WEBVTT - What Happens in Vegas...Might Tell Us Something About the US Economy 0:00:15.564 --> 0:00:29.524 Pushkin. Welcome back to Risky Business, a show about making 0:00:29.524 --> 0:00:32.084 better decisions. I'm Maria Kanakova. 0:00:31.804 --> 0:00:33.044 And I'm Nate Silver. 0:00:33.444 --> 0:00:35.844 Today in the show, we're talking about a decision that 0:00:35.964 --> 0:00:39.044 Maria and I make frequently. In fact, Maria, of course 0:00:39.164 --> 0:00:41.924 lives part time in Las Vegas, but that's a visiting 0:00:42.524 --> 0:00:47.324 since city. I am about to head to Las Vegas 0:00:47.364 --> 0:00:50.204 for my first poker tournaments and some Worldsas of poker, 0:00:50.244 --> 0:00:52.884 Marie and I are both playing in the NAPUT North 0:00:52.924 --> 0:00:57.204 American Poke Retur exactly. They might let some Euros, although 0:00:57.324 --> 0:01:00.724 non North Americans some Brazilians not technically North America, they 0:01:00.764 --> 0:01:05.924 might be there too, But November December, I'll be there, 0:01:06.124 --> 0:01:08.204 hopefully running deep in some events. 0:01:08.204 --> 0:01:10.164 I'm little rusty. How about you? Have you been playing 0:01:10.244 --> 0:01:11.004 much lately or not? 0:01:12.284 --> 0:01:16.124 No, I have not. My last poker stop was ep 0:01:16.284 --> 0:01:19.364 TA Barcelona, so the European port Cotur. That was in 0:01:19.404 --> 0:01:23.244 August and I haven't played since then. But the napt 0:01:24.364 --> 0:01:27.964 obviously we do our disclaimer. I'm a Poker Stars Ambassador, 0:01:28.204 --> 0:01:30.164 member of their Team pro. But this is an event 0:01:30.204 --> 0:01:32.444 that is really near and dear to my heart. It's 0:01:32.844 --> 0:01:35.924 their flagship in the US. And if you remember last 0:01:35.964 --> 0:01:39.164 year at night I went incredibly deep final two tables. 0:01:39.204 --> 0:01:41.644 I think I finished tenth or eleventh, I don't actually remember, 0:01:41.844 --> 0:01:44.284 but it was one of those like really really frustrating 0:01:44.604 --> 0:01:46.604 bust outs when like I don't remember how much I 0:01:46.644 --> 0:01:49.684 cashed for, like between forty and fifty thousand, and first 0:01:49.684 --> 0:01:52.404 place was like a million dollars and I was like, fuck, 0:01:52.804 --> 0:01:55.644 you know, it's one of those It's one of those moments. 0:01:55.924 --> 0:01:59.644 But yeah, today we'll be talking about the Vegas economy. 0:01:59.684 --> 0:02:03.324 I'm actually already in Las Vegas. I'm recording this from 0:02:03.564 --> 0:02:06.844 Lovely Resource World, which is where the event is taking place. 0:02:06.844 --> 0:02:08.084 I'm in my hotel room there. 0:02:08.524 --> 0:02:10.844 And so why are you in an apartment? 0:02:11.604 --> 0:02:15.324 Because, Nate, when I have to play until very late 0:02:15.364 --> 0:02:17.204 and we have to tape and then I have meetings 0:02:17.284 --> 0:02:20.444 right after, I need a space that is not twenty 0:02:20.444 --> 0:02:21.964 minutes away but actually right here. 0:02:23.084 --> 0:02:23.364 Nice. 0:02:23.924 --> 0:02:27.084 Well, one thing you might notice too, pertain to this 0:02:27.164 --> 0:02:30.964 topic is that lately, for people who know what they're doing, 0:02:31.444 --> 0:02:35.004 hotel rooms have gotten cheaper in Las Vegas. I was 0:02:35.044 --> 0:02:38.284 able to stay at some places in summer for I know, 0:02:38.324 --> 0:02:41.364 maybe fifty or seventy five dollars less a night than 0:02:41.404 --> 0:02:42.644 I would have expected to pay. 0:02:43.164 --> 0:02:45.684 Hi, it's so funny night. I'm gonna interrupt you for 0:02:45.724 --> 0:02:47.124 a second, I thought you were going to end that 0:02:47.164 --> 0:02:49.484 sentence at for fifty or seventy five dollars. 