Two Way Hard Three | Las Vegas Casino & Design Blog

I'm very happy today to have a post from a guest writer, Paolo Mello.

Many of you will undoubtedly know Paolo from Twitter, where he posts as @paolomello. You'll also find him contributing to comment threads here and at where his username is 'middleclassbuzz'.

Paolo is a Nevada native and Vegas expert, currently living in New York City. In this excellent piece, Paolo muses on the future of leadership at Las Vegas gaming companies.

You'll find his text after the jump - enjoy!

Just shy of five years ago, celebrated journalist/blogger/podcaster Steve Friess wrote a piece for the New York Times on the reinvention of Las Vegas by the new young titans of industry. Those mentioned in the article were George Maloof, Lorenzo and Frank Fertitta, Tim Poster and Tom Breitling, Andre Agassi and Perry Rogers, Jim Murren, Sam Nazarian and Anthony Marnell. Some of these men were unfamiliar to me, and some of them were longtime heroes. All of them represented the new blood that would guide my beloved hometown forward and into the future.

What a difference half a decade can make.

While these gentlemen were then considered the young up-and-comers, they now seem like the old guard. To be sure, a few of these guys are still out there and at the top of their game. Anthony Marnell is doing a terrific job over at the M Resort, Lorenzo and Frank Fertitta are gradually regaining control over their Station Casinos empire, and Tim Poster is at Fertitta Interactive, a venture that recently applied for an online poker license.

Some of the others haven't exactly lived up to their promise. It still isn't clear what Sam Nazarian is planning to do with the Sahara; the smart money seems to be on a big fat nothing. George Maloof is still running the day to day operations of his baby, the Palms, even though the family name has been stripped from the marquee. Tom Breitling is laying low and raising his family and Andre Agassi and Perry Rogers have long since split up their partnership. Finally, Jim Murren will likely live or die by the success of his vision of the future, City Center. The complex may not end up being a complete failure, but it in no way resembles what it was originally positioned and sold as.

This isn't the stuff we expected from our new "Titans of Las Vegas".

To be fair, Friess' article was written in May of 2008, on the edge of the cliff of a crumbling economy. Had the trend remained on an upward trajectory, each of these men would look like geniuses today. But like Warren Buffett is fond of saying, "when the tide goes out, you find out who's been swimming naked."

My purpose isn't to speculate on what could have happened, because we can't rewrite history. Rather, I'd like to make a simple request:

Would the next generation of gaming industry leaders please stand up?

To start with, what we don't need is more of the same. Amongst my generation and in my neck of the woods (I'm in my early 30's and live in New York City), Las Vegas simply isn't on the radar.

Why not? Mostly because of its reputation for kitsch and tastelessness. It doesn't help that Vegas is a manufactured fantasy land, often teaming with the type of people you would never want starring in your own fantasy. Nightclubs are losing their luster, partly because we've all been-there-done-that and partly because savvy vacationers are tired of getting fleeced. Gambling? Not in its present form. Losing large sums of money and getting nothing in return just doesn't appeal to the internet generation. We can get hours of free entertainment online and in the comfort of our own homes. How about golf? Ha! Just kidding.

So what does the next young, successful casino mogul look like?

For starters, let's talk technology. When people are used to having a state-of-the-art touchscreen smartphone in hand at all times, a box with some big plastic buttons and an 8-bit screen that only eats money won't cut it. We want our technology to work with everything, and I do mean everything. If there's a building that doesn't have internet access, and we aren't provided with the ability to share what we are doing inside that building with our networks, then we probably won't go into that building, end of story.

Can't check out of our hotel room with a simple application from our phone... why not? No integration between casino games, a property website, and a well-designed and useful smartphone app? That's a deal breaker. A smart leader will see opportunity for the types of improvement in service, efficiency, and entertainment that technology can deliver. This can all be created, practiced and perfected in Fabulous Las Vegas, Nevada. After that it can be exported to the four corners of the globe in the same way that Silicon Valley creates the tools that everyone else ends up benefitting from. The alternative? These technologies and competencies are built in Macau and we end up having to pay for them later.

