The Miami area has become, over the last few weeks, the most exciting potential casino development in the US. Massachusetts, it seems, has taken a backseat. Las Vegas Sands, Wynn Resorts, and Genting (who own Genting Highlands in Malaysia, Resorts World in Singapore, and are about to open at Aqueduct in New York) are seen as the frontrunners for gaming licenses, with MGM Resorts and Caesars Entertainment circling in the background.
As part of its pitch, Genting has said that it might build the world's biggest casino. But is that going to be the best fit for Miami? Or the best business model? After the jump, I'll compare casino square footage and break it down.
First of all, let's talk Resorts World Miami. There are apparently two different plans floating around. The Miami Herald has details about a $3.8 billion, 6 tower, 5,200 room resort with 800,000 square feet of casino space divided into 550,000 square-foot and 250,000 square-foot locations.
But according to the Sun-Sentinel, the casino will be much smaller. Even though, going by its proposed 10 million square-foot footprint for the entire resort, Genting would be statutorily permitted to build 1 million square feet of casino space, it's "only" planning for a total of 451,000 square feet--234,000 for regular joes and janes and 217,000 for "VIPs."
Even going by the lower estimate, that's a huge casino. Does it make sense? Steve Wynn has famously said that bigger isn't better, better is better. Let's take a look at a few Las Vegas Strip casino sizes so you can be the judge.
Mandalay Bay: 157,024
MGM Grand: 156,023
Caesars Palace: 136,573
Wynn Las Vegas: 109,900
Imperial Palace: 48,762
The average among Las Vegas Strip casino earning more than $72 million in gaming revenues in fiscal 2011 was 107,834 square feet.
It's ironic that the man who said "bigger isn't better" actually built the biggest casino floor on the Las Vegas Strip.
But does it feel like the biggest casino on the Strip? For my money, MGM Grand feels much bigger and more exhausting to walk through. Similarly, Wynn just feels a lot easier to get around than the Riviera, even though it's slightly larger. So while size might matter, good design is far more important.
But what would an 800,000-square foot casino look like? About the size of Bellagio, Mandalay Bay, MGM Grand, Caesars Palace, Wynn Las Vegas, and The Mirage combined. Under one roof (or two).
Even the 451,000 square-foot casino is immense--about the size of Bellagio, Mandalay Bay, and MGM Grand put together.
How walkable is that going to be? I'm going to resist making a retirees/South Florida crack here, but it's well known that many casino patrons are older folks who may have mobility issues. How inviting is such a massive casino going to be for them?
Foxwoods casino is 344,000 square feet, which is about the size of Bellagio and Mandalay Bay combined. I've never heard anyone say it's easy to get around. Now imagine more than doubling that, and you've got an idea of the scale of what Genting (might be) proposing.
Obviously the larger your casino, the more gaming positions (slots plus tables) you can have in it. The more positions, the greater the potential revenue. Adding more games brings definite economies of scale, as your costs for things like marketing and promotions (to say nothing of construction) are spread across a broader base of positions.
But at some point economies of scale become diseconomies of scale: the casino just gets too big for comfort. Design has a great deal to do with it--remember the Riviera vs. Wynn--but there's only so much design can do. I'm genuinely struggling with the idea of an 800,000 square-foot casino being a fun place to visit.
And this shows why it's not a good idea to impose artificial caps on licenses. To do so creates an invitation to corrupt the bidding/licensing process for one (look at Illinois and Louisiana for proof) and, in this case, encourages companies to submit designs that, at the very least, stretch the boundaries of what the market has historically tolerated.
If the state of Florida believes it's OK for its citizens to play casino games, why not just create a regulatory framework, set zones where casino development is permitted, and let the market sort it out? That way, you'll get the best mix of developers trying to get into the market, and by not having an all-or-nothing approach, they'll start by building projects that are actually workable and ramp them up as their revenues grow or as the market demands. Comparing a few projects on the Las Vegas Strip is instructive: Wynn Resorts started with its eponymous casino, then added Encore, then, when the market changed, pulled the plug on redeveloping the golf course. By contrast, MGM's insistence that all of CityCenter had to be finished at the same time didn't work out so well: the company is stuck with an inventory of condos it will likely never sell for what it once projected, and one important element of the project (Harmon) is possibly going to be demolished before welcoming a single guest.
From the player's perspective, it makes sense to think that a market with more options is going to give you a better deal. The general impression is that the Strip, from a competitive standpoint, is worse off thanks to the 2000-2005 consolidations. I would guess that with only three games in town, both marketing offers and casino odds would be less favorable to the player.
The key to successful casino development is treating it by the same rules as any other business. State-mandated license caps are good for the politicians, who get to auction off the licenses at a premium, and they're great for the lucky winners, but they don't really serve the industry as a whole, casino patrons, or the general public that well.