Casino Journal

SILVER ANNIVERSARY SECTION: The Game Changers

by Paul Doocey

October 5, 2012

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THE MIRAGE (1989)

Hard to believe now, but there was a point during the mid-1980s when people thought the Las Vegas Strip had seen its best days. After all, there had been no new casinos developed on this famous piece of land since 1973, and those that were already in operation were throwing out words like “saturated” and “stagnant” to describe the local gaming marketplace.

Funny how quickly everyone’s mindset changed with the opening of Steve Wynn’s The Mirage casino resort in 1989. Almost overnight, talk of oversaturation was replaced with discussions about who was going to build the next bigger and better casino mousetrap along The Strip.

The Mirage also had an equally important impact outside of Las Vegas. With it, Wynn merged the prevalent casino development trends of the previous 20 years—theming, entertainment and scale—under one roof to create the megaresort. At that time, The Mirage truly was “mega,” setting Las Vegas records for number of guest rooms (3,000) and cost to develop ($630 million). It featured an understated South Seas motif with exotic entertainment elements such as a white tiger habitat, dolphin pool and the famed exploding volcano. All these attractions were offered for free, a savvy marketing move that still has tourists flocking to the resort to watch, stay and even gamble every now and then. The Mirage prototype became the standard casino development model for the next decade, both in Nevada, across the United States and around the world.

The Mirage was trend-setting in another way as well—Wynn used junk bonds to finance all but $80 million of the resort’s cost. Soon other developers followed suit, and this supply of Wall Street-based capital fueled the modern casino development boom.

MGM GRAND (1993)

When Kirk Kerkorian first unveiled his plans for MGM Grand in the early 1990s, jaws likely dropped, given the sheer size of his vision. Back then, The Mirage was the largest Strip casino resort in Las Vegas, and Kerkorian’s monster project, if it ever came to fruition, would dwarf it.

Kerkorian and MGM persevered and when MGM Grand opened in 1993, it set all kinds of Las Vegas records—the most expensive casino resort ever built ($1 billion), the most hotel rooms under one roof (5,005), largest casino on The Strip (171,500 square feet), largest parcel of land (112 acres) and largest theme park (33-acres). The property also included 12-themed restaurants, a 1,700-seat showroom, three swimming pools, a 15,200-seat special events center and much more.

After some initial financial hiccups, MGM Grand eventually performed at a level that got other developers to believe bigger would always better, launching a Las Vegas casino arms race of sorts that culminated with opening of the massive CityCenter, developed by MGM offshoot MGM Resorts, in 2009.

FOXWOODS RESORT CASINO (1992)/MOHEGAN SUN (1996)

Megaresort casinos were in the process of transforming The Strip and Las Vegas. It wasn’t long before developers began to wonder how the format would fare outside of Nevada. The problem: commercial casino jurisdictions with the size and will to foster such massive constructs were few and far between—the aforementioned Nevada and New Jersey, primarily, thanks to size and operation restrictions imposed by riverboat gaming states such as Iowa, Illinois and Mississippi.

Sovereign tribal nations, however, were not under such restrictions. So long as they were a federally recognized tribe and reached a gaming compact with the state, the size of the casino property was only limited by the tribe’s imagination and resources.

One of the first tribes to swing for the casino fences was the Mashantucket Pequots, who had been running a bingo hall on tribal reservation land in Connecticut since 1986. The tribe secured financial backing and expanded its bingo hall to include table games and, by 1993, signed a compact with state officials that allowed them to offer slot machine gaming in return for 25 percent of the revenue. By 1996, Foxwoods Casino Resort had 600 hotel rooms, a 250,000-square-foot casino and over 4,400 slot machines, and was so popular in the region that it became the highest-grossing casino in the nation.

Emboldened by the Mashantucket Pequot example, the Mohegan Tribe also struck a compact with Connecticut and with the help and backing of Sol Kerzner’s Sun International opened Mohegan Sun in 1996. The property generated $30 million in revenue during its first month of operation and never looked back.

