VPP may be dead but that doesn't mean we can't still have a little get together.
As I said in the other post, I really loved a bunch of the VPP vibe and while we're still nailing down a lot of the specifics, I think it's safe to say that fun will be included.
Block off the Fall:
All good (?) things must come to an end and since our venue of choice, SLS Las Vegas, won't be available until 20never, we've decided there won't be a live VPP show this year.
A big thanks to everyone that came out over the past three years as well as to The Palms for hosting the first two and The Flamingo for taking care of last year. I think I can speak for everyone involved when I say we really appreciate the support.
My favorite thing about VPP was having a single event that brought several disparate-but-affiliated communities together in person. That part of it was really fun every year and I hope something else fills that void. I also hope that I can attend that mythical event as a civilian instead of an organizer.
UPDATE: Hey, here's something to check out.
UPDATE 2: Don't forget TAICon, the annual get together from the folks at This Ain't Iowa. This year it's October 20th-24th and the details should be available soon at notiowa.com.
Jeff's back with his latest piece and this time he's examining the performance and challenges facing The Cosmopolitan.
Click through for the full text, it's a good read.
I was just at Cosmo last week for another stay. I've got a bunch of scribbles and other notes that I'm (slowly) working to turn into a piece of my own.
Over the past few days, I've spoken to several journalists about last week's wave of indictments that targeted three major online poker sites. One question that I've been getting is, "Could this benefit brick and mortar casinos?"
My initial answer was no, it wouldn't in the long term. If you look at the numbers of tables and total win from 2002 to 2010, it's clear that, as online poker became more popular, poker in Nevada casinos boomed. That implies that a thriving online market actually helps Nevada casino poker, since more people are more familiar with the game.
Now, you can never prove that the boom in online poker caused the growth in Nevada poker; we all know that correlation doesn't necessarily mean causation. It could be that they both benefited from a bigger upswing in public interest in the game due to the rise of televised tournament poker around the same time. I'd argue that online and televised poker cross-pollinated each other, with a pretty big overlap in their audiences. But even though I can't definitively prove that online poker caused the 2003-06 Nevada boom, it seems the most likely explanation.
So what impact will closing three major websites have? Instead of logging on, will people flock to local cardrooms and casinos? It's definitely possible, particularly in the short term. But in the long term, denying Americans access to online poker will, ultimately, shrink the market for casino poker. With fewer places to learn with training wheels on, it's likely that there will be fewer new live poker players. It's one thing to get the feel of the game by playing for free, then playing for money online; it's another to make the jump from freeplay to a live table.
I was curious (there's a lot of that going around on this site, apparently) about what impact UIGEA's passage had on Nevada revenues, so I compiled a new report, looking at monthly statewide Nevada revenues from January 2004 to February 2011--that, I figured, would give me enough of a set of data to see how significantly UIGEA impacted Nevada gaming. Was there even a small influx of players to Nevada casinos after it passed?
The answer is no, there wasn't. The growth of Nevada casino poker really peaked in the summer of 2006; for the next year, it grew moderately each month. There wasn't any significant change in the rate of that growth in October 2006, when UIGEA was passed, or in the months following. In fact, after a big jump in June 2007 (because the WSOP was moved up by 3 weeks), Nevada poker started to decline pretty dramatically.
It might have been anticlimactic, but the official implementation of UIGEA in June 2010 didn't do anything to stop the decline in Nevada poker either.
To me these numbers suggest that, ultimately, the traditional casino and poker business won't really benefit from online poker prosecutions. I'd guess that either players will find other sites to play on or they'll cut back on their play. And, as I mentioned above, if online play noticeably drops, traditional poker rooms would lose a vast farm system.
So history seems to tell us that the prosecutions won't really be a game-changer for Nevada casinos. Their ultimate impact won't likely be a direct one; instead, it could be that the attention the indictments focus on online poker might spur cash-hungry state legislatures to seriously consider legalizing online poker. Should Congress be persuaded to slightly amend UIGEA to allow interstate play (it already allows intrastate play), we might see a new American online poker industry rise from the ashes of the Black Friday indictments.
But that's a story that hasn't been told yet.
