LAS VEGAS, March 13 (UPI) -- Six months after 9/11, the good news is that most of the tourists are back. The bad news is that the whales -- the biggest gamblers in the world -- are not.
I'm talking about the elite 1 per cent guys who spend at least a million bucks every time they come to town. It's a rarefied secretive game that is only played by six or eight of the biggest casinos on the Strip.
To show you just how big it is, meet Rob Goldstein, President of the Venetian, and part of the new breed of dapper young marketing men who run the city. He runs one of the largest hotels in the world.
The Venetian is valued at $1.5 billion, with 3,036 suites in three 35-story towers, five swimming pools, more elevators than a Wall Street skyscraper, a trendy shopping mall built around an indoor Venetian canal, a Canyon Ranch Spa, a Lutece, a Wolfgang Puck restaurant (his fifth in Las Vegas), Emeril Lagasse's Delmonico, Piero Selvaggio's Valentino, and several other gourmet restaurants. ("I'm a foodie," says Goldstein, who refused to put in a buffet, bucking 50 years of Vegas tradition.)
The Venetian casino never has a slow night, mostly because it's part of a complex that includes the largest privately owned convention center in the country, so that Mondays through Thursdays are consistently sold out even at the highest room rates in town.
In Las Vegas, in the world of the whales, Goldstein is a small player.
Next door to The Venetian is a much bigger fish: Harrah's, flagship of the fourth largest gaming corporation in America, a company with so many casinos in so many states that they invented the "frequent gambler" card.
You can roll dice on the Cherokee Indian Reservation in the Smoky Mountains of North Carolina and redeem those points later for a room at the Players Island Riverboat on the Ohio River near Metropolis, Illinois, in the unlikely event you would want to do that. The 25 Harrah's properties in 10 states now generate $3.5 billion a year.
Yet, in the biggest game in town, Harrah's is still too small to play.
There are only four hotels with bankrolls large enough to consistently host real high-stakes gamblers: Caesar's Palace, Bellagio, the Mirage, and the MGM Grand.
In Vegas the definition of a high roller is someone who bets at least a million dollars every time he sits down at the tables, and there are about 800 of those guys worldwide.
Everyone has the same Rolodex of "whales," as they're called, and the same fleet of Gulfstream jets to bring them to the casino, but what sets these four casinos apart is that they have the intestinal fortitude to set betting limits high enough ($250,000 on a single hand) to get the attention of the big players.
The high-roller "hosts" at the big four hotels will go to any lengths to make these guys happy, including technically illegal things like getting them hookers. (All the hotels officially deny this, but the hookers say otherwise. An elaborate protocol has developed so that often the "host" is technically uninvolved in the transaction.)
It seems like a risky business, and in fact the corporate accounting term for it is "doubtful accounts."
The whales don't have to pay their gambling debts until the end of their Vegas vacation, because that would cause an awkward moment when the unpleasant subject of money was actually discussed.
The high roller simply tells the host how many chips he needs, and the host has him sign a marker. That's because even the smallest high roller is, in the economy of the casino, equivalent to about 4,000 typical gamblers, and there are some who have lost in one day amounts that would normally have to be wrangled out of 200,000 paying customers.
With those numbers virtually any expense can be justified. The MGM Grand, for example, has a special private-access building called The Mansion. It's so artfully hidden that hordes of tourists in sloppy T-shirts and Bermuda shorts pass by it each day without knowing it's there.
"Can you imagine a ten-million-dollar house, but instead of a house, it's a single hotel suite?" says Jason Ader, a gaming analyst for Bear Stearns. "That's how much they spent on each suite -- ten million. It's by far the best place to stay in Vegas, and a very private place."
"What I like about it," says Robin Farley of UBS Paine Webber, "is that the outdoor area, where the pool is, has a clear dome over it so that the temperature can be controlled at 76 degrees. They want to control the very air that the high-roller breathe."
If you're wondering why Ader and Farley, considered the two top Wall Street gaming analysts, would be so ecstatic about an expenditure of $300 million for a 29-room hotel that gives its rooms away for nothing, the answer is in the result. Immediately after opening The Mansion in late 1999, the MGM Grand stole about half the high rollers who had previously gambled at Bellagio, Caesar's Palace and the Mirage. Caesar's Palace was especially hard-hit and has launched a massive construction project to try to match The Mansion room for room.
