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Tuesday, July 28, 1998
COLUMN: Jon Ralston
L.A. paper airs Vegas queries
Thanks to the Los Angeles Times, the question now is not just before Las Vegas but in front of the world: Despite the brilliant rays of optimism shining from gaming industry pollyannas, is the sun setting on the remarkable prosperity that has lit up Las Vegas for decades?
In a Page One story Monday, the national newspaper wondered whether the economic softness now afflicting the center of the casino universe is yet another hiccup or a death gasp foretold. Headlined "Las Vegas Tries to Build Out of Its Slump," the story immediately characterized the city's dilemma in blunt terms by stating that the Strip is "adding more than 12,000 rooms in a city whose economy has gone flat."
The story, to an objective observer, or perhaps even a macroeconomics student at USC, presents the startling dichotomy now occurring in a boomtown trying to avoid the bust: Spectacular new projects with thousands of hotel rooms are being built while gaming and sales tax revenues are proportionately declining, when airlines have decided Las Vegas isn't what it used to be and when the industry faces more threats to its bottom line than at any time.
"For the first time in nearly a decade of explosive growth, the bloom may be off this desert rose," wrote reporter Maria L. LaGanga. She also pointed out that the gamers' unquenchable desire to reproduce in new markets, presupposing that other jurisdictions would beget even more Las Vegas visitors, has not been born out.
The piece contains the requisite rhetorical gushing from the locals about the new projects. Mirage Resorts' Alan Feldman offered that Bellagio is as indescribable as a Beethoven masterwork, while Las Vegas Sands' Bill Weidner painted the Venetian as "what Las Vegas will become."
What the story does, too -- and what few in Nevada have acknowledged yet -- is to detail the inextricable nexus between the gaming industry's performance and the state budget. Taxation Department boss Michael Pitlock pointed out that so far lower welfare and Medicaid caseloads have stemmed the flow of red ink. But he added: "If the revenue trends continue, we could see things tighten up toward the end of this fiscal year ... and in 1999, the Legislature will face some serious choices."
LaGanga also reported on the airline problem, including figures that show the number of passengers moving through McCarran has declined almost 2 percent this year. Some hope that a new airline providing service to Las Vegas, which sources say may be announced as early as this week, may help.
LaGanga also raised the issue of Circus Circus adding 3,000 rooms at its eponymous property and Luxor, "without creating the excitement to bring in new tourists." But Circus President Glenn Schaeffer joined the optimistic chorus: "During the most prosperous decade in the history of the American experience, Las Vegas is the most successful city in terms of growth."
And, yet, the atmosphere seems more poisonous than about a decade ago, when the doomsayers greeted The Mirage not as the beginning of the new era of megaresorts but as a disaster waiting to happen because it cost so much. Now, as projects with twice the price tag of The Mirage come on line, there are the prospects of Indian casinos in California, a more hostile federal government than ever before and a rumbling anti-gaming sentiment at home.
More and more observers think the continuation of the "build it and they will come" philosophy might finally produce a field of nightmares. As Feldman pointed out, declarations that the town is overbuilt have been made at various junctures in the state's history. But the dire predictions might actually come true someday. The question, as the L.A. Times story mused, is whether it will be sooner, rather than later.
Jon Ralston publishes "The Ralston Report," a political newsletter. His column appears Sunday, Tuesday, and Thursday.
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