Critical Mass: Adele, Barça, Real Madrid, and Bennifer

July was a good month for the image of Las Vegas. The month ended with a rainstorm that flooded a parking garage and some streets and dripped through the ceiling of Circa. Videos of water inundated the internet; millions clicked on them and all the major news outlets had some coverage. It was not a real flood, like the one in Kentucky, and there was little damage, but it was Las Vegas and that is news. Earlier in the month, speculation on Adele’s return to the Strip made newspapers from London to New York. Each time Adele’s name appeared in print, so did Las Vegas.

On July 16, Jennifer Lopez and Ben Affleck married in a Vegas wedding chapel. Theirs is the romance of the year; everything they say or do gets full coverage. And since their wedding, every story now also includes a line or two about the Vegas wedding.

Finally, on July 23, the most watched football game (called soccer in the U. S.) was played in Allegiant Stadium: El Clásico. Real Madrid lost to Barcelona in front of 60,000 fans. A nice crowd, but across the planet, between 85 million and 100 million people tuned in to see two of the best teams in the world play in Las Vegas. As Mama Morton says in the musical Chicago, “Baby, you couldn’t buy that kind of publicity.”

Not that Vegas does not try to buy publicity. The Las Vegas Convention and Visitors Authority has a very large budget for publicity. Keeping the city in the media and in the minds of potential customers is its job. For many years, it was an uphill job. Gambling was illegal in most of the country, Vegas had a tainted reputation, and the media was not interested in the happenings in Sin City. That is not the case today. Attitudes toward gambling and Las Vegas changed with the spread of legalization gambling to other states.

The evolution of Las Vegas also helped shape attitudes: Year after year, Las Vegas attracted more people. The increase in visitors led to an increase in investment; casinos were no longer just gambling halls. The mega-properties that dominate the landscape of the Strip are resorts, not casinos. Besides having thousands of hotel rooms, the resorts have dozens of bars, restaurants, entertainment venues, and shopping options. The city hosts tens of millions of people annually. The 150,00 hotel rooms are nearly full every day of the year. Hundreds of billions of dollars have been invested along the famous Strip; it is a place like no other on Earth.

Other cities have casino-resorts. Detroit, Philadelphia, Biloxi, and New Orleans have several; Chicago, Los Angeles, San Diego, San Francisco, Baltimore, Boston, Washington, D.C., and New York City have casinos in the environs. Atlantic City has nine. Only Las Vegas has dozens of fabulous luxury resorts within walking distance of one anther. It is a critical mass and that mass or density is a major reason for the city’s success. It is also the reason that a soccer match, celebrity wedding, and singer’s residency are major national and even international news stories.

Critical mass is when enough of something produces a particular result. The term comes from physics. It entered the popular imagination with nuclear weapons. To make a nuclear explosion requires a critical mass of fissile materials. We learned the word watching mushroom-shaped clouds rise over the Nevada desert. Since the first bombs, the term has been applied to other disciplines, including social science, population studies, and business. Common social theory holds that once a city reaches a critical mass, all intellectual and artistic creativity and scientific discoveries increase exponentially. In business, a comparable theory predicts an increase in customers, sales, and profit in areas with a critical mass of businesses, as in a major mall or other shopping district.

Las Vegas has benefited in both ways. The increased density in casinos and casino operators has led to a more innovative and competitive environment. The concept of a casino-resort is constantly evolving; every new property promises to bring all new elements to its resort and to be a “game changer.” None can quite live up to the hype, but each makes its contribution to an ever-changing game. Nothing is static in Las Vegas. It is a game that casinos in Illinois, Pennsylvania, New York, Maryland, Massachusetts, and other states cannot play. The money and creative talent look to Vegas as a first choice. In the social sense, the same phenomenon is happening; Las Vegas is a magnet for talent in the industries of food, entertainment, sports, architecture, conventions, and retail.

It all combines to draw customers from every corner of country and the globe and to attract the eye of the media. The city has the critical mass necessary and is becoming something unique. It is a place for world-class sports and entertainment and the perfect backdrop for romance.  Just ask Barcelona, Madrid, Adele, Jennifer Lopez, and Ben Affleck.

False alarm disturbs the tranquility of the Strip

Las Vegas got another terrorist scare.

