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Is Nevada gaming yielding to tourism?

Aug 19, 2003 7:34 AM

Nevada has always been at the epicenter of the gambling universe, but lately tourism has become the focus of casino marketers, much to the displeasure of gambling proponents.

"While tourists are good for the economy, they are not as good as gamblers," said Hal Rothman, a UNLV historian and author of the modern history of the city, Neon Metropolis: How Las Vegas Started the Twenty-First Century. "When they do gamble, they bet less money and they don’t play as long."

Nevertheless, the officials charged with the task of attracting visitors to the Silver State believe promoting tourism beyond gaming was in the cards nearly two decades ago.

"Twenty years ago, legal casinos were beginning to spread across the United States, and Nevada made a historic decision to promote its other attractions," said Bruce Bommarito, executive director of the Commission on Tourism. "The rise of tribal-owned casinos further motivated Nevada’s diversification of tourism, which has resulted in today’s assortment of adventure, outdoor recreation, family entertainment, shopping and fine dining, as well as scenic wonders, festivals and events.

"Rather than shrinking in the face of competition," he continued, "Nevada has transformed itself into a wish-list destination that offers a unique and unbeatable package."

That transformation was sparked in 1989, when Steve Wynn built The Mirage, the first in a series of themed mega resorts that enticed visitors with non-gaming attractions.

The ensuing decade of the 1990s saw a building boom unprecedented on the Las Vegas Strip ”” 12 elaborate resorts opened in quick succession as builders tried to outdo one ­­another.

Today’s visitors can now see a string of themed resorts, including Paris Las Vegas and its 50-story Eiffel Tower, New York-New York with a 47-story replica of the Empire State building and 150-foot version of the Statue of Liberty, The Venetian’s canals, Luxor’s pyramid, Treasure Island’s pirate ships and Bellagio’s dancing fountains, to name a few.

"What other city built 60,000 hotel rooms largely along one street in just 10 years?" asked Hal Rothman, the UNLV historian.

Along the way, the money flowed from gamblers to tourists. When the Mirage and Excalibur opened in 1989, gambling accounted for 59 percent of casino revenue on the Strip. This year, it’s projected to be just over 40 percent.

As a stark indicator of how Las Vegas has come to rely less on gambling revenue are the revenue figures for the industry’s largest company, Park Place Entertainment. Gambling accounts for 90 percent of the revenue at Park Place operations in Atlantic City, but only 49 percent at its Western casinos, which are primarily in Las Vegas.

But the notion that casinos are missing the gaming boat is an unfair one, according to casino operators. They say it’s actually part of a strategic plan to "diversify" their offerings.

"Not every tourist is a hard-core gambler who will spend all his time and money in the casino," said one casino insider.

Alan Feldman, spokesman for MGM Mirage, added, "The operators knew that in order to grow, there had to be a greater appeal to tourism and the convention business and less reliance on Las Vegas as a gambling business."

Outside of Nevada, however, the trend is toward expanded gambling. Four decades ago, gamblers in the U.S. were wagering $2 billion a year and losing $200 million, according to Paul Weiler, a Harvard Law School professor who specializes in sports and entertainment.

Today, bets have increased to $750 billion on sports, lotteries, slots, poker and such, and gamblers lose an estimated $70 billion annually, Weiler said.

"The total amount spent last year on every game, every movie, every concert and every play was $25 billion," he said. "Americans now spend nearly three times as much on gambling as we do on all other forms of entertainment."

That’s not the case on the Strip, where visitors’ gambling budget has steadily decreased over the last few years, while the amount they spend on shows, dining and shopping have steadily increased.

According to the Las Vegas Convention and Visitors Authority’s most recent visitor profile, the average tourist’s gambling budget was about $469 in 1998, reached a peak of $665 in 2000, and has steadily decreased to about $503 in 2002.

Meanwhile, the average amount spent on food, shows and shopping increased from $248 in 1998 to about $322 in 2002, for a 30 percent increase.

"Visitors will be induced to spend more money gambling when the casinos come out with something exciting enough to induce them to gamble," said Rocco Tarantino, a game designer who recently penned a deal to provide games to United Coin. "There’s an apathy in the casino that has led to complacency.

"People like to gamble," he continued. "It’s up to us to keep coming up with the games that will keep them interested."

But rather than come up with new games or other casino enticements, resort operators have been stressing new dining, entertainment, shopping and other attractions.

Over the past two years, nearly 20 new nightclub and "ultra" lounges have opened in Las Vegas. Most of these are hip, upscale affairs that appeal to a younger crowd, not necessarily the best candidates for the casino.

A huge segment of the expanding nightlife scene is the gentlemen’s club or adult cabaret. Last December, for instance, the $25 million Sapphire Gentlemen’s Club opened with its 10,000-square foot showroom, 13 skyboxes and a stable of "6,000 entertainers."

"Las Vegas, once famous for its gambling casinos, has become known for its three-figure dining bills and ticket prices," complained Ted Gottlieb, president of Gaming International, which manufacturers instructional cards for casino players. "Less is being done today to promote games than was being done 20 years ago."

Gottlieb said organizations such as the state’s Commission on Tourism and the Convention and Visitors Authority in both Reno and Las Vegas aren’t doing enough to promote gaming.

"The Nevada Commission on Tourism will spend about $2.4 million on advertising this year, tied with Wyoming for the lowest budget of the 11 western states," Gottlieb said. "These organizations are the custodians of our business and they’ve walked away from their job."

Gottlieb said even some casino operators have neglected marketing to gamblers.

"What ever happened to shills (casino-paid players to make the games appear more interesting) and gaming lessons?" Gottlieb said "Many casinos have cut back on free lessons, which have always been an inducement to players."

Another segment of the casino that feels it could benefit from more marketing is race and sports.

Last year, however, sports betting accounted for only 2.4 percent of Nevada’s gaming revenue, which probably accounts for the miniscule budgets casinos allot to their race and sports operation.

"I’m not naïve enough to believe that I don’t know where the money comes from," Bob Smith, director of operations for Leroy’s sports books, said at a recent Casino Management Association seminar. "We aren’t the biggest money maker, but we are important to the entire casino package."

In the final analysis, gaming and tourism should go "hand in glove," said Rothman, the UNLV historian.

"Gaming is the entree, the biggest and most desirable piece on the menu," Rothman said. "But the appetizers and desserts are just as tempting and deserve their place."