How bad was Vegas hit by Nine Eleven?

You can't really tell, because all the casinos lie about it. But here's one way to check it out. I've just driven from the "Welcome to Fabulous Las Vegas" sign on the south end of the Strip all the way to the Stratosphere tower--in 11 minutes. This is bad.

Before Nine Eleven the same trip, at 8 o'clock on a balmy winter evening, would have taken four times as long, and most of that time would have been spent in a dead-stop snarl around the famous "Four Corners" near Flamingo Road. Vegas had been on a wild ten-year roll. Even with a softening economy and competition from legalized gambling in 46 other states, it had become the first world headquarters of multi-national corporate gaming, the result of an alchemical miracle that took a mob business and turned it into a Wall Street analyst's dream. "People might visit their local riverboat or the Indian casino once a month," I was told a year ago by Rob Goldstein, President of the Venetian. "But they still have to come to Vegas. We are Mecca."

No doubt he would choose a different metaphor today.

If you stand at the aforementioned "Four Corners," the most crowded intersection in Nevada, you will be within a five-minute walk of 19 casinos, 50,000 hotel rooms, 39,000 slot machines and $14 billion in invested capital--or more than 46 times the total investment of the Mafia in its 40 years in the city. These two sprawling square blocks include not only the largest hotel in the United States (the MGM Grand), but nine of the ten largest in the world. And what I'm describing is less than a fourth of the Vegas gambling economy.

Moreover, during the past five years the strongest performing casinos have not been on the Strip at all. The big growth markets have been so-called "locals" joints in the outer suburbs, which cater not to tourists but to the thousands of casino employees who prefer their slot machines loose and glitz- free. Unfortunately, the 12,000 casino employees laid off after Nine Eleven took an especially large chunk out of the locals job market. "Layoffs" might be an okay concept on the Strip, where the moguls will do whatever's necessary to protect their earnings projections, but on the Boulder Highway it can mean regulars using the change window to cash their unemployment checks. Station Casinos, which has been buying up land like crazy and erecting family-friendly casinos with multiplex theaters and food courts, saw its once golden stock downgraded from "Buy" to "Hold" in October.

The only casinos to actually thrive last fall were the very ones that Goldstein singled out as provincial--riverboats in the Chicago area, Indian casinos throughout the Lower 48 but especially in California, and the boom city of Tunica, Mississippi, a mini-Vegas among the cotton fields where the Horseshoe Casino, for example, routinely earns a 50 per cent return. The gambling didn't stop; it just moved closer to home, usually within one tank of gas.

Of course, the Four Corners corporations--MGM/Mirage, Mandalay Bay, Harrah's and Park Place--extend beyond Vegas. Harrah's, for example, has so many casinos in so many states that they invented the "frequent gambler" card. You can roll dice on the Cherokee Indian Reservation in the Smoky Mountains of North Carolina and redeem those points later for a room at the Players Island Riverboat on the Ohio River near Metropolis, Illinois, in the unlikely event you would want to do that. The big four have major investments in every American gambling market, as well as South Africa, Australia, Canada, Uruguay and the Isle of Man, so that what you're really looking at, when you stand at Flamingo Road and Las Vegas Boulevard and see the half-scale Eiffel Tower and the dancing Bellagio fountains and the erupting Mirage volcano and the New York-New York roller coaster, are facades behind which are hidden thousands of corporate cubicles, board rooms and office suites, the headquarters of four massive vertically-integrated corporations. (There are still a few stand- alone casinos, but they're considered curiosities. Only in Vegas could billion-dollar properties like the Venetian and the Aladdin be thought of as "boutiques.")

For a while in the nineties, Las Vegas was so successful that they no longer had to discount room rates or hawk cheap buffets to get gamblers to visit. Increasingly the desert outpost had diversified into resorts, hotels, golf courses and even amusement parks spread everywhere from Atlantic City to Maryland Heights, Missouri, to Nelspruit, South Africa, and one of their goals had been to rob Chicago, Dallas and New York of the vast convention and trade show business. Their basic product was Gambler's Lite, an American-style commodity, like home-delivered pizza or video games, that encourages the customer to come on over to the casino and sit a while and don't worry because it's not really about gambling, it's about spending an evening out on the town. The only thing that set the companies apart was the packaging, the theme. (The Mandalay Bay, for example, is described by Wall Street as "heavily-themed," but no one knows precisely what the theme is. It's named after a poverty-ridden city in Myanmar, run by one of the most repressive military juntas in the world, which is actually an inland river town full of rickshaws and wooden shacks that has no bay. The decor would best be described as Eclectic Jungle Moderne.) Even the word "gambler" had fallen into disrepute as the city sought to cast off its Wild West origins and the years when the principal banker in town was the Central States Pension Fund. The official word now is "visitor."

