In this month’s issue, by the way, there’s an excerpt from Eadington and Dolye’s Integrated Casino Resorts that is definitely worth reading. There’s also a look inside Aria’s surveillance room that is interesting, and much more.

As the Wonder Pets might say, it looks like my work here is done. How about some celery?

UPDATE: OK Schopenhauer, you asked for it. Here it is:

My favorite is the one at about 1:14. If you want a good introduction to the Wonder Pets, try this video from Parents magazine.

Half a year after Russia closed all of it's gambling casinos and slot-machine halls, the first new casino opened Saturday under a plan to limit legalized gambling to four comparatively remote areas.

About 500 people showed up for the opening of the Oracle casino in Above City, a gambling zone in southern Russia. But only about 100 of them appeared to be actually placing bets. The casino, in a large shed-like building in a snowy field, has about 200 slot machines and 10 table games.

The zone is about 60 miles from Rostov-on-Don, the nearest sizable city, and 120 miles from Krasnodar.

It's unclear how many Russians will be eager to travel long distances for a gambling excursion, but the casino's operators say they're convinced there's a market and they plan to start building a four-star hotel for gamblers this summer.

“There's a lot of gambling people here” in the region, said Valery Saparin, marketing director for casino operator Royal Time. “We hope that a lot of people will be drawn to us in the near future.”

Casinos mushroomed in Russia's cities after the 1991 collapse of the Soviet Union and slot machines quickly spread beyond gaming halls to shops and malls. The spread of gambling provoked distaste among many Russians over the flashy cars parked outside glittering casinos in Moscow and the harm that gambling can do to society.

All the gambling operations were closed July 1 under a law that was signed in 2006, but that many had expected never would be enforced.

The law limits legalized gambling to Azov City, the Kaliningrad exclave on the Baltic Sea, the Altai region of Siberia and the Primorsky region of Russia's Far East.

via Russia Casino Opens Under New Gambling Plan – IFOXNews.com.

I did a little tooling around the Internets and I couldn’t find any other mention of an “Above City, Russia.” But I did find that Azov City, which is mentioned in the last paragraph, is right where “Above City” should be according to its description in the second paragraph. Whether this is a funny proofreading error or another name for the Azov zone, I don’t know.

How about some fun casino math?

With only 200 machines, and ten tables, the casino has 270 or so gaming positions. With only 100 folks playing at its big opening, that looks like a 37% utilization rate. I have no idea what the benchmarks are for win per position per day in Azov, but they’d better be pretty high to justify building a four-star hotel.

For years, New Jersey regulators have raised concerns about the suitability of casino company MGM Mirage's business partner in China. Now, MGM Mirage has an answer: cash out of Atlantic City.The company plans to divest its 50% stake in the Borgata casino resort, a person with knowledge of the negotiations said last week. Although it has been scouting for buyers it hasn't come to a deal, according to two people with knowledge of the talks.MGM Mirage hopes that its plan to sell its Atlantic City interests will convince New Jersey regulators to agree to curtail their regulatory oversight of the company. Any additional scrutiny has the potential to cause problems with MGM Mirage's business elsewhere.MGM Mirage disclosed last year that New Jersey's Division of Gaming Enforcement had issued a confidential report saying the company should disassociate from Pansy Ho, MGM Mirage's joint venture partner in Macau. It labeled her an “unsuitable” business partner.

via MGM Mirage Prepares to Sell Stake in Borgata – WSJ.com.

Here are some numbers. According to the latest-available financial report, Borgata was on track to show a net income of about $120 million in 2009. MGM Mirage gets half of that. In this economy, adding $60 million to your bottom line is nothing to sneeze at. There are expenses involved–particularly, as we see, regulatory-related expenses. And the threat of drawn-out litigation makes that $60 million a year look less and less attractive.

