The cast is pure Vegas. There’s Terry “Baby Face” Lanni, Steve “Win” Wynn, Big Sheldon Adelson and Gary “The Teacher” Loveman. The plot is a Sin City classic. Four casino bosses make the ultimate bet – GBP 20 billion – to become king of The Strip. But this is not a film. Showdown in Showtown is playing now, live and uncut.
It was 2pm and Sheldon Adelson, the third-richest man in America and boss of the Las Vegas Sands Group, was celebrating the opening last week of the largest hotel-and-casino complex ever built – his GBP 2 billion, 7,200-room Italian-themed Venetian & Palazzo on the Vegas Strip.
Sitting in his private suite, the 74-year-old, who is worth GBP 10 billion, told The Sunday Times that, while he may be only 5ft 7in tall, he is still the biggest crap-shooter in town.
“Some casino operators are born more equal than others. We do a better job than the other guys,” he said. “So-called rivals may criticise me, but I say: are their properties built yet? Are they making as much as me? Are they as rich as me? No, no and, hell, no.”
Adelson may have bragging rights for now but it won’t last long. The view from his office reveals why. The Las Vegas Strip is the biggest building site in America. A town that once blew up old casinos and built new ones on top of the rubble is now upgrading the existing hotels and casinos and building new ones on just about every spare inch of desert.
Adelson’s Palazzo is the first of 10 planned “mega-resorts” that will almost double the size of the Vegas Strip by 2012.
“Las Vegas has never witnessed anything quite like what is going on today,” said Bill Ead-ington, economics professor at the University of Nevada. “It’s building itself anew, being Manhattanised.”
Adelson’s arch-rival, Steve Wynn, the man who created the GBP 1.5 billion Wynn Las Vegas, will later this year open his GBP 1.2 billion Encore hotel-casino, next to Wynn. It will be followed by Boyd Gaming’s GBP 2.4 billion Echelon, a five-hotel and casino complex on the site of the Star-dust, the last mob-run casino in Vegas and the subject of Martin Scorsese’s Casino. Next to Echelon, the towers of GBP 1.5 billion Fontainebleau are rising from the scrub.
A few blocks along the Strip, MGM Mirage, run by Terry Lanni, is building the biggest single privately-financed tourism and hotel development – the GBP 4 billion, 18m sq ft City Center project, which will feature a Mandarin Oriental hotel and the Harmon, the first hotel by Andrew Sasson, the Briton whose Light Group runs Vegas’s hottest nightclubs.
Harrah’s Entertainment, the world’s biggest gambling company run by former Harvard Business School professor, Gary Loveman, is spending millions on upgrading Caesars Palace. British entrepreneur Robert Earl is revamping Planet Hollywood to the tune of £500m.
The established players face fresh competition from two newcomers, each with reputations – and egos – as big as Nevada. This month Donald Trump will cut the gold-plated tape on his GBP 1 billion 64-storey Trump International Hotel and Tower. Sol Kerzner – the man behind the Sun City, Lost City and Atlantis resorts in Africa, the Caribbean and the Middle East – is developing a GBP 1 billion casino and hotel in partnership with Dubai World, an investment arm of the Dubai government which has set aside Islamic law’s ban on gambling for a taste of Nevada bling and ker-ching.
The total bill for this building frenzy is GBP 25 billion. It’s the biggest punt investors have taken on sex, sequins and seven-card stud since Benjamin “Bugsy” Siegel and his henchmen drove from Beverly Hills to a dusty railroad stop in Nevada 60 years ago and announced plans to build The Flamingo.
With the title of undisputed casino heavyweight champion at stake, bosses are trading insults like boxers before a world title fight.
“Steve Wynn thinks that his pearly white teeth – veneers I think they are – shine very good. He thinks he’s some kind of superior being,” Adelson said last week, irked by claims that the Palazzo is a cheap copy of Wynn Las Vegas. “But he’s not superior. He is just like anybody else. He puts his pants on one leg at a time, like I do.”
Wynn lambasts Adelson as a “Mr Magoo figure” who runs “a Wal-Mart-style operation” and says that Sheldon is a man “who harbours a lot of animosity towards a lot of people”.
MGM Mirage dismisses both Adelson’s and Wynn’s latest developments as “old-fashioned towers sitting on top of slot machines”. Lanni’s right-hand man, Alan Feldman, told The Sunday Times: “The days of the traditional Vegas approach – pastiche, themed, cartoonish resorts – are over. It’s about mixed-use property and cutting-edge architecture. That’s what we have at City Center. We’re different. We’re better.” Adelson’s response? “When we eat their lunch, when we take away their customers, they’ll say something different.”
The trash-talking may be more than just the usual jockeying for position. Behind the bravado, casino bosses are nervous – and with good reason. Their giant gamble could scarcely have come at a worse time and could turn into a jackpot-sized bust. Fears of recession, the credit crunch and the sub-prime housing crisis are buffeting the American economy. Consumer spending is down. The Nevada gaming authority said last week that casinos on the Las Vegas Strip won 19% less money from gamblers in the last quarter of last year, compared with 2006.
All the big gambling operators have been hit by falling earnings and a share-price slump in recent months. Shares in the Las Vegas Sands Group have lost nearly half their value since September and Wynn stock is down.
Analysts attribute the decline to a tighter credit market that has put a lid on merger activity and capped investor enthusiasm for longer-term resort projects.
“It is hard to ignore what looks to be like a deceleration in profitability and rising development costs,” said Goldman Sachs analyst Steven Kent.
Bosses concede that 2008 is likely to be rough. Wynn said: “It would be unsophisticated to think Las Vegas is a magical island unto itself immune from the effects of the communities that serve it and its visitors.”
But they are betting that a new advertising campaign – “Your Vegas is showing”, which is now running alongside the highly successful “What happens in Vegas stays in Vegas” – will bolster local American demand. Skilful ad campaigns have already helped to make Vegas one of the top five “American brands”, alongside Apple, Google and Coca-Cola.
Operators also hope that the weak dollar and new air links – Virgin now flies direct to Vegas every day – will draw record numbers of foreign travellers. Some 400,000 Britons visited Vegas last year, making Britain the city’s biggest foreign market.
The big players insist they are not building white elephants. Back in his private suite, Adelson points to a framed cover of Life magazine from 1955 on his office wall, the cover story of which was: Las Vegas. Is the boom overextended?
“People thought Las Vegas was overbuilt 52 years ago when there were just a couple of thousand rooms here. People have been repeating the question ever since that magazine was published, and the answer is always the same: no.
“The truth is, this business is recession-resistant, almost recession-proof. When things are good, people want to come and celebrate. When things are bad, they want to escape. Either way, as long as we come up with new reasons for them to come – and we are – they come.”
Adelson is so confident that his and his rivals’ huge punt will pay off – in spades, not to mention dollars – that he is not stopping at opening the world’s biggest casino and hotel. He is planning to build another multi-bil-lion pound casino hotel complex in town, with up to 5,000 rooms and 1,000 condominiums, to add to the Venetian & Palazzo.
A town that doubles in size in a few years? A hotel with 12,000 rooms? It sounds improbable but Vegas is an improbable place – a town built by mobsters in pursuit of Mammon which has gone on to become America’s No 1 tourist destination.
If it can happen anywhere, it can happen in Vegas. And if it does, you can be sure that Showdown in Showtown will one day become a movie.