And how about value? This is something that not only appeals to a younger (and less well-off) crowd, but surprise, surprise, appeals to most other age groups as well. Las Vegas is a value when compared to most other travel destinations, but compared to the Vegas of yesterday, it doesn't quite deliver the way it used to. We just went through a nasty recession, and many of us still aren't out of it. There is no other place in America that can offer what Vegas can, dollar for dollar; an average $100 room in Vegas would go for over $500 a night in Manhattan. Trumpet the value proposition. It's something to be proud of and it will find its audience.

Finally, and most importantly, every hotel/casino staff deserves a visionary that will treat them like they are the most valuable asset the company has. The service industry is here to stay, in both Nevada and nationwide. Las Vegas has been a leader in treating the art of hospitality with the care that it deserves. Innovation can continue in this area, with best practices exported to other destinations that haven't caught up. Online shoe retailer has proved that you can take an entry-level call center job and elevate it to something people are proud of. The next group of gaming industry leaders would be wise to do the same with wait staff, dealers and housekeepers.

Most of what I'm speaking of isn't revolutionary. The technology is already here, and none of it is out of reach. Vegas knows value, but often forgets to treat it like the competitive advantage that it is.

Company culture is important- making sure the best and the brightest in hospitality want to work at your property is paramount. The good news is, the next generation of leaders won't have it any other way.

They just need to step up and lead.

-- Paolo Mello, 2012


Read archived comments (19 so far)
February 14, 2012 12:03 PM Posted by mike_ch


I think it's fair to say in NYC that gambling can't be the main draw to Vegas, since if you just wanted gambling you could take a trip to Atlantic City instead.

I'm not sure what you actually proposed solves the problem of Vegas kitsch (nor am I convinced it's actually a problem), but they're good points anyhow. I would say Vegas has been actually propositioning itself as a value, but it's only half-way true because of the sheer size of the resort fees (seriously, $25?!) The industry needs to cut the shell game on this, the government began regulating the airline industry into showing all fees and taxes in it's base price, and the hotel industry should show a little concern that the same thing might happen to them. Maybe the Vegas hoteliers feel that Harry Reid will protect them from this, who knows.

The smartphone thing, eh. I would think it would be neat to be able to know where a machine of a certain game/theme/denomination exists in a casino and have a map to that on my phone, but when I'm in a property I use all the same apps on my phone that I do when I'm at home. Twitter, the news, occasionally Maps, that sort of thing.

February 14, 2012 1:08 PM Posted by Paolo

Thanks for the welcome, Mike. I don't think Vegas kitsch is a problem... it's one of the things I love about the town. But it is something I've heard others mention in an unflattering way. I think it's just a perception problem. What one person sees as kitsch another sees as tackiness, I suppose.
I brought up technology/smart phones mainly because I think it's one of the biggest areas of opportunity in the business. If you haven't yet, check out the interview that the Vegas Gang did with the two guys from Bally's from a couple of weeks back. They definitely touched on some of the topics I've been thinking about in regards to this. Tech in many casino properties feels like it is from the stone age. I don't think a younger generation of leaders would stand for it- in fact, I would go as far as to say it could keep younger people from pursuing a career in the gaming biz.

February 14, 2012 2:20 PM Posted by BillyInLasVegas

I couldn't agree more!

Right now you can send a text to check out at almost all strip properties but a cool app would be better. Honestly I rarely even check out anywhere, I usually just leave.

But if I can order and pay for a burrito with my iPhone why can't I do the same with my hotel room? You would think the high end places would at least have some cutting edge apps but it's not the case.

At least the Bally's guys seem to be working on it and hopefully other companies are working on this as well.