But after September 11, this corporate octopus became the beast that has to be fed. The daily "house nut" at the Venetian, for example, is $1 million--the bare minimum they need to break even. When McCarran Airport was closed for the first time in its history, the airport lost a million dollars immediately--in slot machine revenue! There are 1,300 slots within the airport, making McCarran Casino . . . er . . . Airport a bigger gaming operation than any casino in, say, Arizona, not to mention many in Vegas itself.

And when the planes don't land, Vegas loses its fuel supply. "Our whole world revolves around McCarran," says Fred Lewis, the veteran Howard Hughes spokesman who now handles p.r. for the Aladdin.

So in the tense days after September 11th, with McCarran shut down, with 250 conventions being cancelled or postponed, and with luxury hotel prices on the Strip dropping to their lowest levels since the eighties, it looked like America's non-stop Party Central was stumbling drunkenly toward a new universe that even the top marketing executives in the world couldn't figure out.

Should we hang giant American flags on the sides of the casinos? Should we kick the headliners out of the showrooms and do patriotic tributes instead? Should we actually (gulp) close our doors for a day?

Quickly the consultants were engaged, the surveys paid for, the focus groups hastily put together in Phoenix shopping malls, gathering mountains of data that all amounted to the same nervous question: "You wouldn't, uh, stop coming to Vegas, would you?"

And the answer came back loud and clear: "Nope. That's exactly where I'd go to escape."

And as far as the patriotic shows go: "Nope. Save us from CNN, don't remind us of it."

The big American flag on the side of Caesars Palace came down. About half the casinos went dark for the National Day of Mourning, but their doors remained open. The execs breathed easier. Vegas was an island, and that's what people wanted it to be. A rude wretched guest had temporarily disturbed the party with a fistfight, but now we were all regrouping on the patio.

The marketing people learned quickly that "I don't feel like going to Vegas right now," when coupled with a 50 per cent drop in room rates, became "Hell yes, let's gamble." The Venetian was the first big player to slash prices, and quickly the other luxury hotels had to follow. It worked at first, with tourists driving in from neighboring states and a few conventions deciding that, what the heck, we didn't spend five years planning this thing to be deterred by mere terrorism. But now you had a new kind of problem. For the first time you had typical low-roller tourists at the swank Bellagio, for example. They would marvel at the Conservatory--a sort of Versailles-level wonderland of flowers, plants and trees--and they would window-shop in the stores where men's shirts retail for $1400, but they weren't going to be playing any thousand-dollar-a-hand baccarat, and they weren't going to be spending $500 a person for dinner at Picasso- -which is decorated, by the way, entirely with original Picassos.

In other words, the Strip had sawdust-joint types thronging to a resort that had spent the last 12 years building a wonderland for middle-aged Yuppies who sometimes dropped more on their room and their shopping and their $100 Siegfried-and-Roy tickets than they did on the casino floor. Now everyone was back to hustling the nickel slots, and the casinos were caught in a bind. As publicly traded companies, they didn't want Wall Street to think they were discounting room rates too much, but the only thing they had to advertise was cheap rooms. (A spokesman at the Venetian confidently quoted their weekday rate as $129. One hour later, I went to my room and booked a Venetian suite on the Internet for $74.)

But then the second wave of bad news, much more ominous, registered by the end of September: The Asians were gone. "They're afraid to come here," says one casino executive who didn't want to speak on the record. "They're superstitious to begin with, and it's easier for them to go to Macao or Australia or Malaysia to gamble."

The Asians don't just come to Vegas. For many casino marketers, they are Vegas. There are entire marketing divisions devoted to multi-lingual specialists who do nothing but talk to Malaysia on the phone all night. The Asians not showing up in Vegas is like saying all children under the age of 12 are afraid to go to Disneyland.

