Bad times for casinos?

[dendrite]

The BBC are suggesting that the mayor of Vegas has a solution to overcome lost revenue they may be experiencing

Grim, but I guess that whether it's legal or illegal, there will always be a 'sin city' element to Vegas...


http://news.bbc.co.uk/1/hi/programme...ts/7350146.stm

Legalising prostitution in Las Vegas
By Rosie Goldsmith
BBC Radio 4's Crossing Continents


The familiar neon lights of The Strip mix images of sex and glamour
Nevada is the only state in the US that allows legal prostitution, but in its largest city, Las Vegas, prostitution is illegal. When the mayor suggested changing the law, it sparked a huge debate.

Mayor Oscar Goodman grabs the headlines whatever he says or does - and he relishes it. He is proud of Las Vegas' image as "Sin City" and happily calls it "an adult playground".

He boasts about his love of gin, cigars and pretty women and calls himself "the happiest mayor in the universe".

Before he became mayor, he was the top criminal lawyer to the Las Vegas mafia.



There's no check and balance as far as the women's health is concerned
Oscar Goodman
Mayor
But when he suggested legalising prostitution and creating a red-light district and a string of "magnificent brothels" in downtown Vegas, the mayor got his most dramatic headlines yet.

He had opened up a debate on a taboo subject: Las Vegas' illegal prostitution.

Everybody knows it goes on, many businesses profit from it, but in-keeping with the city's slogan "What happens here, stays here", it is rarely discussed.

"It's disingenuous when people say they don't want to legalise it," says Mr Goodman. "Right now it's uncontrolled and unregulated. There's no check and balance as far as the women's health is concerned and legal brothels could be an important revenue-raising device for the city," says Mr Goodman.

"When you speak about it intellectually, not morally, it makes sense," he says. "If we had a referendum or ballot on legal brothels, it would probably pass."

Not without a fight, though. The vested interests in this city are legion.

Spectrum of workers

It is estimated that there are as many as 10,000 prostitutes operating illegally in Las Vegas, in an industry that may be worth as much as $6 billion a year.

Over 150 pages in the Las Vegas phone book advertise "escorts" and "massage", and leaflets promising to deliver "hot babes direct to your room in 20 minutes" are handed out to tourists openly on Las Vegas Boulevard, usually called "The Strip".

"Lucy" [name has been changed to protect her identity] is a top-end "companion" selling her time with men at $4000 a night. She explains how the sex trade functions in Las Vegas.


Even though prostitution is illegal it is easy to spot suggestive adverts
"There are women who get propositioned in the casinos, bars and hotels," she says.

"There are women who do 'extras' out of strip clubs and who 'give pleasure' in massage parlours. Women who do what we term 'outcall' - going to specific apartments to spend erotic time with gentlemen.

"There are women who work by print ads or on-line. And every casino host has a bevy of girls to call at a moment's notice to satisfy their high-rollers."

At the other end of the spectrum - in the seedier parts of downtown Las Vegas, among the cheap motels and ganglands - there are women who sell their bodies to pay for their drugs. They might charge as little as $20.

Robert Clymer, a former FBI agent in the city working in organised crime, says human trafficking adds to the industry.

"The number one problem, according to the FBI, is Asian prostitution," he says. "That means Asian organised crime and human trafficking into the US, straight into Las Vegas. And it's all fuelled by money."

Strange vacuum

With 600,000 people, Las Vegas is the largest city in Nevada.

Its illegal sex trade operates in a strange vacuum because in most of the rest of the state prostitution has been legalised.

In fact, Nevada is the only state in the US to allow legal brothels, which stems from a 1970 state law allowing Nevada's individual counties to licence their brothels. But this only applies to counties with populations under 400,000, which excludes Las Vegas and Reno.

The question today is - is what is good for Nevada, good for Las Vegas?

There are nearly 30 state-sanctioned brothels in Nevada.

With names like "Mustang Ranch" and "Moonlite Bunny Ranch", their owners say they contribute to the local economies and provide safe, clean sex.

Brothels are so much part of the Nevada culture that Home Box Office (HBO) even films a reality TV show inside the Bunny Ranch called "Cathouse".


Legal brothels across the state have to abide by strict regulation
George Flint is the chief lobbyist of the Nevada Brothel Association.
"Legal brothels could work anywhere," he says. "They could be huge in Las Vegas. It would be great for the women and for our industry which is today fragile because it remains a teeny business in a big state."

