Tag Archives: Life in vegas

We’re no longer number one! in the LVBP

July 12, 2011 8:10 pm

I’ve got a new piece in the Las Vegas Business Press about how Las Vegas is going to have to adjust to no longer being number one in gaming:

In June, Macau casinos took in about $2.6 billion in revenues, an increase of more than 50 percent from the previous year. This achievement highlights the dominant place that Macau has taken in the gaming world, and is another reminder that Las Vegas isn’t what it used to be … and that’s not necessarily a bad thing.

via Las Vegas Business Press :: David G. Schwartz : Slip in gambling rankings not bad thing for Vegas.

It’s been a while since Macau knocked Las Vegas out of that number one spot, but I really think it has just begun to sink in. Hopefully now we can start moving forward, to whatever the future holds.

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Which will we see first? in Two Way Hard Three

June 3, 2011 7:34 am

In case you missed it, I’ve got a slightly-more-serious but still fun piece up on Two Way Hard Three about various longshots on the Las Vegas Strip:

With a renewed push for a casino smoking ban in Nevada, I go to thinking: which would happen first–no smoking in a casino, or a casino dress code? They are both changes that some people think would improve the casino experience, but would probably be fought tooth and nail by most operators. I just can’t see them turning away a player because he’s in a t-shirt instead of a sportcoat, or because he wants to smoke.

Still, I thought it would be interesting to consider which of these following scenarios might happen first.

via Which will we see first? | Two Way Hard Three | Las Vegas Casino & Design Blog | from ratevegas.com.

It’s just a thought exercise, but I think it’s useful to try to see around the corner and predict what’s going to happen. It’s obvious that the status quo isn’t going to continue forever, so it’s interesting to try to guess what’s going to stay and what’s going to go.

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Wynn & China on Two Way Hard Three

May 18, 2011 12:32 pm

In case you missed it, I posted a piece yesterday on Two Way Hard Three talking about Wynn Resorts and China:

In today’s flurry of email headlines (which continue whether I’m in the office or not) I read a blurb saying that Wynn Resorts “has become”; a Chinese company. Certainly this is no surprise to Wynn. I remember him saying that as far back as 2005, though then it was more along the lines of, “One day Wynn Resorts will be a Chinese company.”

Of course, this is getting press now since it’s being coupled with his criticisms of the Obama administration, but looking at the numbers, it’s clear that Wynn Resorts has been a predominantly Chinese company for quite some time.

via Wynn’s a Chinese company, now more than ever | Two Way Hard Three | Las Vegas Casino & Design Blog | from ratevegas.com.

Check it out, if only for the neat little charts. I managed to cut out one step in producing those charts, so I’m pretty excited about them.

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Requiem for (a Vegas) Methuselah

March 11, 2011 5:20 pm

It’s pretty rare for a Strip casino to get knocked out. Sure, more than a few have taken the standing eight count of bankruptcy, but usually, no matter how far in debt a casino gets, it produces enough cash flow that the lenders would rather see it open than closed.

The Sahara’s scheduled May closure, however, is as bad as it gets. Not only has the current owners’ business model gone belly-up; they can’t persuade anyone else to take the casino off their hands, make a few changes, and hopefully ride out the storm.

By a strange coincidence, I just talked about the Sahara in my GAM 495: History of Casinos class, so its history is fresh in my memory.

The property opened as the Club Bingo, a 300-seat bingo parlor, on July 24, 1947. To put it in perspective, the first Strip resort, the El Rancho Vegas, had been open six years (and was right across what was then called the “Los Angeles Highway”). Further south, the Last Frontier was just starting to assemble the Last Frontier Village, and the Flamingo was barely a half-year old. Local builder Marion Hicks was putting together the Thunderbird with a little help from “the Big Juice” Clifford Jones (then the state’s Lt. Governor) and, it was later learned, Meyer Lansky.

When the Club Bingo was remodeled, expanded, and rebranded as the Sahara in 1952, it was the first Vegas rebirth. In the past few years we’ve seen the San Remo get some plastic surgery and re-emerge as Hooters, and the Aladdin turn into Planet Hollywood. The Sahara was there first.

So the Sahara officially opened, as the Sahara, on October 7, 1952. The Desert Inn had opened a few months earlier, and Moe Dalitz and Allard Roen were just starting to kick around the idea of a golf course. Jake Freedman and Jack Entratter were watching the Sands take shape; it would open that December. People were just starting to call the stretch of road with all that construction “the Strip” instead of “Highway 91.”

