We live in a world where finance has outstripped production, where it is more important to make money than to build cars or refrigerators. In Managed by the Markets, Gerald Davis tries to make sense of this transition. He raises some interesting points, but ultimately the book is short-sold by needless repetition. It would make an intriguing 30-page article, but there’s not nearly enough material here for a 300-page book.

Case in point: an 8-page preface introduces the arguments of the book: “finance had become the new American state religion,” and citizens had been transformed into investors, as “the expansive use of financial markets has shaped the transition from industrial to post-industrial society in the United States over the past three decades.” This is followed by a chapter-by-chapter outline of the book’s structure. Fair enough. But then, the 30-page first chapter does the same thing, in expanded form, including an even longer summary of the chapters to come.

The author has a tendency to, as Gorilla Monsoon might have put it, “go to the well once too often.” For example, on page five he describes the change to a financial-market based capitalism as a “Copernican revolution.” It’s a fine analogy for the world-shifting rise of markets as the arbiters of capital. But he then re-uses the metaphor three more times in the next 50 pages. It’s overkill. He also has a tendency to find amusing instances of finance run amok–David Bowie issuing $55 million in bonds against future royalties, or a Norwegian town investing in American mortgages–and use them repeatedly, suggesting that there’s not much depth to his research outside the small circle of factoids that are rotated in and out of the text. There is some really interesting material here, but it’s run into the ground over the course of the book.

The book’s highlights are Davis’s analyses of the rise and fall of corporate “social responsibility,” the profound impact of the shift from bank financing (loans) to market financing (stocks and bonds) on the world’s business, and the rise of the vendor state. Each of these developments has serious implications for public policy, and Davis advances thoughtful ideas, though they are rooted in the concept that bigger is better (there’s a great deal of nostalgia for the big corporations of the mid-20th century) and it is difficult to see how any amount of regulation or planning could put the genie of finance back into the bottle at this point.

In short, the ideas are of interest, but the presentation leaves something to be desired.

The book is interesting to me because it informs recent developments in the gaming industry. Massive over-leveraging and what now seems a foolish optimism in the real estate market aren’t unique to the Las Vegas Strip–these trends have shaped American (even global) business for the past decade. Is there anyway that this mess could have been avoided? With shareholders demanding value, and executives having few options to create value but mergers and expansion, probably not–companies that didn’t try to grow quickly were, for the most part, acquired by others or threatened with shareholder revolt. Nor is there much to suggest that the future will be any different, though as I’ve suggested before managers could learn a thing or two from the players at their tables: they need to understand that, no matter how hot the dice have been, it’s just as possible to seven out five times in a row, so it’s best to take some chips off the table during a lucky run. Letting it ride–whether on the pass line or on condo-hotels–can be rewarding, but it’s a risk that often ends badly.

Another interesting point was Davis’s discussion of OEMs, or “Original Equipment Manufacturers.” With the market demanding companies that have few assets and high profits, many manufacturers have outsourced the actual production of the goods that they sell, allowing a second party to own the factory and build the equipment to their specs before slapping their label on it. The original manufacturer, then, is primarily concerned with advertising and brand management, not the headaches of production. This sounds a great deal like what MGM Mirage is doing with its brand name overseas. You can see that the company is positioning itself not as a hotel builder, but as a hotel brander–which is smart, given the vicissitudes of the real estate market and construction. Seeing what the company is doing against the context of what other companies are doing, you can see the logic in the process, though it remains to be seen whether a company that has no physical control over the products bearing its name will, in the long run, have a recognizable brand.

Gamblers in Moscow and other major Russian cities are placing their last bets ahead of a government ban on casinos and gaming halls.

A new law comes into effect at midnight, confining gambling to four regions far from the capital.

It bans gambling on the internet and at airports, supermarkets and other sites.

But critics say the move will leave more than 300,000 people without jobs and push the industry underground, amid a continuing economic crisis in Russia.

Unrealistic idea

The law was passed by the Russian parliament in 2006 and was the initiative of the then President Vladimir Putin, who is now serving as prime minister.

