The Stardust Hotel debuted 60 years ago  | The Mob Museum

I wrote a little something to commemorate the Stardust’s 60th birthday for the Mob Museum:

The Stardust opened in a blaze of fireworks on July 2, 1958. With its 1,000 guest rooms, it was bigger than any hotel previously opened in Las Vegas. Size, rather than style, was the hotel’s most prominent feature. Its 16,000-square-foot casino was immense for its time, and the 140-foot bar that ran along much of its east wall was the forerunner of The D’s present-day Longbar in downtown Las Vegas.

Read it all: The Stardust Hotel, longtime cash cow for the Mob, debuted 60 years ago on the Las Vegas Strip | The Mob Museum

The Artisan Craft Festival Is a Perk for Real People – Vegas Seven

In this week’s Green Felt Journal, I take a look at a lower-profile casino perk, and the local group of entrepreneurs that it benefits:

Smaller-time gamblers play for smaller perks: T-shirts, six packs of soda, even meat thermometers. So it’s not surprising to get a Boyd Gaming promotion offering the chance to redeem B Connected players card points at the Artisan Craft Festival. It’s not the kind of perk you’d expect from cinematic Las Vegas, but it’s perfectly in tune with the reality of who actually visits local casinos.

Read more: The Artisan Craft Festival Is a Perk for Real People – Vegas Seven

I wanted to show a little slice of Las Vegas gambling that isn’t always captured or appreciated in the news: what casinos are like for the vast majority of gamblers. I also wanted to show how local groups like the Artisan Craft Festival mesh with casinos. One of the things about Las Vegas that might surprise non-locals is just how important locals casinos are as meeting spaces. For example, the Nevada PTA held their awards ceremony this year at Texas Station. That might seem very unusual to someone from somewhere else, but in Las Vegas it’s just everyday life. Casinos have the space at reasonable rates, so people use it.

Our Annual Cowboy Makeover in Vegas Seven

I had such a busy day yesterday I couldn’t share this, but I’ve got what I think is a fun Green Felt Journal in this week’s Vegas Seven. It’s all about cowboys:

There’s still a perceptible drop in demand, which is why many casinos save major public-area renovations for the November-to-Christmas lacuna—witness the projects on the casino floors of both Wynn Las Vegas and the Venetian.

But there is one event that thaws the December chill, National Finals Rodeo, which continues through Dec. 10 at the Thomas & Mack Center. Since 1985, the Professional Rodeo Cowboys Association’s big championship has been a major draw, with more than 170,000 spectators over the event’s 10-day span.

via Our Annual Cowboy Makeover | Vegas Seven.

This was fun to write–I’m fascinated by the way Las Vegas remakes itself to suit whoever’s in town. If I wanted to be pretentious (or at least have pretensions towards being articulate), I’d say we’ve got a protean metropolis here.

Who’s the mystery bidder on .5(Borgata)?

One of the revelations from yesterday’s 3Q results announcement was that MGM has received an offer of about $250 million for the 50% share of the Borgata that the company is obliged to sell thanks to the Pansy Ho/Casino Control Commission imbroglio. The bigger isn’t named, but since it is mentioned that Boyd has the right to match the offer, it’s a fair guess that Boyd isn’t the bidder, unless they have some kind of Tyler Durden thing going on at BYD HQ.

So who’s the mystery bidder?

– Someone we’ve never heard of, who has never been in the casino business, and we won’t know much about. By their very nature, it’d be impossible to speculate about who that would be.

Penn National: On something of a buying spree, but with Peter Carlino’s talk of a “death spiral” a while back, doesn’t seem likely. Although it’s just occurred to me the “Death Spiral” would be a good name for a metal cover band.

Carl Icahn: Why not? He tried to pry Trump Entertainment Resorts away from Trump, and this investment probably has more upside. It’ll definitely continue throwing off cash for the foreseeable future, and if the market miraculously turns around could be sold at a premium.