So Las Vegas had to scramble its jets. Those would be the Gulfstream jet fleets that the casinos keep on high alert in the event that a high roller anywhere in the world decides he wants a little baccarat action in the desert. The casino will send a jet to Hong Kong, Singapore, Taiwan, or anywhere else the high roller happens to be. But the high-roller "hospitality lines" had fallen silent, so "casino hosts" jumped on the jets themselves, fanning out through Asia, making personal calls and taking along photos of the latest in high-roller suites and secret VIP golf courses. The whale hunt had begun.

The planet contains only about 800 "whales"--defined in Las Vegas as anyone who bets a minimum of a million dollars per visit--and 80 per cent of those are Asians. After September 11th, when the rest of the nation was obsessed with the Taliban and Ground Zero, the front-page news in Vegas was a speech by the Japanese minister of tourism advising his countrymen that it was unsafe to travel to America. Japan Air Lines cancelled all its flights to Vegas. This was a blow primarily to the high-end shopping malls that are attached to every casino, because the standard industry wisdom is: Chinese gamble. Japanese shop.

And the ethnic Chinese whales scattered through Asia were refusing to board the Gulfstream. But it wasn't just because they got freaked out by CNN. The casinos' guilty little secret is that many of these guys have potential visa problems. When you examine their resumes, you find that the oft-repeated Vegas mantra-- "Organized crime has left the building"--turns out to be not entirely true. The Japanese Yakuza love Vegas. So does the Russian Mafiya. There are Colombians and Mexicans whose principal income probably doesn't come from coffee plantations. Former leaders of the Hong Kong mob have been spotted at the tables. Many others, who live in legal grey areas like offshore banking, are major players. Adnan Khashoggi, the Middle Eastern arms merchant with a $30 million line of credit, once booked an entire floor of a Strip hotel to provide individual rooms for all the women he brought with his entourage. The women spent so much on jewelry and furs in casino-owned shops that the host discounted his gambling tab a record 75 per cent.

Needless to say, no Middle Eastern arms merchants are visiting the U.S. at the present time, and anyone with even the hint of a visa problem is likely to be hustled over to a detention center--not good for long-term whale-handler relationships. The "baccarat win," considered the key statistic for high roller action, has been terrible since Nine Eleven. There are reports of routine 10 per cent and 20 per cent gambling discounts--refunds of losses--for the few whales who are showing up. And that's not good for business, either, because the whales know how to work the system, playing one casino off against another, saying things like, "I'm not lucky here tonight--I think I'll try another casino"--the code phrase for, "Either give me back some of my money or I'm going across the street."

Yet, despite the whales becoming an endangered species, there are some occupations that seem both recession-proof and terrorist-proof. Vegas showgirls earn anywhere from $500 to $800 a week, with a $50-per-show bonus for appearing topless, plus extra income from trade shows and go-go jobs--and they discovered how indispensable they are when the casinos started scrambling for tourists. The Folies Bergere was dark for one night. "Jubilee" closed for a week. But then the casinos realized that, no, one thing they couldn't live without was pretty girls.

The going rate for call girls in the city dropped much less than the room rate. Girls who were getting $300 regrouped at $250 and then jacked up their rates again after a couple of weeks. The ones who call themselves "luxury prostitutes"--$1000 and up-- didn't discount at all. And the reason, according to my buddy Jim Gish, is that Vegas might just be returning to its roots and realizing that the traditional items--gambling, liquor and sex-- might be the basis of the local economy after all.

Jim knows about such things because he runs the show at the Girls of Glitter Gulch topless bar, far beyond the pale of the Strip, on the main downtown drag of Fremont Street where Las Vegas began a hundred years ago. He was one of the few businessmen on the street who refused to participate in the building of the Fremont Street Experience, which sounds like a San Francisco rock band, circa 1968, but is actually a pedestrian mall erected in 1995, covered by a light canopy that features animated special effects once an hour. It was the one effort downtown Vegas made to become more like the theme-park hotels on the Strip.

"What did you think of the Fremont Street Experience?" he asks me with a sneer in his voice, offering me a chair at the bar and a premium vodka. "Cartoons! It's a cartoon show. Is that Vegas? That's not Vegas. That's not why people come to downtown Vegas."

Nearby a zaftigblonde slides down onto her back and arches her leg over the head of a customer. "Now that," says Jim, "is Vegas."

© Copyright 2002 United Press International and Joe Bob Briggs

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