00:00:15 Speaker 1: Pushkin. Welcome back to Risky Business, a show about making better decisions. I'm Maria Kanakova. 00:00:31 Speaker 2: And I'm Nate Silver. 00:00:33 Speaker 3: Today in the show, we're talking about a decision that Maria and I make frequently. In fact, Maria, of course lives part time in Las Vegas, but that's a visiting since city. I am about to head to Las Vegas for my first poker tournaments and some Worldsas of poker, Marie and I are both playing in the NAPUT North American Poke Retur exactly. They might let some Euros, although non North Americans some Brazilians not technically North America, they might be there too, But November December, I'll be there, hopefully running deep in some events. 00:01:08 Speaker 2: I'm little rusty. How about you? Have you been playing much lately or not? 00:01:12 Speaker 1: No, I have not. My last poker stop was ep TA Barcelona, so the European port Cotur. That was in August and I haven't played since then. But the napt obviously we do our disclaimer. I'm a Poker Stars Ambassador, member of their Team pro. But this is an event that is really near and dear to my heart. It's their flagship in the US. And if you remember last year at night I went incredibly deep final two tables. I think I finished tenth or eleventh, I don't actually remember, but it was one of those like really really frustrating bust outs when like I don't remember how much I cashed for, like between forty and fifty thousand, and first place was like a million dollars and I was like, fuck, you know, it's one of those It's one of those moments. But yeah, today we'll be talking about the Vegas economy. I'm actually already in Las Vegas. I'm recording this from Lovely Resource World, which is where the event is taking place. I'm in my hotel room there. 00:02:08 Speaker 2: And so why are you in an apartment? 00:02:11 Speaker 1: Because, Nate, when I have to play until very late and we have to tape and then I have meetings right after, I need a space that is not twenty minutes away but actually right here. 00:02:23 Speaker 2: Nice. 00:02:23 Speaker 3: Well, one thing you might notice too, pertain to this topic is that lately, for people who know what they're doing, hotel rooms have gotten cheaper in Las Vegas. I was able to stay at some places in summer for I know, maybe fifty or seventy five dollars less a night than I would have expected to pay. 00:02:43 Speaker 1: Hi, it's so funny night. I'm gonna interrupt you for a second, I thought you were going to end that sentence at for fifty or seventy five dollars. 00:02:49 Speaker 2: I'm like, whoa, whoa, whoa? Where are you like? I say like, I say it, I stay, like where you stay? 00:02:54 Speaker 3: I say it the middle plus chier plus right, I'm not And there are places you can stay, you know, with comps and stuff for dollars a night, right or less. In fact, I I was booking hotels for the World Series, right, and I noticed that there was a lot of availability at relatively low prices, and so therefore I actually took some money out of like some small gambling related stocks and put them in Walmart instead. I'm like, oh, it seems like the economy is And I don't usually do that kind of active trading thing, right, but it felt like this is a pretty unmistakable signal that demand is weakening. I know those prices well enough where like I want in particular hotels, but you're getting two hundred and twenty dollars a night for a luxury hotel without any comps or discounts, and I'm like, Okay, something is going wrong in Vegas. 00:03:49 Speaker 1: Yeah, and let's just say that there has been this news cycle of like, is Vegas dead? And this is a conversation that comes up every so often. Right, this is not the first time that people have been having this conversation, but people have been saying, you know, there have been a lot of reports say, oh, visitations down, this is down, this is down, Vegas is dying, Vegas is over, blah bla bla. So that's kind of framing the discussion. That's what we're going to be talking about. Is Vegas actually you know, in a rough spot right now, and we're going to actually be looking at the data and using a more risky business lens as opposed to vibes. And you know, man, the vibes just felt off night. All right, let's get into some numbers. 00:04:30 Speaker 3: Okay, So according to the Nevada Independent, I am doing, by the way, Nevada, let's Nevada. 00:04:36 Speaker 1: Let's get you clearnuncing it correctly. 00:04:38 Speaker 2: For Nevada Independent. 00:04:40 Speaker 3: For the Nevada Independent, I'm doing an event by the way for them, I guess the weekend after next. I'm a big supporter of their independent journalism. So you'll see me there at IndieFest. 00:04:51 Speaker 2: I believe it's called. 00:04:52 Speaker 3: However, September saw the Strip record its first monthly gaming revenue decline since May. But the nearly five point five percent dip wasn't a surprise Las Vegas Boulevard's two largest resort operators or shall they spin? Sorry, that last phrase was mine. You know, a five point five five percent drop is pretty material. The Gaming Control Board I'm now cooting it again, said Wednesday that Strip game more when you fell to six hundred and eighty seven point eight million last month, not bad, primarily because of a forty two point seven percent decline in high end baccarat income. Yeah, so baccarat is a game. Have you played Brocrat? 