0:02:49.564 --> 0:02:51.804 I'm like, whoa, whoa, whoa? Where are you like? I 0:02:51.844 --> 0:02:54.004 say like, I say it, I stay, like where you stay? 0:02:54.324 --> 0:02:59.004 I say it the middle plus chier plus right, I'm 0:02:59.084 --> 0:03:01.524 not And there are places you can stay, you know, 0:03:01.884 --> 0:03:06.324 with comps and stuff for dollars a night, right or less. 0:03:06.564 --> 0:03:12.444 In fact, I I was booking hotels for the World Series, right, 0:03:13.204 --> 0:03:17.164 and I noticed that there was a lot of availability 0:03:17.364 --> 0:03:22.484 at relatively low prices, and so therefore I actually took 0:03:22.524 --> 0:03:26.644 some money out of like some small gambling related stocks 0:03:26.684 --> 0:03:29.284 and put them in Walmart instead. I'm like, oh, it 0:03:29.364 --> 0:03:31.284 seems like the economy is And I don't usually do 0:03:31.324 --> 0:03:34.404 that kind of active trading thing, right, but it felt 0:03:34.404 --> 0:03:37.764 like this is a pretty unmistakable signal that demand is weakening. 0:03:37.764 --> 0:03:40.524 I know those prices well enough where like I want 0:03:40.564 --> 0:03:43.004 in particular hotels, but you're getting two hundred and twenty 0:03:43.004 --> 0:03:45.004 dollars a night for a luxury hotel without any comps 0:03:45.084 --> 0:03:47.964 or discounts, and I'm like, Okay, something is going wrong 0:03:48.484 --> 0:03:49.004 in Vegas. 0:03:49.164 --> 0:03:51.764 Yeah, and let's just say that there has been this 0:03:51.844 --> 0:03:55.084 news cycle of like, is Vegas dead? And this is 0:03:55.124 --> 0:03:58.444 a conversation that comes up every so often. Right, this 0:03:58.524 --> 0:04:00.764 is not the first time that people have been having 0:04:00.764 --> 0:04:03.884 this conversation, but people have been saying, you know, there 0:04:03.924 --> 0:04:06.084 have been a lot of reports say, oh, visitations down, 0:04:06.124 --> 0:04:08.684 this is down, this is down, Vegas is dying, Vegas 0:04:08.724 --> 0:04:11.004 is over, blah bla bla. So that's kind of framing 0:04:11.004 --> 0:04:13.964 the discussion. That's what we're going to be talking about. 0:04:14.124 --> 0:04:18.124 Is Vegas actually you know, in a rough spot right now, 0:04:18.204 --> 0:04:20.484 and we're going to actually be looking at the data 0:04:20.604 --> 0:04:25.084 and using a more risky business lens as opposed to vibes. 0:04:25.524 --> 0:04:28.364 And you know, man, the vibes just felt off night. 0:04:28.444 --> 0:04:30.204 All right, let's get into some numbers. 0:04:30.804 --> 0:04:33.484 Okay, So according to the Nevada Independent, I am doing, 0:04:33.524 --> 0:04:36.004 by the way, Nevada, let's Nevada. 0:04:36.124 --> 0:04:38.524 Let's get you clearnuncing it correctly. 0:04:38.364 --> 0:04:39.844 For Nevada Independent. 0:04:40.044 --> 0:04:42.724 For the Nevada Independent, I'm doing an event by the 0:04:42.764 --> 0:04:46.804 way for them, I guess the weekend after next. I'm 0:04:46.804 --> 0:04:49.764 a big supporter of their independent journalism. So you'll see 0:04:49.764 --> 0:04:51.444 me there at IndieFest. 0:04:51.484 --> 0:04:52.244 I believe it's called. 0:04:52.764 --> 0:04:56.484 However, September saw the Strip record its first monthly gaming 0:04:56.524 --> 0:05:00.244 revenue decline since May. But the nearly five point five 0:05:00.244 --> 0:05:03.364 percent dip wasn't a surprise Las Vegas Boulevard's two largest 0:05:03.364 --> 0:05:07.124 resort operators or shall they spin? Sorry, that last phrase 0:05:07.204 --> 0:05:09.844 was mine. You know, a five point five five percent 0:05:10.404 --> 0:05:15.084 drop is pretty material. The Gaming Control Board I'm now 0:05:15.124 --> 0:05:17.364 cooting it again, said Wednesday that Strip game more when 0:05:17.404 --> 0:05:19.884 you fell to six hundred and eighty seven point eight 0:05:19.924 --> 0:05:23.404 million last month, not bad, primarily because of a forty 0:05:23.404 --> 0:05:27.844 two point seven percent decline in high end baccarat income. Yeah, 0:05:27.844 --> 0:05:29.804 so baccarat is a game. Have you played Brocrat? 