The Genting project means a lot to Las Vegas

Nov 19, 2013 3:08 AM

Las Vegas continues to “look good” as other jurisdictions – Massachusetts and Florida being just a couple examples – dither about the legalization of gaming in any form, suitability investigations and how to tax or regulate it.

This was the gist of an observation coming my way recently from a longtime Vegas businessman who recognizes that the good times and bad both come and go.

And why does it look good? I asked.

“Because there is not another state where you’ll find anything like the attitude of cooperation between casinos and government that has existed for years in Nevada,” he said. The results have been good for the state, or haven’t you noticed…

“Nothing is forever,” he told me. “Las Vegas has fought its way through the worst of the bad times these last several years, but the essence of what has given Las Vegas its best years and an advantage that can’t be duplicated anywhere else in this country still seems to be in good shape.”

What’s that?

“The partnership between business and government,” he said. “The movers and shakers in business and government don’t always agree. You’ll hear them arguing about how to take care of the goose that’s laid all these golden eggs but you don’t see them trying to kill the goose.”

I thought about that and told him people used to talk about the importance of this “partnership” much more often than they have in recent years.

“Yeah,” he agreed, “Good things can get taken for granted after a while. Now it is all about the get-rich-in-a-hurry prospects in Macau or wherever. The casinos in those places will do well but there may not be another travel destination in the world where you can find the kind of partnership that exists in Nevada.”

It’s an attitude that will continue benefiting this state, he said, even as Nevada companies look to pump up revenue streams elsewhere.

“Look at the Genting project,” he continued, a reference to the 80-something acres on the north Strip area the Malaysian company bought from Boyd Gaming last March for $350 million. “They’re probably not going to get to it as quickly as people would like, but it is a commitment that means a lot to Las Vegas. You remember how the governor helped roll out the welcome mat? You think a billion-dollar-plus resort project would have gotten that kind of welcome in Illinois?

“Lots of places got gambling,” he concluded, “slots, blackjack tables, what have you, but places like Vegas and the Disney people, they know it is the experience that keeps bringing the masses back.”

I guess Las Vegas set the table, so to speak, a long time ago and the people in charge of making things happen don’t want to screw things up.

“Let’s hope so,” he chuckled.

You gonna let me use your name?

“No, no, no,” he barked. I can’t have my friends thinking I’m talking to reporters.

And abroad: Las Vegas resorts will always welcome budget conscious visitors but the biggest resorts have been putting special attention into efforts aimed at enticing high-end business.

Much of this business comes from outside the U.S. This foreign business accounts for bigger than ever slices of the corporate revenue pies. It may also involve romancing business and convention groups, which generate stronger revenue flows than so-called leisure business.

The “premium niche” business pursued by MGM, Wynn, Caesars and Las Vegas Sands is finding its way to Las Vegas where the spending is reaching impressive levels.

Some of the biggest gamblers prefer not to gamble too close to home, is the way former MGM CEO Terry Lanni once explained the appeal of Las Vegas when Macau or Singapore is hours closer to home.

Steve Wynn was talking about the impact of travel trends by the super-rich on his (Las Vegas) properties. “Last year we won about $600 million at the tables and another $170 million or so at the slot machines.”

Wynn guesses about 25-30 percent of the slot win came from international business. As for the table action, probably 52 percent of that was from Asian customers, 24% was Latin and the remainder, another 24%, was the result of domestic business.

“A lot of people are enjoying (business) success outside the United States,” he said, “and as they make their way to Las Vegas we (Wynn Resorts) are one of their first choices. We cater to that business – people who want the best and can afford to pay for it.”

MGM CEO Jim Murren says International business was helpful during the worst years of the recession when many domestic customers reined in their discretionary spending.

The impact of high-end business throughout companies such as Caesars, Wynn, the Sands and MGM explain why they will jump at the chance to spend billions in possible new markets such as Japan.

Sands executives have said construction costs for a casino in Japan might start at about six billion and go up from there. The price of entry is a big one but the likelihood of big profits is enticing.

Phil Hevener has been writing about the Nevada gaming business for more than 30 years. He can be reached at [email protected].

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