Gone are the days when Silicon Valley twentysomethings dropped tens of millions of dollars on the high-end tables of South Strip casinos, their fortunes disappearing like so many failed dot-coms.
The big-time bettors of currency crisis-plagued Brazil and Argentina have evaporated with the value of their bank accounts.
The premium gamblers of the economically troubled countries of Japan, Taiwan, South Korea, Malaysia and Thailand are slowly returning to the desert city, although their numbers remain down from a decade ago.
That leaves the booming economy of mainland China to mint the freshest millionaires for the Strip’s ultra-chic salon prives.
It’s a troubling dynamic for a town that is largely dependent upon cocky free-spenders to bet big bucks against the house.
“Portfolio wealth has been damaged globally. There’s a lot of paper UFABet wealth that’s diminished,” said University of Nevada, Reno professor Bill Eadington.
Nevada casinos saw their take from baccarat — the favorite card game of Asian high rollers — fall 28.7 percent to $375.5 million during the 12 months ending June 30, according to the Nevada Gaming Control Board. That followed a 10 percent decline to $526.7 million in the 12 months preceding June 2001.
Overall, Nevada’s 342 casinos saw their haul from gamblers fall 3.7 percent for the budget year to $9.3 billion, with the Strip’s take dropping 7 percent to $4.5 billion.
“After September 11 they were filling hotel rooms with slot players as opposed to high-end table games players,” said control board statistical analyst Frank Streshley.
To be certain, the Strip’s high-end casino tables continue to make money from wealthy bettors — just at a more modest level.
“We still don’t have a lot of the high-end people coming back,” Streshley said.
The fortunes of the Strip’s lavish gambling parlors are largely dependent upon jet-setting casino marketers who move about a tight-lipped world of overseas trips, wild dinner parties and one-on-one relationships.
In the aftermath of the Sept. 11 terrorist attacks, international high-roller travel to Las Vegas plummeted nearly 75 percent. Domestic high-end travel fell by half.
Yet, the biggest of the big gamblers — with $300,000-plus credit lines, who make average minimum bets of $6,000 a hand, 12 hours a day for three days a pop — have largely returned.
“If you look at the very high end of our business, it’s very good,” said one Strip casino marketer, who requested anonymity.
It’s the next tier down where the drop-off is found.
The gambler with the $50,000 to $300,000 credit line, who bets at least a $1,000 a hand over three days, has grown skittish.
Like anyone who monitors the mania that is today’s financial markets, premium gamblers are worried about their investment portfolios.
“There’s less people with less discretionary income on the high side,” the marketer said. “Everybody is skeptical with the marketplace, even though I believe we’re doing better than we projected.”
The troubles surfaced about 18 months ago as the U.S. economy softened and were greatly exacerbated by the worldwide travel decline that followed the terror attacks.
“Everything’s the result of something else: what’s happening in the economy, world politics, September 11, everything that’s gone on in the world,” the marketer said.
Casino executives have increased their efforts to counter the decline, sending more direct mailers, working their customer phone lists.
In April, MGM Mirage hosted a Paul McCartney concert and baccarat tournament the same weekend. Both were largely arranged to counter the drop-off in high-end business. The result: a good but not great month for revenue generation.
The Strip’s 43 casinos saw their total take from UFABet gamblers rise 2.64 percent to $381.5 million for the month. But the figures were driven by the one-time events.
“That’s about the only thing that stands out for the month,” Streshley said.
The rest of April’s numbers were relatively flat, raising questions about the city’s money-making outlook for the coming months.
The next high-profile marketing boost to the Strip’s high-end fortunes could come with tonight’s scheduled Bruce Springsteen concert at the Thomas & Mack Center, followed by the Oscar De La Hoya-Fernando Vargas super welterweight championship bout scheduled for Mandalay Bay on Sept. 14.
“I think (enough) time has passed where people want to get on a plane and experience these megaevents,” said a second casino executive. “It’s about creating that unique event that is going to motivate these people to get on a plane.”
The business equation for high-end success has changed since MGM Grand’s May 2000 buyout of Mirage Resorts, creating Strip giant MGM Mirage, which controls slightly more than half of the city’s high-end gambling market through its Bellagio, MGM Grand, The Mirage and Treasure Island.
Caesars Palace and Paris owner Park Place Entertainment controls another 25 percent of the market, with competitors Mandalay Bay and The Venetian picking up much of the remaining business.
The monopolization of the market has led to a decrease in the costly practice of discounting high-roller losses.
Typically, a casino may ask that a $1 million loser pay back $920,000. But The Venetian pushed that envelope two years ago, writing off as much as 15 percent to 20 percent of a gambler’s losses, cutting into the profitability of the high-end business.
“Everybody’s being more responsible on the way they’re using this,” the executive said.
Strip operators are looking for a boost from the scheduled September opening of the state’s first private high-roller salons at the MGM Grand and Caesars Palace, a move authorized by a new state law, ending Nevada’s 71-year requirement that all casino gambling be open to the public.
Casino executives argued the change was needed to lure publicity-shy gamblers who prefer the closed casinos of Asia, Australia and Connecticut to this city’s wide-open gambling floors.
Minimum bets on slots and table games must be $500 while bettors are required to carry cash and credit totaling $500,000. Private hallways and imposing doors will bar curious passers-by, while surveillance cameras will beam images from the private areas to state gaming regulators to ensure that wagering is on the up and up.
Yet, the fortunes of the city’s high-roller salons and baccarat, in particular, ultimately depends upon the health of the national and world economies, the executive argues.
“That’s a game that’s not going to come back until the economy swings the other way,” he said. “People don’t worry about traveling as much as they do about the economy and its effect on their disposable income.”