Las Vegas’s Worst Nightmare

By Jonathan D. Miller

Print Email Share Reprints News Tip? Get Alerts

Trend Czar Archive

• Trekking for Answers
• Instagram’s...
• Snake Oil Anyone?
• Not So Merry Old England...
• Shocking, Just Shocking

More Related Topics

• Arlington Approves Apartment Building at 650 N. Glebe Road
• DEAL-WRAPTranswestern Hires 18 for NorCal, OC Offices
• From the May 2012 Issue of Real Estate ForumBOMA International Advocates for the Private Sector
• City Council Approves Beauregard Redevelopment Plan
• DEAL WRAPAlvarado Joins CBRE

Most Recent Blog Posts

• Practical CounselDeal Closers and Deal Killers
• Chief EconomistThe Jobs Report and Washington's Cognitive Dissonance
• TrendCzarInstagram’s Unsettling Message
• Practical CounselIF THE ECONOMY IS IMPROVING, WHY DOES IT FEEL LIKE IT IS STUCK IN THE DITCH?
• TrendCzarNot So Merry Old England Has One Edge

Related Videos

• ON LOCATION WITH PARTNER'S DERHAKEVideo: Tackling Environmental Engineering
• ON LOCATION WITH COLE REAL ESTATE'S ROBERTSRetail Provides Net Lease Stability
• ON LOCATION WITH SPERRY VAN NESS' ANDERSONCMBS is Back, But Distress is Up
• ON LOCATION WITH PRUDENTIAL'S AQUINOLuxury Retail Leasing is Very Active
• ON LOCATION WITH JLL'S MALONEYMIddle-Market Retail Starts to Pick Up
• GlobeSt.TVAlaskan Economy Rides Out Recession

Upcoming Events

• ICSC ReCon 2012

 As noted last week, now it’ s New York glomming on Las Vegas’s business with talk of a casino-convention complex near JFK Airport. Once lotteries were a ready gambit employed by states to raise revenues—all those dollar entries for Powerball can add up. But now more places go all in, defaulting to unadulterated gambling as a way to generate some jobs-any jobs and create tax base—any tax base.

I have nothing against gambling, but it’s the ultimate consumption based industry at a time when we need to be creating more, consuming less and saving. The casino business does none of the above. You can call it entertainment and a tourist magnet, but it feeds off many people who cannot afford the tab, and now it’s becoming commoditized and headed for a glut.

Casinos could cut it better in our pre-2007 time when ample credit gave everyone carefree license to roll the dice. But today it feeds into psyches hoping for quick fixes to busted finances at a time when average folks can least afford to lose anymore. And as we know, the casino trade is designed to let the house always win. If states and cities can get a piece of that easy action to reduce budget deficits, they are going for it, even if it is less than a zero sum game. So various governors and mayors can tout construction jobs, and the follow on array of service worker employment generated in the hotels and casinos. That can be a heck of a lot simpler than trying to land a high tech company or manufacturer. But is this the way to restore local or regional economic health?

It used to be Nevada was about the only state that offered casino gambling. It was kind of exotic and Wild West, a touch risqué at a time when our general morals frowned on the idea, and politicians shied away. But then Nevada had really nothing else to offer except maybe as a destination point for folks looking to explore some of the nearby national parks in neighboring Arizona and Utah. And Las Vegas with the help of the Mob made something out of nothing in the middle of a desert.

More recently—back in the late 1970s and early 1980s, a few states enacted casino enabling legislation to help out ailing economies. I thought they only advertised their struggles to re-invent hard-pressed places. Atlantic City was the early poster child (it hasn’t exactly worked). Then all those Indian casinos followed, many in forlorn places like outside Syracuse and Buffalo in New York (they haven’t exactly worked). New Orleans opened a land-based casino after Katrina (is this why anyone goes to Bourbon Street?). Nearby Biloxi in Mississippi has featured gambling as the state’s biggest attraction along the hurricane coast (What other attractions are there?) Pennsylvania got on the bandwagon out of semi-desperation—the Poconos heart shaped beds have seen their day. And now Ohio gets in on the act with new gaming halls slated for Cleveland, Toledo and Cincinnati (Do we have to comment further?). All tolled 41 states have some sort of casino related gambling—extending from slots into all the familiar table related games. And expect the numbers to grow. It’s an unfortunate sign of difficult times despite checkered track records and limited gains for local economies.

Unfortunately for the casino Grandaddy—Las Vegas—this trend is just more bad news. Most Americans can gamble in their back yards and save the air fare. Sure the Strip features the biggest concentration of gambling and entertainment, but all the new competition eats into its market share at a time when the city is one of the most overbuilt in the real estate industry.

Oh for the days of the Rat Pack.

(To search across all ALM blogs, go to www.Lexis.com.)