Genting: They’d get a player database for Aqueduct, and maybe a place to ship any premium players they find. Not likely, but it could work

Harrah’s Entertainment: Because owning 4.5 casinos in a declining market makes more sense than owning 4. Hey, they’ve been increasing their Strip footprint under the same logic.

Barr/Bashaw/Gateway Group: It’d be a nice way to get into the gaming market, assuming they have the money for it. It would also eliminate their need for the development of the esrtwhile ACHS-area land.

Isle of Capri: I don’t expect this, but it’s a possibility.

Wynn or LVS: I can’t see this, in any way, shape, or form.

– In the worst resolution to a cliffhanger since Vince McMahon was revealed as the “Higher Power,” Donald Trump will announce that he is, in fact, the mystery man. “It was me all along, Murren,” he will taunt, also taking credit for the 3Q slowdown in Strip casino revenues for MGM Resorts.

In other words, I have no idea who this mystery bidder is. Any thoughts?

AC to “get its act together”

Checking the headlines in the AC Press as of 2PM Pacific time, I couldn’t find a word about the seemingly-momentous decision of MGM Mirage to sell its stake in Borgata. This is curious, since you would think that having one of the biggest casino companies in the world, which at one point had billions of dollars in the development pipeline in AC, officially announce it’s selling out would be at least DEFCON 2-level news.

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.

Other shoe about to drop in AC?

According to a WSJ report, MGM Mirage has decided to sell its interest in the Borgata and presumably close the door on any future developments in Atlantic City:

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.

Recession evolution

The big talk at G2E has been the recession. Last year, it was how to fight it. This year, it’s how to survive it. Anyone else get the sense that we’re living in an age of rapidly diminishing expectations? Here’s a bit from the story from the LV Sun:

The recession is forcing Las Vegas to return to its roots as a more value-oriented destination, and that’s not a bad thing, Boyd Gaming President and Chief Executive Keith Smith said.

“The town has now evolved back to its original roots,” Smith said Wednesday at the Global Gaming Expo. “I think the industry will continue to evolve and refine itself and eventually find a norm between value and high-end.”

via Boyd chief: Recession forcing Vegas back to roots – Las Vegas Sun.

Later in the story, there’s something that must be a typpo:

But with the addition of new technology, costs have increased and operators aren’t buying. Khin said slots stay on casino floors for an average of 25 years without replacement.

That’s impossible. If that were true, most of the machines on casino floors would have been installed in 1984. Slot managers would buy one set of machines when the casino opened and then wait a quarter-century (on average) to buy more. In that case, why would they have a big annual trade show to showcase the newest slots if managers keep machines for 25 years? Is it actually 2.5 years? That seems right. Hopefully someone over at the Sun can clarify that.

Smith makes a great point. I think that perception of value–rooted in real value–is going to be the key for Las Vegas for the conceivable future. The high roller/low roller tilt in this town is definitely a cyclical phenomenon that’s rooted in supply and demand: we’ll be in a low-roller turn for a while, but once things come back room rates and ticket prices will start creeping up again.

Remember, this is an industry where casinos in a city that’s been steadily losing ground (my hometown of Atlantic City) charge people $10 and more to park just because they can. Things like this don’t bode well for the customer. I’ve really got to question the aptitude of an executive who thinks that having customers’ first experience of their resort be reaching into their wallet to pay for something they can get for free elsewhere provides the foundation of a good customer experience. Sure, they don’t do that in Las Vegas, but several casinos tack on resort fees and other add-ons that have a similar effect.

My still-in-process slot hold study indicates (if I’m reading this right, and you may read it differently) that ultimately price isn’t the major determinant for players, it’s entertainment value and convenience. As a group, players are choosing higher-hold, flashier games over lower-hold, more sedate ones. Can this insight be applied to the non-gaming dimension of casino resorts? I think so, and this may be the key.

New UNLV podcast: Interview with John M. Blink

As promised, I’m continuing the podcast even while the Colloquium series goes on hiatus for the summer. Yesterday I did an interview with John Blink, who co-wrote a book about the California Hotel and Casino. Last week I reviewed the book, so take a look if you want a preview.