February 14, 2012 3:57 PM Posted by parchedearth

Is it still even possible to become a new titan in Vegas? The larger properties have corporate structures which typically won't tolerate too much individualism. I can't see a young turk rising through the ranks of Caesars or MGM to become a celebrity casino magnate. Anyone at Wynn or Sands is blocked by the existing potentates. Further, the cost of entry to build a new property is still prohibitive. A new titan would need to buy an existing downtrodden property and turn it around. What about the owners of the gold spike and rumor, golden gate and Fitz, or lady luck? Marnell, Maloof, Poster and Breitling are all still young enough to turn things around at different properties.

February 14, 2012 4:43 PM Posted by BigHoss

Thanks for the writing, Paolo, and thanks for featuring it, Hunter. Your tweet about the interview with Alex Epstein was right on, interesting timing on that one. She has great potential to help East Fremont and the surrounding blocks transform into something that could really appeal to the next generation of Vegas devotees. The issues you raise really make one wonder if a young visionary could ever garner enough momentum to change anything significantly among the Strip properties. Young Yeminidjian (can't remember his first name offhand) doesn't seem a likely candidate and the price of entry seems out of reach for basically anyone.

February 14, 2012 5:32 PM Posted by Paolo

I agree, parchedearth. Those dudes each have many good years ahead of them. I see what you mean about the Caesars and the MGMs of the world stifling individuality and risk-taking. But we have seen a bit of the consolidation of the last decade being reversed- like Ruffin taking over the TI. If this continues, the chances of fresh talent rising up will increase. I think we can all agree that when we have more independent operators and more competition, we as consumers will benefit.
I'm definitely watching Steve Siegel and The Siegel Group with much interest. I'm glad you mentioned them.

February 14, 2012 5:32 PM Posted by Hunter

Who knows - not impossible to imagine a newly minted tech millionaire deciding they want to get into the casino biz, either for fun or because they think they can revolutionize it.

It's ripe for disruption.

February 14, 2012 7:13 PM Posted by Ted Newkirk

New York City (as a DMA) is in the top 5 for my readers/visitors. Hence, I don't believe we are hurting for visitors from the Big Apple. Keep in mind that Paolo may have a group of friends who are simply not "Vegas" types and nothing in the world is going to attract them here.

Look at the "wild success" Cosmo has had catering to that crowd. People who are living on their smart phones are so wrapped up in the phone that they aren't gambling.

Las Vegas draws well from California, The Midwest and a growing international audience who love it. 19% of visitors in 2011 were first-time visitors and Las Vegas has an unusually high "re-visit" rate so we know that many of them will be back.

I guess my question is simply Why go out of your way to market to people who aren't Vegas-type people? It seems like a lot of effort in return for marginal ROI. CityCenter was supposed to attract that group. Ooops.

February 14, 2012 7:31 PM Posted by Paolo

I'd like to add, that a young visionary/leader doesn't necessarily have to own a property. One could make a significant impact as a manager, anywhere in the pecking order; they just need the support of the rest of the organization as well as the freedom to take risks.

February 15, 2012 3:02 AM Posted by JohnD

Nice article. I pretty much agree with everything stated in it, but I immediately thought that you'd overlooked the contributions of Alex Epstein and the Fifth Street Gaming crew.

Alex has been a game-changer for El Cortez and she has for years pushed new ideas and ventures Downtown. She's also a total babe. Then, I checked Twitter and you'd posted an article about her. The Fifth Street Gaming organization seems to not only be listening to their customers, but also to be taking the initiative to look for new markets and revenue streams that have gone overlooked by the big boys.

I wish all of the 'Titans' well, but I just can't like the Fertitas. With the amount of people they laid-off before taking a pay-decrease and the hubris with which they waved their father's money around, it's just nauseating to see them still around town because of a bait-and-switch approach to financing and bankruptcy law.