From 1 July, Russian gamblers will be restricted to specific zones in the Kaliningrad region by the Baltic Sea, the Primorye region in the Far East, Altai in Siberia and an area in the south spanning the Rostov and Krasnodar regions.

The dedicated gambling zones require massive investment, and critics argue that they are far from ready.

via BBC NEWS | Europe | Russian city gamblers last bets.

This might be the biggest rollback of a legal (though under-regulated) national gambling industry yet.

At the Colorado Grande Casino in Cripple Creek, the last security cameras are being placed over the roulette table.

At Bronco Billys Casino, gamblers are laying wagers on blackjack table in the new table games pit.

At the Wildwood Casino, general manager Kevin Werner is planning a pajama party to welcome the changes taking effect at the stroke of midnight Thursday morning.

Thats when the first dice will tumble on the craps tables, the roulette wheel will spin, and bettors will lay down Cripple Creeks first $100 wager. Like the stakes, anticipation is high and a lot is riding on the states Amendment 50 bet.

The changes Colorado voters approved by a wide margin in November could make Colorados three gambling towns destination attractions, high altitude Vegases drawing in the high rollers. At the very least, casino owners and workers are counting on the new games and limits to reverse the slide that started last year.

“Its history,” said Eric Rose, general manager of the Colorado Grande. “Its the biggest thing to happen to Colorado gaming in 17 years.”

via State to launch new games, new limits on Thursday – Colorado Springs Gazette, CO.

I just hope that they keep the popcorn. Colorado casinos are the only ones I’ve ever been in that have complimentary popcorn. It’s the saltiest popcorn I’ve ever had in my life, but it’s still popcorn, which means that it’s good.

On a more analytical note, it remains to be seen if the newly-liberalized gaming rules bolster revenues. This is still a regional market, at best, which isn’t so bad these days, since regional markets are facing the recession better than destination ones. Also, the industry is still pretty small, with gambling only in 3 towns. This may be more of a case of Colorado becoming another Indiana, not another Nevada, or even Mississippi.

You know, I don’t think Steve Cyr used the word “zeitgeist” in his talk, and Bjerg didn’t once mention boozed-up high rollers. That’s what I like about this speakers’ series–we can hear a real diversity of viewpoint and opinion. I’ve got talks on casino surveillance and Macau penciled in for next year, as well as whatever the research fellows are going to be presenting on.

Greg Kot. Ripped: How the Wired Generation Revolutionized Music. New York: Scribner, 2009. 263 pages.

In the past ten years, the music industry has seen a revolution in marketing and distribution that’s truly unprecedented. In Ripped, Greg Kot describes the upheaval and tries to make sense of its meaning. He starts by describing the how the industry became, in the 1990s, “Consolidated to Death” thanks to mergers and acquisitions that concentrated the $14.6 billion-a-year industry in the hands of five huge corporations. Since these companies were driven to maximize shareholder value rather than foster musical or creative excellence, this led to pressure on bands to score immediate hits and made long-term career-building an impossibility for new artists.

But while the industry was becoming more concentrated, new technologies were threatened to undermine it. The entertainment conglomerates were successful because they had capital to underwrite expensive recording sessions and costly promotional efforts and the connections to secure radio and video airplay. The rise of the Internet in the 1990s began to undercut this dominance, then with the debut of Napster and succeeding file-sharing sites, completely overturned it.

The Internet changed music, Kot argues, by cutting out the middle-man. Whether this leads to a more diverse, more creative music scene or merely the substitution of one set of tastemakers for another remains to be seen.

On one level, file-sharing devastated the industry by making it possible for listeners to download music for free, rather than buying it. But this was only an accelerated version of music-sharing that had been going on since the introduction of the cassette tape, a process that was made quicker and easier by CD ripping and then moved into the digital age by using the Internet to swap mp3 files.

On the other, it undercut the stranglehold on opinion previously held by print magazine like Rolling Stone. Fanzines had been circulating for years, but they were expensive to produce and had minuscule readerships. Internet critics, on the other hand, were constrained only by their ability to listen to and opine on new music: uploading their reviews immediately and without much expense, they could be read by thousands. This led to a new critical presence, online sites and later blogs like pitchfork.com, which Kot profiles extensively.