This is a quick (about 20 minute) interview that nevertheless touches on several topics: Blink’s start with Sam Boyd as a teenager, Sam Boyd’s management style, the Eldorado, the Union Plaza, the California, marketing, and of course Hawai’i. I learned some interesting things from talking to John.

Plus, you’ll learn how you can get a free bowl of saimin noodles at Aloha Specialties. This one is all good.

Download the audio file

Subscribe to the UNLV Gaming Podcast in iTunes

Visit the UNLV Gaming Podcast page

Also, I’ve done a cool new logo for the podcast:
UNLV Gaming Podcast

Is anyone geeky enough to know what that’s an homage to?

UPDATE: We have a winner: Joe, who guessed it right:

Sporrts betting rampage

Jeff Haney over at the LV Sun’s had a bad run with Vegas sports books recently. In his latest column, he comes just short of calling for an immediate ban on all sports betting. Here’s the apex of the piece:

My opinion of elected public officials places them slightly below Saturday morning scamdicapper slime on the human evolutionary scale, so I harbor no high hopes they’re capable of taking any meaningful action against unethical sports books.

Still, I wonder if there are any Nevada politicians who:

A grasp at least the rudiments of sports betting and therefore understand why the conduct of Boyd Gaming is ethically reprehensible, and B are not in the pocket of Big Gaming.

I fully realize the odds against that particular two-team parlay coming in are astronomical.

Time for something drastic? – Las Vegas Sun

Even a sports book manager would have to admit that’s good writing.

Echelon groundbreaking

Boyd Gaming broke ground on Echelon Place today. Here’s the AP story, but I’ll cut and paste some stuff from two press releases I go this morning. First up: the Delano and Mondrian:

Morgans Hotel Group Co. and Boyd Gaming Corporation today announced their development and design plans for the new Mondrian and Delano hotels at Echelon in Las Vegas. A world-class team of designers and architects has been appointed to lead the project.

MHG and Boyd have named Chad Oppenheim as design architect, Klai Juba as executive architect, Marcel Wanders as interior designer for Mondrian, Piet Boon as interior designer for Delano and Cagley and Tanner as executive interior designer. Together, this celebrated team of designers and architects will design and develop the hotels to bring a new level of style and sophistication to Las Vegas.

“We are incredibly excited about this project and the talented design team we’ve assembled,” said Ed Scheetz, President and Chief Executive Officer of MHG. “The level of creativity and experience each brings to this project is perfectly matched with MHG’s goal to set a new standard for groundbreaking hotels.”

“The Delano and Mondrian are iconic hotel brands and will help define Echelon,” said Bob Boughner, President and Chief Executive Officer of Boyd Gaming’s Echelon Resorts. “Their presence will add a fresh sensibility to the Las Vegas hotel experience.”

As announced in January 2006, MHG and Boyd will develop a Delano and Mondrian at Echelon through a 50/50 joint venture. The new Mondrian and Delano will feature approximately 860 and 550 rooms respectively, with a diverse collection of rooms, suites, lofts and bungalows. Each hotel will feature its own porte-cochere, lobby, destination restaurants, nightlife venues, pools and gardens and will have direct access to the gaming, retail, dining and entertainment offerings of Echelon. Delano will boast a lobby bar and one of Morgans Hotel Group’s historically successful restaurants, and amenities including a spa and fitness center, private pool and recreation area. Mondrian will include an innovative nightlife venue, private pool and meeting and conference space to appeal to both business and leisure guests. The expected development cost for the project is approximately $950 million.

And here’s the general project rundown:

Hotel Echelon

Hotel Echelon, with 2,500 guest rooms and suites, will embody elegance, comfort and convenience with clean, contemporary design. The guest rooms and suites, designed by Lawrence Lee Associates, will be thoughtfully appointed to host, with equal attention, guests visiting for business or staying for pleasure. The hotel will feature a grand arrival experience and a dramatic entry lobby designed by Gabellini Sheppard Associates. A separate dedicated group arrival area will ensure smooth check-in and access to the hotel. The hotel will also feature a two-story luxury spa, salon, barbershop, a comprehensive fitness center and lushly landscaped pools and gardens.