February 15, 2012 3:30 AM Posted by Paolo

@Ted Thanks for reading and thanks for your thoughts.
You are absolutely right that my circle of friends aren't "Vegas" types. But I would say that they are a kind of "canary in the coal mine". I'm not saying they should be marketed towards because they will change their minds and come back in droves.
What has worked in the past likely won't work in the future. Cosmo and CityCenter's strategies were mostly brand and marketing driven; operationally, they haven't been quite that innovative.
The world has changed too much. Best not to rest on laurels and assume that people will always go to Vegas. There's too much at stake.

February 15, 2012 9:53 AM Posted by jinx

Very nice start. In my opinion as a later 30's person, Vegas is always going to have a bit of a perception problem, especially on the East coast, from what I've seen in my 10-15 year affair with the city, is that it has peaks and valleys in relation to how it plays across the country and typically is due to the way it reinvents itself.

I'll fully agree with you on options are needed to bring technology closer with the current generation and the hotels. I'm still fascinated that although I've stayed in 15-20 resorts on the strip, only 1 has offered me the option of text check in and check out (Caesars). (They handle it fantastically as well).

I don't think we are going to see a lot of incorporation of technology though from these resorts. Their history shows us they are 'legacy' corporations that maybe able to polish the current model in a new way at times, but they run into severe problems when they try to innovate. As large corporations (in many cases), it's just not easy to implement new technology across the board or to change a business direction. There is a cultural and behavioral hurdle that businesses are still working over in trying to adapt at these levels and in my opinion it's going to be needed to be done on smaller scale first before the plan is something that the larger businesses decide to 'truly' adapt.

February 15, 2012 10:17 AM Posted by detroit1051

I first visited Vegas in the early 1980's when I was already in my 30's. This was before the time of clubs and over-the-top nightlife. As a Detroiter, Vegas appealed to me because it offered a fantasy world of faux luxury I did not experience at home. I was loyal to the same properties and seldom strayed to others except to sight see. The combination of a casino, nice rooms and/or suites as well as, at the time, "gourmet room" dining was all I wanted. My property loyalty enhanced my experience due to increased comps. Yes, I know, nothing is free in Vegas, but they were fun times.

I started at the Las Vegas Hilton which at the time, along with Caesars, were considered the premiere properties in town. Thirty years ago, The Hilton and Caesars didn't seem like corporate operations. They hadn't yet lost the "old Vegas" spirit and independence. As years went by, I migrated to the then new MGM Grand, Steve Wynn's The Mirage, then Bellagio and finally, Wynn Las Vegas. MGM Grand may have been built somewhat on the cheap, in my opinion, but when it opened in 1993, it ran as a great Kerkorian place with excellent casino promotions, tournaments and parties.

Back to my original thought, Vegas was a fantasy world that didn't exist at home, and in those days, casinos weren't ubiquitous.

A UNLV student wrote a thesis in 2010 on target markets Vegas should focus on. Two years ago, the author probably didn't realize how fundamentally Vegas would be changed. I found a lot lacking in his thesis (along with unacceptable spelling errors), but he suggested that Vegas should concentrate on Baby Boomers who will be spending for the next 20 years. Although I missed being born in the baby boomer years, I certainly relate to them more than younger generations. Here is his report:

I don't believe we will see a new generation of gaming industry leaders like Kerkorian and Wynn. The business today does not attract entrepreneurial leaders; it attracts corporations who can operate groups of entertainment components like hotels, restaurants, clubs and, oh, by the way, casinos. Cosmopolitan may be a good example of a property which was envisioned as an independent hotel casino that a young titan might build, but the developers didn't have deep enough pockets. Even now, Deutsche Bank is struggling and realizes hotel rooms and hot restaurants/clubs can't pay all the bills. If the casino doesn't turn around by the second anniversary, coming up soon, I think DB will sell it to MGM. Even though CityCenter isn't a great success, Cosmopolitan could probably do better under MGM's corporate umbrella along with all its other Strip properties.

I've never considered Sheldon Adelson a gaming industry leader. He's a smart business person who sold Comdex to the Japanese at the right time and focused on the convention/meeting business and was also smart enough to see the potential in Macau and Singapore.

