We Don’t Want to Be Like Vegas

Historically, Las Vegas was the bad-boy of the gaming industry in the eyes of legislators and regulators. When introducing casinos into a new jurisdiction there was one thing they all knew for certain – they did not want to be like Vegas. For years people compared the casinos in Atlantic City to those in Las Vegas. In 2014 it is clear that Atlantic City was successful; it is not like Las Vegas. Twenty or thirty years ago, maybe they were comparable, but no one will ever again compare Atlantic City and Las Vegas. In the 1980s it was not at all certain that Las Vegas was on a very separate and better path. In hindsight, we can see the signs that Las Vegas had a better regulatory, financial and competitive environment than Atlantic City, but we did not see them then.

The closing of casinos in Atlantic City has been the subject of national attention-getting headlines all summer. It did not seem so important in January when the Atlantic Club was purchased by two competitors and closed, but when the wave of closings hit this summer, it was big news. The casinos that have closed cost a lot of money to build – from several hundred million to several billion, now they are worthless. When a buyer can be found the selling price is small fraction of the value of the property at its height. One could, if one wanted, buy a casino in Atlantic City for $25 or $30 million dollars.

To most of us, $30 million is still a lot of money, but not in Las Vegas. In Las Vegas one might have to pay almost $50 million a year for the top disk jockey – you know the guy who plays the previously recorded music in dance clubs. The dance club itself would set you back $80 to $100 million besides. That is what Caesars Palace spent to remodel its latest night club.

A few Wicked Whispers & Racy Rumors this morning to start the week! Is the world’s highest-paid DJ about to jump from Hakkasan at MGM Grand for a new and even larger paycheck contract? Just as Grammy Award-winning singer-songwriter, producer and DJ Calvin Harris is booked to headline New Year’s Eve celebrations at the mega club, I’m hearing that he’s on the move in the spring…was named the world’s highest-paid DJ this year and last year ($46 million) by Forbes magazine…Calvin is reliably said to be signing a two-year contract to be the resident headliner at the new Caesars Palace club emerging from the recently closed Pure…AMG and Caesars Entertainment have earmarked $80 million to $100 million for the Pure renovation set to open in Spring 2015. Robin Leach, Las Vegas Sun, 9-23-14

The economics of Las Vegas are very different from those of any other gaming jurisdiction. Vegas is a modern-day, old-west, shoot-em-up kind of place where the investments made in casinos are like the gunfights in the street in the west. To survive on the Las Vegas Strip you have to be in the game, totally and completely committed to the game. The regulations in Atlantic City never allowed that to happen. Las Vegas is unique in the entire world; there is not another gaming jurisdiction anywhere that is even close to it. Sometimes it is a bit edgy, a bit over the top, but with the hundreds of billions of dollars that are invested in its entertainment infrastructure, it is in a class by itself. And all of those people who were adamant they did not want to be like Vegas, they can sleep well tonight. They are not like Vegas, they will never be, nor will any other place ever be like Vegas.

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