0:05:29.844 --> 0:05:30.004 Ever? 0:05:30.444 --> 0:05:32.484 No, I've never played baccera. I know a lot about 0:05:32.524 --> 0:05:34.564 it because, as you know, I'm working on a book 0:05:34.564 --> 0:05:37.484 about cheating, and Baccara is a very popular game to 0:05:37.564 --> 0:05:42.044 cheat because it is a game where the casino has 0:05:42.124 --> 0:05:45.804 one of the lowest edges and if you are even 0:05:45.804 --> 0:05:48.684 if you're not cheating, if you're a skilled baccara player, 0:05:48.964 --> 0:05:52.244 it's where you can make the most money technically speaking, 0:05:52.484 --> 0:05:55.684 But if you're cheating, then you know sky's the limit. 0:05:56.004 --> 0:05:59.604 But this is the game where even though the casino 0:05:59.764 --> 0:06:03.244 has the smallest edge, they actually make the most amount 0:06:03.324 --> 0:06:07.164 of money because this is what the high rollers come for, right, 0:06:07.244 --> 0:06:10.004 the big whales that come from Asia's Baca is their 0:06:10.084 --> 0:06:13.124 game of choice. So even though the edges might be 0:06:13.164 --> 0:06:16.644 smaller for the house, the total volume makes a huge 0:06:16.644 --> 0:06:20.524 difference because when you have people betting, you know, thousands 0:06:20.524 --> 0:06:22.644 and tons of thousands and hundreds of thousands of dollars 0:06:22.684 --> 0:06:24.084 at hand, Shit gets real. 0:06:25.444 --> 0:06:26.924 No what I mean the house that just like zero 0:06:26.924 --> 0:06:31.084 point ninety percent. Baccarat is a funny game. I actually 0:06:31.164 --> 0:06:34.884 play in the pits and often maybe maybe maybe twice 0:06:34.924 --> 0:06:37.284 a year, there'll be a friend when I'm out in 0:06:37.324 --> 0:06:38.924 Biga for something else, like, oh, let's go do this, 0:06:39.044 --> 0:06:41.564 and like, you know, you're geting a little expected value, 0:06:41.564 --> 0:06:44.644 but you get you get drinks and helps your rewards points. 0:06:44.964 --> 0:06:47.004 I think once or twice a year is the optimum outcome, 0:06:47.044 --> 0:06:47.644 at least for me. 0:06:47.884 --> 0:06:48.044 Right. 0:06:48.364 --> 0:06:52.644 Bacarat is interesting in that there's no actual decision made 0:06:52.644 --> 0:06:56.244 by the player. Whereas craps you roll the dice a blackcheck, 0:06:56.364 --> 0:06:59.844 you have decisions to make right. So in principle, if 0:06:59.844 --> 0:07:03.444 you're playing those games optimally, the house edge, depending on 0:07:03.484 --> 0:07:06.284 the rules set, can be lower. But anytime you give 0:07:06.284 --> 0:07:09.844 players a decision, they tend to make bad gambling bets 0:07:09.884 --> 0:07:13.684 and or otherwise play non optimally. Whereas Bacarunt, it's just 0:07:13.764 --> 0:07:16.044 you know, you slide a lot of money in and 0:07:16.844 --> 0:07:19.324 you have a coin flip that slightly waited against you. 0:07:19.364 --> 0:07:20.204 But yeah, it's a. 0:07:20.204 --> 0:07:24.404 Game for pure gambling d Jens pretty much. However, it's 0:07:24.444 --> 0:07:26.964 not just a high end that's being affected here again 0:07:26.964 --> 0:07:35.004 back to Nevada Independent meanwhile, stripped that volume philt Nevada, Nevada, Nevada, 0:07:35.084 --> 0:07:36.084 Sierra Nevada. 0:07:36.404 --> 0:07:38.164 It's a Sierra Nevada mountains. 0:07:38.204 --> 0:07:42.004 Meanwhile, visitor volume fell for the ninth street month according 0:07:42.004 --> 0:07:45.244 to Las Vegas Convention, and this is authority declining eight 0:07:45.244 --> 0:07:47.884 point eight percent, with justinner three point one million visitors 0:07:47.924 --> 0:07:50.564 still a lot coming in September. Through nine months, Las 0:07:50.604 --> 0:07:53.884 Vegas visitation is down eight percent from twenty twenty four, 0:07:53.924 --> 0:07:57.564 which includes double digit declines in July and June, the 0:07:57.644 --> 0:07:59.364 events that we were out there, or I was, at 0:07:59.444 --> 0:07:59.804 least for. 0:07:59.724 --> 0:08:00.484 The World Series. 