Fortunately, this time it was a false alarm. There was no terrorist, no shooting, and almost no injuries. It still rocked the tranquil atmosphere and created temporary havoc.

At about 10 in the evening on Saturday, July 16, at the MGM Grand, a window in the valet-parking area was broken; the window breaking created a very loud gunshot-like noise. Subsequently, one person was arrested for misdemeanor destruction of property. The police investigated the incident immediately and announced there was no shooter and no present danger: “It caused a loud bang. There was a subsequent panic, thinking it was possible gunfire, given the nature of what’s been happening across the nation. We were able to quickly tell people that was not the case,” said Police Department Capt. Branden Clarkson.

The incident made headlines for several days, not because of the broken window or the arrest. The story that was picked up by the media was the ensuing panic. Seven Strip hotels in some way responded to the initial reports of a live shooter on the Strip and at least one show stopped. The World Series of Poker was halted, tables were turned over, and players and dealers were crouching under the tables. There were numerous other reports of panic, with people running for cover and hiding under furniture; police, ambulances, and firetrucks swarmed the Strip. The injuries that occurred were due to people falling, or fallen people being stepped on by other fleeing customers. Even though the police had said there was no danger, it took as long as 30 minutes for the message to reach some casinos and to have order restored.

To an outside observer, the scenes would have looked as if a 1920s’ filmmaker was filming a silent, black-and-white, slapstick comedy, complete with Keystone Cops. The film might have starred Charlie Chaplin, Laurel and Hardy, or Buster Keaton. It would have been very funny, tickling audiences everywhere. However, the incident did not make for a funny evening on the Las Vegas Strip. The people interviewed afterward all expressed genuine fear and suggested it might have a long-term impact on them emotionally. Ronald Balogh, a tourist from Florida, said, “It was very real for me. This was kind of a non-event, but it was so poignant that it left a mark. It changes your perception of the place. I always felt very safe there. Not anymore.”

The incident does not compare with the Las Vegas mass shooting of October 1, 2017, or any other event where people have been shot, killed, and injured. Several recent events were horrific: the Uvalde, Texas, school shooting on May 24 when 19 students and two teachers were shot and killed. And the Fourth of July shooting in Highland Park, Illinois, where seven people were killed and 25 injured. The Las Vegas broken-window event was close enough in time to those two incidents to tap into the Uvalde and Highland Park emotions. In fact, mass shootings are occurring often enough to keep the national wound open and bleeding. Nationally, our nerves are raw and we are jumpy like soldiers recently returned from combat.

If those kinds of mass killings happened only in Las Vegas, it would be the death knell of the city. Las Vegas lives from tourism. Forty-million to fifty-million people a year go to Las Vegas to play, relax, and enjoy the food, entertainment, sports, shopping, and mingling the city has to offer. If people did not feel safe in Las Vegas they would stop going. Tourism has ground to a halt in war zones like Syria and Lebanon, for example. Las Vegas has had several incidents, but fewer by far than other big cities in the country. The shattering window and the ensuing panic are a reminder of the insecurity felt everywhere. The feeling is becoming part of the national psyche. It won’t impact tourism in Las Vegas any more than it impacts tourism to Texas, Florida, or Chicago.

That is not to say there is no impact on tourism, retail shopping, or even going to school. However, whatever the impact might be, it is not easy to quantify or even identify. Personally, I have not gotten over my hesitancy to be in public from the pandemic. I still wear a mask when I shop, go to the bank, and get a haircut. And I do those things less frequently than I did before March 2020. I am not alone in my angst. The situation created by the frequent shootings is even more complicated. There are no masks, vaccines, and social distancing practices that can protect a person from being shot. There is no limit on the shooting or estimated time of for the shootings to end. The anxiety will grow if there are more incidents; therefore, the economic impact will grow as well.

The city of Las Vegas is on edge and police are increasing their coverage and training. It will take all the advertising power of the LVCVA to show that Las Vegas is safe. Ronald Balogh is a perfect test case. If he continues to go to Las Vegas as regularly as he did before, all will be well. If, on the other hand, he cuts the number of his trips in half or to one in four, Las Vegas will feel it. Balogh said he no longer feels safe in Las Vegas, though he did not say he would not come back. The image of an “otherworldly” fantasy of freedom, fun, and tranquility was tarnished by October 1, 2017. July 16, 2022, showed how much the tranquil image has been disrupted.

