× Gambling News In-Depth iGaming Calendar Connections GI Friday Trafficology GI Magazine GGA 2017 AffiliateCon
IN-DEPTH 23 March 2016
Las Vegas risks pricing itself out of the market
Everything costs more in Sin City nowadays, but sooner or later it will get pushed too far, argues Paul Sculpher
By Paul Sculpher

Las Vegas is the original casino resort and the touchstone for anyone looking at the casino industry as a whole. While it could easily be argued that other locations around the world are more important – certainly with regard to gross gaming revenue – Vegas is always a place that most people mentally jump to when they think of casinos, and indeed for the western world it has always been the cathedral of gaming.

With that in mind, let’s go back 20 years, to my first few trips to Sin City. Back then, genuine resorts were pretty thin on the ground, and the Vegas experience was very different. The emphasis wasn’t on spectacular hotel rooms and wildly extravagant public spaces. It was more about providing facilities so gamblers could cover their basic hierarchy of needs – bed, gambling, boozing and getting out of the desert heat.

There were very few places you could blow an inflation-adjusted $300-plus on a room, and there were far less in the way of heavily promoted top end restaurants. Big name chefs were by no means the norm. The other glaring difference was the club scene – there were essentially no clubs within casinos, which really reflects the change in emphasis from gaming revenue to non-gaming in the 20 years since.

What I really want to focus on, however, is the extraordinary increase in the cost of a Vegas experience. I recently was out in the city for the G2E trade show, and brought along a colleague who had not been to Vegas at all for about 25 years. He was stunned by the difference in cost in all areas since his last visit, and remarked how he felt like a walking ATM for casino operators, who don’t even try to hide it any more. As he pointed out, basically if you have a daily budget (after paying for your room) of, perhaps, $150 a day – a reasonable daily budget in most vacation destinations around the world – in Vegas, you’re going to do a lot of walking around looking at things and not much enjoying yourself.

That’s not to say it’s impossible to enjoy Vegas on a budget, but that’s only if you have very limited expectations – and Vegas is a city built on over-expectation. The whole, largely unspoken, theme of the place is that if you have money, you’re going to have a much better time than those other guys, and you can make sure to be seen spending it, which must simply make you a better person.

This used to be only built around gambling, and the VIP hosting that went with it – look at me, I get to play in this special area – but it has crossed over into the social scene now. The old line featured in the movie The Usual Suspects was: “the greatest trick the devil ever pulled was convincing the world he didn’t exist”.

In my view, the greatest trick ever pulled by anyone on the planet was Vegas – and now the rest of the US – convincing the club scene youngsters that it’s a good idea to spend $400 on a $20 bottle of vodka to sit in a so-called VIP area, served by a waitress who’s mainly comprised of plastic and makeup, all to look ever so slightly down on the non-VIP guests, who generally have exactly the same disposable income but are having their VIP experience the night before or the night after.

It’s the little things that really underline how a Vegas visitor is getting squeezed a bit more every visit. My favourite point in this area is alcohol prices. Years ago, you could pick up beers in the little shop in the lobby of most casinos for pretty much supermarket prices. I mean, if you’re too lazy and hit the minibar you’re going to pay through the nose – that’s just a fact of hotel life – so 15 years ago you’d get yourself organised and stock up some pre-going out drinks for, say, $8 per six pack. However, the operators are wise to this now and have hiked the prices sharply, so the savvy traveller needs to remember to swing by a drugstore in the cab on the way to the hotel to get organised.

That’s not to say all the little rip-offs are borderline invisible. It’s a widely accepted fact that the RTP percentages on slots were tightened in favour of the house during the recession period, and they most certainly haven’t been returned back to pre-recession levels. Back in July, Steve Wynn was remarkably candid about his tightening up of house edge on table games too, with craps odds being reduced and placing the “sucker” games more prevalently on the gaming floor to pick up the lazy money from the tourist market. Worse still, the widespread prevalence of 6:5 Blackjack indicates an essential shamelessness about raising the cost without visibly raising the price of gaming.

The last item on the list is everyone’s favourite: resort fees. A regular Vegas visitor would simply sigh and accept these unexpected bill boosters as a fact of Vegas life, but they really take a bite out of a Vegas budget, all for (generally) the ability to use wifi and the titness suite – which in many a hotel outside Vegas, would be free in any case.

The point is, it all adds up. My feeling is, no matter what your budget is, you always (winning run excepted) spend a bit more in Vegas than you plan to. This is not because of the temptation – 22 visits and counting tends to dampen down the impulse buying – but purely because everything’s a little saltier in the price department on each subsequent visit, or you’ve something to pay for that you’d never paid before. From the accountant’s perspective, that looks great, but sooner or later it’ll get pushed too far, and the salami slicing of my wallet contents adds up to a bigger bite than the visitor is prepared to pay. Las Vegas has an atmosphere all of its own and I’ll never stop visiting completely, but as casino gaming continues to spread across the US and the world, eventually people will realise that the core experience – gambling and drinking in an upscale environment – can be almost replicated in their more local resort at a fraction of the price. When that happens, it may be too late to put the genie back in the bottle. Stretching spend per head and ignoring pressure on total visitors is a recipe for disaster. Ask the UK bingo industry. And while it may not happen today or tomorrow, the current approach of skinning customers for all they’re worth as fast as possible is asking for trouble.

Paul Sculpher runs gaming industry recruitment specialist GRS Recruitment along with Steven Jackson. He can be contacted at [email protected]
DISCUSS THIS ARTICLE
IN-DEPTH 21 May 2018
#WeAllWantToPlay: Diversity in the gaming Sector
Micky Swindale, Partner at KPMG reflects on the lack of diversity in the gaming industry and what has spurred this growing trend. Using the past as a guide, Micky considers how the industry might redress the issue
READ MORE
PREMIUM CONNECTIONS