Finally, the Internet let bands communicate directly with their fans, bypassing the record companies. The turning point, Kot argues, came in Fall 2001, when the band Wilco streamed its new album Yankee Hotel Foxtrot for free on its website after record label refused to release it. Other established artists, from Prince to Radiohead, took similar steps to sell or provide music directly to listeners, and lesser-known groups seized on online radio stations and sites like YouTube, MySpace, and Facebook to get their music to potential fans.

Kot does a good job of chronicling the transformation of music in the Internet era, though there is a strong emphasis on alternative indie rock (Arcade Fire, Bright Eyes, and Death Cab for Cutie are some of the bands profiled) and mash-up artists, to the exclusion of other genres. There’s also the nagging sense that the new musical order will not, when all is said and done, lead to greater freedom for artists or a better selection of music for fans to choose from: it will merely result in the exchange of one set of gatekeepers for another. Does it really make a difference whether it’s an editor at Rolling Stone or at pitchfork.com who refuses to review a new album?

On the whole, it’s a good read that presents an in-depth view of the Internet era, focused on the alt rock scene. If your idea of good music is more Clint Black or Grover Washington (or anyplace in between), you might feel a bit like you’re reading about a foreign country whose language and customs you don’t really understand. For those interested in this kind of rock music and the influence of technology on culture, though, Ripped will be both rewarding and thought-provoking.

In my own reading, I was struck by some parallels and several divergences from the gaming industry, which is similarly concentrated and facing and similar leap to the digital frontier, but which is not subject to the same centrifugal forces as music, chiefly because the industry is organized around major resorts. Since ownership of them is more dictated by financial markets than technology, the Internet has not impacted the mainstream gaming industry to the same extent as music, though its effects on ancillary betting forms, particularly poker and sports betting, has been immense.

I may develop these thoughts further, but 760 words is enough for anyone in one day, I think.

Richmond Shreve. Lost River Anthology (Rites of Passage). Cape May, New Jersey: Cape Island Press, 2009. 146 pages.

This is new ground for me: the first person I’ve had in a workshop or class who’s published a book. Richmond Shreve was in my creative non-fiction workshop a few years ago at the Winter Getaway, and I got to see a few of these pieces in process. It definitely provides a different outlook for reviewing the book.

Lost River Anthology is a collection of short stories that Shreve has written over the past nine years. They aren’t related, but do share some themes: reckless youth, the wisdom and perspective gained by getting older, the beauty of nature. The stories are fiction in the sense that the characters and situations have been altered or invented, but they certainly speak to deeper emotional truths that Shreve has learned.

This collection is series of thoughtful meditations that, when read together, speak to each other in surprising ways. Shreve is a writer who’s not afraid to explore the frailties and insecurities that make characters complex, or the beauty that’s often hidden in the world around us.

Some of the stories, like “Slammin’ Leap,” “Love’s Ghosts,” and “Getting Lucky,” are about young characters, viewed through a sometimes-wistful, often wiser lens. Others, like “Fire Truck Man” and “What Do I Know,” are about older characters coming to grips with changing worlds.

My favorite is “The Junket,” which is also the longest and, to my eyes, best-developed piece in the collection. It’s about a young man who flies out to Las Vegas with his fiancees father on a gambling junket. Here, Shreve recreates the Las Vegas of the 1970s with many small details and asides that make the piece real. We see that, with enough money to gamble, a man can be a king in Las Vegas…but we also see that wearing the crown has a price.

Linda Himelstein. The King of Vodka: The Story of Pyotr Smirnov and the Upheaval of an Empire. New York: Collins Books, 2009. 400 pages.

Nineteenth-century Russia was full of both cataclysm and opportunity. As in the the United States, there were profound changes to the social and political structure. And, as in the United States, some of those who benefited from these changes became extremely wealthy.

One such man was Pyotr Smirnov. Born a serf, he took advantage of the opportunities provided by Alexander II’s emancipation of the serfs and Russia’s growing economy to create a vodka empire. Himelstein does a wonderful job of recreating the world that Smirnov grew up in and came to dominate, drawing on extensive research in Russian archives, memoirs, and other contemporary accounts of Smirnov and his times.

