Editorial: Growth plan stirs ample controversy

Sunday, Jan. 10, 1999 | 9:08 a.m.

Too many casino executives have their heads stuck in the sand, but at least MGM Grand Chairman Terry Lanni acknowledges that we may soon have a potentially disastrous surplus of hotel rooms at a time when tourism is flat. Last week Lanni told an economic forum meeting in Las Vegas that the Clark County Commission should weigh growth restrictions on the building of new hotel-casinos.

Lanni said the Clark County Commission should consider requiring casinos to take rooms out of the local inventory before they get approval for their new projects. Some who will disagree with Lanni's plan will note, correctly, that it is much easier for a casino executive to talk about a moratorium when his company already has a 5,000-room megaresort in place. Still, for Lanni to break ranks with fellow casino capitalists and suggest that the government has a role to play in the economy surely jolted Las Vegas political and business leaders.

Although we believe Lanni should be commended for tackling the issue, we don't know whether this is the answer to the problem. There are serious doubts and questions about his proposal. For instance, is it fair for government to deny others from entering the market? Would those who already own property, in hopes of one day building a casino, be denied their chance to compete? Would a moratorium result in a static gaming product, stifling the ingenuity that has made Las Vegas the No. 1 gambling destination in the world?

It should be remembered that in the early 1990s there was a concern that the explosion of gaming nationwide would result in fewer tourists coming to Las Vegas. Instead, just the opposite occurred. New megaresorts were built that brought even more tourists to Las Vegas, creating an incredible economic expansion.

But while this miracle occurred once before, the question is whether it can happen again. Back then the worry was that casinos outside Nevada would keep tourists away -- but those casinos in the Midwest and elsewhere couldn't come close to matching Las Vegas' spectacular resorts. The problem now, though, is more direct and immediate -- whether there simply will be too many rooms in Las Vegas itself, meaning that some casinos here may fall by the wayside.

Hopefully Lanni's suggestion will prod other businessmen and elected officials to engage in a serious debate as to the direction this economy is headed. More innovative ideas, creating a needed dialogue, are essential if realistic solutions are to be found.

Economic booms don't last forever -- just ask the residents of Denver, Dallas and Anchorage about the effect plummeting oil prices had on their local economies -- and if adjustments aren't made, the landing can be harsh for all involved. Lanni is right that government needs to take a greater role in the issue of overbuilding because if the local economy takes a downturn government -- not the market -- will have to be there to pick up the pieces.