Loosening Up Downtown in Vegas Seven

The new Vegas Seven is available online now, and I’ve got an interesting piece about some happenings Downtown:

The folks running downtown’s Las Vegas Club hotel-casino think the slot players are right. PlayLV, which operates the club for the multinational investment group Tamares, has embarked on an ambitious course of slot-loosening—and a pull-no-punches campaign to let downtown gamblers know about it.

via Loosening Up | Vegas Seven.

This was a lot of fun to research, mostly because I don’t usually get to talk to people with such strong differences of opinion (well, except for John Curtas and Marilyn Spiegel, maybe). The biggest obstacle that the LVC will face, I think, is getting the players to actually believe that they’ve willingly loosened their slots.

Steve Rosen’s thoughts about Downtown branding itself specifically as a value gaming destination, with loose slots above everything else, are interesting, and make some sense. A few years ago hotel and f&B values were enough to distinguish Downtown from the Strip, but today that’s no longer the case. Would giving gamblers genuinely looser slots make a difference? I think it might.

Here’s a custom piece of art the PlayLV folks sent me that didn’t make the magazine–I still think it’s pretty funny:
Vegas Club loose slot ad

“The Center of Pleasure Has Shifted,” it’s not.

Requiem for (a Vegas) Methuselah

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.

More about the “Friday Effect”

In my analysis of the January Nevada gaming numbers, I made reference to slot win from December being rolled over into January, something I dubbed the “Friday Effect” because I couldn’t think of a better description. I got a few emails asking for more details about it, so here’s the explanation that GCB Senior Research Analyst Michael Lawton gave me via email, shared with his permission:

December ended on a Friday so as a result of operators not dropping and counting on weekends we had December slot revenue roll into January. This also generally happens every Dec/Jan as operators don’t like to disrupt the slot floor during the holiday when there are such heavy volumes. The other factor is that the handle is reported in the actual month that it occurred because the meters are read electronically by on-line systems. As a result our stats get distorted because operators report on a cash basis and report the drop in the following month. I would estimate that approximately $58 million rolled into January from December for the State and of that $41 million was from the Strip.

One of the side effects of the difference between reporting the drop and win is that the handle estimates in my monthly reports are usually a bit different from the official coin-in numbers, but they’re still close enough to get the general gist of what’s happening. In slots, for example, the bottom line is that play has consistently fallen across the state.

Looking at past results and the December/January swing, I’d guesstimate that for most markets January slot hold was 0.4% to 0.5% higher than it should have been.

Nevada January gaming revenues: not encouraging

The January numbers are out, and while they appear to be merely ho-hum (a 0.67% Statewide revenue decrease), they are actually quite troubling. Here’s the executive summary of the report:

January 2011 continued what has been a trend: a persistent, moderate decline in the state’s gaming revenues. This is the third consecutive month in which state gaming revenues declined.

Statewide, slot revenue from the previous January, but this may not be all it appears. Because December ended on a Friday and many operators did not want to disrupt weekend operations by collecting slot win, December’s slot revenues were artificially lower than they should have been, while January’s are higher. The Gaming Control Board estimates that about $58 million of slot revenues were rolled into January from December. Therefore, there was likely a decline in slot win. Both table win and handle declined
Table revenue decreased by 11.44% year to year, and handle slipped 13.19%–not signs of a revival at all.

On the Las Vegas Strip, slot revenue appeared to gain because of the Friday Effect, but the roll-over of December revenues into January produced a historically-high 8.67% slot hold percentage (January 2008’s 8.57% was the previous record holder). Baccarat play slumped precipitously (29.16% year-to-year decline), a sign that perhaps the “baccarat recovery” has fizzled. Continued weakness in slot (-2.44%) and, more troubling, table handle (-15.10%) point to continuing difficulties on the Strip.

Downtown Las Vegas saw a year-to-year gain, but with both slot (-1.58%) and table (-10.27%) handle falling, it continues to be a market with problems. Since 2004, total revenues have fallen 23.81%, with 33.11% and 39.45% declines in table and slot handle, respectively.

The Boulder Strip, a weathervane for local Las Vegas play, saw a 10.93% jump in revenues, but this is partially offset by an abnormally-low table hold percentage in January 2010 and an 11.40% jump in slot hold caused by the Friday Effect.

Washoe County saw a continued decline, with revenues falling by 4.93%. Handle and win both declined, nothing new for a market that has shrunk 22.19% since January 2004. Over the past 8 years, table revenues have declined faster than slots, but clearly this is a market in decline.

Nevada Gaming Statistics: January Comparison (pdf) – more reports

Back in September of 2009, I warned job-seekers about waiting for casinos to save them:

This time, the casino cavalry won’t be coming over the hill. It’s time to look to another — more balanced — solution.

In March 2011, that’s even more true when applied to the state’s budgetary fix. There’s no sign of a sustained turnaround in the gaming industry, which has traditionally shouldered much of the tax burden for the state, is in a prolonged slump that clearly isn’t over.