According to the 2008 MGM Mirage Annual Report, in that year the company spent $24 million on its MGM Grand Atlantic City development before pulling the plug due to the worsening economy. Now that we’ve all seen the city’s revenues fall back to 1997 numbers, it would be hard to argue that this was a bad decision. Unless something dramatic happens (that is, unless casino operators make something dramatic happen), Atlantic City is clearly a declining market.

What about Macau? According to MGM Mirage’s investor relations, the company earned $24 million in revenue from MGM Grand Macau in the third quarter of 2009. That pencils out to roughly $96 million for the year.

Which is greater? $60 million or $96 million? The decision seems obvious.

There is also the fact that Macau is the world’s fastest-growing casino market, and Atlantic City has, as I said before, gone back to 1997 and, with the imminent arrival of Pennsylvania table games, is poised to fall even further.

Even as an Atlantic City native, I’ve got to admit that MGM’s management has few options here. Clearly the most responsible decision for the company’s health is to stay in Macau.

To make a long story short, Atlantic City needs MGM Mirage far more than MGM Mirage needs Atlantic City at this point. Should this make a difference to the integrity of the licensing and enforcement process? Absolutely not. But there’s something to be said for over-zealousness. Past operators chased from Atlantic City by regulatory overkill–Hugh Hefner and Hilton Hotels are the most prominent–continued to do business in other states with not even a whisper of impropriety. Hilton was even invited back.

What does this all mean? New Jersey’s regulators aren’t doing the state any favors by throwing the book at MGM Mirage. The only beneficiaries might be the existing operators, who will have one less rival to face (if MGM decided to go ahead with their AC project), and even that’s debatable, since a project of the scale that MGM had proposed would have probably brought more people to town. This looks like a lose/lose situation.

President Bill Clinton will speak at The Colosseum @CaesarsPalace on Mon., Feb. 22 at 7:30pm. Tickets go on sale Monday!

via The Colosseum ColosseumatCP on Twitter.

Why do I say “another?” About a year and a half ago, Mikhail Gorbachev played the Seminole Hard Rock Hollywood Hotel and Casino.

So if the hierarchy is Clinton–> Caesars, Gorbachev–>Hard Rock, who is going to sign for the Star of the Desert Arena in Primm?

Seriously, that’s got to be a bit of a comedown–from leader of the free world to a casino showroom. At least Reagan could say that his gig at the New Frontier came 25 years before his presidency.

Linn Mills and Dick Post. Nevada Gardener’s Guide. Revised Edition. Franklin, Tennessee: Cool Springs Press, 2001. 272 pages.

Few, if any, people move to Nevada for the gardening, but it is possible to grow a healthy and productive garden in the Silver State. In the NEVADA GARDENER’S GUIDE, authors Linn Mills and Dick Post–respected authorities in Southern and Northern Nevada, respectively–help the novice gardener learn how to develop a greener thumb.

The authors start by walking the reader through the basics of Nevada gardening. As a desert region, Nevada has large swings in temperature. Two helpful maps show the heat zones and cold-hardiness zones, which the plant descriptions that make up the meat of the book refer back to. This is invaluable–by following Mills and Post, you will pick the right plants for your region, which should save plenty of heartache later.

Like other gardening books, the NEVADA GARDENER’S GUIDE has detailed information about individual plants. Most of the book is made up of single-page summaries of individual plants. Each has a photo, a descriptive paragraph written by one of the authors, , info on how to plant, growing tips, care instructions, tips on design, and the authors’ “personal favorite” variety. The full-color illustrations on each page give the reader a good idea of what their plant should look like when in good health. With the watering, sun, and pest-control information, keeping them in good shape should me much easier.

After the introduction, the book is divided into 12 parts, each dealing with a different category of plant: a few include annuals, cactuses, ground covers, palms, shrubs, and trees. If it grows in the soil (or a pot), you’ll likely find it in here.

In short, this is an indispensable aid to gardeners in any part of the state. Armed with the information here, you’ll feel better picking out plants in the nursery, planting at the right time, setting your watering timers. It’s a wonderful reference work that should pay for itself many times over.