0:08:00.684 --> 0:08:04.564 Yeah, so last week a lot of the gaming companies 0:08:05.684 --> 0:08:10.164 reported their quarterly earnings and they didn't. 0:08:09.884 --> 0:08:10.564 Do that well. 0:08:10.644 --> 0:08:14.644 Right, There wasn't good news, especially for Caesar's but also 0:08:14.684 --> 0:08:19.764 for MGM, and we see them blaming a lot of things. So, 0:08:20.044 --> 0:08:24.404 first of all, the MGM call was among the most 0:08:24.564 --> 0:08:27.644 eyebrow raising that I've heard, and didn't listen to the 0:08:27.644 --> 0:08:30.284 whole call, but I saw kind of some excerpts and 0:08:30.364 --> 0:08:33.684 the transcript, and this is very rare, but the president 0:08:34.124 --> 0:08:38.684 and CEO, Bill Hornbuckle, actually said shame on us. This 0:08:38.764 --> 0:08:43.044 is a direct quote because he attributed some of their declines. 0:08:43.084 --> 0:08:45.164 So some of it He's like, oh, yes, factors, you know, 0:08:45.524 --> 0:08:48.204 summer was bad for everyone, all this stuff, blah blah blah. 0:08:48.524 --> 0:08:53.124 Spirit Airlines has limited flights, which is true. Visitation is 0:08:53.164 --> 0:08:56.364 down ate, as you just said. He said, but he 0:08:56.484 --> 0:09:01.484 said that they basically lost the plot on pricing at 0:09:01.604 --> 0:09:05.764 MGM properties, and we talked about that on the show 0:09:06.284 --> 0:09:09.724 before when we were talking about you know, yes you 0:09:09.724 --> 0:09:12.204 can get some room deals. But then there was kind 0:09:12.244 --> 0:09:15.404 of an infamous thing at Aria someone posted a twenty 0:09:15.444 --> 0:09:19.564 six dollars bottle of Fiji water. When they saw that 0:09:19.604 --> 0:09:22.484 they were doing this, like you know, flexible pricing where 0:09:22.524 --> 0:09:25.364 there were surge pricing basically at some times of day, 0:09:25.724 --> 0:09:27.884 and your bottle of Fiji could actually cost twenty six 0:09:27.964 --> 0:09:31.164 dollars apparently at Excalibur. I learned this from the earnings call. 0:09:31.204 --> 0:09:33.844 I didn't know because I haven't been an Excalibur for 0:09:34.204 --> 0:09:36.804 a while. I have been there for events, and I've 0:09:36.844 --> 0:09:39.484 been there for what's what's it called that dinner with 0:09:39.524 --> 0:09:42.604 like the fighting, you know, the where you with your hands, 0:09:42.604 --> 0:09:45.924 whatever it's called. Anyways, I've been to Excalver for those things, 0:09:45.924 --> 0:09:49.364 but I've never had Starbucks there. And apparently the coffee 0:09:49.404 --> 0:09:53.644 at Starbucks was started at twelve dollars anyway, So he 0:09:54.164 --> 0:09:57.284 said that they have now tried to price correct because 0:09:58.044 --> 0:10:02.364 I'm quoting now quoting Hornbuckle quote, we should have been 0:10:02.484 --> 0:10:06.404 more sensitive to the overall experience. And then he continues, 0:10:06.444 --> 0:10:08.204 you can't have a twenty nine dollar room and at 0:10:08.244 --> 0:10:12.044 twelve dollars coffee. We lost control of the narrative over 0:10:12.084 --> 0:10:14.684 the summer. I think we would all agree to that 0:10:14.844 --> 0:10:17.484 in hindsight. Now, in the moment people were trying to 0:10:17.484 --> 0:10:20.204 tell them right, there was no in hindsight, like these 0:10:20.244 --> 0:10:22.884 things were going viral. People were saying the prices on 0:10:22.924 --> 0:10:27.524 the strip have become outrageous. Now I am a Las 0:10:27.604 --> 0:10:30.004 Vegas resident. You know, I don't. 0:10:29.884 --> 0:10:30.564 Call a vegan. 