Let’s look the tax implications of the revenue decline. Since 2007, annual gaming revenues for Nevada have fallen by 19.02%. Here’s the budgetary impact:

Roughly estimating a 7% tax on the state’s total gaming revenues (it’s 6.75%, but adding in fees makes it closer to 7%), we see:

2007: total revenues $12.8 billion, total tax approximately $889 million

2010: total revenues $10.4 billion, total tax approximately $728 million

That’s $161 million in direct tax revenue lost, which, when added with the sales and other taxes that have also slumped because of visitors spending less on everything, makes the state’s current budget situation understandable.

Diversification is really the only way forward.

Details about the Cosmopolitan’s new sports book

Like I admitted on Twitter, I take lousy photos, so I promised that I’d share some of the PR stills of the Cosmopolitan’s new sports book. I’m also throwing in the press release–if you read any media accounts that sounds suspiciously like this, it just means someone’s taking it easy on the word-smithing front:

Las Vegas, March 8, 2011 – The Cosmopolitan of Las Vegas and Cantor Gaming, an affiliate of global financial services firm, Cantor Fitzgerald, L.P., debut The Cosmopolitan Race & Sports by Cantor.

“The new Race and Sports Book by Cantor, with the latest in betting technology, spectacular design and prime sports watching location adds yet another unique and dynamic element to the already exciting scene at The Cosmopolitan,” says John Unwin, CEO of The Cosmopolitan of Las Vegas.

The new sports book, located on the second floor, situated adjacent to Marquee Nightclub, welcomes patrons with two outside betting windows. Inside, guests are greeted into the intimate space by metallic red, grey and dark wood interiors. Wagering is available at fixed betting, or individual ‘trading’ stations within the book, as well as on Cantor’s proprietary mobile tablets which can be used at both the race and sports book and Book & Stage on the casino floor. Two additional betting stations at Book & Stage also are available for placing bets.

Forty-three ‘trading’ stations each feature plush seating, viewing screens and are equipped with Cantor’s proprietary In-Running ‘sports trading’ technology. In the same way that prices in the financial markets change from moment to moment, Cantor’s lines and spreads change continuously as the action of a sporting event unfolds.

Lee Amaitis, President and CEO of Cantor Gaming, said: “The Cosmopolitan is the most exciting new property on The Strip. Its vision to bring a fresh, sophisticated and modern experience to Las Vegas in a world class venue, reflects our own mission to transform sports wagering through our ground-breaking technology. The same innovation in technology that we have brought to Las Vegas has changed the way we live our lives in sectors as diverse as finance, travel and retail. The Cosmopolitan is a tremendous stage on which to continue to build our ‘sports trading’ franchise.”
Cantor Gaming now operates four race and sports books in Nevada.

Here is the entrance and a smidge of the horse-racing area:
R&S Entrance

And this is the sports book area:

R&S Trading Stations Close

It’s pretty small, but the Cantor folks are hoping to do a lot of business on their eDeck mobile devices, and, when they get GCB approval, smart phones and tablets.

If you want to learn more about where Cantor wants to take sports betting–or “sports trading” as they call it–I strongly suggest you listen to the Lee Amaitis UNLV Gaming Podcast.

Casino crime in the LVBP

In this week’s Las Vegas Business Press, I look a little more closely at what the two-incident “epidemic” of strong-arm casino chip robberies means”

Strong-arm robberies aren’t exactly rare in the United States. According to Federal Bureau of Investigation statistics, there were almost 409,000 robberies in 2009, the last year for which data is available. Often, these robberies don’t even make the local news. Yet when a robbery involves a Las Vegas casino and its gambling chips, it has been national news.

This is mainly because casinos have an aura of invulnerability around them: many assume that because surveillance cameras are so ubiquitous around casinos, committing a crime is impossible there.

Committing the crime isn’t always the hard part. Getting away with it might be

via Las Vegas Business Press :: David G. Schwartz : Casinos’ open layouts invite all, even thieves.

It’s definitely an interesting idea to think about…just how safe are casinos? A honest polling of the incident reports generated in Strip casinos would probably say, “Not as safe as you think,” and in some ways it’s encouraging that these kind of strong-arm robberies are so rare.

In the end, there’s really no way to defend against this kind of thing, short of metal detectors and perimeter checkpoints. The best prevention is a good deterrent, which is linked to a high clearance rate for these sorts of things, which suggests that casino security and Metro have been doing their jobs pretty well.

Marilyn Spiegel interview

About 2 weeks ago, I interviewed Marilyn Spiegel for a profile piece in Vegas Seven. There are always space constraints, so I thought it would be a good idea to record the interview and post at at UNLV Gaming Podcasts, mostly so she can share her story in her own words.

I”m having some issues with iTunes presently–it may not show up in your feed, but you can get it here:

29-March 3, 2011
Marilyn Spiegel, President and CEO, Wynn Las Vegas
In this interview with CGR Director David G. Schwartz, Spiegel shares her thoughts on luxury at Wynn Las Vegas and chronicles her career in gaming.