I don't believe real innovators are looking at the hotel/casino industry. They're more interested in technology and ideas, not brick and mortar industries.

Like it or not, the fortunes of Las Vegas are in the hands of corporate giants like MGM Resorts and Caesars Entertainment. I'd sure like some "Young Titans" to surface and prove me wrong.

Finally, although I'm not as tech savvy as all of you are, it amazes me that Strip operators don't realize how important convenient technology is to visitors in all age groups.

February 15, 2012 3:10 PM Posted by Paolo

@detroit1051 "I don't believe real innovators are looking at the hotel/casino industry. They're more interested in technology and ideas..."
Unfortunately, I think you are right about this. The gaming industry is certainly dominated by the big boys, but that doesn't mean a scrappy little independent boutique can't pop up somewhere. Let's keep our fingers crossed.

February 16, 2012 7:12 PM Posted by HillBilly

Vegas is kitsch. So is Disney, both are wildly successful. The one thing I've been watching get completely out of control over the past 10 years, however, is the hustle in Vegas. Every time you turn a corner there is some schmuck acting like you owe him money. They don't even pretend to offer service for a tip anymore. The "you owe me" attitude runs rampant from dealers, to cab drivers, and is now all over the place with Batman, and the frakking toy story characters littering the strip. Now there are legions of dudes in suits trying to send you to sapphires. I mean a whole army of them. I was asked 6 times in 15 seconds (no kidding, we counted) this weekend and all of it for one club. I swear we need a spam filter just to walk down the strip.

Vegas still has value but something must be done about the hustle. At some point, people who are good tippers like myself start to see everything as BS and we don't tip so well anymore. This will only serve as an obstacle in recruiting people that want to provide excellent service.

February 18, 2012 10:16 AM Posted by ReadyKilowatt

I agree that the lack of tech will continue to be a problem for Vegas. The traditional visitor (Gen X and older) wanted to get away from computers and phones because they were traditionally used for work. The millennials have been using computers and phones for social and fun for all their lives and don't want to deal with people over the small stuff. I'm too old to be a millennial, but I tend to think the same way (and the old folks are starting to come around). When I get to a hotel and see $10+ per day on WiFi it pisses me off. Then I see the the comp system that requires me to fill out a paper form and hand it to someone who keys the same information into a system that already has all my info from booking the room and I get a little more frustrated.

99% of the comp tracking could be done with smartphones and QR codes. You sit down at a machine, scan the code and start gambling. When you sit at the table scan the code on the felt and go. check your points balance with an app or webpage. When it's time to eat, there's a QR code on the cash register. I could even see an end to the stupid room keys that don't work with a QR and/or NFC sensor tied to a back end system.

February 21, 2012 4:59 AM Posted by Paolo

@ ReadyKilowatt I think you have the right idea. And the most important part, at least from an operational standpoint, is that these measures would end up saving a lot of money for the company over time. It's a win/win situation.

February 22, 2012 1:29 PM Posted by Jilly From Philly

I think one part of the resistance against too much reliance on smartphone technology (such as using QR codes instead of club cards) is the possibility of cheating. Casinos already tell you to put away your phone -smartphone or not - when at the tables, so I think the last thing they want to do is encourage its use in gaming situations.

However, I do think that more integrated tech in Vegas is generation lives and dies on social media and ubiquitous internet access. Its no longer a luxury add-on - its essential. So smarter tech integration is def going to be key.

March 5, 2012 6:54 AM Posted by detroit1051

Tilman Fertitta's Landry's is buying Isle Biloxi for $45 Million. Based on their plans, they'll turn a mediocre property into a first class competitor to Beau Rivage. I don't think Isle Biloxi ever recovered from Hurricane Katrina, and ISLE didn't have the vision (and money?) to re-imagine the property.

Is Tilman Fertitta one of the new Young Titans? Vegas, Laughlin, AC and now Biloxi plus all of Landry's other restaurants.