0:10:30.724 --> 0:10:33.484 I'm a vegan. I'm a vegan baby spelled the same 0:10:33.484 --> 0:10:36.124 way as vegan, except with a capital letter, which is 0:10:36.244 --> 0:10:40.844 very confusing to me. But so as a resident, I don't, 0:10:41.004 --> 0:10:42.484 you know, I don't feel it as much because I 0:10:42.484 --> 0:10:44.644 don't really go to the strip for stuff. Right, I'm 0:10:44.644 --> 0:10:47.044 on the strip when I'm playing poker, and that's it, right, 0:10:47.124 --> 0:10:49.404 I don't. I don't actually do that much here. But 0:10:49.604 --> 0:10:52.324 even for me, like I realized that a lot of 0:10:52.364 --> 0:10:55.324 the garages have stopped offering free parking, which means that, 0:10:55.404 --> 0:10:59.404 you know, I won't go there for dinner anymore. Usually 0:10:59.404 --> 0:11:02.404 there's like, oh, if you're a Nevada resident, you get 0:11:02.524 --> 0:11:05.964 like two hours free or something like that. But come on, guys, right, 0:11:06.324 --> 0:11:10.364 that's something, but it's still kind of annoying. So there 0:11:10.404 --> 0:11:13.524 are things that even affect locals. And I think people's 0:11:13.524 --> 0:11:17.444 habits started changing and people got really mad, and there 0:11:17.524 --> 0:11:20.484 was a segment of the population that was like, you know, 0:11:20.884 --> 0:11:23.564 fuck you, Like I don't want to. And I think 0:11:23.604 --> 0:11:27.644 this is crucial because sure, like you come to Vegas. Like, 0:11:27.684 --> 0:11:29.764 you know, you're kind of a sucker when you're gambling, 0:11:30.044 --> 0:11:32.244 but you have fun. You don't want to be treated 0:11:32.324 --> 0:11:35.004 like a sucker. You want to be treated like a 0:11:35.084 --> 0:11:39.524 human being who has a functioning mind and understands when 0:11:39.524 --> 0:11:42.444 they're being taken advantage of. It's a horrible feeling, that 0:11:42.444 --> 0:11:44.564 feeling of like knowing that you're being taken advantage of, 0:11:44.604 --> 0:11:46.764 you're like, you know what, fuck you don't do that 0:11:46.804 --> 0:11:47.044 to me. 0:11:48.244 --> 0:11:51.404 No, And look, if you're an experienced traveler, then there 0:11:51.444 --> 0:11:55.724 are various things you can do. Right number one, if 0:11:55.764 --> 0:11:57.284 you're in the I don't want to sound like a shill. 0:11:57.324 --> 0:12:00.564 If you're in these casino comp programs, even at the 0:12:00.604 --> 0:12:04.204 lowest tier, they typically give you lower rates. Also, my 0:12:04.324 --> 0:12:09.204 finding is that like Vegas, hotel prices are quite spiky 0:12:09.604 --> 0:12:13.364 based on conventions or the events that are held near 0:12:13.364 --> 0:12:14.244 the major properties. 0:12:14.324 --> 0:12:14.484 Right. 0:12:14.644 --> 0:12:17.764 If there's something big Allegiance Stadium, Ortemobile Arena right, that 0:12:17.844 --> 0:12:21.204 might affect like Mandelaid Bay prices across the bridge from 0:12:21.204 --> 0:12:23.204 the Raiders' games, right, Or if there's a big conference 0:12:23.244 --> 0:12:26.604 at Venetian it might be more expensive. So my recommendation 0:12:26.764 --> 0:12:30.804 is that like you know, you price shot pretty aggressively. 0:12:31.084 --> 0:12:33.084 Don't just have like one property or loyal to you 0:12:33.124 --> 0:12:38.084 can usually find good deals at least some options, you know. 0:12:38.164 --> 0:12:40.284 But also like, yeah, there are little hacks where like 0:12:40.724 --> 0:12:45.764 you will notice sometimes experienced Vegas travelers the day they 0:12:45.804 --> 0:12:49.324 get in will come in with giant twenty four packs 0:12:49.364 --> 0:12:53.084 of water and twenty four packs of Modello beer and 0:12:53.124 --> 0:12:56.324 snacks and whatever else, right, because the Walgreens on the 0:12:56.324 --> 0:13:00.604 step have relatively normal prices or whatever, right, whereas in 0:13:00.644 --> 0:13:02.884 the casinos it's a lot more right, they're even like 0:13:02.884 --> 0:13:06.404 little miniacs. If you feel like just walking around, maybe 0:13:06.444 --> 0:13:09.564 you're waiting for a poker tablet, get up and have 0:13:09.604 --> 0:13:11.844 a drink or something. You can go to like the 0:13:11.924 --> 0:13:15.844 little kiosks where they sell supplies, right, and those are 0:13:15.884 --> 0:13:17.164 like a little bit cheap, and if you go to 0:13:17.204 --> 0:13:20.444 the bar, right, but just for little supplies and stuff. 0:13:20.524 --> 0:13:20.724 Right. 