Our goal with the look of Sinatra was to pay tribute to the man without turning the restaurant into a museum. With that in mind, Roger conceptualized a lovely palette that was both neutral and fresh, and filled the space with highly sculptural pieces to offset the oversize portraits of Frank. A perfect example is this lovely antique ship; Roger came across this and the pair of obelisks that flanks it at the Paris flea market. The three pieces are Sicilian in origin and resided in an Italian restaurant in Paris, which sat empty for many years until it was dismantled. This trio happened to arrive the same day Roger was touring the flea market. He didn't have anything quite like this in mind, but as he tells it, he walked by the stall while they were being brought in, and he wasn't five steps away from the stall before he was returning to inquire about them.

via Wynn Las Vegas & Encore Newsletter – 2010 January – Moment of Discovery.

You should click through and read the whole story–it’s quite interesting.

Does knowing that Roger Thomas found these antiques by chance in a Parisian flea market add to your appreciation of them? I think so. The thing is, every casino has hundreds of stories like these, both about the places themselves and the people who’ve been in them. Obviously, most of the visitors don’t care about these stories–they just want a place to sleep, gamble, and eat, and if they can get a good deal, that’s enough for them. But I think that there are plenty of folks who would be intrigued by the stories–the lore, you could call it if you were feeling expansive–of casinos. It would make them feel more personal, and more fun.

Wynn’s got the right approach by sharing these sorts of stories. I’d like to see more casinos do this, either through blogs, newsletters, or iPhone apps. Just imagine a hotel-specific app that didn’t just tell you what a restaurant’s hours were, but related the bio of the executive chef adn talked about where some of the menu items came from. You wouldn’t just be selling food–you’d be selling a story for the same price. And people want stories.

On one side, pro-fee advocates argue that they offer convenience. On the other, resort fee opponents maintain that fees are poorly advertised and shock the customer. There may be a way to please both groups of visitors, those who want convenience and those who want low prices. A tiered pricing model, in which customers get to pick one of several levels of service for the same room, might help generate additional revenues and give guests a greater feeling of control over their experiences, which may translate into greater customer satisfaction and stronger bottom lines.

For example, imagine a three-tiered pricing structure for a guest room, with “standard,” “gold,” and “platinum” levels.A guest booking a room at the “standard” rate would receive a room key and not much more. He or she would have to pay extra for virtually every other hotel service; for example, to visit the health club, use the Internet, or make phone calls.

At the “gold” rate, customers would receive everything that came with the standard, plus free wireless Internet, phone calls, bottled water, copies of the local paper, etc.

For guests looking for more, a “platinum” rate could deliver all the benefits of the gold rate, plus several extras — dining credits, a selection of prix fixe menus at select hotel restaurants, tickets to the hotels big show, complimentary spa services, and nightclub admissions.

Guests opting to “go platinum” will value cost-certainty and convenience over spontaneous choice.

Some resorts are already offering something close to platinum-tier pricing. Wynn Las Vegas, for one, offers several packages, including a golf getaway, jetsetter package, romantic retreat, and the Ultimate Wynn Package, that offer guests varying levels of amenities.

We’ve seen the trend towards cost certainty become popular over the past year in Strip restaurants. From all-day, single-price buffet offers to prix fixe gourmet dining, visitors have responded positively to the chance to pay one price for an expected level of service. It stands to reason that an operator to apply this model more broadly to the total guest experience could become a trend-setter.
Companies owning several properties along the Strip are particularly well-poised to offer a variety of dining and entertainment options that will generate true economies of scale and diversity.

Whether it’s called tiered pricing, a vacation package, or something else, this may be an idea that needs to be explored more aggressively as resorts seek to defend their market share in what promises to be a challenging year.

via Las Vegas Business Press :: David G. Schwartz : Tiered room pricing: A modest proposal.

I came in about 250 words over for the article which was shortened for publication, and I included some of the cut material in the quote above where I lay out the proposal.