The Mansion is also blamed for one of the worst high roller bidding wars the city has ever seen. One of the first things that happens when a whale loses money is that he says something to the effect of, "I'm unlucky here, I think I might play somewhere else." That's a signal for the casino host to offer to discount the whale's gambling debts. If he's lost a million, the casino might settle for $900,000, so that he'll continue to play at their tables instead of someone else's. In some cases, particularly prized customers have been discounted up to 25 per cent. The high-rollers are all aware of this and consider it the ultimate perk, so there was a period of about six months two years ago when, as one executive put it, "discounting was out of control."
"If the high roller knows what he's doing," says Alan Feldman, a Vice President at MGM/Mirage, "he knows that discounting is the only way we can compete for his business. Everyone provides the amenities, the room, the show tickets, the restaurants, and the golf privileges. Everyone can send a G3 to pick him up. So he's trying to get everyone to now start discounting five to ten per cent, and if you're not careful you can get upside down. The house edge is not that great. He can be a big loser and you can still lose money."
Kerry Packer, the good-natured wisecracking Australian tycoon, is an especially prized whale. The staff at big Strip hotels consider him the ultimate "George" (big tipper), because he not only leaves generous tokes but he makes sure everyone has fun when he does it.
Packer legends abound, like the time he was playing blackjack at Caesar's and befriended a perky cocktail waitress who was excited because she and her husband had closed on their first house that day.
"How much does a house in Las Vegas cost?" Packer supposedly asked.
"Well, ours cost $135,000," she answered.
He then peeled off $150,000 in cash and said "Promise me
you'll pay that note off tomorrow." (It's not recorded whether the one-fifty grand went into the tip pool.)
Another time Packer noticed that a swing-shift blackjack dealer had been moved out of the high-roller area to a table on the main casino floor. On his way out, Packer stopped at the man's table and said, "You won't share those tokes inside, will you?"
The dealer explained that, no, he was just a substitute there and his main job was at the hundred-dollar table.
Packer then placed $20,000 in chips on all six playing positions at the dealer's table. "Whichever hands win, that's how much you take home," he said.
He played out the hands -- no one remembers how many hands won -- and left.
So that's Kerry Packer, a dream client for any casino host. It's interesting, though, that all "whale" stories end with the whale leaving millions behind. There are very few stories about high-rollers going home with millions, although that happens often enough that a single gambler can sometimes affect a corporation's quarterly earnings statement.
One of the worst-kept secrets in town is that Packer dropped $20 million at a baccarat session at the Bellagio two years ago. But the story within the story is that the Bellagio had pulled a fast one on its rivals. The costs of bringing Packer to Vegas had been borne primarily by Caesar's Palace and the MGM Grand, which had been fighting over his business for a long time. Both hotels were startled to discover that he had wandered out of their grasp and lost his money at a place that had invested zilch. Since casino hosts are supposed to know where their whale is 24/7, this was a major scandal.
"Caesar's and MGM were pissed, as you might imagine," related a casino executive. "I think Packer was probably being mischievous. It was easier to sneak away because two hotels were courting him at the same time. But, of course, the same two hotels were giving him things the very next day. They probably even discounted him."
"Fortunately," says Feldman, "the high-rollers can't do that anymore."
And that is because in May 2000, after a one-hour breakfast meeting between the two most powerful men in town, Kirk Kerkorian of MGM Grand and Steve Wynn of Mirage Resorts concluded the biggest merger in casino history, creating MGM/Mirage, a 16-casino empire that has most of the industry's blue-chip properties, including three of the four high-roller hotels: the MGM Grand, Bellagio and the Mirage.
"There were four high-roller players," says Feldman, "and now there are two. That's why there's no more discounting."
Or is there? One of the side effects of 9/11 is that the Asian millionaires stopped coming to Vegas. The figures aren't yet in from the Chinese New Year, traditionally the biggest gambling day in the city, but when they do come in, and we know just how many overseas high rollers were in the city, we're likely to find out that they were lured there, not with women, not with wine, not with song, not even with a room at The Mansion. They were lured back to America with heavy discounting.
(Email Joe Bob Briggs, "The Vegas Guy," at JoeBob@upi.com or visit Joe Bob's website at joebobbriggs.com. Snail-mail: P.O. Box 2002, Dallas, TX 75221.)