Welcome to Theme Park Insider! Join the community or log in
Theme Park Insider
Facebook Twitter YouTube Email Newsletter

PENNIES FROM KEVIN - Merger Madness

With the four largest Strip casino operators melding into the two largest casino operators in the world, Kevin looks into what may lie on the horizon for a city constantly in flux.

Written by Kevin Baxter
Published: July 27, 2004 at 2:00 AM

The future seemed dire for Vegas after MGM Mirage announced plans to buy out Mandalay Resorts, creating the world's largest casino company which would own more than half the hotel rooms on the Strip. Many feared for even more "price-fixing" than has happened this past year. Personally, I feared for the Mandalay casinos, namely Luxor and Mandalay Bay, two of the most innovative resorts on the Strip. MGM has never been known for its ingenuity. Yeah, the MGM Grand is huge, but it isn't all that innovative. A theme park in the back yard was a good idea, but the theme park that was created was anything but good. New York-New York is pretty inventive, but considering it was a combined effort between MGM and Primadonna Resorts, I'm not going to count it. After MGM bought out Primadonna, the owner of the Primm casinos, they probably fired whoever thought up NY-NY.

Anyhow, the proof of MGM's utter lameness has come since their buyout of Mirage casinos, the casinos that truly started Sin City's renaissance. MGM Mirage has destroyed much of what used to make Treasure Island such a fun place, having removed much of the theming and any semblance of entertainment from the pirate battle. And don't get me started on what has happened to The Mirage's buffet. Time will tell how the new Bellagio tower will turn out, but one thing's for sure - it is already damaging the symmetry of the original tower.

Then along comes Harrah's. The company that IS the world's largest casino operator plans on remaining Number One by offering to buy Caesars. While Harrah's has had little chance to outshine the big boys on the Strip, Caesars has been more than trying to take up the slack left when Steve Wynn sold the Mirage resorts to MGM. Paris Las Vegas is one of the most ingenious casinos in Vegas and Caesars Palace has been improving by leaps and bounds inside, although all the recent construction makes it look a little like the Winchester Mystery House on steroids.

So what will happen? We may never know. There is a lot of speculation as to Harrah's' goals. Do they really want this to happen? Or are they hoping to throw a wrench into MGM Mirage's plans? Harrah's could be trying to make sure antitrust laws, which have been ignored in many recent media mergers, are actually used in the MGM Mirage/Mandalay deal. And how better to make that happen than to present the government with a case where the four largest hotel companies in the largest hotel market in the country are planning on becoming two behemoths?

If that plan works perfectly, both mergers could be invalidated, which would keep Harrah's and Caesars at One and Two internationally. If the mergers are allowed are to go through - with conditions - then Harrah's wins also. Harrah's/Caesars would be at an eleven-to-five disadvantage on the Strip and eleven-to-six-and-a-half overall in Vegas. Station Casinos owns six in the general Vegas area, so regulators would have a hard time forcing Harrah's to divest itself of any of the six they plan on owning. Eleven is a whole 'nother number and if MGM Mirage-Mandalay is forced to sell more than one they would have serious problems. Circus Circus on the North end of the Strip is an easy choice, but then what? Certainly not the Mirage or Treasure Island, since they are linked in more ways than just the monorail between them. The Bellagio? One of the highest-priced hotels on the Strip? Get serious! Anything else would seriously break their stranglehold on the South Strip.

So, what if the mergers make it past federal overseers? Harrah's has wanted their own mega-resort for over a decade. Would Caesars Palace fulfill that need? Or do they have an idea for a mega-resort already and a burning need to see that resort come to life? Would being Number Two force MGM Mirage to start construction on a new casino between Monte Carlo and Bellagio? How about their desire to implode Excalibur and build a more adult casino in its place? And what of the land across from Luxor? Plus, Circus Circus sits on a huge swath of real estate and it is begging for improvement.

But future development may not even involve the two biggies. Debtloads may keep them from creating anything for a while - though these companies are making BILLIONS every year. Waiting for debt to dissipate may give other casino operators time to expand southward. Planet Hollywood will most likely be too busy trying to make their Aladdin makeover work. The Tropicana has been the subject of implosion rumors for years, all that needs to be decided is whether current owners or future ones will be doing the imploding. The Sahara doesn't seem interested in expanding, as it has been trying to sell its land across Las Vegas Blvd for a while. The casinos between that and Wynn Las Vegas are having enough problems on their own and couldn't afford an expansion.

That leaves Steve Wynn, the Venetian and the Stratosphere. They all have money, though all three are tossing money into their current projects: Wynn Las Vegas for Wynn, a Treasure Island-like expansion next-door to the Venetian and various improvements for the Stratosphere. Still, many believe time is about up for those problem casinos, most notably the Frontier and Riviera. The Stardust may upgrade with Wynn Las Vegas going up right across the street, so when that fails, expect an Aladdin-like quick sale. Then we have the Imperial Palace, which sits right between Harrah's and the soon-to-be-Harrah's-owned Flamingo. There's also the Barbary Coast, the why-does-this-still-exist casino between two Caesars-owned properties, the Flamingo and Bally's, which has been involved in a recent merger itself and may sell to someone for the right price.

After having built three of the most notable casinos on the Strip, Wynn is probably the biggest threat to expand. Considering all he needs to do is sell one or two of his paintings to pay for something new, Wynn should always be considered a threat in Vegas. The Venetian's Palazzo expansion isn't just a new tower but a whole new connected casino, so I don't expect much from them. The Stratosphere is the real wild card here. The owner has deep pockets and bigger ideas. Why he hasn't purchased the lot acrosss from the Sahara is beyond me. Then there's always the Donald. Trump has gotten his Nevada gaming license, and he may want to buy out one of the ailing casinos just to prove he isn't a completely incompetent casino operator, as his Jersey casinos tell a different tale.

So, nobody knows what is in the cards for Las Vegas, but one thing is for sure, there's going to be a lot of big news coming out of Sin City for the next year.

My two pennies... gimme yours!

Readers' Opinions

From Robert Niles on July 27, 2004 at 9:25 AM
To me, some of the best excitement in Vegas lies off the Strip -- the Hard Rock and the Palms, to cite two examples. I'd love to see more individual or family ownership of Vegas casino resorts. Steve Wynn, the Maloofs and the Mortons bring an individual style and flair to their resorts that are lacking in the corporate facilities.

Anti-trust law once existed to keep large corporations from ossifyin the economy by driving every potential source of competitive innovation out of business. I'd hate to see these proposed mergers suck the oxygen out of the Vegas market for independent operators like Wynn and the Maloofs. Not only would I prefer to see these mergers rejected, I'd like to see MGM-Mirage forced to divest some of its current properties. Then let's see what kind of customer-friendly innovation we get on the Strip.

From tim MONDEAU on July 29, 2004 at 4:46 AM
2 rules while in Las Vegas; #1 put your money on black, and #2 put your money on Steve Wynn.
From Kevin Baxter on July 30, 2004 at 12:39 AM
While I tend to disagree with the first, I completely agree with the second!

Planning a trip to Walt Disney World?

Family vacation

Insider's Pick: Don't try to do Disney without the ever-entertaining and informative Unofficial Guide to Walt Disney World 2014. Save time and money with these tested tips and strategies for getting the most from a Disney World vacation. It's a great investment in happiness for you and your family.

Get it! In paperback | For Kindle | For iBooks