0:13:20.764 --> 0:13:23.844 You know, I'm person who's definitely of means, right, but 0:13:23.964 --> 0:13:26.324 like it's almost a matter of spite. Sure, let's say 0:13:26.324 --> 0:13:29.244 I need some fucking like socks because I'd never be 0:13:29.364 --> 0:13:32.244 enough socks, oh ya. And the Vegas trips always stay 0:13:32.284 --> 0:13:33.924 longer than I thought, And I go through the socks. 0:13:33.764 --> 0:13:36.604 Right, you know that's really funny, Nate, I'm learning something 0:13:36.644 --> 0:13:37.124 new about you. 0:13:37.204 --> 0:13:38.004 I need to get this. 0:13:39.364 --> 0:13:41.804 I'm just gonna go across the street to the Target 0:13:42.244 --> 0:13:44.204 or walk Greens and buy socks because even though if 0:13:44.244 --> 0:13:46.924 I'm like being hyper rational about like, yes, it's probably 0:13:46.924 --> 0:13:48.564 worth it paying fucking thirty bucks for a pair of 0:13:48.604 --> 0:13:50.804 socks in the gift shop, like it just defends. 0:13:50.564 --> 0:13:51.844 Me, of course on some level. 0:13:51.884 --> 0:13:55.644 And you know, look, the notion of Vegas is to 0:13:55.724 --> 0:13:59.484 some extent like the easy life. Right, things are easy 0:13:59.524 --> 0:14:01.884 and you're feeling good and casual about things, and that 0:14:02.004 --> 0:14:04.844 might let you you spend a little bit more on 0:14:05.004 --> 0:14:08.364 indulgences like gambling for example, or certainly you know, if 0:14:08.364 --> 0:14:10.244 you go to like the high limit somewhere, they may 0:14:10.244 --> 0:14:12.004 compt your drink because you're gambling big. But if not 0:14:12.324 --> 0:14:13.804 the price of wine there's going to be a little 0:14:13.804 --> 0:14:18.804 bit more expensive potentially. But like the the notion is 0:14:18.844 --> 0:14:21.164 like kind of lower tier of like, oh, I can 0:14:21.204 --> 0:14:22.964 have a room for fifty bucks. Yeah, if you're if 0:14:23.004 --> 0:14:26.204 you're if you're paying every type of resort fee and 0:14:26.284 --> 0:14:31.724 every water or beer costs a lot, you know, the 0:14:31.724 --> 0:14:34.684 the load to middle end restaurants on the Strip are 0:14:34.724 --> 0:14:38.204 are getting cycled out in favor of kind of high 0:14:38.284 --> 0:14:40.524 end concepts. 0:14:40.044 --> 0:14:43.044 And things like that. Right, there are options off. 0:14:42.884 --> 0:14:45.484 The strip that by the way, Nate, that's another that's 0:14:45.524 --> 0:14:49.004 another recession indicator, both in Vegas and in New York 0:14:49.044 --> 0:14:51.684 when you see like all of these incredibly high end 0:14:51.724 --> 0:14:55.884 steakhouses open and you're like, uh uh, you know we're 0:14:55.884 --> 0:14:57.684 heading for a crush. 0:14:57.844 --> 0:15:02.204 No, but like it partly reflects like some degree of 0:15:02.364 --> 0:15:04.804 greed where you're optimized. You know, people a lot of 0:15:04.804 --> 0:15:09.564 people roughly speaking, have like fixed budgets for expenses. I'm 0:15:09.604 --> 0:15:12.404 gambling it they're going to spend in Las Vegas. Right, 0:15:12.404 --> 0:15:13.724 maybe you have one big night out that you put 0:15:13.764 --> 0:15:15.484 in a credit card, but like, you know, I feel 0:15:15.484 --> 0:15:17.844 like I can afford to lose five hundred bucks on 0:15:17.924 --> 0:15:19.964 blackjack and maybe you know you're probably gonna lose most 0:15:20.004 --> 0:15:21.604 of the time, or bucca ut whatever else. Right, and 0:15:21.644 --> 0:15:25.804 you're paying like thirteen dollars for a bottle of Fiji 0:15:25.964 --> 0:15:29.004 and then and then your dinner, you're paying you know, 0:15:29.084 --> 0:15:31.724 New York prices plus thirty percent. Again another hack if 0:15:31.724 --> 0:15:33.604 you know it is like the ubers are pretty cheap 0:15:33.604 --> 0:15:35.564 in Las Vegas. If you don't have a car, go 0:15:35.604 --> 0:15:39.084 off strip. The food can be remarkably good and remarkably cheap, right, 0:15:39.124 --> 0:15:42.044 But like, but you're not creating this ease of like 0:15:42.084 --> 0:15:43.764 I'm going to have a place to place and there's 0:15:43.764 --> 0:15:45.164 some good deals and I'm having fun. 0:15:45.644 --> 0:15:47.644 Just the whole attitude seems kind of short sighted. 