Gaming Control Board approves extension of underperforming salons

Thursday, Nov. 4, 2004 | 11:15 a.m.

When casino companies battled to change the state law to allow for the establishment of private gaming salons in Nevada two years ago, members of the state Gaming Control Board expected there would be a financial windfall for both the casinos and the state.

So far, it hasn't happened.

The Nevada Legislature had to modify state gaming laws to allow wagering to occur behind closed doors. With few exceptions, state laws prohibit gambling that isn't in a public setting.

Despite the apparent failure of private rooms to attract high-rolling gamblers by allowing them to play behind closed doors, board members on Wednesday approved licenses for Caesars Palace and Mandalay Bay to continue operating their private international gaming salons.

In separate requests, board members unanimously approved unlimited licensing, extending the two-year temporary licenses approved when legislation allowing the salons was passed.

The MGM Grand received a similar license extension at a previous meeting.

All three board members said they were disappointed that after all the trouble the state had gone through to get salons approved that they hadn't drawn as many customers as regulators were led to believe they could expect.

Board member Bobby Siller asked how many new customers Caesars Palace had attracted with the addition of the salon.

Just one in two years.

Rosalind Krause, senior vice president of casino services at Caesars, said the company spent millions to develop the salon and market it. She said the company uses the room for other events in addition to setting it off as a private area for high-rollers.

Krause said the company considers the salon to be one more amenity it can offer to big spenders, comparing the investment in the room to the addition of the Coloseum performance venue, a new tower with high-roller suites under construction and new restaurants and chefs.

"We had the expectation that they (casinos) would aggressively market the salons to the 1 percent of the clients out there who said they would not come here unless they had the private salon," Siller said. "I had this thing rammed down my throat and then only one new customer resulted. It's rather disappointing."

Krause said Caesars officials are continuing to try to drum up business and sometimes the high-roller who takes advantage of the salon plays in the public area or brings an entourage that plays publicly.

Things aren't much better at Mandalay Bay's salon.

Terri Porcaro, a vice president and general manager at Mandalay Bay, said while the company's room hasn't attracted new gamblers, existing customers have used the private setting, with six players making 10 trips to play in the private area.

Porcaro said Mandalay also is marketing the salon as an amenity, saying it's important to have in the competition for high-rollers with casinos in Australia and Macau. She said Mandalay marketers have been told by high-rollers that they plan to come.

Regulators unanimously approved the licenses despite their disappointment in attracting customers. They said they had great expectations for new revenue by approving the salons, but are disappointed that the Las Vegas casinos can't lure customers that already have been identified as prospects who would only come if they had the private setting.

"It's not like you have to find these people," Siller said. "You already know who the people are."