Back in the good, old days - when the Mob ran Las Vegas and there was no crime (except for a few bodies in the desert of people who wanted to be criminals) - the casino owners owned everything on their property. There were no vending machines. No cigarette machines. No franchise restaurants. The entire casino operation was ONE business. No single department had to be profitable. The entire business had to be profitable, therefore, the restaurants could offer a ninety-nine cent breakfast or a four ninety-five prime rib. Food promotions and give-a-ways were all part of getting people through the door to make money from gambling. At some of the casinos you could get six dollars in nickels for four dollars in cash. Las Vegas was different from the rest of the world, and it ran more efficiently, but sometime in the mid-eighties that began to change.
The first casino to bring in a franchise restaurant was the Riviera when they put in a Burger King. Burger King, of course, paid rent and that company, separate from the casino, had to be profitable on its own. With that single change Las Vegas began a downhill slide with little possibility of recovery. Casinos are no longer businesses with a bottom line of their own. They are miniature cities which house dozens of different business under one roof - all of which must be profitable individually.
In a meeting a few days ago regarding why live entertainment has died in Las Vegas, someone said, "Casinos are catering to the under thirty-five crowd. They charge a hundred dollars to get in the door and three hundred dollars for a bottle of liquor and play nothing but canned music." We all nodded our heads in agreement and went on to discuss how to overcome the situation and bring live entertainment back.
It wasn't until the meeting had broken up, and I was home in the quiet of my little office that I thought, "Wait! The casinos aren't catering to the under thirty-five crowd. Their lessees are." The business of casinos is no longer entertainment and gambling. They are landlords. Today most restaurants in casinos are franchises. Perhaps buffets are the exception. Entertainment is four-walled, meaning the entertainers lease the rooms to put on their own show. Shop space is leased. Every individual entity within the casino has to meet their own bottom line, and casinos no longer do that with gaming. They do it by leasing space, charging exorbitant prices for rooms, and keeping their labor costs down with ticket in-ticket out slots and automated bill breakers.
Not long ago I walked through two of the mega-resorts on the Strip at eight in the morning. There was a total of six people playing the machines and three people at the blackjack tables at one casino. There was a total of twelve at my next stop. If the little five thousand square foot neighborhood casino down the street from me only had that many customers at four in the morning, they would close! But it was worse at the mega-resorts I visited that evening. About eight o'clock the same day, when dinner should be over and the four-walled shows hadn't yet started and people should be gambling, I did another reconnaissance mission and counted a total of one hundred and twenty-five people at machines and the live gaming tables in a casino with more than a thousand machines. The taxes on the machines alone has to be budget-breaking. No wonder casinos can no longer afford to pay entertainers and loss leaders on food.
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