Tweet
CHRISTINA BINKLEY ON LAS VEGAS AND THE GAMING INDUSTRY
by Paul Comstock
California Literary Review
http://calitreview.com/topics/business/543/
April 10 2008
CA
CLR INTERVIEW: Christina Binkley is a columnist for the Wall Street
Journal and spent ten years as their lead reporter covering Las
Vegas. Her new book, Winner Takes All, recounts the phenomenal growth
of Las Vegas and America's gaming industry. Below is Christina's
interview with the California Literary Review.
Winner Takes All: Steve Wynn, Kirk Kerkorian, Gary Loveman, and the
Race to Own Las Vegas
by Christina Binkley
Hyperion, 320 pp. As the subtitle of your book suggests, there are
three major players in the Las Vegas casino industry. Would you give
us an overview of their backgrounds and management style as well as
their current holdings? Let's start with Steve Wynn.
Steve Wynn is the showman of the group and the one who has built his
fortune with charismatic leadership as well as gritty chutzpah. The
spoiled eldest son of an East coast bingo operator, he's an Ivy League
college graduate and a passionate art collector. He has a wild temper
that can swing from fury to humor at a moment's notice. People who
work closely with him find that he will flatter them fantastically
one day, and brutally harangue them the next. I think that he is
often unaware of how loud and mean he is perceived as being. Wynn is
a substantial shareholder in the company he took public, Wynn Resorts,
and owns homes in Las Vegas; Sun Valley, Idaho; and New York City.
How about Kirk Kerkorian?
Kirk Kerkorian, a generation older than Wynn, is the son of Armenian
immigrants and was raised first in central California and later in Los
Angeles, where he wound up in reform school-though he doesn't seem to
have been as troubled as today's youths who end up in reform school. As
a youth, he worked to help support his parents and siblings. He made
is first fortune in aviation. The casino and movie businesses were
his mid-life career and while casinos have made him richer and more
famous, he manages them quietly and from afar as investments rather
than getting involved in operations. His wealth is tied up in two
entities, Tracinda Corp., which owns most of his various businesses,
and the Lincy Foundation, his charitable enterprise.
Finally, Gary Loveman.
The youngest generation of the three, Gary Loveman never expected to
be a mogul of any sort. He grew up in a blue collar Indiana family
and married his high school sweetheart while pursuing a career in
academics. As one of MIT's top PhD candidates in economics, he accepted
an offer to teach at Harvard Business School. It was a part-time
consulting gig that led him to Harrah's Entertainment, but his canny
ideas about marketing to low-roller gamblers eventually earned him
the top job at the company. A few mega-deals later, he's richer than
his wildest dreams (but not nearly as rich as Wynn and Kerkorian)
and seated at the helm of the world's largest gambling company.
Your book gives a fascinating insight into the data that's collected
on gamblers by Harrah's and how it is used.
While Wynn and Kerkorian catered to high rollers, Harrah's has long
focused on low rollers. It's not hard to know your best customers,
keeping track of their birthdays and personal proclivities, but it's
very difficult to know enough about the multitude of low rollers to
market to them effectively. Harrah's took the scientific approach,
studying gamblers the way Pavlov studied animal behavior. They tracked
customers' behavior in casinos, recording how fast they hit a slot
machine button, how long they gamble, and so on-and noting how they
respond to marketing offers such as free food, cash to gamble with,
etc. After years of collecting this data, Harrah's has created what
some call a "secret recipe" of how to get gamblers to gamble more at
Harrah's casinos.
One of the depressing things about casinos is watching people gamble
away money it doesn't look like they can afford to lose. What are
the moral implications of the casino industry using its insights into
the behavior of gamblers to extract more and more money from them?
Casino executives like to make the free will argument-that most
people have the ability to choose between gambling and walking out
the door. The evidence suggests that this is true for most people.
Unfortunately, it's often the most vulnerable people that get taken
advantage of-just as in the subprime mortgage industry-when highly
sophisticated marketers focus their smarts on less advantaged people
who are chasing a dream. Some casino executives are troubled by
this-my book focuses on one of Harrah's leading marketing executives,
Rich Mirman, who became troubled by his own methods and innovations.
You mention in your book Steve Wynn's "genius at social
stratification."
At Wynn Las Vegas, for instance, there is a special and very luxurious
entrance for guests who pay, or are invited to stay in the "Tower
Suites"-hotel rooms that are no larger or different than the rest of
the hotel other than that they have this special entrance and more
intimate front desk. The swimming pool for these suites is literally
above and overlooking the pool for regular folk-so Tower Suite guests
can look down on the hoi polloi. In fact, the whole resort has been
designed to allow these patrons to move around in their own private
sphere. This allows the Wynn to cater to celebrities, business leaders
and others who generally have avoided Las Vegas in the past for its
lack of intimate luxurious offerings.