Today, both Foxwoods and Mohegan Sun are sprawling facilities that house over 6,000 slot machines each, in addition to a myriad of lodging, dining, entertainment and cultural offering. True, both facilities were hard hit by the current recession and are seeing their gaming markets diminish as neighboring states legalize casino wagering, but both Foxwoods and Mohegan Sun were game changers, proof that megaresorts could thrive in both the tribal and northeast gaming markets.

ATLANTIS PARADISE ISLAND (1994)

By the mid-1990s, the megaresort was a proven casino development formula within the United States. What no one was certain of, however, is would this gaming development format play as well overseas.

Sol Kerzner believed it would. As head of Sun International Hotels, he had been the guiding light behind the Sun City gaming complex in South Africa, which in 1992 became something of a megaresort when it opened Lost City, a $275 million attraction themed around a lost mythical civilization. The 62-acre manmade jungle featured cliffs, rock formations, waterfalls, streams, and swimming pools that eventually opened onto four-themed hotels and two champion-level golf courses.

Fresh off the success of Sun City, Kerzner purchased the three resorts that made up Paradise Island in The Bahamas. Sun International invested $250 million into the resorts and transformed them into Atlantis Paradise Island, a true megaresort that included a massive casino, multiple hotel towers, numerous restaurants, bars and shops and, most noticeably, a 14-acre water park that featured caves, pools, waterslides, rides and the world’s largest outdoor open-water aquarium, home to more than 100 species of fish.

The end result of this investment was much the same as the one made at Sun City—people flocked to Atlantis Paradise Island, which opened in phases from 1994 through 1998. Megaresorts could indeed survive, and thrive, outside their U.S. birthplace.

THE VENETIAN (1999)

By the time Sheldon Adelson decided to expand Las Vegas Sands in the late 1990s with the construction of a massive new megaresort that would eventually become The Venetian Resort Hotel Casino, analysts were already fearful that Sin City was quickly becoming oversaturated, especially with hotel rooms. The Venetian, set to open in 1999, would add 3,000 rooms to The Strip, which was still trying to absorb the thousands of rooms generated by the recently opened Bellagio, Mandalay Bay and Paris, and the soon to open Aladdin.

Adelson, however, was unworried, certain that his property had one advantage the others could not match—a direct connection to his 1.6 million Sands Expo and Convention Center. Not only would The Venetian benefit from the thousands of tourists flocking to see his recreation of the iconic Italian city, but the property would also get a boost and steady income from the millions of business people attending trade shows and convention in Las Vegas each year. The sheer size of the property and its dizzying array of amenities allowed it to cater specifically to businessmen and tourists, as well as gamblers, shoppers and locals.

Adelson’s hunch was right. Bolstered by these varied revenue streams, The Venetian has managed to thrive and expand in the hyper-competitive Strip marketplace. In addition, The Venetian essentially became the prototype for the modern integrated casino resort; a development mode Las Vegas Sands further established and refined with the subsequent openings of Sands Macau and Venetian Macau in China and Marina Bay Sands in Singapore.

THE PALMS (2001)

Over the years, a slew of Las Vegas casinos have marketed themselves as the cool or hip place to be. In truth, many of them are; at least to the 45-years-and-older adults that frequent them. Indeed, it wasn’t until George Maloof built and opened The Palms in 2001 that a casino resort could claim to attract the really cool and hip crowd—young adults under 35 years of age.

Maloof, who had cut his teeth on the Las Vegas locals market as head of the Fiesta casino chain, designed the Palms to appeal to a combination of value-conscious gamblers and younger patrons with a penchant for partying. Far from the largest casino in Las Vegas, The Palms found success as go-to location for people who wanted to hang out and socialize without stepping foot into nearby gargantuan casino resorts loaded full of families, tourists and, well, old people. The Palms evolved into an attraction for A-list celebrities thanks to its lineup of trend setting lounges—Rain Nightclub, Skin Lounge and Ghost Bar. Appearances on MTV’s Real World and a host of other youth-oriented reality television series didn’t hurt, either.