And the Sahara saw booms and busts, right from the start. It did so well that it added rooms a year after its opening When several casinos declared bankruptcy in the aftermath of 1955′s over-expansive boom, the Sahara soldiered on. Not every casino made it out of that slump intact, but the Sahara did.

The 1960s might have been the golden age of the Sahara. For the price of a drink, Don Rickles would insult you in the Casbar Lounge. But the story beneath the surface was even more interesting. In 1961, Del Webb acquired the casino from Milton Prell and his partners, becoming the first publicly-traded corporation to own a Nevada casino. Because of the restrictive gaming ownership laws of the time, they had to create a series of shell operating companies, but this was a real milestone.

Architect Martin Stern, Jr., raised the Sahara’s profile with two tower expansions in the early 1960s, putting the Sahara at the cutting edge of casino resort design. He applied some of the lessons he learned there in the iconic Sands tower and the International (1969) and original MGM Grand (1973).

In its later years, the Sahara coasted along, drifting further into the value-oriented market, but filling an important niche in Las Vegas nonetheless. The casino’s closing, no matter how you try to spin it, is awful news and a real loss to the city.

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Station hiring in Vegas Seven

February 3, 2011 10:54 am

It’s Thursday, which means another Green Felt Journal is available for your reading pleasure in Vegas Seven. This one is a look behind Station Casino’s recent hiring push:

The local employment picture has been a dire one. In the past five years, the unemployment rate has more than tripled. That’s why a local company hiring 1,000 new employees is pretty good news.

Of course, even 1,000 jobs hardly puts a dent in the unemployment picture. With more than 140,000 Las Vegans out of work, even if every casino in town added 1,000 workers—and that’s just not going to happen—we’d still have an unemployment rate higher than it was four years ago.

More significant is what these hires say about the near-future of the Valley—and the nature of casino work.

via Station’s math: More employees mean more business | Vegas Seven.

The jobs themselves mean a lot, particularly to the people who got hired, but I think that long-term the more significant thing we can parse from this development is that we might be seeing a reverse of the trend towards fewer employees per position.

With 140,000 people out of work, though, even that’s not going to help really “put Las Vegas back to work.” All of the casinos in Clark County employ about 147,000 people. They’d each have to double their payrolls to solve the unemployment problem, and that’s clearly never going to happen. Moderately higher staffing levels across the industry will create a few thousand more jobs, but clearly Las Vegas is going to have to diversify.

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New Podcast: RJ Rowley’s talk

January 25, 2011 2:27 pm

Today I was fortunate to hear one of the best Gaming Colloquium talks we’ve had in a while: RJ Rowley talking about locals casinos in Las Vegas. Here’s the info you need:

26-January 25, 2011
RJ Rowley, Assistant Professor, University of Wisconsin-Platteville
“Neon Beyond the Neon: The Geography of Locals Casinos”
In this talk, Rowley discusses his research into the origins of the locals casino phenomenon in Las Vegas. Locals casinos, which cater primarily to residents of the city rather than tourists, date from the 1970s and are a characteristic development of the local landscape. Rowley also links the expansion of the locals gaming market with the proliferation of casino gambling across the United States.

Listen to the audio file (mp3)

View flyer (pdf)

UNLV Gaming Podcasts

If I have time before class, I’ll upload his two maps. Otherwise, I’ll do it tomorrow.

This was a great talk, and a wonderful start to 2011 for the podcast series. I’m chasing a few big interviews which will hopefully materialize soon.

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Is the party really over?

December 29, 2010 1:36 pm

Interesting column in The Economist that I don’t necessarily agree with:

More important, few residents of Las Vegas would any longer agree that their city is either great or happy.

Nevada has America’s highest unemployment rate. In Las Vegas, unemployment has risen more this year even as it has flattened in the rest of the country; it peaked at 15.5% in September. Nevada also has America’s highest foreclosure rate. In Las Vegas more than 70% of homeowners with mortgages owe more to the bank than their houses are worth. This desert valley, which once represented the most extreme pleasures in American consumerism, now has the most severe hangover.

via Las Vegas in crisis: Party over | The Economist.

There’s a lot of truth in this article, but the perspective is just slightly wrong. And that makes all the difference.