And Another One Bites the Dust

Station Casinos announced the permanent closure and demolition of three of its casinos: Fiesta Henderson, Fiesta Rancho, and Texas Station.

The casinos have been closed since March 17, 2020, when Station closed its 20 casinos in Las Vegas on the order of Governor Steve Sisolak. All Nevada casinos closed that day and remained shuttered until June 4. The reopened casinos were restricted to 50 percent capacity until the end of May 2021, in addition to social distancing, mask, and entertainment-limit mandates. In Las Vegas, not every casino company reopened all of their casinos. Station chose not to operate four of its properties, one of which, the Palms, it sold. Now, the other three are set to become dust. In the meantime, Station has announced two properties in Vegas and is working with North Las Vegas on a third, the location of which has not been disclosed. Those decisions do not necessarily indicate a change in strategy, but rather a reevaluation of operating tactics; it is a common outcome of COVID-19.

The pandemic had an impact on everything in our lives. It changed the way we think, work, buy, play, and plan for the future. The pandemic kept people at home, in some cases for months. People learned to work, shop, and entertain themselves without walking out their front doors. Netflix and Amazon stood by ready to provide anything and everything consumers wanted and to bring it to them. Most of the workforce has returned to work and people are once again going out to restaurants, concerts, and movie theaters. But Netflix and Amazon have not lost their hold. Streaming and delivery services existed before the pandemic, but they gained a much stronger foothold when people were unable or unwilling to go out. In the aftermath of the COVID crisis, online shopping, home delivery, and streaming are firmly entrenched.

Even when people go out, they do it differently. Like Station Casinos in Las Vegas, while locked inside, people started to rethink their basic tactics — and sometimes even their life strategies. The rethinking has led to career changes, with fewer people willing to return to a regular job, increased savings, and more long-term planning. Long-term planning, although always extremely important, was not as common as one would think. Previously, once people had chosen a career field and set up a 401K program, they commonly fell into a simple day-to-day routine life. The coronavirus shocked everyone. No one, except possible Nassim Talib, the author of Black Swans, foresaw the possibility of a complete shutdown of the world economy. Working part-time from home, no social contact, and living off savings were unimaginable until they became a reality.

Once a thing becomes imaginable, planning for it becomes possible, indeed necessary. Every business that survived the crisis, regardless of its size, realized the need for larger cash reserves. Planning for a year or two without any cash income meant having a year or two of cash reserves was essential. Individuals and families learned the same lesson. We cannot just go from day to day without a contingency plan for a catastrophe. The rethinking also led to reassessing the value of some of the things and activities in people’s lives. Here again, businesses were in lockstep with individuals in making the reassessment.

For casinos, that covered a large range of things. Buffets were at the top of every list. Buffets are expensive to operate and had become marginally effective as a marketing tool. When every casino has a buffet, every casino needs a buffet. But when suddenly there are no buffets, whether a casino opens or reopens a buffet can be carefully reconsidered. Most buffets, at least in Nevada, failed to pass the rethinking test. Other facets of the business, such as restaurants, bars, table games, slot machines, and entertainment options, were put to the same test. As a result of the reevaluation, most casinos now have fewer slot machines, table games, restaurants, and entertainment options than they did before the Great Shutdown.

With 20 casinos in the Las Vegas Valley, Station Casinos could treat its individual properties in the same way other casino companies were treating slot machines and buffets. The location and success of each property could be separately evaluated. In the case of Station, it was not just four outdated and underperforming casinos that were put to the test; four locations were also reevaluated. Those four simply did not make the cut. From a financial point of view, the optimum solution was the Palms. The San Manuel Band of Mission Indians paid $650 million for the property. The Palms might not have been worth further investment by Station. But the tribe is an experienced and successful casino operator from California and will probably make a success of the Palms.

The other three Station properties apparently did not find a buyer. Actually, Station probably did not want to sell them to another casino operator. The competition among casino operators for locals is intense. Keeping a competitor out can be an effective and worthwhile strategy. Station does plan to sell the land once the casinos have been demolished. The city of North Las Vegas hopes for a community-minded development, not big box retailers. The mayor says the city would not object to a casino, but Station is likely to put restrictions on the sale to prevent that.

Whatever the outcome, the market approved of Station Casinos making those properties bite the dust. The stock of the Station parent company, Red Rock Resorts, rose nearly four percent.

