Editorial: Gaming’s tectonic shifting

Tuesday, March 7, 2000 | 9:08 a.m.

The MGM Grand's $6.4 billion acquisition of Mirage Resorts is much more than a story about a merger spurred by flagging stock prices. A transition certainly is under way in the gaming industry, with casinos turning to mergers so they can stay competitive. The time for imaginative entrepreneurs, such as Mirage Resorts Chairman Steve Wynn, may be coming to an end. The real question is whether this trend of placating shareholders ends up creating a cost-cutting obsession that is at odds with the outrageous opulence found in casinos, which may make accountants blanch, but that gamblers embrace.

Love him or hate him, Wynn came to symbolize the emergence of the gaming industry during the 1990s, including its acceptance by a large part of the American public. Wynn's bluntness created his share of detractors, but it shouldn't go unmentioned that he set new standards for excellence in the industry, including envied working conditions for Mirage Resorts employees. MGM Grand executives say they don't plan layoffs, but it remains to be seen whether Mirage Resorts employees will continue to receive the same treatment admired by other workers, both inside and outside the gaming industry. Despite Wynn's success, Mirage Resorts' stock had fallen precipitously in the past year, closing at $10.88 on Feb. 22, the day before MGM Grand offered $17 per share to buy Mirage Resorts. (The company had traded above $26 as recently as last May.)

Meanwhile, the fact that even Wynn's Mirage Resorts was swallowed by the merger wave shows that no one is immune to the consolidation trend that is so prevalent throughout all sectors of the economy today. This trend will only accelerate in the gaming industry if California voters pass a referendum today legalizing Las Vegas-style gambling on Indian reservations. The biggest market for Las Vegas casinos is Southern California, and experts believe that Indian gaming there will hurt some of the small to medium-sized casinos here, prompting them to find suitors if they are to stay in business.

Only time will tell whether the spate of recent mergers will dampen the creativity exhibited by Wynn that helped spawn the gaming industry's explosive growth during the past decade. But if Las Vegas is to continue its success it must find the right balance -- satisfying both shareholders and the finicky tastes of gamblers, who have come to expect more from the money they spend on entertainment.