00:05:29 Speaker 2: Ever? 00:05:30 Speaker 1: No, I've never played baccera. I know a lot about it because, as you know, I'm working on a book about cheating, and Baccara is a very popular game to cheat because it is a game where the casino has one of the lowest edges and if you are even if you're not cheating, if you're a skilled baccara player, it's where you can make the most money technically speaking, But if you're cheating, then you know sky's the limit. But this is the game where even though the casino has the smallest edge, they actually make the most amount of money because this is what the high rollers come for, right, the big whales that come from Asia's Baca is their game of choice. So even though the edges might be smaller for the house, the total volume makes a huge difference because when you have people betting, you know, thousands and tons of thousands and hundreds of thousands of dollars at hand, Shit gets real. 00:06:25 Speaker 3: No what I mean the house that just like zero point ninety percent. Baccarat is a funny game. I actually play in the pits and often maybe maybe maybe twice a year, there'll be a friend when I'm out in Biga for something else, like, oh, let's go do this, and like, you know, you're geting a little expected value, but you get you get drinks and helps your rewards points. I think once or twice a year is the optimum outcome, at least for me. 00:06:47 Speaker 2: Right. 00:06:48 Speaker 3: Bacarat is interesting in that there's no actual decision made by the player. Whereas craps you roll the dice a blackcheck, you have decisions to make right. So in principle, if you're playing those games optimally, the house edge, depending on the rules set, can be lower. But anytime you give players a decision, they tend to make bad gambling bets and or otherwise play non optimally. Whereas Bacarunt, it's just you know, you slide a lot of money in and you have a coin flip that slightly waited against you. 00:07:19 Speaker 2: But yeah, it's a. 00:07:20 Speaker 3: Game for pure gambling d Jens pretty much. However, it's not just a high end that's being affected here again back to Nevada Independent meanwhile, stripped that volume philt Nevada, Nevada, Nevada, Sierra Nevada. 00:07:36 Speaker 2: It's a Sierra Nevada mountains. 00:07:38 Speaker 3: Meanwhile, visitor volume fell for the ninth street month according to Las Vegas Convention, and this is authority declining eight point eight percent, with justinner three point one million visitors still a lot coming in September. Through nine months, Las Vegas visitation is down eight percent from twenty twenty four, which includes double digit declines in July and June, the events that we were out there, or I was, at least for. 00:07:59 Speaker 2: The World Series. 00:08:00 Speaker 1: Yeah, so last week a lot of the gaming companies reported their quarterly earnings and they didn't. 00:08:09 Speaker 2: Do that well. 00:08:10 Speaker 1: Right, There wasn't good news, especially for Caesar's but also for MGM, and we see them blaming a lot of things. So, first of all, the MGM call was among the most eyebrow raising that I've heard, and didn't listen to the whole call, but I saw kind of some excerpts and the transcript, and this is very rare, but the president and CEO, Bill Hornbuckle, actually said shame on us. This is a direct quote because he attributed some of their declines. So some of it He's like, oh, yes, factors, you know, summer was bad for everyone, all this stuff, blah blah blah. Spirit Airlines has limited flights, which is true. Visitation is down ate, as you just said. He said, but he said that they basically lost the plot on pricing at MGM properties, and we talked about that on the show before when we were talking about you know, yes you can get some room deals. But then there was kind of an infamous thing at Aria someone posted a twenty six dollars bottle of Fiji water. When they saw that they were doing this, like you know, flexible pricing where there were surge pricing basically at some times of day, and your bottle of Fiji could actually cost twenty six dollars apparently at Excalibur. I learned this from the earnings call. I didn't know because I haven't been an Excalibur for a while. I have been there for events, and I've been there for what's what's it called that dinner with like the fighting, you know, the where you with your hands, whatever it's called. Anyways, I've been to Excalver for those things, but I've never had Starbucks there. And apparently the coffee at Starbucks was started at twelve dollars anyway, So he said that they have now tried to price correct because I'm quoting now quoting Hornbuckle quote, we should have been more sensitive to the overall experience. And then he continues, you can't have a twenty nine dollar room and at twelve dollars coffee. We lost control of the narrative over the summer. I think we would all agree to that in hindsight. Now, in the moment people were trying to tell them right, there was no in hindsight, like these things were going viral. People were saying the prices on the strip have become outrageous. Now I am a Las Vegas resident. You know, I don't. 00:10:29 Speaker 2: Call a vegan. 