Suites at Echelon

The Suites at Echelon is a 650 all-suite hotel catering to the discerning business traveler and indulgent vacationer alike. With a separate entrance and porte cochere, the Suites at Echelon will offer an elevated level of style, service and amenities. With interiors designed by Jeffery Beers International, the hotel will feature suites ranging in size from 800 square feet to over 7,000 square feet, a hotel lobby with guest reception and concierge, an intimate bar and lounge and a feature restaurant. The Suites at Echelon will showcase dedicated conference space, a luxurious spa, salon and full-service fitness center. The all-suite hotel will be steps away from high-limit casino action.

Shangri-La Hotel, Las Vegas

Shangri-La Las Vegas will be operated by Shangri-La Hotels and Resorts, Asia’s premier five-star luxury hotel company. The intimate, modern luxury setting will include 282 guest rooms and 71 premium suites with a distinctive porte cochere and hotel lobby. Shangri-La will feature 14 guest rooms per floor, providing quick and easy access from elevators, and will offer a superior in-room hospitality experience. With interiors designed by Hersh Bedner Associates, the hotel will feature a 20,000 square foot CHI spa, well-appointed premium meeting space and two feature restaurants.

Delano and Mondrian Las Vegas

The new Mondrian and Delano will feature approximately 860 and 550 rooms respectively, with a diverse collection of rooms, suites, lofts and bungalows. Morgans Hotel Group has named Chad Oppenheim as design architect for both hotels, Marcel Wanders as interior designer for Mondrian and Piet Boon as interior designer for Delano. Together, this celebrated team of designers and architects will design and develop the hotels to bring a new level of style and sophistication to Las Vegas.

Each hotel will feature its own porte cochere, lobby, destination restaurants, nightlife venues, pools and gardens and will have direct access to the gaming, retail, dining and entertainment offerings of Echelon. Delano will boast a lobby bar, one of Morgans Hotel Group’s historically successful restaurants, and amenities including a spa and fitness center, private pool and recreation area. Mondrian will include an innovative nightlife venue, private pool and meeting and conference space to appeal to both business and leisure guests. Construction on the Delano and Mondrian is expected to begin in the first quarter of 2008.

Echelon Retail Promenade

Echelon’s Retail Promenade will complement the style and sophistication of the five distinctive hotels of Echelon. With interiors designed by Gabellini Sheppard Associates, the contemporary promenade will feature a mix of luxury boutiques, international brands, distinctive cafes and signature restaurants. The Retail Promenade is co-owned by Boyd Gaming and General Growth Properties, one of the retail industry’s most diversified and well-resourced operators.

Entertainment Venues

AEG, one of the world’s leading producers of entertainment and sporting events, whose venues include The O2 in London and O2 World in Berlin, the Staples Center in Los Angeles and the Nokia Theater in New York City, will operate the 4,000-seat production theater that has been designed to accommodate both concerts and production shows. In addition, a more intimate 1,500-seat theater will house touring acts and performances.

The Meeting Center

The Meeting Center at Echelon has been designed to meet Las Vegas’ strong and growing demand for meetings and convention space integrated into a resort environment. The Meeting Center will feature 650,000 square feet of meeting and convention space, bringing the total meeting and convention space at Echelon to approximately 750,000 square feet, including over 200 meeting rooms. The Meeting Center’s proximity to the 5,000 rooms at Echelon will offer guests unparalleled convenience and access.

Echelon Resort Las Vegas

This is going to be way more than Borgata West, and will do a lot for the north end of the Strip. I wonder how much new convention space the Strip can absorb–Fontainebleau will also be heavy on meeting space. I’m interested in seeing how this one develops.