By catering so skillfully to these folks as well as the masses who keep
his slot machines going, Wynn manages to have his cake and eat it too.
At one time Vegas marketed itself as a family resort. That seems to
have gone by the wayside. How does Vegas see itself now?
Vegas is proudly Sin City once again. The family-resort episode was
revealed as a mistake within months of the openings of a series of
family friendly casinos like the MGM Grand and Treasure Island and
Excalibur. The problem for Las Vegas, though, is that it was stuck
with those casinos long after. The MGM Grand has demolished its Oz
theme, though, and Treasure Island has renovated away the last of
its child-friendly attractions.
It's hard to imagine Las Vegas building more elaborate and expensive
casinos and continuing to make money, but I guess the pessimists have
always been proved wrong. How do you see things playing out over say,
the next ten years in Las Vegas and also throughout the United States?
There's no way the planned 40,000 new hotel rooms will be built
there-yet. The current economy will force developers to slow down their
plans in the near term. But in the next ten years, we'll see far bigger
and more sophisticated resorts opening than are operating today-with
more retail, entertainment and restaurants. CityCenter is the first
of these new style resorts, which are really more like cities, with
condos and interconnected hotels, retail districts and entertainment
zones. Harrah's, which has plans for something similar yet potentially
bigger, is exploring how to use communications technology like texting
to encourage resort guests to remain within the Harrah's sphere rather
than migrating to rival properties.
Because of the cash generated from gambling, Las Vegas is in the
forefront of the vast new world of retail and commerce-what we'll
see there in 10 years, we'll see elsewhere in 15-not just in terms
of casinos, but also in shopping malls and theme parks.
We'll also see more regional and Native-American-owned casinos opening
up around the country, and more power concentrated in the hands of
the wealthy Indian tribes who own some of them.
In Bethlehem, Pennsylvania they're building a casino where the huge
Bethlehem Steel plant used to operate. To me, it's symbolic of a
country that once produced items of value to the world, now gambling
away its wealth.
Bingo! To coin a hackneyed phrase. I agree that it's symbolic of
a country that once produced items of value, but is now creating
entertainment that offers little of value other than diversion, and
it's produced by employees who are paid far more poorly than their
predecessors in manufacturing.
by Paul Comstock
California Literary Review
http://calitreview.com/topics/business/543/
April 10 2008
CA
CLR INTERVIEW: Christina Binkley is a columnist for the Wall Street
Journal and spent ten years as their lead reporter covering Las
Vegas. Her new book, Winner Takes All, recounts the phenomenal growth
of Las Vegas and America's gaming industry. Below is Christina's
interview with the California Literary Review.
Winner Takes All: Steve Wynn, Kirk Kerkorian, Gary Loveman, and the
Race to Own Las Vegas
by Christina Binkley
Hyperion, 320 pp. As the subtitle of your book suggests, there are
three major players in the Las Vegas casino industry. Would you give
us an overview of their backgrounds and management style as well as
their current holdings? Let's start with Steve Wynn.
Steve Wynn is the showman of the group and the one who has built his
fortune with charismatic leadership as well as gritty chutzpah. The
spoiled eldest son of an East coast bingo operator, he's an Ivy League
college graduate and a passionate art collector. He has a wild temper
that can swing from fury to humor at a moment's notice. People who
work closely with him find that he will flatter them fantastically
one day, and brutally harangue them the next. I think that he is
often unaware of how loud and mean he is perceived as being. Wynn is
a substantial shareholder in the company he took public, Wynn Resorts,
and owns homes in Las Vegas; Sun Valley, Idaho; and New York City.
How about Kirk Kerkorian?
Kirk Kerkorian, a generation older than Wynn, is the son of Armenian
immigrants and was raised first in central California and later in Los
Angeles, where he wound up in reform school-though he doesn't seem to
have been as troubled as today's youths who end up in reform school. As
a youth, he worked to help support his parents and siblings. He made
is first fortune in aviation. The casino and movie businesses were
his mid-life career and while casinos have made him richer and more
famous, he manages them quietly and from afar as investments rather
than getting involved in operations. His wealth is tied up in two
entities, Tracinda Corp., which owns most of his various businesses,
and the Lincy Foundation, his charitable enterprise.
Finally, Gary Loveman.