0:15:47.844 --> 0:15:51.364 It's incredibly short sighted. And I think that all of 0:15:51.404 --> 0:15:56.284 these you know, corporations are looking to maximize revenue, right, 0:15:56.604 --> 0:16:00.324 and they sometimes will become short sighted to do that. 0:16:00.404 --> 0:16:03.364 And I think that for Vegas, there was a really 0:16:03.404 --> 0:16:08.804 important inflection point during COVID, right where Vegas shut down, 0:16:08.844 --> 0:16:13.964 the strip shut down, properties cut staffing by huge amounts, right, 0:16:14.364 --> 0:16:16.444 there was no room service for a long time, but 0:16:16.484 --> 0:16:19.804 they even cut you know, valet, they cut everything, and 0:16:20.244 --> 0:16:22.444 all of a sudden, their profit margins were much better, 0:16:22.684 --> 0:16:24.924 and they were like, oh, this is good, this is 0:16:24.964 --> 0:16:27.724 actually great. And then they're like, wait, maybe we can 0:16:27.804 --> 0:16:30.644 keep doing this. And then also during the pandemic, when 0:16:30.684 --> 0:16:33.724 they were when occupancy was like really really low, they 0:16:33.804 --> 0:16:36.884 cut rates and they saw something they didn't like. So 0:16:36.924 --> 0:16:39.564 what happened at properties like Caesar's and this is something 0:16:39.844 --> 0:16:42.964 you know, I was here if you remember, for about 0:16:43.044 --> 0:16:47.484 six months when Vegas was fully reopening, to report on that, 0:16:48.604 --> 0:16:51.364 and so I learned kind of a lot about what 0:16:51.444 --> 0:16:54.404 was going on on the ground and what we saw 0:16:54.604 --> 0:16:58.604 in places like Caesar's. And I'm quoting Caesar's because I 0:16:58.644 --> 0:17:01.084 actually had I talked to a lot of people at 0:17:01.084 --> 0:17:04.764 Caesar's who described this to me. By people, I mean 0:17:04.804 --> 0:17:08.284 staff like dealers, et cetera, they had very negative experiences 0:17:08.324 --> 0:17:10.724 because the prices had gotten so low that they were 0:17:10.764 --> 0:17:13.804 getting a customer that they didn't want right. They were 0:17:13.804 --> 0:17:17.364 getting people who were mistreating the dealers, who were not 0:17:17.644 --> 0:17:23.044 treating hotel rooms correctly, who were causing disturbances, who weren't 0:17:23.044 --> 0:17:26.524 tipping like it was not the experience that they wanted. 0:17:26.804 --> 0:17:29.244 And so there were two things that happened right at 0:17:29.284 --> 0:17:32.004 the same time. We had the staffing meaning you know, 0:17:32.124 --> 0:17:35.644 higher margins, staffing reductions meaning higher margins. And then we 0:17:35.804 --> 0:17:38.964 also had this, uh oh, like if we reduce room 0:17:38.964 --> 0:17:42.164 prices too much, things are starting to get bad. So 0:17:42.684 --> 0:17:46.404 what ends up happening They start raising prices on rooms 0:17:46.444 --> 0:17:48.604 and on other things so that they can get their 0:17:48.684 --> 0:17:52.564 quote unquote target customers. Right, we don't want the rebel rousers. 0:17:52.924 --> 0:17:55.404 We don't want the people who are you know, who 0:17:55.444 --> 0:17:58.444 are yelling at the dealer and throwing things. We want 0:17:58.484 --> 0:18:02.684 a slightly higher caliber of clientele. And at first kind 0:18:02.684 --> 0:18:05.244 of that that works, right, they actually get exactly what 0:18:05.284 --> 0:18:08.484 they want, and occupancy rates are going up because people 0:18:08.884 --> 0:18:11.924 have been cooped up during COVID, and so it's this 0:18:12.044 --> 0:18:15.044 amazing rebound mountain because everyone wants to come and gamble 0:18:15.084 --> 0:18:18.044 and socialize in all of these things. But crucially, they 0:18:18.044 --> 0:18:20.084 don't staff