00:10:30 Speaker 1: I'm a vegan. I'm a vegan baby spelled the same way as vegan, except with a capital letter, which is very confusing to me. But so as a resident, I don't, you know, I don't feel it as much because I don't really go to the strip for stuff. Right, I'm on the strip when I'm playing poker, and that's it, right, I don't. I don't actually do that much here. But even for me, like I realized that a lot of the garages have stopped offering free parking, which means that, you know, I won't go there for dinner anymore. Usually there's like, oh, if you're a Nevada resident, you get like two hours free or something like that. But come on, guys, right, that's something, but it's still kind of annoying. So there are things that even affect locals. And I think people's habits started changing and people got really mad, and there was a segment of the population that was like, you know, fuck you, Like I don't want to. And I think this is crucial because sure, like you come to Vegas. Like, you know, you're kind of a sucker when you're gambling, but you have fun. You don't want to be treated like a sucker. You want to be treated like a human being who has a functioning mind and understands when they're being taken advantage of. It's a horrible feeling, that feeling of like knowing that you're being taken advantage of, you're like, you know what, fuck you don't do that to me. 00:11:48 Speaker 3: No, And look, if you're an experienced traveler, then there are various things you can do. Right number one, if you're in the I don't want to sound like a shill. If you're in these casino comp programs, even at the lowest tier, they typically give you lower rates. Also, my finding is that like Vegas, hotel prices are quite spiky based on conventions or the events that are held near the major properties. 00:12:14 Speaker 2: Right. 00:12:14 Speaker 3: If there's something big Allegiance Stadium, Ortemobile Arena right, that might affect like Mandelaid Bay prices across the bridge from the Raiders' games, right, Or if there's a big conference at Venetian it might be more expensive. So my recommendation is that like you know, you price shot pretty aggressively. Don't just have like one property or loyal to you can usually find good deals at least some options, you know. But also like, yeah, there are little hacks where like you will notice sometimes experienced Vegas travelers the day they get in will come in with giant twenty four packs of water and twenty four packs of Modello beer and snacks and whatever else, right, because the Walgreens on the step have relatively normal prices or whatever, right, whereas in the casinos it's a lot more right, they're even like little miniacs. If you feel like just walking around, maybe you're waiting for a poker tablet, get up and have a drink or something. You can go to like the little kiosks where they sell supplies, right, and those are like a little bit cheap, and if you go to the bar, right, but just for little supplies and stuff. 00:13:20 Speaker 2: Right. 00:13:20 Speaker 3: You know, I'm person who's definitely of means, right, but like it's almost a matter of spite. Sure, let's say I need some fucking like socks because I'd never be enough socks, oh ya. And the Vegas trips always stay longer than I thought, And I go through the socks. 00:13:33 Speaker 1: Right, you know that's really funny, Nate, I'm learning something new about you. 00:13:37 Speaker 2: I need to get this. 00:13:39 Speaker 3: I'm just gonna go across the street to the Target or walk Greens and buy socks because even though if I'm like being hyper rational about like, yes, it's probably worth it paying fucking thirty bucks for a pair of socks in the gift shop, like it just defends. 00:13:50 Speaker 2: Me, of course on some level. 00:13:51 Speaker 3: And you know, look, the notion of Vegas is to some extent like the easy life. Right, things are easy and you're feeling good and casual about things, and that might let you you spend a little bit more on indulgences like gambling for example, or certainly you know, if you go to like the high limit somewhere, they may compt your drink because you're gambling big. But if not the price of wine there's going to be a little bit more expensive potentially. But like the the notion is like kind of lower tier of like, oh, I can have a room for fifty bucks. Yeah, if you're if you're if you're paying every type of resort fee and every water or beer costs a lot, you know, the the load to middle end restaurants on the Strip are are getting cycled out in favor of kind of high end concepts. 00:14:40 Speaker 2: And things like that. Right, there are options off. 00:14:42 Speaker 1: The strip that by the way, Nate, that's another that's another recession indicator, both in Vegas and in New York when you see like all of these incredibly high end steakhouses open and you're like, uh uh, you know we're heading for a crush. 00:14:57 Speaker 3: No, but like it partly reflects like some degree of greed where you're optimized. You know, people a lot of people roughly speaking, have like fixed budgets for expenses. I'm gambling it they're going to spend in Las Vegas. Right, maybe you have one big night out that you put in a credit card, but like, you know, I feel like I can afford to lose five hundred bucks on blackjack and maybe you know you're probably gonna lose most of the time, or bucca ut whatever else. Right, and you're paying like thirteen dollars for a bottle of Fiji and then and then your dinner, you're paying you know, New York prices plus thirty percent. Again another hack if you know it is like the ubers are pretty cheap in Las Vegas. If you don't have a car, go off strip. The food can be remarkably good and remarkably cheap, right, But like, but you're not creating this ease of like I'm going to have a place to place and there's some good deals and I'm having fun. 00:15:45 Speaker 2: Just the whole attitude seems kind of short sighted. 