UPDATE: I've expanded the CGR report to include data going back to January 2004. And it's now in landscape instead of portrait orientation.
Episode #60 is up!
This time on the show:
* Internet Poker's Black Friday
* Sam Nazarian's Delusional SLS Project
* Kerkorian to Leave MGM Board
* MGM Resorts in Macau
* Change of Control at SJM
** Sure Bets **
Working on my lecture for tomorrow about Las Vegas gaming in the 1980s and 1990s, I wanted to go back to some of the original sources. So I've been browsing through the archives quite a bit.
I found a press release issued on November 14, 1989 titled "MIRAGE RESORT SETS NEW DIRECTION FOR LAS VEGAS." For those keeping score at home, that's 8 days before the Mirage's grand opening.
Here's a few excerpts:
Already, many are saying The Mirage will create a new standard for resort hotels that will redefine Las Vegas as the resort destination of the future.
"We said when we first announced the project that it would be a property which would help set a new direction for Las Vegas, one which would appeal to the entire family audience," said Stephen A. Wynn, chairman of Golden Nugget, Inc., developer of the plush, new resort.
"We've created an alternative to the traditional style of the Las Vegas casino-hotel," said Wynn. "Everyone will recognize The Mirage as a special place: a resort hotel which includes a casino, not a casino which includes a hotel."
The Mirage will attract on audience which has largely passed up Las Vegas as a choice for vacation travel. Younger, affluent families have, in recent years, sought out Mexico, Hawaii, and Caribbean destinations when choosing vacation spots. Now, with the Mirage, Wynn expects to bring some of these consumers and their families to Las Vegas instead.
So was Wynn right or wrong?
Clearly, The Mirage changed Strip casinos. So from that angle he definitely was right. The casinos built in the 1990s, to one extent or another, either tried to emulate or tried to differentiate themselves from The Mirage. It's definitely the most influential casino since Caesars Palace. I'd say that it's even more influential than Caesars, since the things built after Caesars (Kirk's International and MGM) didn't really incorporate its biggest breakthrough, the theming. The Mirage, on the other hand, immediately impacted casino design.
But Wynn wanted to more than change the way casinos looked--he wanted to change their audience. And I don't think he was successful at that. The Mirage didn't really redefine Las Vegas as a family-oriented destination. Sure, families come here, but they always did. And I'm not sure how many of them choose to come here instead of going to the Caribbean or Orlando.
So it's an interesting look into the past, particularly when you consider what Wynn's done since--after Treasure Island, he gave up the idea of appealing to families entirely. And there's that whole no-stroller policy at his casinos, which would definitely leave some families out.
When I finally get the chance to put a lot of my lectures and other writings into book form, I want to really explore this thread, since I don't think the Vegas of 2011 is at all what people anticipated in 1989, and the difference says a lot about what Vegas really is.
Word is starting to get around that the FBI has seized the Internet domains of popular online poker sites including Full Tilt Poker, PokerStars and Absolute Poker.
According to CNBC's Twitter account, the companies have been charged with 'Fraud, Illegal Gambling'.
While some users may still be able to reach the sites in question (Internet DNS changes take time to propagate, especially when they're... uh, unscheduled), that won't last. The domains have been seized by the FBI's Cyber Initiative and Resource Fusion Unit.
This is pretty huge.
We've been talking about online poker and Nevada gaming companies getting into bed with these folks... Well, if they're convicted, I have a feeling we won't be seeing PokerStarsWynn.com anytime soon.
More to come on this and I'll update with more details as they're available.
Update: The US Attorney's press release.
One thing that's not clear at the moment is what is going to happen to customer funds that were on deposit with these sites. As of right now, they're unavailable for withdrawal.
If you want to follow the discussion in the poker community, have a look at these forum posts.
Update: After a bit of a delay, the Vegas papers have stories up:
Our own Jeff Simpson will be a guest on PBS' Nevada Week In Review this evening, talking about online poker and other topics I'm sure.
The show airs locally on Channel 10 at 7:30pm, with repeats Saturday at 7:30pm and Sunday at 12:30pm. The show is also available online and as a podcast (that's how I watch every week).
It's the end of an era... sort of.
MGM Resorts International founder and primary shareholder is stepping down from it's board of directors in June.