The industry’s moving in a few different directions right now, and this is one of them. I’m sure that there are a million back-of-the-house reasons not to do this, but coming at this from the consumer’s perspective, it deserves consideration.

Ellyn Bogdanoff has given up. Once one of the most ardent opponents of gambling expansion in the Florida House, the Fort Lauderdale legislator is now ready to open the doors to full-fledged casinos because, she says, Florida “is losing the battle'' to the Seminole Tribe.

Backed by one of Las Vegas' largest gambling magnates, Bogdanoff wants to allow casinos at five to seven “destination resorts'' throughout the state through the Florida Gaming Equalization Act.

Under the plan, voters would first have to approve the casinos in local referendums. Then, a state gaming commission would grant permits for the convention-focused entertainment centers. Applicants could range from the big names of Vegas to Florida's parimutuel industry. The expansion would offer competition to the Seminole Tribe's Hard Rock casino resorts near Hollywood and Tampa.

Sheldon Adelson, chairman and CEO of the Las Vegas Sands Corp., told The Miami Herald/St. Petersburg Times on Friday that he is prepared to invest in bringing mega-convention centers and casinos to Florida that would include shopping centers, theaters, spas, hotels, restaurants and, yes, full casinos.

One possibility: a $3 billion resort casino that could create as many as 7,000 jobs, he said.

via Lawmakers push for full casinos in Florida resorts – Florida – MiamiHerald.com.

I did a little bit of consulting for a group that was investigating Florida gambling back in 2006, including a presentation before the House of Representatives’ Committee on Business Regulation, so this is an issue that I’m interested in. I’d want to look at the current numbers before saying anything concrete, but my analysis in 2006 showed that there was substantial room for growth in the state’s gaming industry. Since then, there has been expansion–Class III gaming, slots at tracks–and it would be interesting to run the numbers again to see how much more room for growth there still is. If nothing else, the past two years should have proven that the market isn’t infinite.

For those interested in the potential impacts and issues that the “mega-resorts” might have in Florida, I humbly recommend two books: my own Suburban Xanadu (particularly the last chapter), and Eadington and Doyle’s Integrated Resort Casinos.

The Center for Gaming Research at the University of Nevada Las Vegas http://gaming.unlv.edu invites graduate students and academic faculty to apply for month-long residency fellowships. Fellows will spend one month doing research at UNLV Special Collections. Although primarily in English, the holdings include many texts in French, German, and Italian. This, the largest gambling library in the world, spans the 17th to 21st centuries and includes manuscript collections, casino corporate archives, promotional and publicity files, and government publications.

What you get
A $4,000 stipend to cover housing and expenses
Desk space in the UNLV Special Collections Reading Room

What you give
One month’s residency in Las Vegas
A public lecture relating to your research near the end of your residency
A brief paper that will be published as part of the Center’s occasional paper series
Ultimately, a larger publication article, chapter or book that showcases your research

Who’s eligible
Both academic faculty and ABD graduate students are encouraged to apply. Applicants primarily represent the fields of history, economics, English, history, sociology, and anthropology, though those from all disciplines with relevant research interests are encouraged to apply. Suggested fields of research include Las Vegas history, the history of gambling, and comparative studies of gambling in literature, history, and society.Before applying please learn as much as you can about the scope of the collections—priority will be given to applicants who specify collections they plan to use. Visit the Center website for more information about the program, past fellows, and the collections.How you applyFor the 2009-2010 academic year, please submit the following by July 16, 2010:
1. A cover letter briefly introducing yourself
2. A short 2-4 page description of the proposed research, with details on secondary research already done and sources to be used at UNLV
3. A full curriculum vitae
4. One letter of recommendation that evaluates your past research and current project
5. For graduate student applicants, a dissertation prospectus or article-length writing sample

Please send all materials and any questions about the program to the center’s director, Dr. David G. Schwartz, at dgs@unlv.nevada.edu. Please submit all materials electronically. Paper submissions and those that do not include each of the five above elements will be automatically excluded from consideration. Successful applicants will be notified by August 13, 2010 and will schedule their residency on a first-come, first-served basis.
UNLV is an Affirmative Action / Equal Opportunity educator and employer committed to excellence through diversity.