'Sexual slavery'

But some religious groups, academics and campaigners say that all prostitution is wrong and legalising it does not stop sex trafficking or the abuse of women.

"I see it as sexual slavery," says Candice Trummell, director of the Nevada Coalition Against Sex Trafficking. "I think it's morally and ethically wrong for governments to say it's OK to sell humans in that way. The government should not pimp the girls."



I don't think prostitution will ever be legal here. There's too much money to be made from the illegal sex trade
Kate Hausbeck
sociology professor, University of Las Vegas
When asked if she was calling the government a pimp, Ms Trummell answered: "Yes, absolutely".

Kate Hausbeck, a sociology professor at the University of Las Vegas, has spent nearly 10 years researching both the legal and illegal sex trade in Nevada.

She concludes that the best model for Nevada - and any country in the world - is the decriminalisation of prostitution.

"Empower the women who do the work. Give them labour protection and the rights given other workers. Because it's a job and a choice for many women," she says.

But, when asked about Mr Goodman's idea of legal brothels for Las Vegas, she says she doesn't think prostitution will ever be legal here.

"There's too much money to be made from the illegal sex trade. The casinos and convention industry fear it would be a step too far," she says.

[dendrite]

It might be a bad time for casinos, but they're still building and planning on building more in the future. Latest plans up for approval are for a big casino that will be much taller than the Palazzol. If it gets approval, it will be the tallest inhabited building in Vegas

These guys never plan to open the 'smallest' casino or the 'most average' casino, lol.

With all the building and plans for Vegas, It's hard to imagine what it will look like in 10 years time.

Las Vegas Strip
LAS VEGAS-Plans for a 61-story, 2,500-room resort at the northeast corner of Charleston Boulevard and Grand Central Parkway were expected to be approved Thursday night by the Las Vegas Planning Commission. The hotel would be several stories taller than the 50-story Palazzo, which at 614 feet is considered the tallest building in the Las Vegas Valley. The 1,149-sf Stratosphere Tower is not considered a building because it is not fully habitable.
The applicant is Grand Central South Partners LLC, which is comprised of Grand Central Holdings LLC and Grand Central South Property Holdings LLC. The mailing address for both -- 5850 Canoga Ave., Ste. 650 in Woodland Hills -- is that of the Merrill Group of Cos., a national real estate investment, development and management firm based in Los Angeles.

Dubbed Grand Central Hotel, the development would total more than 2.4 million sf on 12.54 net acres. The hotel and its amenities – pool and spa, lounge, fitness center, restaurant, coffee shop and retail shops – would total 2.17 million sf and be located on the southern portion of the site, fronting Charleston and Grand Central. The northern portion of the site, abutting Clark County Government Center, would be home to a 260,000-sf convention facility, according to plans.

Grand Central South Partners owns one of the four parcels that comprise the site, having paid Boston-based Taurus Investments $13.75 million for the 3.23-acre site at the start of this year. The other three parcels have been owned by Union Pacific Railroad Co. for more than a decade. The site Grand Central South Partners acquired was previously proposed for a high-rise condominium tower.
Representatives of Merrill and the City of South San Francisco could not be reached Thursday for additional information.

[Mousey]

Gas or gamble? Economy forces some to choose


by Gary Stoller, USA TODAY

Carlos Bueno and his wife, Mayra, drove three times last year from their home in Houston to a casino in Lake Charles, La., but they won't be making the two-hour drive this summer.
"Gas prices are the main reason," says the 32-year-old father of three children who works for a utility company and also is canceling the family's annual vacation to the Dominican Republic. "The economy is harsh right now, and the little money saved for vacation will have to be spent on fuel for our vehicle."


Bueno says he spent about $1,500 on his casino trips last year, and it costs about $70 a week to fill the gas tank of his Nissan Altima.

The pressures of a weak economy — concerns about job security and rising prices for gas, food, home heating oil and other goods and services — are causing many gamblers to cancel or reduce the number of casino trips. Those who go are gambling less money than in the past: At the traditional ....

[jetset]

MGM Mirage feeling the pain, too - it's just reported Q1 year on year profits fell 30 percent to $118.3 mill., attributing the fall to resort opening costs, a casino fire and the downturn in the US economy.

CEO Terry Lanni called the period "challenging ", adding that he planned to increase revenue through marketing.