Smirnov didn’t have an unopposed march to riches. When he started making vodka in 1864, the vodka field was crowded with competitors, bootleggers and counterfeiters who made his building a brand more difficult. There was also a developing anti-alcohol movement that, supported by writers from Chekhov to Tolstoy, lambasted vodka makers for ruining the Russian people body and soul.

As a result, Smirnov spent much of his time doing religious and charitable work in an effort to forestall criticism. He also had to devote a great deal of energy to courting imperial officials, as receiving the imprimatur of the tsar was the best–and in those days, only universally understood–stamp of approval. Smirnov also triumphed at the international expositions held in Paris, Philadelphia, and Chicago, where his vodkas and liqueurs received high honors.

Towards the end of his career, Smirnov also contended with several plans to have the imperial government monopolize the vodka trade, both to increase revenues and to curtail drinking–two mutually exclusive goals. The monopoly only came to pass after Smirnov’s death, when his three oldest sons took over the business.

The author really immerses the reader in the culture of Russia at the time, allowing us to understand what kind of man Smirnov was. She doesn’t end the book with her protagonist’s death, instead following the unsuccessful reign of his sons and the eventual revival of his brand as US-based Smirnoff vodka. Her chief strengths are her comprehensive research and her faithfulness to her sources. For some, these may be weaknesses. This is not, by any stretch of the imagination, a novelistic telling of the story. There is very little dialogue, as most of the writing is simply a synthesis of the source material, which doesn’t include any words spoken by Smirnov or any records of his thoughts.

It’s an extremely informative biography, though, and one that’s sure to appeal to those who enjoy reading about both Russian and business history–or those who just like vodka.

All the same content is here–it’s just a new look. I’ve been wanting to update the look anyway, so this gives me a real incentive.

Anxious to get revenue wherever they can find it, Clark County commissioners approved a construction proposal that will make way for slot machines at an airport rental car facility despite a recommendation to reject all the bids.

Commissioners voted unanimously on Tuesday to approve a $375,553 bid to complete office space at the Rent-a-Car Center at McCarran International Airport even though the bid was 41.6 percent higher than an engineers estimate of what the job should cost.

The office space is important in terms of generating revenue because it will house an area to supervise slot machines, a requirement under Nevada gambling regulations.

Slot machines are a major revenue-generating concession at the airport, earning about $38.5 million from more than 1,300 slot machines in the last fiscal year. Operating revenue for the entire year at McCarran and four smaller county airports was $376 million.

Officials hope to install 40 slots at the Rent-a-Car Center, although they dont have an estimate of how much money they will generate. With the vote Tuesday, the project could be complete by fall.

County approves Rent-a-Car Center slot machine bid despite cost – Business – ReviewJournal.com.

I crunched the numbers and got a win/slot/day of about $81 for the airport slots–way lower than the Clark County average, but not too bad for an operation with minimal overhead.

A commissioner spoke of the need to get the slots clanging as soon as possible. According to my calculations, if we assume the same win/slot/day metric for car rental slots as airport slots (which is being a bit generous, I think), with 40 slots online, each day that the car rental slots aren’t up, the county loses $3240 in revenue. If taking a re-bid would push the slot opening back by a month, this is about $100,000 in revenue that will be “lost.”

But wait–according to their engineer’s estimate, the job really should cost 41.6% less than the high bid, or, according to my arithmetic, $219,355.95, which is $156,197.05 in real cash money that the county is overpaying.

If putting it out to bid meant a month’s delay but produced a bid in line with the engineer’s recommendation, the county would save about $56,000, which I think they could definitely use. That’s salary + benefits for a full-time employee who could be out there working (or not).

And that’s assuming that car rental slots are as profitable as airport slots. I don’t think they will be, because people at the airport are a captive audience–they have an hour or two to wait for their plane to take off, and nothing they do will make it take off faster. They don’t have anything to do but sit around and wait. People waiting for rental cars, though, have to stand in line. I don’t know many people who’ve been on a plane for hours and are loaded down with luggage who’d rather play 8/5 Double Double Bonus Poker than get their car and get to their hotel.