Kerkorian built the largest hotel in Las Vegas three times with The International, the original MGM Grand and then the MGM Grand we know today. Inextricably linked with Las Vegas, his fortunes have risen and fallen with Southern Nevada's.
What does this mean for MGM and Las Vegas? Probably not a whole lot will change. While it seems clear Kerkorian has served as an advisor to Murren and Lanni before him, it doesn't sound like that advisory relationship will change much, at least in the near term. If MGM executives could convince the board to go ahead with CityCenter, they're pretty much being allowed to do whatever they want over there anyway.
Kirk Kerkorian is stepping down from his position on the board of MGM Resorts International in June. It's a significant milestone for Las Vegas gaming, since he's one of the few remaining links with pre-corporate gaming.
Kerkorian owned a share of the Dunes in 1955, but really got involved with the industry in 1964, when he agreed to lease land he owned across from the Flamingo for the construction of Caesars Palace. For a while he was Caesars' landlord, and even had an office in Caesars after its 1966 opening, but he decided to sell the land to Caesars and focus on building his own casino hotel.
So in 1967 Kerkorian did two things: he hired architect Martin Stern, Jr. to begin building the International, whose tri-form hotel tower set the template for the next generation of Strip casinos, and he bought the Flamingo to train the staff who would run the International, which was slated to be the world's biggest hotel, and have the world's biggest casino floor.
It's worth noting that members of the group that Kerkorian bought from were later convicted of skimming money and hiding Meyer Lansky's stake in the property, so this represented a real changing of the guard. A few years ago I interviewed Alex Shoofey, who Kerkorian hired away from the Sahara to run the place, and he spoke about the challenges of making the transition from the old school to the new school--a process that would continue until the Boyd Group's purchase of the Stardust in 1985.
Kerkorian opened the International in 1969, and it was the first of the second generation casino resorts, which integrated every aspect of the resort into one large tower-and-podium structure. After selling it to Hilton in 1971/72, he built the first MGM Grand, which was at the time the world's largest hotel, selling it to Bally's in 1986. That same year he organized MGM Grand, Inc, and for the next few years owned a few casinos, including the Sands, Desert Inn, and Marina--the last of which was incorporated into the new MGM Grand that opened in 1993 as, again, the world's largest hotel.
From this point on, most people are familiar with the MGM Grand/MGM MIRAGE/MGM Resorts story, so I won't rehash it, but I thought it was important to point out Kerkorian's constant involvement with the industry since 1967. With him leaving it in June, Steve Wynn is the senior figure in the Strip game--he first got involved in 1967 at the Frontier, but really started making a mark on the business at the Golden Nugget in 1973.
Even though Kerkorian isn't the same public presence as Wynn, Adelson, or even Loveman, he's hardly an absentee owner, and his stepping down from an active role on the board of MGM Resorts really does signify the end of an era.
In an interview with the LA Times, Sahara 'operator' Sam Nazarian claims that the plan all along was to close the hotel for renovations and for it to re-open in 2014 as "SLS Las Vegas, with six restaurants and two nightclubs".
"We've spent $30 million in design development drives; we're shovel-ready," said Nazarian, who formed his company in 2002 with proceeds from real estate investments as well as a wireless telecommunications company he sold. "If we were admitting defeat we would have admitted it."
Uh-huh. A few questions:
- What exactly has he spent $30 million on designing?
- Why no mention of the secret plan when the resort's closing was announced?
- How much will this renovation cost? He's only got three years so unless he's not going for major upgrades, work had better start by the end of 2011 if he wants to make 2014.
- Who is going to lend him this money and put cash into a North Strip property that is neighbors to a dirt lot and the ugliest unfinished building in America?
As Jeff said on Twitter - "I'm skeptical. Very."
An IPO for MGM's Macau has been long rumored and we finally have details on how the deal will be structured - MGM's stake will actually increase by 1% to give them a 51% majority control position.
MGM's sometimes controversial partner, Ms. Pansy Ho, will have her stake reduced to 29% while the remaining 20% is sold to the public. In a related transaction, Ho will purchase $300 million in MGM notes.