More than any other property, The Palms proved a properly designed and marketed casino resort can have currency among younger generations, a fact that only grows in importance as the industry searches for replacements to a rapidly aging player base. The property was also the inspirational for The Cosmopolitan and other more recent resorts looking to bring “sin” back into Sin City.

CITYCENTER (2009)

No list of game changing casino properties of the past 25 years would be complete without mentioning CityCenter, MGM Resorts’ self-styled urban metropolis set on 67-acres along the Las Vegas Strip. CityCenter, which is estimated to have cost $9.2 billion, features ARIA, a 61-story, 4,004-room gaming resort; luxury non-gaming hotels including Las Vegas’ first Mandarin Oriental and Vdara Hotel & Spa; Veer Towers, the development’s only strictly residential buildings; and Crystals, a 500,000-square-foot retail and entertainment district.

The property is a trendsetter in so many different ways—the largest single gaming project in the world; the first to make residential units an integral part of lodging options; the first to utilize a casino-wide installation of a server-based gaming network; just to name a few. However, given projected gaming market and development trends, it’s unlikely another resort the size and scope of CityCenter will come along anytime soon.

HONORABLE MENTIONS

Riverboats/dockside gaming (1990s) helped expand casino gaming throughout the Midwest and south, creating innumerable local gaming markets. Racinos (1990s) also gave a much needed boost to various drive-in market and proved slots and pari-mutuel racing can co-exist. Bellagio (1998) set the benchmark for a high-end casino experience. Mandalay Bay (1999) one of the first megaresorts to gear its offering to the young and hip instead of families. Pechanga Casino & Resort (2002) proved megaresort-style gaming could thrive in California. The Borgata (2003) brought modern, megaresort-style experience to Atlantic City. Revel (2012) blazed a trail for future urban casino development with its embrace of the local environment and its layout, designed to appeal to both resort and casino patrons.

SIDEBAR: Game Changing Products

It’s fair to say that thousands of new products have been introduced to the gaming industry over the past 25 years, many of which have transformed the brick-and-mortar casino experience. Here’s our top five:

TITO/Cashless Gaming
A quarter century ago, almost all slots operated on coins or tokens, costing facilities thousands of dollars each year in maintenance and other fees. Today, bill acceptors, ticket printers and all the software and hardware needed for creating a cashless game environment have become ubiquitous, a seemingly natural part of the casino experience, with benefits to operators and players alike.

Player Tracking Systems
Used to be slot and table play were tracked by harried managers toting fistfuls of paper and trying to keep up with a customer’s rate of play. Over the past 25 years, the player tracking process has become almost entirely automated, providing the customer with proper comps and rewards, and managers with valuable information that can be parsed by modern business intelligence and data mining tools into actions that can add money to the bottom line.

Players Clubs
True, the players club concept has been around longer than 25 years. But modern technologies such as swipe cards and computer systems have allowed for the creation of uber-programs such as Harrah’s Total Rewards, which has transformed the casino experience for thousands of customers while generating millions of dollars in additional revenues and cross-marketing opportunities for Caesars Entertainment.

Server-based Gaming
The adoption rate has been a little slow, but server-based gaming appears to be here to stay. The ability to constantly supply fresh content and instantly apply it to a facility’s gaming machines should prove invaluable going forward, especially as younger generations—weaned on video game style action—take to casino gaming floors.

The Internet
Both as a marketing tool and potential future source of gaming revenue, the Internet and Web-inspired/enabled technologies such as smart phones and iPads are set to revolutionize the land-based gaming experience.

Paul Doocey
is editor of Casino Journal magazine. He can be reached at dooceyp@bnpmedia.com.

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