You can view a printer-friendly pdf of the position description here.

via Center for Gaming Research: Fellowships.

If you are eligible, I encourage you to apply. The selection committee usually has dozens of applications to sort through, and we’ve gotten some very strong researchers in over the past few years.

Advisers to Gov. Chris Christie have called for casino regulatory reform, a public-private Atlantic City marketing initiative and possible state intervention in city government as ways to save New Jersey’s casino industry from competition and its “failed” business model.

On Friday, Christie released 19 transition team reports containing dozens of recommendations for reducing and reforming state government. The detailed proposals include making Atlantic and Pacific avenues in Atlantic City one-way streets, accelerating Atlantic City International Airport expansion and building an Atlantic City Expressway interchange for the airport and a new aviation research facility.

Another idea mentioned, although not endorsed, is to privatize the state lottery and have it work with New Jersey racetracks, which have sought to install video-lottery terminals, which operate like slot machines. The report calls for consolidating New Jersey’s declining racing operations.

In a report critical of Atlantic City government’s handling of finances, transition team members called for an unexplained “state presence” in city government to ensure fiscal efficiency.

via Christie advisers call for casino regulatory reform, marketing of Atlantic City – pressofAtlanticCity.com : Today’s Top Headlines.

I believe that proposals to make Pacific Avenue one-way have been floating around since before World War II. I’ve come across them going back decades. These infrastructure issues don’t address the main problem, which is declining appeal for the city as a whole.

The report boils AC’s decline down to four issues:
1) Increased competition in “Convenience Gaming” in the 5 State mid-Atlantic region.
From 1990 to 2009, Atlantic City has gone from a “monopoly”, to a scattered
competitive marketplace of 26 existing alternatives of VLT/Slots with close to a
doubling of the supply of gaming product in recent years. Atlantic City remains the
only alternative in New Jersey, but has been surrounded by a “picket fence” of
competitive interests in surrounding states; the vast majority of which are
principally stand alone warehouses of slot machines with little non-gaming product
(no hotels and little in the way of night life, retail and food offerings). The newest
generation of increased Atlantic City competition through convenience gaming is
New York’s Aqueduct Racetrack pending 4,500 VLT facility. This needs to be
monitored.
2) Impact of the “Great Recession” on customer’s spending.
3) Partial Smoking Ban has material revenue impact (est. 10% decline).
4) Perception of Atlantic City as unsafe and unclean arising from a failure to invest in
the areas surrounding the casinos, and local government’s inability to manage this
current reality, in spite of unparalleled tax revenue per capita on a statewide peer
basis.

DRAFT TRANSITION REPORT
NEW JERSEY GAMING/SPORTS AND ENTERTAINMENT COMMITTEE

Here’s my take:
1. Competition: It’s not going away, and it was inevitable. National casino expansion really took off circa 1990, so the city’s casinos have had 20 years to prepare. One way to fight it, as this report suggests, is to follow the Las Vegas model and add unique attractions. That’s not going to be perfect–it increases dependence on fly-in and high-spending customers, who are more sensitive to economic fluctuations than moderate-spending day-trippers–but it’s a start. If you doubt that, compare the 20-year trends for Las Vegas and Reno.

2. Recession: Not much you could have done about this.

3. Smoking ban: Even a complete ban would lead to a temporary decline, but Delaware’s history suggests that the numbers will rebound within 3-4 years. If the current anti-smoking trend continues, I wouldn’t be surprised to see most American casinos limiting smoking within ten years.

4. Perception: This is an area where the city’s casinos can make a difference. The city needs a message, and needs to stick with it. I don’t think that people come to Las Vegas because it has a reputation as a particularly clean or safe place; most big cities, in fact, have issues with crime and blight. People come to Las Vegas to have fun. Can you have fun in Atlantic City? I think so, and potential visitors need to find that out.