For instance, the author says that “Tourists are now returning, but in numbers too small” to help Las Vegas. While it’s true that the average spend per visitor has fallen, visitation actually rose in 2010. This would have been a more accurate article a year ago, but even then I’d insist the real story wasn’t that Vegas visitation had fallen, but that it was so resilient. At the (hopefully) tail end of the worst recession in sixty years, 37 million people still came to Las Vegas this year. Surely, that’s got to count for something.

And I take issue with the idea of an “existential” crisis for Las Vegas. Yes, I do believe that it’s possible that the rapid devaluation of people’s net work over the past three years has probably made them more risk averse, or “gun shy,” as I was quoted as saying. But the fact is, they are still coming to Las Vegas, which means that the city doesn’t have a major crisis of existence.

Even my theory, as logical as it sounds, is just a theory, and will never be a fact. As I explained to the reporter, it’s impossible to falsify a claim like that–you would have to have done measures of risk tolerance among people coming to Las Vegas in, say, 2006, then re-done studies on the same people this year. And since it can’t be falsified, it can’t be “true” in the way that 2+2=4 is. So, as I said, it’s the kind of thing that I’ll bring up at cocktail parties if people ask for a pop psychology explanation of what’s going on, but I can’t really say if that’s the reason for falling table hold percentages (a phenomenon which pre-dates the recession, BTW).

For that matter, I asked the reporter for evidence of this big cultural shift: how can he prove that the “zeitgeist” had shifted? It’s a pretty glib concept that, again, can’t be falsified. I could just as reasonably say that, since people saw the economic system melt down and saw companies insulated from their bad choices via government bailouts, people might have a greater tolerance for risk, or at least a lesser appreciation for its consequences.

It’s particularly galling that the author didn’t acknowledge existing revenue trends that might disprove his argument. Slot handle, which I consider as good a measure for the broad “demand” for Nevada gaming as any, rose for the first time in October.

As I told him, the idea that the zeitgeist has shifted against Las Vegas and gambling is both incredibly glib and not borne out by the facts. According to the best archaeological evidence, humans have been gambling for thousands of years; its short-sighted to say that a recession, even one lasting three years or longer, is going to change that.

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Silverton goes off-beat in Vegas 7

December 17, 2010 12:46 pm

I missed this yesterday, but my latest Green Felt Journal column is out in Vegas Seven. It’s about some of the unusual events taking place at the Silverton:

Santa is floating inside the 117,000-gallon aquarium at the Silverton Casino and Lodge, his white beard billowing as the parrot fish and stingrays glide by. He’s taking orders for Xbox Lives and bikes via an assistant standing outside with a microphone.

“This is very unusual,” says one Summerlin resident who is here with her three toddlers to see Santa. “But it’s great. I love it.”

Once known for its bargain buffets, a 2004 renovation gave the property a more upscale look and higher-end amenities such as the Twin Creeks steak house. The recession shelved plans for a larger expansion, and in the current economic climate, the casino is finding it as hard to compete as anyone else.So, snorkeling Santa to the rescue.

via Not your father’s casino marketing strategy | Vegas Seven.

The underwater Santa was really quite unusual. With the microphone picking up his scuba breathing, it really sounded like he was about to ask HAL to open the pod bay doors. Very surreal.

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Projecting the future

December 7, 2010 9:10 am

A while back, some folks asked me what I thought the near-future held for Las Vegas gaming and tourism. After mulling over some of the LVCVA data for the past 40 years, I gave them six different scenarios. This might be nice for a wider audience, I thought. But, since I had a lot on my plate, it fell to the bottom of my to-do list.

Today, reading about the PWC report in the Las Vegas Sun, I decided to share what I came up with.

There are so many variables at play, I decided to forecast out six different scenarios that begin with the current trend, but allow for some flexibility.

Instead of looking at statewide numbers, I focused on Clark County, since I was using the LVCVA’s data and they include Clark County gaming revenue with their visitor data.

Through September, Clark County revenue is just about flat with 2009; that’s about where it should end up (a while back I did a post with some statewide revenue projections if you’re curious). The Strip is definitely trending up, but everywhere else continues to drag.

My methodology was simple: by dividing the total county gaming revenue by the number of annual visitors, I got a neat “gaming spend/visitor” number. Yes, this includes the locals’ play with the visitors’ play, but since the locals’ economy is largely driven by tourism (more tourist spending=more tips/paychecks for locals that can end up a locals’ casinos) this wasn’t necessarily a drawback.

Based on the about 2.5% increase in visitation we’ve seen for Las Vegas this year, I decided to offer two main scenarios: a modest and a major increase over the next six years.