The youngest generation of the three, Gary Loveman never expected to
be a mogul of any sort. He grew up in a blue collar Indiana family
and married his high school sweetheart while pursuing a career in
academics. As one of MIT's top PhD candidates in economics, he accepted
an offer to teach at Harvard Business School. It was a part-time
consulting gig that led him to Harrah's Entertainment, but his canny
ideas about marketing to low-roller gamblers eventually earned him
the top job at the company. A few mega-deals later, he's richer than
his wildest dreams (but not nearly as rich as Wynn and Kerkorian)
and seated at the helm of the world's largest gambling company.
Your book gives a fascinating insight into the data that's collected
on gamblers by Harrah's and how it is used.
While Wynn and Kerkorian catered to high rollers, Harrah's has long
focused on low rollers. It's not hard to know your best customers,
keeping track of their birthdays and personal proclivities, but it's
very difficult to know enough about the multitude of low rollers to
market to them effectively. Harrah's took the scientific approach,
studying gamblers the way Pavlov studied animal behavior. They tracked
customers' behavior in casinos, recording how fast they hit a slot
machine button, how long they gamble, and so on-and noting how they
respond to marketing offers such as free food, cash to gamble with,
etc. After years of collecting this data, Harrah's has created what
some call a "secret recipe" of how to get gamblers to gamble more at
Harrah's casinos.
One of the depressing things about casinos is watching people gamble
away money it doesn't look like they can afford to lose. What are
the moral implications of the casino industry using its insights into
the behavior of gamblers to extract more and more money from them?
Casino executives like to make the free will argument-that most
people have the ability to choose between gambling and walking out
the door. The evidence suggests that this is true for most people.
Unfortunately, it's often the most vulnerable people that get taken
advantage of-just as in the subprime mortgage industry-when highly
sophisticated marketers focus their smarts on less advantaged people
who are chasing a dream. Some casino executives are troubled by
this-my book focuses on one of Harrah's leading marketing executives,
Rich Mirman, who became troubled by his own methods and innovations.
You mention in your book Steve Wynn's "genius at social
stratification."
At Wynn Las Vegas, for instance, there is a special and very luxurious
entrance for guests who pay, or are invited to stay in the "Tower
Suites"-hotel rooms that are no larger or different than the rest of
the hotel other than that they have this special entrance and more
intimate front desk. The swimming pool for these suites is literally
above and overlooking the pool for regular folk-so Tower Suite guests
can look down on the hoi polloi. In fact, the whole resort has been
designed to allow these patrons to move around in their own private
sphere. This allows the Wynn to cater to celebrities, business leaders
and others who generally have avoided Las Vegas in the past for its
lack of intimate luxurious offerings.
By catering so skillfully to these folks as well as the masses who keep
his slot machines going, Wynn manages to have his cake and eat it too.
At one time Vegas marketed itself as a family resort. That seems to
have gone by the wayside. How does Vegas see itself now?
Vegas is proudly Sin City once again. The family-resort episode was
revealed as a mistake within months of the openings of a series of
family friendly casinos like the MGM Grand and Treasure Island and
Excalibur. The problem for Las Vegas, though, is that it was stuck
with those casinos long after. The MGM Grand has demolished its Oz
theme, though, and Treasure Island has renovated away the last of
its child-friendly attractions.
It's hard to imagine Las Vegas building more elaborate and expensive
casinos and continuing to make money, but I guess the pessimists have
always been proved wrong. How do you see things playing out over say,
the next ten years in Las Vegas and also throughout the United States?
There's no way the planned 40,000 new hotel rooms will be built
there-yet. The current economy will force developers to slow down their
plans in the near term. But in the next ten years, we'll see far bigger
and more sophisticated resorts opening than are operating today-with
more retail, entertainment and restaurants. CityCenter is the first
of these new style resorts, which are really more like cities, with
condos and interconnected hotels, retail districts and entertainment
zones. Harrah's, which has plans for something similar yet potentially
bigger, is exploring how to use communications technology like texting
to encourage resort guests to remain within the Harrah's sphere rather
than migrating to rival properties.
Because of the cash generated from gambling, Las Vegas is in the
forefront of the vast new world of retail and commerce-what we'll
see there in 10 years, we'll see elsewhere in 15-not just in terms
of casinos, but also in shopping malls and theme parks.
We'll also see more regional and Native-American-owned casinos opening
up around the country, and more power concentrated in the hands of
the wealthy Indian tribes who own some of them.
In Bethlehem, Pennsylvania they're building a casino where the huge
Bethlehem Steel plant used to operate. To me, it's symbolic of a
country that once produced items of value to the world, now gambling
away its wealth.
Bingo! To coin a hackneyed phrase. I agree that it's symbolic of
a country that once produced items of value, but is now creating
entertainment that offers little of value other than diversion, and
it's produced by employees who are paid far more poorly than their
predecessors in manufacturing.