The Nevada State Bird has Returned

A growth spurt is taking place in Las Vegas and the timing is strange.  The sudden burst of casino development is typical after a long economic upturn. It is rare coming out of one crisis and entering another possibly more difficult one. In the first decade of the 21st century, the gaming industry was exploding with activity. It was just before the Great Recession, but no one anticipated the economic crisis; it was a time of enthusiasm and grand plans.

Sadly, for the projects under construction or just completed, the timing was terrible. The economy fell into a recession and projects that appeared perfect in 2005 were clearly out of sync with the real-world economic circumstances. The poster child for that was the Revel in Atlantic City. When Revel was being planned, a couple of billion dollars seemed perfectly reasonable. Atlantic City was busy and the business was increasing year after year. In 2007, however, the market changed dramatically and suddenly; there was a major recession, Pennsylvania authorized casino gaming, New York added video lottery terminals at racetracks, and other states added gaming options. A perfect storm of problems.

Revel’s design and price did not include the possibility of any of those events. Its originators saw Atlantic City on a perpetual upward spiral. A.C. was a direct rival of Las Vegas and the property was fit to stand and compete on the Strip. Revel was going to be different. It disdained slot players and a main floor filled to the brim with those ugly plebian devices. Rather, Revel was chic, sophisticated, trendsetting, and as uncasino-like as the designers could make it.

Then, in 2008, the project was scaled back and in 2009 construction stopped. Construction was renewed in 2011 after Chris Christie became governor and Revel’s champion. With his nudging, pulling, and begging, Revel was completed. It finally opened in 2012, but after a bankruptcy or two, it closed its doors in 2014. The $2.4 billion building eventually sold a couple of times for approximately $100 million, a great bargain. Revel finally got an owner with a plan; it needed a redesign, name, and an operating philosophy more in keeping with the rest of the town. The property is now called Ocean Casino Resort.

The model of a business conceived in a time of plenty, but executed after that time has passed, is typical. CityCenter in Las Vegas had a similar experience, although it did get built. Like Revel, its conceptual origin was the pre-Great Recession world, with a plan even grander than Revel’s. It cost about five times as much as Revel and was intended to change the entire landscape of gaming and Las Vegas. Unlike Revel, CityCenter did survive. That required creative financing and the recovery of Las Vegas’ tourism economy. The grand design, however, did not survive; like Revel, it had to adjust its strategy to the new reality.

Other casino projects were not as lucky. The famous Stardust was closed and demolished in 2007 as Boyd Gaming made grand plans for a megaresort on the site. Construction began, but just barely. Eventually, Genting bought the property and built a resort that didn’t open until 2021. Resorts World Las Vegas bears no resemblance to the Echelon project that Boyd had imagined. Its vision came from the company’s experience in Asia and is unique.

Another of the prerecession projects in Las Vegas was Fontainebleau. Its founding design goes back even further than the others. Its foundation was in elite tourism in Florida and even before the Great Recession, observers were questioning its viability. Fontainebleau was under construction when the recession hit. Like the other projects in the same boat, the site shut down. Then, it sat virtually untouched for 15 years; over the years, there were several changes in owners and financial status. In the end, one of the original partners came back to finish his dream. It will be very interesting to see how a resort conceived more than 20 years ago, a 20th century Floridian concept, does in the third decade of the 21st century.

Fontainebleau is in the final stages of construction; when finished, it will join Resorts World, Circa, and Hard Rock as the next generation of casinos in Las Vegas. But those are far from the last of the developments. A number of rebranded and reimagined properties are undergoing change. Stimulated by new ideas, new ownership, and an evolving landscape, they are out to bring something new and different to the Las Vegas Strip. And there is more to come: Three new properties have been announced in the last week or two. The skyline of Las Vegas is once again filled with construction cranes.

The sudden interest in new developments in Las Vegas is intriguing. We are not in a go-go era, like the one before the Great Recession. In fact, we are in a very uncertain and unsettling time. The pandemic is still lingering and its impact on the economy continues through employment and supply-chain issues and wild swings in consumer behavior. To further complicate the picture, there is rampaging inflation and the threat of another recession. Is this the time to invest?