I actually spent the morning reading the Wynn Macau annual report and while there are few zingers (Cotai still hasn't been approved by the government despite Steve basically saying 'any day now' during the last conference call), the one inescapable fact is how much money they are making over there. It's staggering.
MGM historically hasn't been as successful in Macau as Wynn but that's been on an uptick and being able consolidate the affiliated company on their books should help their financial picture.
Here's Jeff Simpson's take on the morning's news:
MGM Resorts made an important announcement about its Macau joint venture this morning, a deal that I think will be a big plus for the Strip's biggest operator. In a deal with partner Pansy Ho, the JV will sell 21 percent of its ownership shares in an initial public offering -- all supplied from Ho's current 50 percent stake in MGM China. 18 percent of MGM China's shares will be sold through the proposed IPO and another 3 percent will be made available as an over-allotment -- all 21 percent will come from Ho's half-stake in the JV. MGM Resorts will buy an additional one percent of MGM China shares, that coming from the over-allotment. The proceeds of the IPO and of MGM Resorts purchase of the additional 1 percent stake in MGM China go to Ho. Ho, in turn, has agreed to buy $300 million of MGM Resorts senior debt. The deal and the IPO, if approved by the Hong Kong Stock Exchange, will result in:
* MGM Resorts upping its stake in the MGM China joint venture from a 50 percent stake to a 51 percent stake.
* Public shareholders will own 20 percent of the JV.
* Ho's stake in the JV will drop from 50 percent to 29 percent.
This is a great deal for MGM Resorts as it allows them to take control of their Macau JV without diluting its ownership stake because of the IPO. MGM Resorts also is spared having to dig deep to buy out the stake Ho is selling into the IPO. The deal also conveniently allows Ho, who now has a significantly increased stake in and probable operational control of her father's market-leading casino company, SJM, to dilute her MGM China stake and reduce conflict-of-interest concerns.
The challenge for MGM Resorts will be to continue its slow improvement in Macau operations, increasing its market share while Ho's allegiance and contacts will likely increasingly favor SJM.
In a separate deal, the Michael Jackson estate and Cirque du Soleil announced a long-rumored joint-venture to produce two Jackson-themed shows, one of which will tour and the other of which will take up residency in a Strip showroom of an MGM Resorts hotel [ed: most assume this will probably be Mandalay Bay or, less likely, Monte Carlo]. I imagine the Las Vegas show will be a success and will be a plus for all three entities (MGM, CdS and the Jackson estate), the glut of CdS shows notwithstanding.
Jeff's back and we're talking about poker again this time around. Since the last post went up, Nevada Governor Brian Sandoval has weighed in with a letter to the author of AB258 that makes his position fairly clear.
The letter is available here from the Las Vegas Sun.
What did the mainstream media miss when analyzing this development? Continue on for Jeff's take on how this impacts this issue.
Update: According to Channel 8, an amended version of the bill made it out of committee and is heading to the Assembly floor.
Every month, Revenue Day is always a bit of a mixed blessing for me. It means a lot of fairly frenetic number crunching (at least by the standards of academia), but also a chance to share my thoughts on what's happening in the gaming industry. I've been mulling over the numbers since about 6:45 this morning, and here's where I'm at right now.
First, if you want to see the numbers I'm referring to here, check out the official release and my February comparison (pdfs both). The February comparison looks at the results from 2004 to 2011, so it gives some much-needed historical perspective. Here, I'm going to focus on the Strip, because this isn't the blog for RateElko or RateBalanceOfClarkCounty.
Year to year, it looks pretty bad. Baccarat revenue was the big loser, declining more than 31%. There were some bright spots--mini-bacc revenues more than doubled, slot revenues actually increased, thanks to higher hold. The funny thing is that table handle increased--slightly--meaning that people gambled more at tables, while slot handle fell. But, because the casinos were less lucky at the tables this February, they had what appears to be an off month.
Zeroing in on baccarat, it's clear that this the Strip didn't do that badly. This is still the second-highest total baccarat win for the month since 2004, and the handle was just under the 2010 record. So people played nearly as much; they just won more in 2010 than 2011. It's important to mention that Feb. 2010 had an abnormally high hold percentage: 17.04% (not a record, but still far from the 12% or so average). Feb. 2011's hold, 11.71%, was really a return to normal.
