Thesis: Casino Business in Las Vegas

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¶ … Gaming in Las Vegas

Brief History and Guide to Casino Gambling in Las Vegas he had an idea -- to build a city out of a desert stop-over for GI's on the way to the West Coast. That kid's name was Moe Green -- and the city he invented was Las Vegas. This was a great man -- a man of vision and guts. And there isn't even a plaque -- or a signpost -- or a statue of him in that town!... - Hyman Roth, modelled after crime boss Meyer Lansky, "The Godfather" (1974)

Perhaps the most famous gaming site in the world is Las Vegas, Nevada, but this bright spot in the desert did not just fall out of the sky as the epigraph above emphasizes. Indeed, the Las Vegas of the 21st century is the result of an enormous amount of investment over the years, first by the underworld but with an important shift to informed investments by legitimate business concerns during the latter half of the 20th century. Today, Las Vegas represents a vacation destination for millions of people from all over the world, and, not surprisingly, Las Vegas also has more slot machines than any other city in the United States. The billions of dollars that the city's casinos take in every year have contributed to a superb municipal infrastructure and Las Vegas has ranked among the fastest-growing communities in the country for a number of years. In this environment, it would appear reasonable to suggest that the spectacular growth experienced by Las Vegas in recent years will continue fore the foreseeable future, and increasing levels of tourism will also mean that the market for casino gambling will also likely continue to grow. To determine what is involved in starting a casino in Nevada in general and Las Vegas in particular, this paper provides a brief history of Las Vegas, an overview of the casino business in terms of the financial aspects of starting them, controlling regulations and statues, common investment patterns, government regulation, and modern casino management. A summary of the research and important findings are presented in the conclusion.

Review and Discussion

On the one hand, the city leaders of Las Vegas point to the wide range of family-related activities now available in "Sin City," as well as emphasizing the numerous historic sites nearby, the quality of their schools and streets, the fabulous convention center facilities, the ultra-modern spas and resorts, and even the low-cost aspects of visiting their fair city for families from around the world. On the other hand, many potential visitors and a majority of authorities agree that the business of Las Vegas is mostly just one thing: casino gambling. For instance, according to Littlejohn (1999), "The industry in Las Vegas is casino gambling. For most people this denotes a four-mile stretch of Las Vegas Boulevard South called the Strip, which occasionally spills over onto side and parallel streets, from Sahara Avenue at the north end to just past Hacienda Avenue at the south, where it bumps into McCarran Airport" (p. 1). Besides "the Strip," the "Industry" in Las Vegas today also includes Downtown Las Vegas, situated nearby just north of the Strip and which was once the city's actual downtown district, as well as smaller casinos scattered about the city and county (Littlejohn). For the past two decades, Las Vegas has experienced meteoric growth, but it has also transformed itself from its gangster beginnings into a modern metropolitan area that has much to offer visitors and residents alike. In this regard, Mohl (2004) reports that, "With 8,000 residents in 1940, its population multiplied many times over in successive decades, reaching 1.4 million in 2000. Las Vegas exemplifies late twentieth-century Sunbelt city growth -- with a difference" (p. 368).

The difference cited by this author was in fact a significant one, and distinguishes Las Vegas as a truly unique phenomenon in terms of investment patterns and growth. For instance, Mohl emphasizes the importance of outside capital in developing the region: "First railroads and mining and later federal funding for 1930s-era dam building, war-time air bases, and postwar atomic testing sites" (p. 368). In fact, the federal government spent about $19 million dollars to build the Hoover Dam as well as Boulder City located nearby to house the construction crews; as a result, there were over 5,000 Boulder Dam construction workers collectively earning $750,000 a month by 1934, and many of them spent much of their pay in Las Vegas which was located just 30 miles away (Gragg, 2007). While these funding sources helped to fuel the city's initial growth by bringing people to the otherwise desolate area, it was the visionaries of the underworld who recognized the potential for the region for providing these people with something to do with all of the money they were making. Indeed, casino gambling initiatives have been part of the city's history from the outset. According to the City of Las Vegas Web site (2008), "The city of Las Vegas celebrated its 100th birthday on May 15, 2005. The event celebrated the May 15, 1905 land auction when 110 acres of land in downtown Las Vegas were auctioned off" (Fun facts, p. 2).

Although a hotel and casino were established just a year later, the Golden Gate Hotel and Casino was forced to shut down its gaming operations when a 1910 law made gambling illegal in Las Vegas (Fun facts). The city's future was set back on the casino gambling industry course in 1931, though, when the State of Nevada legalized gambling (Fun facts). Since that time, the casino gambling industry in Las Vegas has experienced some colorful, sometimes-violent, expensive and fundamental transformations in ownership, financing and investment methods. In this regard, Mohl advises that even more important to the city's destiny than the pre-war and World War II investments in the area by the federal government, though, "was the postwar arrival of mobsters, mostly Jewish, who parlayed Nevada's libertarian politics and legalized gambling into an illicit playground for high-rollers and two-bit hustlers" (p. 369).

Unlike the legitimate investment climate that typifies the Las Vegas gaming industry today, the resources for constructing the original "Strip" came from sordid sources that exerted control over the industry until the 1970s. As Mohl reports, "Using mob and teamster pension money, Las Vegas's newly arrived criminal entrepreneurs built hotels and casinos and retained control of the growing city until the 1970s, when outside corporate interests moved in and initiated a new phase in the city's development" (p. 369). The authorities agree that the criminal element has been replaced by large corporations with a view to bring the gaming industry in Las Vegas to new levels. As a result, today, most of the casinos in Las Vegas are owned by gaming corporations (Chandler & Jones, 2003). Likewise, Cooper (2004) reports that, "Wall Street corporations have replaced mafias and mobs. At a recent gambling industry convention in Las Vegas, the chief financial officers of three major casinos sat on a public panel. When someone from the floor asked if investment in the casino business was a good bet, one of the CFOs answered, essentially: The difference between us and Enron is that at least our money is real" (emphasis added) (p. 28).

With almost 40 million tourists a year (Gragg, 2007), investors have also taken note of the peripheral industries that can benefit from a legitimate casino gambling industry in recent years. According to a study by Alexander and Paterline (2005) that compared the economic impact of casinos on their host cities, in sharp contrast to states that host Native American casinos, cities such as Las Vegas that feature so-called "destination casinos" benefit in other ways as well For instance, these authors report that, "Gamers who view the casino as a tourist destination are more likely to spend money at hotels, restaurants, gas stations/convenience stores, and recreation outlets near the casino development" (Alexander & Paterline, p. 20).

The "new phase" of development described above has paid off in major ways over the last 4 decades and with all of this money at stake, it is little wonder that the State of Nevada and the City of Las Vegas have the administration of the gaming industry down to a science, but there are some serious legalities involved in establishing a casino operation. Among the considerations involved in establishing a casino in Las Vegas today is the need for a qualified labor force, which is not an inexpensive undertaking. As Mohl emphasizes, "Las Vegas is now one of the most organized cities in the West. The unionization of hotel and casino workers, whose Culinary Union provides a dependable labor force to the hotels assures high pay to low-skill workers" (p. 369). In addition, the health care plans and other benefits provided union employees are ranked as among the best in the nation and are therefore inordinately expensive for their employers (Chandler & Jones, 2003).

Furthermore, there are some critical licensure… [END OF PREVIEW]

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