Maybe.  The old model of investing before the decline almost guaranteed disaster. Now, during turmoil and uncertainty, investment is in the future and not in the past. Investing in the past is rarely successful, while investing in the future has a much better chance of succeeding. The problem, of course, is the risk. Facing the risk and finding financing are never easy; in the midst of a downturn, it can be nearly impossible.

The new projects in Vegas seem to have the courage of their convictions and, more important, the financial wherewithal needed to bring the projects to fruition. Las Vegas is exciting; in the fields of food, entertainment, shopping, conventions, resort design and now sports, it is a place of dynamic change and innovation. The next couple of years promise to be even more exciting. It is nice to see the state bird – the construction crane – back in Las Vegas.

In the short-term, Las Vegas needs to survive the pandemic, inflation, and a recession. When the sky clears, the new properties will be ready.

Gaming is a seasonal industry, sports betting even more so

Gaming is a seasonal industry. Winter and summer have slower revenue months than spring and autumn. Many extenuating circumstances, such as hurricanes, floods, recessions, and pandemics, can change traditional patterns, but those are anomalies. Because of the seasonality of gaming revenue, it is rarely meaningful to compare one month to the previous month. November nearly always produces less revenue than October, for example. Official comparisons are always year over year and not month over month. When Louisiana, Missouri, New Jersey, Nevada, or Pennsylvania report monthly revenue, the comparisons are year over year, not month over month.

In public companies, financial reporting also uses a year-over-year comparison. In fact, it is common wisdom that when a company tries to change the comparisons, it is attempting to obscure some less-than-favorable facts. When there is a special occasion, such as a recession, pandemic, or hurricane, a footnote might use other comparisons. During the recent pandemic, comparisons other than year over year were used. As casinos reopened and later reduced the restrictions, comparing to the previous month was significant in demonstrating the improvements ensuing from those changes. It was such an unusual period of time that for most of 2021, comparisons were made to 2019 instead of 2020. The logic was simple: 2019 was the last normal year, so instead of comparisons to the disrupted and unique year of 2020, using 2019 made more sense. Even some gaming regulatory agencies added an additional column to include 2019 figures.

It quickly became apparent that 2021 was going to be an exceptional year, dwarfing 2020 and even surpassing 2019. That narrative eclipsed all other storylines. Until 2021, 2019 had been the best year the gaming industry had ever had. Gaming revenue for all of 2021 was $52.9 billion, an increase of 73 percent over 2020 and 18 percent over the previous record of $44.9 billion in 2019. It was a very big story. By the end of 2021, most reporting agencies and gaming companies had returned to the normal year-over-year comparisons. That is certainly the case in 2022. However, it has not always been the case with the media; sports wagering is at least partially responsible.

Sports betting is relatively new as a national industry. Beginning in May 2018, sports betting began expanding dramatically. From three states reporting sports-betting revenue in June 2018, the industry grew to 27 states reporting in May 2022. Several more states have legalized sports betting and are in the process of developing the structure. The year-over-year improvement in the handle and revenue probably has at least two more years to go; new states are being added, more states are adding mobile wagering, and sports fans are growing more familiar with the possibilities. Eventually, the comparisons will be apples to apples and not distorted by expanded options.

The introduction of sports betting has increased the number of media outlets covering gaming and sports. Hundreds of outlets now report on sports wagering and most of the coverage comes from sports reporters, not business reporters, a phenomenon that has also occurred in coverage of other forms of gaming. Newspapers have been cutting staff and coverage for years. As a result, much of the gaming coverage is no longer done by experienced gaming or business reporters. Reporters have been repurposed from other subjects and bring a very different perspective from business writers.

Those changes have resulted in a new standard, comparing month over month, instead of year over year. In New York, in fact, it has become common to compare week over week, a truly unusual point of view. Month-over-month comparisons have led to many false assumptions. One major assumption concerns the impacts of the war in Ukraine, inflation, and a pending recession on revenues. Month after month in 2022, there have been stories of the decline in sports betting. It is said to be due to war, inflation, or competition from other states. The facts are something different. Sports betting is even more seasonal than casino gambling. It has one major season, football, and several minor ones, such as basketball, baseball, and national-championship competitions.

Football season begins with the resumption of the NFL in September and ends with the Super Bowl in February. Betting picks up in September and continues to grow until the Super Bowl. After that, wagering on sports begins to decline and continues to decline until September. Reporting on the decline in wagering in April as compared to March is equivalent to reporting on the sun rising in the morning earlier in April than in March.