The modest increase in visitation assumes a compound annual growth in tourism of 1%. Yes, that’s less than the 2010 total, but I figured this was averaged out for six years, and should conservatively take into account some possible contraction.

The major increase in visitation assumes a compound annual growth in tourism of 7%, which is about equal to what the Strip saw in the 1990s. Not likely, as far as I can see, but it’s a good best-case scenario.

For each possible increase in visitation, I posited three possibilities:

1. Gaming spend/visitor will continue to fall at the 2009-2010 rate (3%)

2. Gaming spend/visitor will remain flat (sounds good, but when adjusting for inflation isn’t)

3. Gaming spend/visitor will increase by an average of 3% year

Below, I’ve got summaries of each of the six scenarios [I'll post jpgs of the data this afternoon, time permitting]

SCENARIO 1
(Modest increase in visitation, 3% gaming spend/visitor decline)
Visitation +1%, Spend -3%
Clark County gaming revenues decline by about 10% by 2015. More visitors coming doesn’t matter, if they don’t spend more. This kind of sustained decline would have serious impacts for the state’s budget, since 85% of all gaming revenues come from Clark County.

SCENARIO 2
(Modest increase in visitation, gaming spend/visitor flat)
Visitation +1%, Spend Flat% By 2015, gaming revenues increase by about $500 million, to $9.2 billion. This looks like a win, but it's actually going to be running neck-and-neck with inflation.

SCENARIO 3
(Modest increase in visitation, 3% gaming spend/visitor increase)
Visitation +1%, Spend +3%
Now we’re getting somewhere. Gaming revenue increases by $2 billion by 2015, with about $10.8 billion coming in. This is at least a viable future.

SCENARIO 4
(Major increase in visitation, 3% gaming spend/visitor decline)
Visitation +7%, Spend -3%
Even if visitation skyrockets, it’s not worth much if spend/visitor declines: despite handling almost 6 million more visitors in 2015, the total gaming revenue actually fall below their 2010 levels.

SCENARIO 5
(Major increase in visitation, gaming spend/visitor flat)
+7% visitation, flat spend
This looks workable, with an increase of gaming revenue to $10.2 billion by 2015. If there’s a bigger bump in non-gaming spending and higher sales tax collections that offset the increased costs associated with having more visitors, this could be workable.

SCENARIO 6
(Major increase in visitation, 3% gaming spend/visitor increase)
7% increase in visitation, 3% increase in visitor spend
Isn’t this the best of both worlds? More visitors, spending more. We get Clark County gaming revenues rising to $11.9 billion by 2015.

——

Let’s compare my scenarios with PriceWaterhouse Coopers. In 2014, they believe that Nevada’s total gaming revenues will be $12.4 billion. Extrapolating from my Clark County data (assuming that the county will average 85% of total state revenues), here my estimated 2014 statewide totals. These might be a bit optimistic, since I’m guessing that Clark County’s total share of state gaming revenues will increase.

Scenario 1:$9.4 billion
Scenario 4:$10.4 billion
Scenario 2:$10.9 billion
Scenario 5:$11.8 billion
PWC: $12.4 billion
Scenario 3:$12.7 billion
Scenario 6:$13.3 billion

I think the PWC folks might have been right on this one. It’s not the most optimistic projection, but it’s not unduly pessimistic, either. If I had to handicap it, I’d say that in 2014 the statewide gaming revenues should be somewhere between $11.5 billion and $13 billion. There are so many variables out there, though, that it’s pretty hard to handicap.

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The complex Vegas story in LVBP

November 3, 2010 1:44 pm

It’s not every day that venting about the frustrating aspects of your job leads you to a column. But if you read my piece in the Las Vegas Business Press, you’ll see how I use some misconceptions about Las Vegas as an opportunity to set the record somewhat straight:

Recently, for example, I received an e-mail for a U.S.-based correspondent for a respected foreign publication who wanted to know whether the rumors were true, and that Las Vegas would soon be closed because of the poor state of the economy.

via Las Vegas Business Press :: David G. Schwartz : Beyond the headlines, real LV story is complex.

For some reason election season put me on a lot of foreign correspondents’ radar, even though I almost never talk politics. I don’t envy those who have to quickly dial into a complex situation and summarize it for a general audience at all.

Still, the idea of Vegas closing down made me think of the end of National Lampoon’s Vacation.

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