Where I Stand — Shannon Bybee: Ever-evolving industry

Tuesday, Aug. 14, 2001 | 9:30 a.m.

Editor's note: In August Where I Stand is written by guest columnists. Today's writer, Shannon Bybee, is executive director of the UNLV International Gaming Institute.

IF ONE WORD best describes the evolution of gaming in Las Vegas, it is "change." Change has been a key element in Las Vegas becoming acknowledged as the worldwide center of casino gaming.

Las Vegas gaming began on Fremont Street when gaming was legalized in 1931, but with the opening of the El Rancho Vegas on the "Strip" in 1942, there began a shift in focus from Fremont Street to the Strip that continues today. In 1946 the Flamingo ushered in the era of the luxury hotel. The opening of Caesars, Circus Circus, and the Hilton (built by Kirk Kerkorian as the International) in the late 1960s marked the next major development. This era brought creative architecture and large size (1,500-plus rooms).

Kerkorian built even larger when in 1973 he opened MGM Grand, which is now Bally's (2,500 rooms); the first casino hotel to cost over $100 million. However, there was little change in the Las Vegas Strip from 1973 to 1989 when the Mirage opened. Mirage initiated the era of the "megaresort." The "megaresort" facility becomes part of the entertainment experience that enhances a visitor's experience and brings them back. With the Mirage, Steve Wynn "reinvented" Las Vegas and others followed. This has enabled Las Vegas to enjoy its greatest growth and financial success during the greatest expansion of gaming in the history of the United States.

To put the significance of the "megaresort" in perspective consider that the Mirage at approximately $750 million cost more than all of the hotels built in Clark County up to that date. In the less than 12 years since the Mirage opened, approximately $15 billion of investment has been made in casino hotels on the Strip and the number of hotel rooms has doubled.

Meeting the challenges of the future will require the gaming industry in Las Vegas to continue to "reinvent" itself to adapt to the changing landscape as it has done so well over the years. What then are the biggest challenges the gaming industry must grapple with as the future unfolds?

Three important issues require the involvement of public policymakers: transportation, clean air and an adequate supply of water. Failure to solve these three problems may negate any efforts of the gaming industry. Management of the Water District and McCarran International Airport have shown that government can stay ahead of the growth curve, not behind it. Other transportation problems and clean air are more difficult to deal with politically, financially and technically. Improving auto traffic on the Strip, building a monorail, and cleaning up the air pose problems exceedingly more complex than providing a place for planes to land and take off.

Some believe that gaming on the Internet is essential to the success of Nevada's casinos. Others have expressed concern that it may create problems for the industry. Recent hearings revealed that some of the regulatory issues related to Internet gaming are not within the control of Nevada regulators and may not soon be resolved. However, the Internet is and will be used to enhance customer service. Combining marketing with the ability to act on that, by making reservations and similar two-way communications, will continue to be refined. But legalized wagering on the Internet may be years away.

Gaming in general and the megaresort in particular are capital intensive businesses. The need to raise adequate capital from satisfactory sources will remain essential to the future success of gaming in Las Vegas. Licensed operators can be forced to pay more taxes, but lenders and investors cannot be forced to invest more capital. They have to believe they will make an acceptable return on their investment or they will not make the investment. Customers and investors concerns must be addressed; without them there will be no gaming industry.

The future for Las Vegas gaming remains as bright as its past. But to continue the success that has marked the past 12 years will require the continuing efforts and cooperation of both the private and public sectors to keep reinventing Las Vegas. But it must be noted that it has not been public policymakers nor planning committees or any other group action that has been the most important causal factor in Las Vegas' success. It is instead the creative imagination of casino executives like Steve Wynn with a vision of what will attract customers and the ability to persuade lenders and investors to risk (or "bet") hundreds of millions of dollars to bring those ideas to reality.