The real story is the year-over-year growth that has taken place in sports. It has continued into the middle of 2022, while casino-revenue growth has slowed or even stalled. The sports story is nuanced and includes the doubly significant mobile sports betting handle and win. Other forms of gaming revenue are also nuanced, influenced by freestanding VLTs, new casinos, and igaming. Igaming revenue is growing nearly as fast as sports revenue and is more consistent, showing a less pronounced seasonal pattern. In the long run, it will settle into a season pattern like that of casinos, horse racing, and even bingo.

Looking at year-over-year comparisons can illuminate the changes being brought by sports, igaming, new casinos, and new casino competition. It is essential in analyzing long-term trends.

Slot Machines and Bottles of Wine Side by Side on the Shelf

During the recent AGS GameOn Summit, Nick Hogan of ReelMetrics compared slot floors to shelf space in a supermarket. Hogan suggested that using such a metaphor would aid in slot analysis and produce a higher yield. It can be a great metaphor and an effective way to think about a slot floor. It is also not a new concept.

The first time I heard that metaphor used to analyze slot machines was from two IGT salesmen in the early 1980s. Denny Garcia and Bill Engle had come to gaming from the wine industry. They were both top salespeople. They were accustomed to keeping careful track of the way their product was displayed and how much shelf space it was afforded. They knew that placement and the percentage of shelf space affected sales and, of course, their commission. I don’t know exactly how Si Redd found them, but he did.

IGT was a fledgling company trying to build its business around video poker. Redd ended up with the video poker concession as part of his breakup with Bally’s Manufacturing. Bally’s was the dominant slot manufacturer at the time. Sy was a top salesperson and a partner, their visions did not match, and Redd left to form his own company. As part of the separation arrangement, Bally’s kept the reel slot machines; Redd got the new and as yet unproven video poker. Bally’s did not believe video poker could be successful. Si did.

In an attempt to make a dent in the nearly 100 percent reel-machine slot floor, IGT hired the best salespeople it could find and Denny and Bill were part of that initial team. Engle ended up with the Comstock in downtown Reno as a potential customer. Like Denny, Bill did not start by making sales calls. Rather, he started by studying casino layouts, product mix, traffic patterns, and customer preferences. Then he came by to chat. He had confidence in video poker, but he did not try to make a sale. Instead, in order to analyze our slot floor and make recommendations, he needed as much performance data as we felt comfortable providing. We did not have a lot. It was an analog world, not exactly an era of sophisticated analysis. We read meters by hand, entered the data into primitive computer programs by hand, then used a dot-matrix printer to print out our reports. We looked for the games with the highest win and with our annual budget bought more of those games.

Asking for slot data was a strange request. We considered our slot performance to be highly privileged information. We did not even share it within the company, much less with an outsider. No one had asked for the information before. Other slot salespeople simply presented a product and asked for an order. A common recommendation was, “This is a hot game,” though no definition of a hot game was ever provided. How could it be? Slot sales people did not have any data to use as a measurement. A hot machine was simply one that was hot with the casinos; they bought more the following year. A new game was judged on its appearance and similarity to another game that was popular in previous years.

It was against our better judgment, but we provided Bill Engle with the data we had. The result was a proposal that took our breath away.

Bill and company recommended a complete change and rearrangement of our slot floor. He had identified the best and worst games and locations. The proposal recommended taking one-third of our slot machines off the floor, unworthy of the space, the device fee, and other taxes. The proposal suggested that one entire section, far from the best location, be converted into a video poker area.

Other recommendations about placing some very popular games in historically poor locations were made on the assumption that those were destination games and customers would find them. Other games with potential should be placed in high-traffic areas where people normally gathered, like waiting areas for restaurants.

Signage was also a critical element, used to differentiate areas and call attention to particular attractions.  It was an exciting proposal, a more advanced understanding of slot performance than we had ever seen or heard before.

Of course, there was internal resistance. Oldtimers thought no salesperson could possibly understand slot machines, and in particularly wine salesmen, which to them was a derogatory term. The biggest hurdle, however, was the price — three or four times our normal slot budget. The process to approve the purchase, borrow the money, and reconfigure the entire slot floor was slow, complicated, and difficult. But in the end, it was done. That one purchase changed the business and our way of understanding gaming devices.