00:15:47 Speaker 1: It's incredibly short sighted. And I think that all of these you know, corporations are looking to maximize revenue, right, and they sometimes will become short sighted to do that. And I think that for Vegas, there was a really important inflection point during COVID, right where Vegas shut down, the strip shut down, properties cut staffing by huge amounts, right, there was no room service for a long time, but they even cut you know, valet, they cut everything, and all of a sudden, their profit margins were much better, and they were like, oh, this is good, this is actually great. And then they're like, wait, maybe we can keep doing this. And then also during the pandemic, when they were when occupancy was like really really low, they cut rates and they saw something they didn't like. So what happened at properties like Caesar's and this is something you know, I was here if you remember, for about six months when Vegas was fully reopening, to report on that, and so I learned kind of a lot about what was going on on the ground and what we saw in places like Caesar's. And I'm quoting Caesar's because I actually had I talked to a lot of people at Caesar's who described this to me. By people, I mean staff like dealers, et cetera, they had very negative experiences because the prices had gotten so low that they were getting a customer that they didn't want right. They were getting people who were mistreating the dealers, who were not treating hotel rooms correctly, who were causing disturbances, who weren't tipping like it was not the experience that they wanted. And so there were two things that happened right at the same time. We had the staffing meaning you know, higher margins, staffing reductions meaning higher margins. And then we also had this, uh oh, like if we reduce room prices too much, things are starting to get bad. So what ends up happening They start raising prices on rooms and on other things so that they can get their quote unquote target customers. Right, we don't want the rebel rousers. We don't want the people who are you know, who are yelling at the dealer and throwing things. We want a slightly higher caliber of clientele. And at first kind of that that works, right, they actually get exactly what they want, and occupancy rates are going up because people have been cooped up during COVID, and so it's this amazing rebound mountain because everyone wants to come and gamble and socialize in all of these things. But crucially, they don't staff back up. And now I'm talking about all of the properties because they're like, wait, we can operate with fewer people. And so I don't actually know if the numbers are one hundred percent accurate here, but my feeling is that no properties actually went back to pre COVID staffing even today, that everyone that even as they ramped back up, it's still not at one hundred percent of what it was. I might be wrong. I'm saying this is what I think based on kind of the research I've done. I know that this is true at some properties. When you say all, you know, that's that kind of sweeping statement might be incorrect. So this is why I'm caveating it. But in general properties have not staffed back up to the same levels, and then what ends up happening is they try to They're like, ooh, it worked, like we have high occupancy and we raise prices. Let's raise prices a little more. Oh, you're telling us that we shouldn't do this, that people are feeling exploited, but they're still coming. Well, there's a lag right, there's a lagging effect. And this is where the short sighted this comes in, Like people will tolerate it for a little bit, but then you start putting prices up even more, being like, oh, where's you know, maybe they're totally priced and sensitive. Hahaha, let's do this, let's do that. And then suddenly it's like you know, the frog and the boiling water, right, you're raising the heat a little bit, and all of a sudden, your customers are like, what the hell, right, look at my room rates, look at my water, look at my coffee, and you're not treating me as well. But because you don't have I have to wait ten minutes at the valet, because you didn't hire back an fla like, the experience is worse too, what the fuck? And that is an appropriate reaction. So I think that's what we're now saying. 00:20:00 Speaker 2: And we'll be right back after this break. 00:20:17 Speaker 1: Now, you know, in terms of Vegas as a kind of barometer for the rest of the country, because it often is, right like when there are bubbles, when we're about to hit a recession, like when when things are starting to get out of hand, Vegas is often the place where you start feeling some of those things first. It's human driven, right, It's a service economy, and it's driven by kind of trends in general in individual habits. Right, how are people traveling, what are they spending their money on, what are they spending discretionary income on, how are they kind of spending their leisure time? All of these things, Vegas will start feeling that first. And so you know, at the beginning of this episode, I've kind of made a joke about high end steakhouses being a recession indicator. It's not really a joke, right, There are things like that where you're like, oh, you know, too many, too many things like we're hitting peak right and you're going to you're gonna see that fall off soon. I remember a number of years ago going to Miami when Miami was going through this was like maybe twenty two thousand and nine, like post recession, and like really back when I could stay at the Satai for like two hundred dollars a night and this is a tie by the way, is a hotel that's like over a thousand dollars a night. But yeah, so Miami wasn't doing well and I just saw abandoned luxury construction projects everywhere, right, Like it was just it was just a graveyard for cranes and like these half finished high rises. That was one of my first real world experiences where I was like, oh, right, when you see something like this, like that was probably a sign beforehand that there was kind of a real estate bubble. So since, you know, thinking about the economy more broadly, there are certain things that we talked about today that are Vegas specific, but then there are other things that I don't think are like the Vegas is dead narrative, but more of a Hey, there are some troubling signs right in consumer sentiment and in the way that consumers are feeling right now in this part of the economic cycle. 