Tonight, a new World Series of Poker champion will be named at the Penn & Teller theater in Las Vegas. The highest honor in poker will make a millionaire in a city that's used to taking fortunes from its customers. But in recent years, the tables have turned and the house's advantage has been diminished as customers seek a new kind of thrill in Sin City.
The party looks like it's returned to Vegas, but the gamblers are slower in arriving. We saw it when the Cosmopolitan opened and became the new hot spot on The Strip filling rooms at strong rates and making a killing on food and drinks. But high room rates and popular nightclubs don't make a profitable resort, gamblers do.
Gamblers a world away
Unlike Macau, where gambling is the focus, the young crowd in Las Vegas is less concerned with playing blackjack than they are with making it to the afternoon pool parties. When Wynn Resorts (NAS: WYNN) and Melco Crown (NAS: MPEL) are focusing on maximizing revenue per table and how to compete for junkets, Caesars Entertainment and MGM Resorts (NYS: MGM) are trying to get customers just to play at their tables.
Another contributor to the struggles in Las Vegas is that the Asian players who used to travel halfway around the world to play the tables in Las Vegas no longer have to, as the newest casinos are in Singapore and Macau. What's the draw to the aging Las Vegas Strip?
The party rages on
So while Las Vegas Sands (NYS: LVS) , Melco Crown, and Wynn Resorts are counting their winnings in Asia, the Las Vegas-focused operators are struggling to survive. MGM lost $107 million in the third quarter and Caesars Entertainment just announced that it lost $164 million in the quarter. They can continue to point to solid room rates as a sign The Strip is improving, but the fact is that gamblers aren't coming back. For the past 12 months, gaming revenue is still down, even though the visitors seem to have returned.
It wasn't the college kids on spring break that built Las Vegas, it was the gamblers who would sit at a table all day. Maybe it's a changing demographic, the spread of gaming in the U.S., or a bad economy, but those people don't seem to be visiting quite as often.
It's too bad, because I enjoyed ogling what those players helped build as I strolled toward one of the city's growing and less profitable poker rooms.
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