Over time, with Garcia, Engle, and others as skilled, IGT accomplished the same thing in most casinos. Video poker moved from a non-event to 30-40 percent of slot machines in Nevada. It also created a beachhead for IGT reel games that followed. Starting with less than 200 video poker games at the Comstock, IGT went on to dominate the industry. At its height, it supplied more than 70 percent of the entire slot inventory in Nevada.

IGT’s success did not come quickly or without challenge, but it did come. I like to think it started with two wine salesmen who knew what they were doing. They understood the importance of location, product mix, and analysis as it applied to the shelves of supermarkets. They believed it could also apply to slot machines in a casino. And it certainly seems like it did.

Sam McMullen Wanted to Spend More Time with His Family, So He Did

Sam McMullen died on May 30 in Las Vegas.  The Las Vegas Review-Journal reported, “Lobbyist and lawyer Sam McMullen, a staple at the Nevada Legislature for more than 40 years, died Monday. He was 72. McMullen worked in the legislature since 1973, starting as a student lobbyist while attending the University of Nevada, Reno. He later attended Georgetown Law School. A fourth-generation Nevada native, he grew up in Elko and lived in Las Vegas.”

“He goes back to the days where a deal could get done with a handshake,” his wife of 48 years, Mary-Ellen McMullen, said. “People knew that when Sam McMullen walked in the door, they were getting a straight shooter, they were getting the truth, and he always cared ultimately about how it would impact Nevada.”

The article contains a great deal of praise for Sam, most of the quotes coming from his wife and daughter. That is not surprising; he prided himself on being a family man. Before he was a lobbyist in Las Vegas, Sam was a senior VP for Harrah’s. In the 1980s, Harrah’s was headquartered in Reno. McMullen left Harrah’s in 1990 to return to Las Vegas and begin a career as a lobbyist. His job with Harrah’s required being in Reno and Atlantic City, as well as Australia, to build a Harrah’s in Sydney. Sam was young and his future looked bright with Harrah’s, except it did not fit into his value system.

McMullen left Harrah’s to move full-time to Vegas. He used the time-honored explanation, “I’m leaving to spend more time with my family.” The statement often covers a contentious parting of the ways and is meant to protect both parties. That was not the case for Sam. He wanted and did spend more time with his family. Sam meant it.

When Sam worked at Harrah’s, I was employed by the Comstock. We had occasion to meet. Reno is a small town and casinos are forced to work together on numerous projects; for Sam and me, that included lobbying on local issues and promoting special events. Hot August Nights and Festival Reno were among those events that brought us together. It was a very long time ago, in another century and another Reno.

Reno was trying to reinvent itself as the national’s special-events capital. Any event that would draw from a national or even regional audience was worthy of a place on Reno’s calendar. Sam had a nationwide set of contacts and the right legal background to help us negotiate the political and business landscapes. He brought the power of the Harrah’s brand and his own reputation for integrity to every negotiation.

The Comstock was a small locals casino with a local ownership group. We aspired to bigger things, but lacked the skills and finances to be more than a minor Reno operation. The Comstock had built its business around in-house special events, tournaments, Super Bowl parties, unique invitation-only entertainment, and holiday parties. At the peak of that business model, the Comstock had nearly one major special event a week. It seemed natural to encourage the city to develop more events in which all of the casinos could cooperate using their own customer bases. It took many meetings and lots of lobbying to sell other casino operators on that vision. To be effective, the efforts at persuasion needed people like Sam McMullen. Sam had the skills, the experience, and the respect of his peers. Whenever I called, Sam took my call and helped.

Many others worked to create Reno’s menu of special events in the late 1980s and early ‘90s. Reno as a special events capital was a successful strategy for a while, until the full scope and impact of Indian gaming hit the market. But by that time, I was gone from the Comstock and working as a consultant in Indian Country. Sam, as well, had moved off to Las Vegas and lobbying. We usually met and talked for a few minutes at the annual gaming show, the predecessor of G2E. Without a company behind me, I often felt lost on a battlefield that was too big for me. At one of our meetings, I asked Sam if he ever felt intimidated when he walked into a room filled with corporate lawyers.

“No,” he replied. “It’s just more challenging. It raises the bar and makes the game more exciting.” That was reassuring and gave me confidence to fight another day. Thanks, Sam.


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