Plenty of Nevadans rolled their eyes in response to casino magnate Steve Wynn’s closed-door conversations with leading legislators and with Gov. Brian Sandoval on Wednesday in Carson City — meetings at which he reportedly warned the economics of Nevada’s gaming industry are “not healthy,” and that future growth of the big players here will thus occur in other markets.
The cynics asked whether they should shed tears for Mr. Wynn, who’s hardly down to his last million-dollar art treasure, implying these are predictable cries of poverty from an industry that’s willing to pay higher tax rates elsewhere while issuing veiled threats that Reno and Las Vegas could become ghost towns if taxes are raised here.
We weren’t in those meetings, and those who were aren’t talking. But does anyone really think the boom times are back?
Yes, Mr. Wynn is a businessman who has never been shy about lobbying for his own interests. And no, it’s not credible to claim that gaming has invested its last million in Las Vegas. Major arena, retail and resort projects are being planned.
But whether you’d vote Mr. Wynn prom king or not, he didn’t get where he is by misreading the numbers. If Las Vegas companies are reporting healthy bottom lines because they’re doing well in Macau, where do you think they’ll re-invest and expand?
Airport traffic and visitation are up from the worst of the recession years, and that’s good. But what about the handle? If occupancy rates are being maintained by low room rates and visitors who aren’t dropping big dough in the high-roller rooms — if the profit centers are now the nightclubs, concerts, restaurants and other nongaming enterprises, rather than the tables — that opens up a wider field of competition.
The model in which jurisdictions such as Massachusetts demand higher tax rates in exchange for granting near-monopoly status for one or a couple of casinos — successful so far only in the somewhat unique circumstances of Monaco — is so different that direct comparisons to Nevada are flawed. Las Vegas has enjoyed a 60-year boom precisely because the town has been wide open to casino competition, with moderate, predictable tax rates.
No, our elected officials shouldn’t merely click their heels and salute every time a casino owner trundles by. They need to do their own research, ask to see the numbers, do their own due diligence. But the political class has killed golden geese in other jurisdictions, plenty of times, simpering like an Ayn Rand character, “Oh, you businessmen always complain that one more straw will break the camel’s back, but then you always find a way to pay ...”
We wish Mr. Wynn and other gaming titans would side with a unified business lobby in demanding that lawmakers do no harm. Instead, they demand that other industries get a bigger tax bill so gaming can be left alone. That emboldens elected officials to look everywhere for new money.
Mr. Wynn, almost every business in this state is “not healthy.” Want to see a recovery? Lawmakers need to tighten their belts and set priorities to accomplish the state’s most important functions. They need to make our money go farther by reforming public employee pensions, collective bargaining, prevailing wages and construction defect litigation. They need to reduce the burdens on all businesses so companies can put people back to work. The surest, least harmful way to increase tax collections is economic growth
That should have been Mr. Wynn’s message to Carson City.