Listen to the audio file (mp3)

One area that I’m sure people will be interested in is her thoughts on the closing of Alex. In his February conference call, Steve Wynn credited her with making him rethink the restaurant. Here’s an excerpt from the article:

“There were already thoughts about customer preference at Alex,” she says. “Alex Stratta is a phenomenal chef, but the dining experience is lengthy and American tastes have changed.”

Spiegel has no doubts that she made the right call.

“We have capacity in our other restaurants. If you’re able to drive the fixed costs of your restaurants over more covers, it’s more efficient. And if that space can be used better for a different idea, so be it.”

Its at about the 24-minute mark of the podcast, if you want to skip ahead.

I wanted to know what a food critic thought of Spiegel’s call, so I asked John Curtas of Eating Las Vegas. Here’s his response to me, which regrettably didn’t make the final cut of the article:

Great restaurants inside hotels are amenities that the hotel either does or does not want to offer its guests. Wynn has made a calculated decision to abandon his “great chefs/restaurants” brands of ‘o5, and it has nothing to do with “America’s changing tastes.” They think their customers won’t mind, and they think they can make more money with mediocrity.

The whole “fine dining is dead” chestnut is used as an excuse by chefs/restaurateurs/hotels to cut back on quality (and increase their profits) by pretending to be “with it.” My educated guess is Ms. Spiegel is more interested in pushing steaks and booze on her high rollers/nightclubbers than anything with a whiff of sophistication about it.

Leisurely, fine dining has always been a niche market for the aspirational and well-heeled. It hasn’t gone away, it’s simply not (quite) as fashionable as it was five years ago. Every high-end restaurateur I’ve spoken with, from the Bellagio to Caesars Palace, has told me their business is up…and doing even better now that people who would’ve dined at ALEX are looking for their big deal meals elsewhere. (If you don’t believe me, I’ll take you on a tour of a few of them some night).
John Curtas, Eating Las Vegas

Pretty strong stuff that definitely adds a different perspective.

Overall, I think Marilyn Spiegel has a great story that I’m glad I could help her share with people.

Frank Riolo’s leap of faith in Vegas 7

Finally, another Green Felt Journal in Vegas Seven. And this is a good one, too:

It’s not often that a CEO becomes a hero by jumping off a building, but most CEOs aren’t like Frank Riolo. And most companies don’t operate observation towers attached to a Las Vegas casino.

Since May 2008—just about the start of the current economic slide—Riolo has helmed American Casino & Entertainment Properties, the company that operates the Stratosphere, Laughlin’s Aquarius and Arizona Charlie’s East and Decatur for Whitehall Properties, an investment arm of Goldman Sachs.

In April, Riolo’s main charge, the Stratosphere, was putting the finishing touches on its new Sky Jump ride. As part of the opening festivities, he opened up the ride for free to all employees who wanted to try. It looked like so much fun, he joined them.

via Leap of Faith | Vegas Seven.

All of this grew out of a conversation I had with Mr. Riolo after he heard me on KNPR’s State of Nevada. As we were chatting, it dawned on me that he had a story everyone should hear.

While he was walking me around the property we ran into Brian Thornton, which turned out to be quite fortuitous, since he was an excellent guy to talk to about the El Cortez suite design competition. It’s another reminder of what a small town this really is. That’s not always a bad thing.

Podcast w/ Lee Amaitis is up

At the opening of the Tropicana’s new Cantor Gaming-run sports book, I had a very interesting conversation with Cantor Gaming President and CEO Lee Amaitis. It was so interesting that I thought I should share it with everyone. So we made an appointment for a sit-down interview, and here it is.

UNLV Gaming Podcast #27
Lee Amaitis, President and CEO, Cantor Gaming
In this interview with CGR Director David G. Schwartz, Amaitis gives a perspective on his career and discusses the current state of sports trading, as well as sharing his thoughts on the future.

Listen to the audio file (mp3)

Cantor Gaming

More UNLV Gaming Podcasts

Amaitis says some intriguing things about where sports betting is heading. It’s particularly noteworthy that he avoids the term “sports betting” and refers to “sports trading,” suggesting a completely different model for the activity. If you’re interested in where gaming and technology are heading in the very near future, you’ve got to listen to this one.

Thoughts on 2010 in Las Vegas Business Press

This week in the Las Vegas Business Press, I take a look back at a year that raises more questions than it answered:

From the start of last year, Nevadans had no illusions. The recession showed no concrete signs of letting up, and within the gaming industry hope, particularly about the newly opened CityCenter, was mingled with bigger anxieties about the dire local and problematic national economy. A look back at 2010’s gaming revenue picture shows that, while the worst didn’t happen, the “baccarat-based recovery” raises some serious questions about the future.

via Las Vegas Business Press :: David G. Schwartz : Breaking even does not equal economic revival.

Hopefully we can tell a little bit about where we’re going by knowing where we’ve been.

Today’s a busy day. I’ve got a special surprise in my class today: it’s being filmed for C-SPAN’s Lectures in History series. I don’t know when it will air, but I’ll keep you all posted. The lecture is about Las Vegas casinos in the 1940s, which includes the birth of the Strip and the story of the infamous Flamingo…as well as some neat historical stuff about the origins of Nellis AFB and Basic Magnesium.