00:22:26 Speaker 3: Yeah, it can be a leading indicator, right of consumer optimism, although weirdly so it's a little weird. 00:22:33 Speaker 2: It's a live by modal where like. 00:22:37 Speaker 3: You know, in general, people feel like, I have money, look to go and spend a bunch of money on a Vegas trip, and then also to spend money gambling, and. 00:22:43 Speaker 2: They want you to do both. Right. 00:22:45 Speaker 3: No longer true that unless you're a VIP who is guaranteed to gamble a lot. The hotels restaurants are no longer just a loss leader. 00:22:52 Speaker 2: Right, But. 00:22:54 Speaker 3: You have to be feeling pretty optimistic about the state of things to say I'm gonna go and have a big boy's weekend or girls weekend, gotchelor at weekend in Vegas, right, especially if it develops a reputation for no longer being a budget destination but a luxury destination. That's part of it, right, I mean, ironically, like some sin stocks and sin activities, cigarettes, booze, dambling can go up when conditions are really bad because people feel like fuck it, fuck it, you know, the world's coming to an end, and will blow it in Vegas. But we're kind of in this stagnation area where there's been a lot of consumer pessimism for a long period of time. 00:23:31 Speaker 2: Right. 00:23:32 Speaker 3: There is from some countries declining international travel too. You know, I think poker players or at least some people I knew that didn't want the experience of like going in the United States and maybe being harassed by an immigration officer set carrying all these I guess you probably wouldn't cary that much cash. 00:23:49 Speaker 1: Right, No, but there but the visa, the more stringent visa requirements, how long you're supposed to stay, like having to check in the fact that people were being detained and sent away like it was. Yeah, it's something that does deter people from coming. 00:24:03 Speaker 3: Yeah, and that can be like a little bit precious, Right, But you're relying on these vtps, let's be honest, you know, East Asian countries and in particular for the most part, right. 00:24:13 Speaker 1: Yeah, especially since baccaras you're leading revenue source. 00:24:16 Speaker 2: Right. 00:24:16 Speaker 1: The reason that the revenue growth that was seen in Vegas over the last several months, not talking about these reports that we were talking about there were bad but before that we had some great growth and they were all driven by Bacara, Right, And now we have a bad month, and it's because Baccara is down. Like there are certain things that you know, you you do need to be you don't want friction, right, and we are seeing things that are adding friction to the experience for a lot of people. And I think that's true not just to Vegas, but a visitation. You know, that's something I think everywhere saw a decreased tourism numbers. New York did like that, I know, but a lot of a lot of places all over the country definitely felt. 00:24:59 Speaker 3: The companies also struggle a lot with like pricing. So these resort fees for example, right, God, yeah, I actually the last time I student the WIN, I had some. 00:25:10 Speaker 2: Promotion where there weren't resort fees. 00:25:14 Speaker 3: But then you go to the gym and it's like twenty bucks to use a gym, and there's like a psychological thing where it's like, I mean, what was a reserve? You probably forty nine bucks? Right, Like that was the only thing I was using. I was doing it every other day, right, So like it's actually a good deal, but you feel like you feel like Nicola dimd And then you know, shifting those equilibriums away where prices seem more it's hard because like if most people are not sweating the small details, right, they have some notion that like there's always tacked on expenses and in veguess I know those are particularly bad, right, But like you know, if you're listed at two hundred and ten dollars a night on Expedia and the other property is two hundred and fifty and they're all inclusive, and you have fifty six dollars in fees, you're actually more expensive. But maybe you kind of prick people a little bit when they're signing up, right, I mean that's kind of one aspect of it. This is actually a place where like legislation could do well, right, where it's like, okay, we can break that eyqulibrium by saying you need to have more transparency whenever you're selling an experience, right, that there are not add on fees that are as are a default are tacked on for for every customer. 00:26:15 Speaker 2: I mean you have us with sports. 00:26:16 Speaker 3: Tickets and and lots of other things too, right, And like you know, you could have that better default. There's a such general sense of like I remember like going like Gibson Steakhouse in Chicago, right, and the steaks are expensive by Chicago standards. Their wine list is not particularly marked up. There's actually some good deals on the wineless. I know it's like sounds like a stupid example. There's like there's like an old school mentality of like you are paying a lot to have a good experience and to get in, right, and and you're paying a lot for the steak and we're not going to nickel and dimee you for for other stuff, right, You're paying a lot for the good, high quality stuff. 