[Richtree7]

the new casinos will draw their employees from? Yes, there will be some people losing jobs in other job markets to draw from. There is a very large need for new employees to staff the new casinos. I am mostly referring to the casinos I frequent in Ct. Restaurant wait staff, cleaning & maintenance personnel, dealers, etc. I often ask wait staff in the buffet where they are from. A very large percentage of them came from other countries prior to 9-11. Many from South America and Asia particularly. Now it is exceedingly difficult for citizens from these countries to obtain work visas to get into the U.S.

[babs7262]

It was on the news 2 days ago that Atlantic City had its biggest drop in history. They are in serious trouble. Just think what will happen when the non smoking thing happens!

I myself havent been there since April. I use to go every year at this time. I would normally leave tomorrow for a couple of nights because Rich goes camping but we cant afford because of the prices and not to mention all of the rain (hes a roofer).

[Darem1]

Article in the paper down here was saying that the gulf coast casinos,
Biloxi, Gulfport and New Orleans were hurting also. Folks just don't want to pay the gas to drive to them. Some of us live six to eight hours away, and that's more than a tank down, a tank while there a couple of days, and a tank home. So the trip that used to cost $40 in gas now costs $100. And we don't have a guzzler. Won't impact our once in a while trips as long as they give us freeplay, comp'd room night, etc. Still cheaper than going to Hilton Head and paying for everything for a couple of nights. But if I didn't get anything from them we wouldn't go. And that would end my gambling days.

[NASHVEGAS]

Good article, imo, on Vegas and the current state of the casino industry!! Some of the comments that follow (click on link) are also interesting. There is also link at the end of the article to a popular and often quoted blog site that discusses the on-going decline in Vegas's entire economy including the effects of the bizzaire housing bubble et al.

http://www.lasvegassun.com/news/2008...ze-revenue-dr/


Even major players feel serious squeeze as revenue drops, debts rise
By Liz Benston
Sun, Oct 19, 2008 (2 a.m.)
LAS VEGAS SUN

"Casino companies’ earnings are plummeting by double digits. Debt costs are rising for many companies. And their customers are spending less.

In the financial world, in this economy, those are the trend lines of doom.

Indeed, a few smaller operators are already close to bankruptcy. But could giants like MGM Mirage and Harrah’s Entertainment be next?

The breathtaking series of Wall Street failures and Washington bailouts of recent months suggests anything is possible — even spectacular failures in Las Vegas.

For now, bankruptcy protection remains a remote, if grim, possibility for all but the most damaged companies. Experts say that banks will negotiate with the big casino operators rather than force them into bankruptcy.

“These companies are still generating a huge amount of cash. The banks are going to work with operators that are willing to cut back on capital expenditures,” said one banker, who requested anonymity.

Yet financial experts say for the casino giants to survive in this economy, they must continue to make smart, sometimes painful moves. They also need a little of that luck so many people come here to find.

Casino executives and analysts interviewed by the Las Vegas Sun last week were entirely aware of the industry’s plight as they explained the steps needed to shore up these companies.

The chief concern among casino operators remains how long the economic downturn will continue. The deeper and more prolonged the downturn, the more likely that companies will be forced into bankruptcy.

In the meantime, casino operators are pursuing options to cut costs and hold creditors at bay.

Harrah’s recently completed an inter-company loan of $200 million to trim the company’s debt. It’s now paying a portion of its interest by issuing additional bonds, saving the company millions of dollars in cash.

Station Casinos will seek some reprieve from its banks, though the company’s debt costs will likely go up, analysts say.

Both companies have relatively little cash left after interest payments to pay for upgrades to their properties.

Casino operators are also cutting costs where they can, including payroll, their single largest operating expense. At many companies, this has meant laying off managers and rank-and-file workers in recent months.

As of August, the state reported that the gaming industry employed roughly 600 fewer people than a year ago. Although more workers have lost their jobs in that time, these figures reflect that many people who lost jobs have since found work, especially at new casinos that are hiring or have opened.

Some companies have halted construction projects, and analysts expect more plans to be put on hold in the coming months. (The exceptions are big projects too far along to mothball, such as MGM Mirage’s CityCenter and the Octavius hotel tower at Harrah’s-owned Caesars Palace.)

Some executives are putting more cash, or equity, into their companies. Las Vegas Sands Chief Executive Sheldon Adelson, the company’s largest shareholder, recently lent the company $475 million of his own money to pay down debt.

Companies with wealthy shareholders could do the same, analysts say.

Still, some companies may not be able to wait out the economic downturn. Herbst Gaming and the owners of the Hooters hotel, for example, are not generating enough cash to cover debt payments.

