The Mentalist Behind The Las Vegas Strip’s First All-Spanish Show | Forbes

As a teacher, one of the most gratifying things is seeing your students go out and make their own success. So writing this story for Forbes about one of my former students was a delight:

Since last December, Michel, billed as “El Mentalista Meixcano” (the Mexican Mentalist) has starred in Ilusión Mental, a mind-reading show that is performed entirely in Spanish. The show, which runs at 5:30 p.m. four nights a week at Planet Hollywood’s Sin City Theater, just notched an important milestone: its 100th performance. And the fact that it is thriving in a crowded, competitive (a quick scan of shows no less than 114 current productions) market says a great deal about the potential for Spanish-language entertainment in Las Vegas.

Read it all: The Mentalist Behind The Las Vegas Strip’s First All-Spanish Show

If you speaking Spanish and are visiting Las Vegas, this is something to check out.

Miracle Man & More in Vegas Seven

In today’s Vegas Seven, I have an About Town profile of the work Russell Joyner’s done with Miracle Mile Shops:

The International Council of Shopping Centers’ annual REcon event is the Super Bowl for retail real estate professionals. It’s going on right now at the Las Vegas Convention Center, so all eyes in the shopping-mall world are riveted on Las Vegas. Plenty of attendees have made it a point to talk to Russell Joyner, who, in eight years has turned Miracle Mile Shops at Planet Hollywood into the talk of the town.

via Miracle Man | Vegas Seven.

Talking with Joyner, I got a sense of just how many moving parts there are in Strip retail.

From last week, I’ve got a short look at the closing of the Stirling Club, if you missed it.

TR @PH in V7

A week ago today, Planet Hollywood officially became a Total Rewards property. In my latest Vegas Seven column, I talk a little about the behind-the-scenes work that made this possible:P

If you didn’t notice anything unusual at Planet Hollywood recently, don’t feel bad: You weren’t supposed to. But behind the scenes, and occasionally in front of them, a massive operation transformed the property into the eighth Las Vegas casino under Harrah’s Entertainment’s Total Rewards umbrella.

Since its relaunch in 2007, Planet Hollywood has offered players its A-list club, which, like other casino loyalty programs, lets them earn points redeemable for meals, lodging and entertainment with each dollar wagered.

Harrah’s Total Rewards does the same thing on a national scale, letting players bank rewards credits from 35 properties across the United States and Canada. Even before the Planet Hollywood acquisition, Harrah’s has been planning its conversion to the Total Rewards system.

Conversion required more than installing an update patch on a few computers. Technicians had to remove all existing systems, including the core casino management system (which tracks and records play), the lodging management system (which lets the hotel take room reservations) and back-of-the-house systems that track everything from employee hours to ordering and receiving.

via Total Rewards program expands with inclusion of Planet Hollywood | Vegas Seven.

I was able to walk the floor while they were doing the work and talk to many of the people involved in it, and two things struck me: the sheer amount of work involved and the minimal impact it had on customers.

It’s not exactly the Manhattan Project as far as major engineering efforts go, but it’s still pretty impressive.

Comparison shopping in AC

Yesterday I wrote a bit about the numbers behind the proposed mini-casinos considered for Atlantic City. Now, with news that Hard Rock is talking about spending $300 million to build a mini-casino, I thought I’d do a little number-crunching and learn if you’d be better off using that money to buy an existing property or build a mini-casino.

Trump Marina’s been for sale; that’s no secret. There’s a $75 million offer on the table for it. Financial analyst William Hardie now values the property at $24 million. We can argue about whether that’s a fair assessment–Trump certainly would–but let’s say we’ve got a choice between buying Trump Marina for even $80 million or building a mini-casino for $300 million. Which should we take?

In 2008, Trump Marina had 72 table games and 1,983 slots, with a 78,535 square-foot casino.

The mini-casino would be restricted by law to 20,000 square feet, which I say pencils out to roughly 24 table games and 512 slot machines.

Right off the bat, something should be obvious: for nearly four times the cost of entry, you get one-quarter the slot machines. In theory.

In theory, I guesstimated that these mini-casinos would earn, all things being equal, about $68 million a year.

Back in the real world, Trump Marina earned $203.6 million in 2008, after a long decline (in 2002, it made $283 million in gaming revenue). It is obviously under-performing, and has the potential to do much better business. It’s near two of the biggest and best-performing properties in the city (Borgata and Harrah’s), much better neighbors than the Atlantic City Hilton near Albany Avenue. It has an existing customer and marketing database and needs no additional infrastructure. At the very least, it’s a turnkey business. Of course, you’d have to invest heavily to bring it up to its potential, but how much would it cost to remodel? It took $150 million to transform the Aladdin into Planet Hollywood. P-Ho is about 2.5 times the size of the Marina.