If you take baccarat out of the equation, table game revenue actually increased from year to year, from $148.9 million (2010) to $153.0 million (2011). Basically, outside of the decline in baccarat, which was really a fall back to reality, the Strip didn't have an awful month--though it didn't have a great one, either.
Baccarat hold percentage is so crucially important to the overall gaming picture for the Strip and the state (55% of Nevada gaming revenues are generated on the Strip) because we're in a baccarat-based recovery, in which the game boosted revenue for much of 2010 while other games that draw more broadly from the spending public (which has less money to spend) stagnated. So, if a few high rollers get a few hot shoes, the entire state's revenue picture darkens.
Putting it in perspective: in February 2004, baccarat win accounted for 6.08% of total Nevada gaming revenue. In February 2011, it accounted for 15.98%. When the house gets lucky, that number is even higher; in February 2010, 21.77% of state gaming revenues came from a few baccarat tables on the Strip.
For those of you investors who are trying to gauge the performance of companies with heavy Strip exposure, there's an even higher reliance on baccarat: from 11.92% (2004) to 27.35% (2011), with the high point in 2010 (36.10%). Since the Strip totals also include resorts that don't have a lot of baccarat action, I'd guess that for WYNN, LVS, and MGM, that percentage is much higher.
It also appears that, in the big picture, the Cosmopolitan hasn't moved the needle much; with slot handle down, it doesn't look like there's a growing revival in broader gambling spending on the Strip.
And here's an interesting fact: for the first time since at least 2004, the number of baccarat tables on the Strip actually fell. This tells me that we shouldn't expect much more growth of this segment; if we're lucky, handle will remain about constant year-to-year, with revenue fluctuating along with the hold. It's not the worst possible scenario, but it's not a recipe for real growth, either.
From a story in today's Las Vegas Sun about sportsbook apps coming to smartphones:
After launching its first application for BlackBerry phones in September, the company has introduced the application for Android and will soon be compatible with iPhones.
Apple requires all App Store bound apps to go through an approval process. They don't tell us where these reviewers are but most people seem to think they're in California, Massachusetts and Texas. Per state law, this app only works inside Nevada's borders.
Is Apple going to come out to Nevada just to review this app? If so, that's not an option that is generally available to other developers and would obviously cost money. Is Leroy's going to break gaming regulations to allow Apple's testers to opt out of the location targeting? Maybe some sort of simulated test mode that tries to straddle both requirements?
This issue may be unique to the iPhone and thus maybe not all that interesting of a story in the general sense... but it shows how technology is intersecting with gaming almost continuously these days. Perhaps telling is the fact that Apple removed specific language that prohibited gambling apps several months back, opening the door to non-simulated wagering.
On this topic, I'm certain that there is more to come.
A couple of friends were traveling from Southern California to Las Vegas recently and their route made me start to wonder how others like to make their way across the Mojave.
What freeways and highways are you using? What are your 'must-stops'? How long does it usually take you?
For me in Santa Barbara, my route goes like this:
1. 101 to the 126 in Ventura
2. 126 to the 5 in Valencia
3. 5 to the 14 near Santa Clarita
4. 14 to the 138 (Pearblossom Highway) in Palmdale
5. 138 turns into the 18 which dumps onto the 15 in Victorville, where you head north to Vegas
The drive is about 350 miles and generally takes about five hours (my best time is 4 hours, 28 minutes - there are a few places you can seriously haul-ass if you want to).
I really like my route - lots of beautiful desert, mostly smaller roads with less traffic - but it's not the path that Google suggests.
If I followed their advice, I'd skirt around Simi Valley and over to the 210, then up the 15. I generally don't like getting that close to Los Angeles traffic unless I'm visiting someone down there. I've used that route and it's not awful but if I can avoid the Cajon Pass, I feel like I'm in better shape.
Like many, I often stop in Barstow (Lenwood) and sometimes Baker, for gas, food and the occasional vomiting (sorry McDonald's).
What's your route? Travel tips? Secret stops?
I'm especially interested in drives from LA proper, Orange County or even San Diego.
This time around, Jeff dives into the complexity of regulating online poker.
It's an interesting take - be sure to give it a read, after the jump.