back up. And now I'm talking about all 0:18:20.244 --> 0:18:23.044 of the properties because they're like, wait, we can operate 0:18:23.044 --> 0:18:26.684 with fewer people. And so I don't actually know if 0:18:26.844 --> 0:18:30.244 the numbers are one hundred percent accurate here, but my 0:18:30.484 --> 0:18:33.644 feeling is that no properties actually went back to pre 0:18:33.684 --> 0:18:37.924 COVID staffing even today, that everyone that even as they 0:18:38.124 --> 0:18:41.604 ramped back up, it's still not at one hundred percent 0:18:41.684 --> 0:18:44.364 of what it was. I might be wrong. I'm saying 0:18:44.404 --> 0:18:47.004 this is what I think based on kind of the 0:18:47.004 --> 0:18:49.484 research I've done. I know that this is true at 0:18:49.644 --> 0:18:52.604 some properties. When you say all, you know, that's that 0:18:52.724 --> 0:18:55.364 kind of sweeping statement might be incorrect. So this is 0:18:55.404 --> 0:18:58.684 why I'm caveating it. But in general properties have not 0:18:58.804 --> 0:19:01.724 staffed back up to the same levels, and then what 0:19:01.884 --> 0:19:03.924 ends up happening is they try to They're like, ooh, 0:19:04.004 --> 0:19:07.404 it worked, like we have high occupancy and we raise prices. 0:19:07.484 --> 0:19:10.164 Let's raise prices a little more. Oh, you're telling us 0:19:10.164 --> 0:19:12.204 that we shouldn't do this, that people are feeling exploited, 0:19:12.244 --> 0:19:14.804 but they're still coming. Well, there's a lag right, there's 0:19:14.844 --> 0:19:17.404 a lagging effect. And this is where the short sighted 0:19:17.404 --> 0:19:19.964 this comes in, Like people will tolerate it for a 0:19:19.964 --> 0:19:23.004 little bit, but then you start putting prices up even more, 0:19:23.044 --> 0:19:26.284 being like, oh, where's you know, maybe they're totally priced 0:19:26.284 --> 0:19:29.244 and sensitive. Hahaha, let's do this, let's do that. And 0:19:29.284 --> 0:19:32.084 then suddenly it's like you know, the frog and the 0:19:32.204 --> 0:19:35.564 boiling water, right, you're raising the heat a little bit, 0:19:35.804 --> 0:19:39.244 and all of a sudden, your customers are like, what 0:19:39.324 --> 0:19:41.724 the hell, right, look at my room rates, look at 0:19:41.724 --> 0:19:45.004 my water, look at my coffee, and you're not treating 0:19:45.004 --> 0:19:46.764 me as well. But because you don't have I have 0:19:46.804 --> 0:19:48.964 to wait ten minutes at the valet, because you didn't 0:19:49.004 --> 0:19:51.924 hire back an fla like, the experience is worse too, 0:19:52.364 --> 0:19:55.524 what the fuck? And that is an appropriate reaction. So 0:19:55.564 --> 0:19:57.044 I think that's what we're now saying. 0:20:00.484 --> 0:20:02.364 And we'll be right back after this break. 0:20:17.204 --> 0:20:19.884 Now, you know, in terms of Vegas as a kind 0:20:19.884 --> 0:20:23.164 of barometer for the rest of the country, because it 0:20:23.244 --> 0:20:26.844 often is, right like when there are bubbles, when we're 0:20:26.844 --> 0:20:30.924 about to hit a recession, like when when things are 0:20:30.964 --> 0:20:34.004 starting to get out of hand, Vegas is often the 0:20:34.004 --> 0:20:36.844 place where you start feeling some of those things first. 0:20:37.604 --> 0:20:40.604 It's human driven, right, It's a service economy, and it's 0:20:40.684 --> 0:20:45.724 driven by kind of trends in general in individual habits. Right, 0:20:45.964 --> 0:20:48.724 how are people traveling, what are they spending their money on, 0:20:48.764 --> 0:20:51.404 what are they spending discretionary income on, how are they 0:20:51.724 --> 0:20:55.724 kind of spending their leisure time? All of these things, 0:20:55.884 --> 0:20:58.644 Vegas will start feeling that first. And so you know, 0:20:58.684 --> 0:21:00.644 at the beginning of this episode, I've kind of made 0:21:00.684 --> 0:21:04.204 a joke about high end steakhouses being a recession indicator. 0:21:04.604 --> 0:21:07.004