So instead of starting from scratch and investing $300 million in a new facility with one-quarter of the revenue potential, why not just buy Trump Marina and renovate it–really renovate, almost beyond recognition? Even if you put $100 million into it, you’re still saving money, and you’ve got a much bigger, better-situated Hard Rock casino with way more potential upside.

BTW, in the late 1990s Trump’s Castle was almost re-themed as a Hard Rock casino, but for a few reasons that didn’t happen and we got Trump Marina instead. Maybe that’s why I wanted to run the numbers on this one.

Am I missing something, or when you look at it like this does $300 million for a mini-casino seem like a bad deal to you, too?

Latest GFJ: The Power of Twitter

My much-anticipated Green Felt Journal piece about casino tweeting–which inspired me to finally claim @unlvgaming and get to work–is out, in today’s Vegas Seven:

Casinos are always looking for new ways to reach customers. So it’s no surprise that they’ve embraced Twitter, the popular social networking application that lets anyone tell the world, in 140 characters or less, “what’s happening.”

Casino tweets range from straight-up promo offers TI Suite Sale $50 F&B + 20% Off Spa / Also $61 Strip View w/free breakfast to single-sentence press releases Celine Dion is returning to @CaesarsPalace and will be back home at the ColosseumatCP 3/15/2011! to actual interaction with followers Hey #vegas tweeps, come introduce yourself this Saturday night! #stationsocials.

On one hand, it’s great that casinos are connecting with potential customers, whether it’s by smoke signals or Short Message Service. On the other, just because you can do something, it doesn’t mean you should. Does all of this tweeting, retweeting and following actually add anything to the bottom line, or is it just sound and fury for the sake of sound and fury?

via Tweets connecting casinos with potential customers | Vegas Seven.

It was a fun piece to write, and I learned quite a bit from my talks with Brandie and Hunter (though to be fair, I get to talk to Hunter every few weeks on the Vegas Gang). With an Advertising and New Media Summit at the next Casino Marketing Conference, it’s clear that social media is increasing in importance for casinos, just as it is for other businesses.

You on the phvegas big screen

If you really want to see your name in lights, you’ve got the chance this weekend, thanks to the folks at Planet Hollywood. From their press release:

Now through Sunday, Feb. 28, Miracle Mile Shops at Planet Hollywood Resort & Casino is giving everyone a chance to be famous by posting photos and messages on the center’s Strip-side LED screens.

In partnership with Clear Channel Spectracolor and LocaModa, Miracle Mile Shops debuts a state-of-the-art technology allowing anyone to interact with the center’s record-breaking LED screens. Pedestrians along the Las Vegas Strip will be able to see their own photos, messages, Twitter posts and Foursquare check-ins displayed in real time on the 130’ by 40’ digital screen located above the north entrance. To have images and messages posted, onlookers will simply need to follow instructions provided on the LED video screen.

Miracle Mile Shops’ interactive, social media capability continues the center’s effort in bringing Las Vegas original and exciting content on the LED video screens. With more than 13,000-square-feet of sign space, the center’s Strip-side video walls offer an endless array of video and sound production opportunities. The LED screens boast more than two-million pixels, each capable of 16-million colors, and can be remotely controlled from anywhere on the planet. Future video screen features will include content on timely Las Vegas events and holidays, providing ongoing entertainment and information for onlookers.

Keep up with the latest Miracle Mile Shops news via Facebook and Twitter.

It’s an interesting concept, and a great tie-in of an asset the casino already has with social networking. I hope they’ve got some kind of filter, because I imagine that they’ll get plenty of images and messages that aren’t family friendly. I’m sure the Gaming Control Board wouldn’t take to kindly to a licensee who’s had a few problems in the past (Prive, anyone?) broadcasting anything remotely racy in 16 million colors.

For this reason, I’m guessing this will either be a great success or a fantastic disaster by Monday. It’ll be worth watching, in any event.