A rebound by 2010 would be soon enough for companies to get a reprieve from lenders and weather the downturn, experts say.

Yet with gaming stocks and bonds trading at less than 50 percent of their value of a year ago, most investors aren’t hopeful for a quick turnaround.

Some experts believe there might be a cultural shift at play with longer-term implications for businesses, especially the Las Vegas resort industry, which encourages escapist, spendthrift behavior.

“Post the era of using homes as ‘piggy banks’ and overspending as a nation at every level, we believe a new era of national thrift is before us,” Andrew Zarnett, a bond analyst with Deutsche Bank, said in a research report last week. “We believe last week’s activities in the stock market have caused too much psychological damage and the general public has been traumatized by these events ... We believe Americans will be forced, if not at their own volition, to reduce household debt.”

The result, Zarnett says, will be reduced consumer spending and an unprecedented gaming industry recession.

For several casino companies, the economy began its slump soon after they took on massive debts. At the tail end of the credit boom, Station Casinos and Harrah’s went private with the help of private equity firms that borrowed extensively to make the deals happen.

Ideally, leveraged buyouts rely on cheap loans that are paid down by growing earnings over a longer term than is acceptable to Wall Street. The companies can then be sold back into the public market for more money.

It’s hard to blame these companies for taking on debt when they did because few business models would have assumed a decline this deep, according to one Las Vegas casino executive, who requested anonymity.

“Nobody considered a situation where your cash flow goes down by 25 percent because that would have been a ridiculous assumption to make a year ago,” the executive said. “You would have been laughed out of the room.”

Before the economic decline, major casino companies used cheap capital to build expensive properties and acquire others. Lenders gave them money at attractive interest rates on the assumption they would generate enough cash to pay off their ballooning debts, or at least refinance them at lower rates.

The credit crisis, by itself, wouldn’t have been too dire for casino companies. As long as casinos generate huge amounts of cash that grow over time, as well-run casinos have throughout history, even monster debts can be managed.

Operators have seen boom-and-bust cycles before, and the Strip has historically functioned with some independence from the broader U.S. economy.

Yet in this downturn consumers of all income levels are spending less, contributing to double-digit earnings declines at some casino companies. Those factors have shifted the industry’s economic outlook.

“If you thought this kind of thing would happen, you wouldn’t do any deals, ever,” the casino executive said.

Michael Paladino, senior director of gaming, lodging and leisure companies for bond rating agency Fitch Ratings, calls this an “unprecedented consumer downturn, relative to the size of the industry today.”

Companies that didn’t borrow billions of dollars to go private have their own set of concerns: All casino companies have terms, or covenants, with their banks.

MGM Mirage, whose bank lenders for the company are some of the same entities that are lending money to the company’s CityCenter joint venture, recently negotiated some relief. The banks are allowing the company to increase its ratio of debt to earnings in exchange for a higher interest rate.

Although many companies don’t have any bonds coming due until at least 2010 or thereafter, MGM Mirage has a pair of bonds worth about $1.3 billion that mature next year. The company will likely take on additional bank debt or refinance the bonds at higher rates, analysts said.

Las Vegas Sands expects to open a casino resort in Bethlehem, Pa., next year and condos at its Palazzo resort in 2010, but those projects alone might not generate enough additional cash to satisfy the company’s banks, especially if earnings are depressed, analysts said. Meanwhile, the company is sinking billions of dollars into a stretch of resorts in Macau that may not boost profits for years.

Wynn Resorts has more of a cash cushion than many of its competitors. As a preemptive strike, Wynn negotiated more leeway on the company’s debt without having to pay higher interest rates for it. And yet, Wynn is also facing an earnings decline that, should it continue, could put the company’s banks in the position of calling the shots, analysts said.

These problems could be solved in an instant — by earnings growth.

In the meantime, companies will further tighten their belts. This may mean further staff cuts or delays of periodic upgrades to, say, hotel room furniture or restaurant interiors — an unappealing prospect in a business where customers expect to be coddled and entertained, even dazzled.

In a worst-case scenario, companies could sell property or land. The credit markets would have to improve first because few companies would have the ability to finance a purchase otherwise, Paladino said.

However prolonged the downturn, Paladino said the industry will eventually look different, perhaps with less reliance on debt to fuel growth.

“Nobody’s saying that banks aren’t going to lend again,” he said. “But the longer it takes, the worse things are going to be for this industry."”