If the actual win/machine/day is substantially below that of airport slots, that makes this an even bigger waste.

It’s funny that a guy with no vested interest in the project and about five minutes to spare was able to come up with some estimates of how much money the slots could make, based on nothing more than information included in the article and basic arithmetic, but the public officials who are charged with safeguarding the public interest–and taxpayer dollars–”don’t have an estimate” of how much the slots would generate so they accepted a bid that was far higher than their own experts suggested was tenable.

The NFL Doesnt Want Your Bets – WSJ.com.

Tropicana Casino and Resort, once expected to fetch $1 billion or more, was sold today for $200 million to a group of lenders headed by billionaire financier Carl C. Icahn.

A bankruptcy court judge approved the sale agreement, culminating an 18-month quest for new ownership that began when the economy was strong and ended with it in a deep recession.

Icahn and his fellow lenders, who already hold a $1.4 billion mortgage on Tropicana, timed the market downturn perfectly by stepping in when no other investors were willing to bid to drive up the price.

"There is basically no other option available at this point," U.S. Bankruptcy Court Judge Judith H. Wizmur said while approving the sale to the Icahn group.

The deal is pending regulatory approval by the New Jersey Casino Control Commission and a final closing, a process expected to take until year's end.

Tropicana went on the market in December 2007, when the troubled former owners were stripped of their New Jersey gaming license for mismanagement and regulatory violations.

Bankruptcy judge approves $200M. Tropicana sale to Icahn group.

Since Icahn specializes in turning around distressed properties, this might not be an entirely bad thing. Yes, there’s the sad example of the Sands in Atlantic City, but the Stratosphere here in Vegas ended up being a win-win-win: he took the casino out of bankruptcy, ran it successfully, and sold it at a profit. That’s how the game is played.

At this stage, the Tropicana brand name has suffered such severe collateral damage in Atlantic City that I wonder whether a complete re-branding has been contemplated, since the casino is no longer owned by the parent of the Las Vegas Tropicana. I also wonder whether being a standalone property will change anything about the way it’s marketed.

Federal prosecutors have charged two men with conspiring to sell counterfeit video slot machines bearing the name of the Reno-based International Game Technology.

The two men include a 43-year-old Cuban national accused of selling the slots in Latvia.

Rodolfo Rodriguez Cabrera and 35-year-old Henry Mantilla of Cape Coral, Fla., also are accused of selling counterfeit IGT computer programs in the seven-count indictment that was returned by a federal grand jury in Las Vegas in April and unsealed on Wednesday. Justice Department officials say Cabrera was arrested Monday in Riga, Latvia.

Mantilla is scheduled to appear on a summons in federal court in Las Vegas on July 2.

If convicted, each faces up to 45 years in prison and more than $5 million in fines.

Feds: 2 Conspired to Sell Counterfeit IGT Slots – Las Vegas Now |.

Here’s the lesson we can learn from this: don’t try to sell rip-off IGT slots. That prison time makes slot cheating look like jaywalking.

10-June 9, 2009

Dylan Evans, University College, Cork

At the 14th International Conference on Gambling and Risk-Taking, Dr. Schwartz interviews Dr. Evans, who presented a paper on the risk intelligence of expert gamblers. When it comes to assessing risk, expert gamblers are far better than doctors, even good ones.

UNLV Center for Gaming Research: Podcasts.

It’s good stuff–if you’re interested in participating in Dr. Evans’ study, visit his website: http://www.dylan.org.uk/.

I’ve also rebooted the Paradise Misplaced website, so you can discover all the fun that was the unbuilt Xanadu hotel yet again.

June 25, 2009

Gaming Research Colloquium Series: Dr. Ole Bjerg, Copenhagen Business School

"Whats in a Game? The Co-Evolution of Poker and Capitalism"

Thursday, June 25, 12:15 PM

Special Collections Reading Room

View flyer (pdf)

Center for Gaming Research: Special Events.

This should be a provocative talk about how the histories of poker and capitalism intersect.