Giving the little guy a chance on the Strip

It’s Thursday, which means another edition of the Green Felt Journal in Vegas Seven magazine. This week, as whether the “little guy” still has a chance on the Strip:P

Last year at around this time, “deconsolidation” was the buzzword along the Strip. MGM Mirage had just announced its sale of Treasure Island to Phil Ruffin, formerly of the New Frontier. Investment bankers and industry analysts announced that, just as the previous 10 years had seen Strip casinos swept into progressively larger corporate empires, the next era would see them splinter into smaller fiefdoms fortified by hedge-fund and private equity investment.A year later, it’s now clear that the pundits couldn’t have been more wrong. Rumors of an MGM Mirage fire sale proved immature. Harrah’s Entertainment has actually added a casino to its portfolio, having taken over the management of Planet Hollywood after acquiring a substantial stake via debt purchases.

via Does the little guy still have a shot on the Strip? | Vegas Seven.

As I promised before, this column also has my first overt Star Trek reference.

Also, only in Vegas would a multi-million dollar company with thousands of employees be considered “the little guy.”

Some other highlights from the issue:
– Nicole Lucht talks to Tony Marnell about the M Resort’s first year
–Mericia Gonzalez looks into the future of Vegas nightclubs
–Jeff Haney, formerly of the Sun, writes about HORSE at Aria. He’s a great poker writer, and hopefully this is the first of a regular series of column.
–and if you didn’t catch it last week, check out Jessica Prois’s talk about statistics with author Jeffery Rosenthal (Struck by Lightning: The Curious World of Probabilities)

Tons of other great reading in there–these are just the ones that have the biggest gambling/Strip connection.

Thoughts on Harrah’s “spree”

My comments on the recent Harrah’s purchase in the LVRJ were a combined Planet Hollywood/Ohio racetrack thought:

David Schwartz, director of the University of Nevada, Las Vegas' Gaming Research Center, said that the “common sense and intuitive response” would seem to be to ask why a company carrying $19.3 billion in debt is “buying more stuff.”

Especially, he added, since “the events of the past year, dating from the collapse of Lehman Brothers, kind of validates people who go by common-sense judgments.”

Jan Jones, Harrah's senior vice president of communications and government relations, however, said company executives believe the current economic environment is providing opportunities for cash-smart investments such as the company's expansion into Ohio's gaming market.

“We're always going to keep ourselves, within reason, in a position where we would be able to take advantage of the opportunities that become available with the right economics,” Jones said. “Taking advantage of good economic opportunities is always in the company's best interest.”

via MERGERS AND ACQUISITIONS: Harrah’s buys Ohio racetrack – Business –

I think we’re both right (of course I’m biased). While I can see, in theory, that a $42 million investment today may yield healthy cash flow in a few years, which would put the company in a better place financially, I stand behind my assertion that the common-sense reaction to the news–that you don’t buy when you’re already heavily in debt–should at least be considered.

This isn’t just about the racetrack deal, but a more general comment about leverage in the gaming industry. While many industries use varying amounts of leverage in the normal course of their financing, it should be clear that highly-leveraged casinos companies have run into trouble over the past year.

Similarly, it’s interested that the “deconsolidation” trend has not just halted, but actually reversed, if the Planet Hollywood debt acquisition leads to something. I’m challenged to see what Harrah’s would do with another 3,000 hotel rooms, particularly since they already have options at most price points, from IP to Caesars Palace.

It’s like playing poker–going all in with pocket kings is brilliant if your opponent winds up having 2/7 off suit (and neither twos nor sevens show up with the community cards). It seems idiotic, though, when you find out your opponent had pocket aces. In other words, I’m beginning to suspect that there are just too many factors outside of the control–or even perception–of most corporate decision makers to make any but the most conservative decisions “risk free.”

Prive investigation and gaming regulation

There’s a great article by Liz Benston in the LV Sun today about the investigation that ultimately deprived a nightclub of its license:

Managing a Las Vegas nightclub requires the deft and daring skill of operating a party environment that almost crosses the line into illegal activity. Anything less would be considered too tame to generate a buzz.

Planet Hollywood knew its tenant, the Prive nightclub, was crossing the line but didn’t stop it, and gaming regulators pounced.

Last week Planet Hollywood agreed to pay a $500,000 fine to the Gaming Control Board after acknowledging it knew of illegal and illicit activities occurring at the club, which operates on the mezzanine level above the casino. On Thursday the county denied the club a permanent liquor license, forcing its closure at midnight Tuesday, when its temporary liquor license expired. The club opened less than two years ago.

As a result of the unprecedented enforcement action against Planet Hollywood for allowing a nightclub to run wild, contracts between hotels and their nightclubs are now being rewritten to give the hotels greater authority to lay down the law with nightclub managers.

via Is the party over for Prive? – Las Vegas Sun.

If you haven’t already, I encourage you to click over and read the whole thing.

