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Chris Jones

Casinos Save Private Salons

4 November 2004

NEVADA -- State gaming regulators on Wednesday asked two of Nevada's largest casinos to make like Capt. Ahab and hunt more vigorously for so-called "super whales."

Representatives from Caesars Palace and Mandalay Bay came to the Sawyer Building seeking Gaming Control Board approval to continue operating private gaming salons in their respective Strip casinos.

Both officials got what they came for, but only after board members spent several minutes chastising them for failing to meet past promises that the salons would attract more high rollers, or 'whales,' to Las Vegas rather than other international gaming destinations.

Board member Bobby Siller said he was discouraged that Caesars has only lured one new customer, and just two players overall, to its private salon during its first two years of operation. He was more upset when a Mandalay executive added her resort's private gaming area was only used 10 times by six players, all existing customers, during that same span.

"It just seems like no one is making an effort to go after this selective group," Siller said of extreme high rollers, which he dubbed super whales. "What have you been doing the last two years?"

When gaming companies in 2002 asked the state to overturn a law that required all gaming to take place in public, Siller said the casino industry indicated a pool of high-end players had been identified and was seemingly waiting in the wings to gamble privately in Nevada. Though he does not oppose salons, Siller wondered why those players have not materialized.

"It just seems like you're not holding up your end of the commitment to create new customers," Siller said.

Rosalind Krause, vice president of casino services at Caesars Palace, said her company spent $15 million developing salons that have generated casino winnings of approximately $6.4 million during closed-door play.

Despite those results, Krause said private gaming is an important amenity that keeps Caesars Palace competitive when vying for big players, even if they don't opt to play behind closed doors. Caesars is also expanding its marketing efforts in Asia, a process that could drive more players to the private gaming areas, Krause said.

Mandalay Bay Vice President and General Manager Terri Porcaro said her company is also trying to lure more high-end Asian players through its salons, though high end international play "isn't huge" at her resort, she said.

Porcaro declined to disclose financial details of Mandalay's salon.

Like Siller, board Chairman Dennis Neilander said he was disappointed by the salons' progress, though he added that external pressures have hurt high-end play throughout Las Vegas, most notably last year's severe acute respiratory syndrome and the aftermath of the Sept. 11, 2001, terror attacks.

"The regulations seem to be working," Neilander said of the 2-year-old laws that made salons possible. "Hopefully we're on the track to getting new customers."

The only other local casino with private gaming, MGM Grand, in August told the board no customers had used its private gaming areas since they opened two years ago. Still, others find long-term value in the concept.

George Smith, a Richmond, Va.-based gaming analyst with Davenport & Co., believes salons can help casinos attract or retain international players in today's increasingly competitive global gaming environment.

"There's a marketing angle there," Smith said. "That (high-end player) niche is still out there, and some people are pursuing it as they see the industry shift toward a retail, low-end slot player."

Ron Reese, a spokesman for Las Vegas Sands, said Wednesday his company has also applied to open a private salon at The Venetian, though state regulators have not ruled on that request.