00:26:53 Speaker 2: Right, But like it's not you know, it's some I went. 00:26:56 Speaker 3: To Carnegie Hall the other day and there the concession prices are like not as marked up as at other venues because and it just di it's like like it's a classic experience, right, and like if I went a little prosecco at intermission, generous nack of peanuts or something, right, I'm still paying twice as much as I should, right, but like not four times as much. And it's just like the constant small irritation if you never feel like you're getting like tweeted you know, well, you know, hey, look these guys. 00:27:24 Speaker 2: Give me a break. 00:27:25 Speaker 3: I'm never I could have they could have charged me more, would have paid more, but I'm paying a lot for the experience. It's just I don't know, I it's exactly the kind of stuff that you think would have like a short term spreadsheet maximizing quality to it, that that would have effects that accumulate over two, three, five, ten years. 00:27:41 Speaker 2: Right, yep. 00:27:42 Speaker 1: I think that's I think that's absolutely right. 00:27:44 Speaker 3: Also, like all these interlocking rewards programs, on the one hand, they can incentivize some consumers to gamble more or spend more in the resort or whatever else. Right on the other hand, like it can be frustrating. 00:27:59 Speaker 2: When you're in line for an. 00:28:02 Speaker 3: Overpriced brunch or something and then there's another line of Diamond seven stars and another line and of super whatever, right, Like that experience can be a bit frustrating. Steve win at The Wind famously or not famously when I talk to people for the book, right, he always thought, you want to if you're coming to a luxury property like the Wind, everybody should be treated like a VIP yep, Right, And we understand that, like, yes, there's probably some tower suite for the true Bacara degenerate VIP, but we don't want too much tearing. And by the way, the Wind is a place where like they seem to go the extra mile for staffing. 00:28:38 Speaker 2: Not that I've never had a problem there. I stay these places so much. 00:28:41 Speaker 3: I've had a bat experience at every Vegas retort at some point, right, But you notice a consistently higher effort. 00:28:48 Speaker 2: From staff, and you feel like. 00:28:50 Speaker 3: Oh, yeah, this is this is a luxury that that I'm being promised. 00:28:54 Speaker 1: Right, Yeah, there's you know, it's psychologically. I just want to pause here for one second. It's really interesting because there's one school of thought which is like, oh, make everyone see, you know, the seventh star diamond line, so that they have they aspire to it, right, Like see that if you like pay, if you play here more, you get to cut the line. On the other hand, like if you're waiting incessantly, it's really annoying to see people who keep on cutting you, right, and it can it can backfire. What the Wind does is actually, yes they have exclusive, like incredibly high roller experiences, but you don't really see it, right, Like there are suites that are like it's their own check it, it's their own area, like, it's their own everything. The really nice ones that are on the golf course with the outdoor space, like that's a it's a whole different thing, right, So yeah, it's like it's a whole different part of the resort, so when you go there, you do feel like a VIP. By the way, Wind Resorts their properties in Macau saw a revenue up nineteen percent from twenty twenty three to twenty twenty four. And it's Vegas ones also group from twenty twenty three to twenty twenty four, but less so three point seven percent. But Wind was has been showing actually kind of more more positive results. And I think that those counter examples, including Macaw, by the way, it's a chink in the narrative. A lot of people are saying, oh, well, you know Vegas is dead and dying because of all of you can now sports, but from everywhere, like online gambling, et cetera. But that's I don't I don't think that that's actually true, because we see that McCaw revenues are actually like up for everything, for for all properties like people are people are gambling in person like none other. And regional casino revenue so that you're talking about someone el et cetera, et cetera, regional properties are actually doing really really well right like those those revenues are going up. So even within Vegas, there are very different stories of what's happening on the strip downtown and in casinos that are locals, casinos that are you know, just you know, scattered throughout Las Vegas. So we see very different revenue patterns. But I just want to say that to the first one. You know, psychologically speaking, you have to be careful, Like there's a fine line between showing people something aspirational and making them feel like you're treating them poorly and letting other people get in front of them and you know, really ruining their experience, and especially if you're paying a lot already, then you want to be treated well, you want to be treated like a VIP. 00:31:26 Speaker 2: Yeah. There's basically three markets in Vegas. Right. 00:31:29 Speaker 3: There's like the locals market, which is almost entirely all striped and like it sounds like maybe some budget travelers, but people who were in and around Las Vegas probably lived there. 00:31:39 Speaker 2: Right. 00:31:40 Speaker 3: There's, on the other hand, the high end luxury market, which has you know, wasn't as much of a thing twenty years ago. Like people like Steve Wing have a lot of responsibility for this. Uh, you know, you can kind of subpure that into like you know, rich domestic people who like to gamble and have fun, but also internationally, you know, if there are options and the things like international relations. 00:32:06 Speaker 2: And how is the to get your money in and out? 00:32:08 Speaker 3: If you're gaping a lot of money and you're like a Chinese national, i' going to have a hard time at a border. 