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