The best thing for the people trying to restore Atlantic City to do at this point would be to take a long look at what Las Vegas has done right. Once, Las Vegas was primarily a gambling destination, with a heavy reliance on Southern California. In the past ten years, Indian casinos have cut into the Southern California market. But even with the recession, Las Vegas is in a better place now that it was in 2000–which is more than Atlantic City can say at this point. Why?

Las Vegas was able to transition into areas as disparate as business meetings and nightlife: Atlantic City should make investments in these, particularly in the meetings market, since that will boost mid-week occupancy and keep hotels full. A combination of business travelers spending more on f&b, lodging, and entertainment, supplemented by what remains of the day-tripper market, can give a mid-week base for both non-gaming and gaming revenues. Then on the weekend resorts can focus on attracting higher-end destination gamblers and travelers. The convention room rates will provide a base that will let the resorts offer better-class rooms that can make money seven days a week, not just two.

It won’t be easy–there are many negative perceptions to overcome, as well as some serious renovation and construction work–but at least it will give the city a chance.

Jane White. America, Welcome to the Poorhouse: What You Must Do to Protect Your Financial Future and the Reform We Need. Upper Saddle River, New Jersey: FT Press, 2010. 247 pages.

I’m leery of anyone who tells you what bad shape you’re in, then says that they and only they can help you get out of the fix you’re in. It’s a modus operandi that snake oil salesmen honed to perfection years ago, probably because it works. Still, I approached this book with an open mind, despite the subtitle (”What you must do to protect your financial future”).

Then on pages 16 and 17, White says that it’s essential that 401 (k) participants be able to buy software that tells them to “contribute the maximum, don’t time the market, and stick with index funds,” helpfully disclosing to readers that she’s “interested in developing this software.” Suddenly, it seems that while the advice might be good, it’s at least a tad self-serving.

Indeed, the first part of the book is all about 401 (k) plans. White believes that it’s unjust that people aren’t forced to contribute more money to their 401 (k) plans, and makes no bones about the fact that ordinary people shouldn’t be allowed to “shoot themselves in the foot” by managing their own retirement portfolio. There are two numbers that she returns to, time and again, without explaining why they are important. Throughout the book, White insists that Americans must have ten times their “final” salary saved in their 401 (k) by the time they retire, without explaining why nine times is too little and eleven times is too much. Second, she proposes that the federal government mandate that all employers with more than 9 employees be forced to contribute 9 percent of their salary to a 401 (k) plan. Again, why 9 (for both criteria) and not 8 or 10?

White’s thesis–that it would be good policy to legislate adding an additional nine percent to labor costs overnight–seems to fly in the face of what we known about the economy. She doesn’t consider that employers might lay off employees or cut salaries to compensate. It’s like she thinks employers are just going to pull this extra nine percent in compensation out of the same hammerspace that she pulled the nine employees/nine percent number. I kept waiting for her to explain it in more detail, but she didn’t.

Besides the dodgy macro-economics, much of the book is partisan finger-pointing that doesn’t advance the debate on retirement security or help people planning for their retirement. At this stage, most Americans probably don’t care whether Bill Clinton or George Bush did more to contribute to the mess we’re in: they just want honest solutions to get out of it. More disturbing is White’s contempt for the rich, who she believes should have to pay proportionally more taxes, again without thinking that this might lead people to become less productive, which surely is to the detriment of everyone.

Personally, I got a hoot out of her statement that “a college education should be a taxpayer subsidized right for low- and middle-income Americans…no family earning $60,000 or less should have to pay anything for college.” I couldn’t disagree more, even though I’m a tenured faculty member of a university and were such a law to pass it would doubtless personally benefit me. That’s because I think that you don’t value what you don’t pay for. If you want a college education, you should have to pay at least something for it. White makes some good points about Sallie Mae wreaking havoc with the student loan process, but the solution is to mandate low-interest student loans and work study opportunities as well as merit-based scholarships, not give away college to anyone whose family happens to not make more than $60,000 a year (another arbitrary number).