The goings-on at Prive bring up a deeper issue that I alluded to in a story about Randall Sayre’s 7/21 Industry Letter (pdf). Here’s most of the letter:

Recently there has been a great deal of attention focused on nightclub operations affiliated with Nevada licensees. Clearly, this is an important issue which, if
left unattended, can lead to serious regulatory ramifications. In addition to nightclub operations, there are a number of other areas where
regulatory concerns have surfaced. Either through lack of knowledge or apathy, licensees are creating regulatory challenges in areas requiring corrective action. Following are just a few examples of these areas of interest:
• The conduct of promotions;
• Approval and conduct of tournaments and charitable events;
• Race and Sports Book Operations;
• Intellectual property theft; and
• Questionable or misleading advertising
The vast majority of this State’s licensees attempt to “get it right” and any indiscretions are typically addressed in a non-disciplinary fashion with the cooperation
of the licensee. The Board recognizes these are hard economic times and licensees are facing increased competitive pressures. This does not mean, however, the Board
can allow a reduction in the regulatory standards governing licensees’ operations. In order to reduce disciplinary actions and foster open communication between
the Board and gaming licensees, the Board is proposing informal seminars covering our collective areas of concern. These seminars would allow the Board to identify some
common pitfalls frequently seen and provide an opportunity for the industry to voice their challenges and concerns. The process will also provide any needed clarification of
governing statutes and regulations.
This would be an operator’s workshop, not a formal seminar on law. The appropriate audience would be mid-level supervisors and program managers. It would
be property individuals that are responsible for following and enforcing policy and legal/regulatory requirements.

I hope that Sayre is successful in getting the casinos to send their managers to these workshops. This is the kind of program that they should be thankful for. Here’s why:
Imagine a homeowner throwing a party. During the course of the night, things get a little loud. The police are called. Should they break down the doors and immediately rest everyone for disturbing the peace, or knock on the door, ask to homeowner to keep it down, and see what happens?

The first option preserves public order and minimizes the burden on law enforcement–imagine if they had to arrest, transport and book everyone in the house, instead of policing the rest of their jurisdiction. Of course, if things get loud again and noise complaints continue, they would have to take “corrective action,” but usually, a little reminder of neighborly courtesy is enough.

This is essentially Sayre’s approach. Some parts of the regulations casinos operate under–the Minimum Internal Control Standards–are completely unambiguous. You’re either in compliance with them, or not. Others are more nebulous. Take, for example, NRS 463.0129, the backbone of gaming regulation in Nevada:

NRS 463.0129 Public policy of state concerning gaming; license or approval revocable privilege.

1. The Legislature hereby finds, and declares to be the public policy of this state, that:

(a) The gaming industry is vitally important to the economy of the State and the general welfare of the inhabitants.

(b) The continued growth and success of gaming is dependent upon public confidence and trust that licensed gaming and the manufacture, sale and distribution of gaming devices and associated equipment are conducted honestly and competitively, that establishments which hold restricted and nonrestricted licenses where gaming is conducted and where gambling devices are operated do not unduly impact the quality of life enjoyed by residents of the surrounding neighborhoods, that the rights of the creditors of licensees are protected and that gaming is free from criminal and corruptive elements.

(c) Public confidence and trust can only be maintained by strict regulation of all persons, locations, practices, associations and activities related to the operation of licensed gaming establishments, the manufacture, sale or distribution of gaming devices and associated equipment and the operation of inter-casino linked systems.

(d) All establishments where gaming is conducted and where gaming devices are operated, and manufacturers, sellers and distributors of certain gaming devices and equipment, and operators of inter-casino linked systems must therefore be licensed, controlled and assisted to protect the public health, safety, morals, good order and general welfare of the inhabitants of the State, to foster the stability and success of gaming and to preserve the competitive economy and policies of free competition of the State of Nevada.

(e) To ensure that gaming is conducted honestly, competitively and free of criminal and corruptive elements, all gaming establishments in this state must remain open to the general public and the access of the general public to gaming activities must not be restricted in any manner except as provided by the Legislature.

The key here is the requirement that licensees “protect the public health, safety, morals, good order and general welfare of the inhabitants of the State, to foster the stability and success of gaming and to preserve the competitive economy and policies of free competition of the State of Nevada.” Technically, a casino could have its license revoked for a kitchen worker forgetting to wash his hands after using the bathroom–that is, after all, endangering the public health. Should that happen? No, because no one would be willing to build a multi-billion casino if their license rested on such a slender thread.