00:32:14 Speaker 2: Right. 00:32:15 Speaker 3: Macaw goes through cycles where China seems to be encouraging or discouraging more money to flow through there for different actual or rumored reasons. Right, So that's part of it. But like kind of this middle market has gotten squeezed a little bit, and like, you know, if a friend were to recommend, oh, I want a nice baseline experience in Vegas where I don't feel nickel and dime, and then I might indulge in a few things, Like I'm not sure i'd have like a great propperty to recommend them necessarily. 00:32:48 Speaker 2: I don't know, I don't maybe, I don't know. 00:32:50 Speaker 1: Yeah, I'd probably, I mean, i'd probably steer them downtown. Honestly, I'd probably steer them to one of the newer or remodeled properties downtown, like a you know, like a Serco type of place that has a really nice sportsbook, that has new restaurants. By the way, we mentioned this few months back, but the Rio, you know, under new leadership, has actually invested in renovating and has some like hot happening restaurants and people like for the first time, Yeah, for the first time. The Rio is you know, it's been a joke. You know, we're we're poker players and the Rio has you know, always been kind of a dump when it comes to like the World Series and all of that. Everyone was really happy when the World Series left the Rio. There was an outbreak. I remember, I think my first or second year playing poker, when I was just starting to you know, when I was researching the Biggest Bluff, there was a Lesionnaire's disease outbreak for people staying at the hotel like bad, right, bad, Yeah, robberies, but robberies happen on strip too, like man robberies. I know, people who've been robbed in their hotel rooms at properties as nice as the Blagio, like just just to be to be perfectly candid like that. It can happen anywhere. But yeah, but the Rio was especially bad. But now people I think because they were trying to turn it around. They started trying to make people feel better, right and give them a better experience, and a little goes a long way, right if you start doing a tiered service of room service, like MGM properties did at some point this year, I don't think. I don't know if Bill Hornbook specifically mentioned this in his call, I don't remember, but this is one of those like what were you thinking missteps where they started having tiered room service where if you wanted actual like plates and silverware and like the stuff that you normally want when you order room service, you had to order premium room service for like an additional I don't remember twenty thirty forty dollars, and the basic room service just came in takeout containers, and come on, you're already paying ridiculous amounts for this room service. Like that would make me feel like shit, right as someone's staying there, and so a little goes a long way. Just don't do that, right, Like you're actually, over the long term going to have higher margins. Which is all to say that those problems, though, are easily fixable, I think. But for your friend who's looking at middle tier properties, yeah, that's that's why I would say, like, maybe don't even go on strip because it's really hard to find, like a good experience where you feel good and unless like you've found good rates, like it's possible, you know sometimes midweek, like some really nice hotels, even like the Wind will have rates that are really nice and you're like, whoa, I can stay at the Wind for like one hundred and something dollars a night, yes, please, right, but like absent that like your baseline rates. Yeah, it's it's really really tough and we'll be back right after this, okay. 00:36:12 Speaker 3: I mean we mentioned the pandemic in passing. I do think, in fact, I kind of had this thesis in my book that there was like a lot of pent up demand for bad quote unquote behavior and for risk taking behavior and for socialization, like the scenes in Vegas in like summer going into fall twenty twenty one. I mean, there was one time when I, like I nearly thought was going to get like there might have been a crush on one of those pedestrian bridges right like Vegas kind of swinging together back into life faster than their places was like, it was a lot of fun for a period of time, but things were also a little bit a bit cheaper than right the long term trends. 00:36:50 Speaker 2: I mean, you know since the pandemic. I mean, you know there are things like, for example, people. 00:36:59 Speaker 3: Are taking ozempic more. Yeah, that can reduce the desires to. 00:37:05 Speaker 1: Hut and drinks and gamble. 00:37:07 Speaker 3: Anyway and gamble a little bit, right there is I would argue, like a little bit of a wave of like prudishness. I mean, look, things are always sensitive at the high end to like the crypto economy a little bit, which has been good lately. Actually maybe that contradicts the trend. But like, but you know, the preferences of like people of means and you know, maybe that Vegas trip becomes a ski trip because they're being a little bit more health conscious or something like that, right, or maybe they feel like you know, Vegas always struggle between do we want to be family inclusive and gender inclusive? Or is this for the bros? You know they struggle with that a little bit. But you know, you know a problem in lots of businesses is like you know, as a middle aged forty something guy, right, like, you know, they're kind of doing a good job to hold on to those customers. But yet young people are different, The zoomers are different. They may not be you know, first of all, they're less sociable. In general, if you do not like people they're in Las Vegas is not a good place, right, and the whole mass of humanity. I mean, part of why I like Vegas is because you get like a real cross section. You do all types of contexts from different people. I enjoy indoses the people watching in Vegas, but like, but if you're a little bit agoraphobic, then then that's not going to be the best experience. 