White also snarks about gambling as “one of the sleaziest industries of all, in which the ‘house always wins’–otherwise how would the industry make any money?” in a throwaway line, that again betrays a misunderstanding of how businesses work. How does any business, from an ice cream stand to a 401 (k) manager, stay in business except by taking in more money than they pay out?

The book closes with some standard populist invective against “greedy and needy politicians,” with demands that Congress become “closer to Main Street than to K Street” (the Washington street on which many lobbyists have offices). It’s not particularly original. As political agitprop, it’s serviceable for those of both parties who want to “throw the bums out,” but it doesn’t help Americans trying to plan for their retirement.

In between all of this fluff, there is some helpful, but unspectacular, advice to Americans: spend less, save more, and stay out of debt. Of course, if everyone buys less the retail and ultimately manufacturing sectors will tank, so it’s probably best that not everyone takes her advice. The personal finance stuff in general is simple common sense, and nothing that would justify a $23 book purchase. So maybe readers should take her advice and economize–in this case you should take the money you would have spent on this book and save it for your retirement.

Gamblers are putting more money into slot machines in Pennsylvania than they are in Atlantic City.The Gaming Industry Observer says December was the first month ever that slot-machine handle in Pennsylvania surpassed Atlantic City's.

Editor Joseph Weinert calls it a milestone that is a result of declining slots play in New Jersey and rising slots play in Pennsylvania.The difference was $2.1 billion in Pennsylvania to about $2 billion in New Jersey. On top of that, Weinert is forecasting an increase in Pennsylvania's slots revenue in 2010 and a drop in Atlantic City's.

However, Atlantic City casinos brought in more money total because of table games revenue there. Pennsylvania just legalized table games earlier this month.

via Pennsylvania slots revenue surpasses Atlantic City for first time – pressofAtlanticCity.com : Latest News.

There were some interesting comments on the article, including one about parking that says pretty much what I’ve been saying for a while, namely that Atlantic City casinos should not charge for parking. If you are driving to Atlantic City from the Philadelphia area, here are the tolls you’ll pay: $4 to get back into Philly, $6 roundtrip at the Egg Harbor toll plaza, and $1.50 roundtrip at the Pleasantville toll plaza. That’s $11.50, just to get to town. Factor in gas (probably 5-6 gallons, roundtrip, at $3 per) for another $15 or so. Then add a parking charge that can be as high as $25 if there’s a convention in town. We’ve got $27.50 total driving costs before the parking, and then another $5 to $25 on top of that. At a minimum, that’s $32.50 or so that the patron has spent to get to your casino.

Why should they pay more and spend more time getting to Atlantic City when they can get to a PA casino quicker? Even if they have fewer comps, they’ve just saved themselves the cost of a meal by cutting out those driving costs.

If I was running an AC casino’s marketing department, I’d seriously consider giving anyone with a PA driver’s license $30 in freeplay just for walking through the door and comp their parking. That might make it worth their while to make the drive. Sure, it’s a big giveaway, but at this point it should be clear that it’s necessary.

PA slot casinos have an effective tax rate of 55%. AC casinos have an effective tax rate of about 9%. Shouldn’t they be able to offer a better experience to players if they invest part of the 46 cents on the dollar more that they keep back into the facility or into marketing?

Anyway, I saw this story in the LVRJ and had to post it as one of those “only in Vegas” things:

The Wetlands Park nature preserve will be closed until at least Saturday due to slight flooding, Clark County officials said today.

via Flooding brings closure of Wetlands Park – Breaking News – ReviewJournal.com.

Is that an example of irony? The wetlands park is closed because it’s too wet? My east coast residents got a good chuckle about the Christmas wonderland thing that Opportunity Village does being closed last year because of snow, and I’m sure they’d get a laugh out of this, too.