I’m aware that there is some disconnect–some might call it hypocrisy or at least confusion–in the idea of casinos as watchdogs of “morals” when the bulk of promotion for Las Vegas in the past few years has been geared towards proving that the city is a place without morality. But it’s clear that, in the minds of the industry and its regulators at least, that there is immorality and then there is immorality. Gambling more than you should is OK; cheating on your spouse with a consenting adult is OK; engaging in public sex or, if you a prostitute, soliciting clients in casinos is not. I’m not saying that drawing the line between these things is logical, or even rational; I’m just saying that it’s there, and everyone in the industry knows it.

A lot of things that Sayre makes reference to blur that line between permissible and impremissible immorality. The letter is the Control Board’s offer to work with the industry to clarify exactly where the line is, to explain what will put licensees in clear violation of NRS 463.0129. With this letter, the GCB is saying that, regardless of what’s been going on until now, here’s how things are going to run from now on. They’re doing this without staging intrusive raids or indiscriminately levying fines for things in this gray area.

If the operators don’t take the Board up on its offer, they will be out of excuses if they are tabbed for “corrective action.” They have an out–“I didn’t know that was a violation”–and if they don’t take it, they’ll only have themselves to blame.

Another day, another bad marker case

Along with word that business in Las Vegas is “bouncing along the bottom,” the big news today is the latest in celebrity bad marker cases, former NBA star Antoine Walker. From the LVRJ:

Walker faces three felony counts related to writing bad checks at Las Vegas casinos between July 2008 and January 2009. According to the criminal complaint, Walker wrote six checks worth $100,000 each at Caesars Palace around Jan. 19. Before that, the 12-year NBA veteran wrote $400,000 worth of checks for chips at Red Rock and Planet Hollywood, prosecutors say.

Walker has paid back a portion of the money but still owes $822,500.

via Walker charged with writing bad checks to casinos – Sports –

I did a quick interview on this subject with KVVU (Fox 5) this morning, so I’ve got a few thoughts.

First, for some reason, as I read the story, I kept thinking that he got a marker for $400,000 in red chips. And the old CCTV operator in me said, “That’s four thousand stacks.” I assume that even though he was playing at Red Rock, he did not receive the money in $5 chips.

Anyway, the serious stuff starts here. Why do casinos even offer credit play? That’s a common question. The answer is that we’re talking about sums so big, few people are going to be bringing in cash, and if they are, the IRS may start to get suspicious, since most legitimately high-wealth individuals don’t walk around with hundreds of thousands of dollars on them. There is a detailed process, filled with internal controls and external checks, before someone is granted credit. Generally speaking, the casino investigates the player’s credit history and, if they seem to be good for it, lets them sign a marker.

Why are unpaid markers considered bad checks? That’s a very good question, and the best answer is that this is because that’s what the law is. Why is that the law? I haven’t been able to find much on the legislative debate over the bill that made gambling debts legally collectible in 1983, but I imagine that the casino industry had a fair degree of input into the process.

How much money are we talking about? In 1998, attorney Bob Faiss estimated that between 5 and 15 percent of all money wagered at all Nevada casinos is bet on credit. If you’re interested in the mechanics of casino credit, Faiss’s testimony before the National Gambling Impact Study Commission is as good a summary of any of the process.

For fiscal year 2008, gamblers wagered about $232.4 billion dollars in Nevada casinos.* Five percent of that is about $11.6 billion. Fifteen percent is approximately $34.9 billion. For the sake of argument, let’s assume that the number is ten percent of all money wagered in Nevada casinos. In that case, we can say that Nevada casinos extended about $23.2 billion in credit during fiscal year 2008.

According to the Nevada Gaming Abstract, in that year casinos statewide reported a total of $132.1 million as “bad debt expense,” i.e., uncollected markers. That seems like a lot of money, and it is. Compared to annual gaming revenues of about $12 billion for that period, though, it doesn’t look so big (“only” 1.1 percent). Next to the estimated total credit play, $23.2 billion, it’s tiny: 0.56 percent. Just over one-half of one percent of casino markers end up as bad debts.

That’s probably worse than a commercial bank’s lending rate, but isn’t that bad. According to a recent news story, Bank of America, one of the largest banks in the US, is writing off more than 10 percent of its credit card loans.

While more alarmist elements may imagine that there’s a tidal wave of bad credit decisions and unpaid markers coming from Nevada casinos, looking at the numbers shows that this isn’t true. Only a small percentage of markers end up unpaid, and it seems that casinos do a pretty good job of due diligence before letting players sign markers. Of course, a few high-profile cases gives a much different impression.
*If you want to check the math, divide the total table and slot revenues by their respective win percentages, then add them.