00:38:27 Speaker 2: And so. 00:38:29 Speaker 3: Yeah, look, every business has to worry about about churn or not acquiring enough new customers because a lot of times you look at traffic to something and it's steady and looks like all the same people are coming, right, what's really happening into the surface is that like maybe you have twenty percent new customers over six month period, but twenty percent leave, right, and you tend to steady state most of the time. Right, If one of those two numbers gets off, right, and I haven't looked in the details as much as it is, it is it loyal customers not coming back, or my guess as it might be more intimidating to like to new customers potentially because if you're loyal in Vegas, then A you probably have status, and b just this like street smart, so like how to navigate and find the better experiences. 00:39:14 Speaker 2: And the better deals. 00:39:14 Speaker 3: Right, Like if I were your garde to Vegas, certainly, if you were Marie, I'd be like, here are the shows you should go to good absence, for example, here are the restaurants should go to, most of which are off strip yep. Here little hacks you can buy socks and water and beer for cheaper than in the little thing they have in the casino, right, and do these four things and keep your points, and then that's great, But like it's a little bit intimidating to new visitors. 00:39:37 Speaker 1: Absolutely absolutely, And if you are someone who's kind of young and planning, you know, a fun birthday, weekend, bachelor party, whatever it is. In the past, you might have just default said, oh, Vegas, right, that's the best place for it, and now you might you might actually think twice and actually look at other look at other things. So just to kind of sum up everything we've been talking about, let's answer the micro and the macro questions. First like is Vegas dead? And second like, is what's happening in Vegas an indication that kind of we should be worried about broader economic health right now. 00:40:19 Speaker 3: Like I said, I thought it was an interesting indicator back in the spring and when consumer settlement really started to go down, right, I think now that's more well established across a wide brand new beta. Look, some of it is cyclical. Vegas has always been highly cyclical, right, this is like nothing new, And ironically Vegas a very cyclical decisions to build these high end resorts. They might take five or ten years to build and thirty years to realize a profit. 00:40:42 Speaker 1: I got a fun time blow. It was just a was just a absolute cursed property. The number of years it took to finally open was just mind numbing. 00:40:52 Speaker 3: No, it's pretty hard to anticipate long term kind of secular trends and desires for gambling and entertainment. But yeah, look, I mean the look the younger generation is kind of nitty and they're kind of introverted. Actually, and those epic I think is material for some categories, like like restaurants and booze related businesses, right like, And that's that all seems like material to Vegas's bottom line and long run, it is quite international, maybe not as much as some American cities. But if the US becomes a less desirable destination, I think there are some actual headwinds here. 00:41:30 Speaker 1: Yeah, I would say that there are some troubling indicators. I don't think Vegas is dead. I don't think Vegas is dying. I think that Vegas needs to change some of its habits if it wants to have long term appeal and sustainability and be able to capture that demographic that may want to just have a nice experience. But yes, they're a kind of younger generation that has different habits, right, and different points of oh, this is what makes me want to go somewhere and actually spend money on a trip. By the way, you know, in the past, we've had these like Vegas is dying, et cetera, et cetera, and we've had amazing innovators who've reinvented Vegas, you know, like Steve Wynn most recently, who you know, realized that, oh, you know, the old way of building casinos is wrong, right, We're actually going to like let in light and like do all these different things and change the way that we make people feel. And it worked, right, and it actually people who go to Vegas today don't realize like what a huge change that was and how much it changed the face of the strip. And so maybe you know, there's someone coming up right now who will figure out a way to really capture a lot of this younger demographic in the meantime, I don't, you know, I don't think it's dying, but I do think that there are some troubling into kators throughout the entire US ecotomy and especially in Vegas, like you got to treat people well. Let us know what you think of the show. 00:43:05 Speaker 2: Reach out to. 00:43:06 Speaker 1: Us at Risky Business at pushkin dot FM. Risky Business is hosted by me Maria Kanakova. 00:43:12 Speaker 2: And by me Nate Silver. 00:43:14 Speaker 3: The show was a cool production of Pushing Industries and iHeartMedia. This episode was produced by Isaac Carter. Our associate producer is Sonya gerwit Lydia, Jean Kott and Daphney Chen are our editors, and our executive producer is Jacob Goldstein. Mixing by Sarah Bruger. 00:43:31 Speaker 1: If you like the show, please rate and review us so other people can find us too, But once again, only if you like us. We don't want those bad reviews out there. Thanks for tuning in.