Looking in on: Gaming

Remember the days when it was all about casino profit?

Last week executives with the Strip's dominant operator, bursting with pride, announced that 58 percent of the company's revenue the first three months of this year was generated from nongaming sources, up three percentage points from a year ago.

Conveniently, spectacular profits in entertainment, food and beverage departments diverted attention from MGM Mirage's surprisingly lackluster casino results.

It's not spin but a company simply doing its job, bosses say. That nongaming percentage is expected to rise as the company outspends the competition with new attractions that don't involve gambling.

"The market for this audience is far greater than the gaming audiences, and we've found it to be as profitable," President and Chief Financial Officer Jim Murren said. "Every time we open up a restaurant or lounge we get a positive impact."

That's why the company is busy dolling up the Luxor and other properties such as Monte Carlo, New York-New York and Treasure Island. The oldest of those, Luxor, is in line for a big makeover of its bars and clubs in preparation for next year's Cirque du Soleil-themed magic act fronted by Criss Angel.

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The American Gaming Association last week offered new insight into its long-standing polling data showing the country's widespread acceptance of gambling. For the first time, the trade group's pollster asked respondents what appealed to them most about casinos. Twice as many respondents (49 percent) said the overall casino experience - including food, shows and entertainment - was more fun than gambling (23 percent).

"The way in which people are relating to gambling is so different than it was a quarter century ago," pollster Peter Hart said. Casinos have become "an important part of their entertainment dollar and their evening." Not only are nongambling activities less controversial, but are becoming more important to the bottom line. Problem is, states already uncomfortable with gambling actually encourage slot joints by charging such high tax rates that operators can't afford to build the more complete "entertainment experience" that customers want, association President Frank Fahrenkopf said.

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PBS' Frontline on Wednesday will explore abuses of the Patriot Act, the post-9/11 legislation giving law enforcement new tools to seize phone records and other privately held information. Front and center in the privacy debate is the FBI's demand for records on tens of thousands of hotel guests in Las Vegas in the days leading up to New Year's Eve 2003. Initiated over vague threats of a terrorist attack, the probe remains a sore subject with casinos, for which customer privacy is an economic principle rather than just a marketing slogan. Even so, this latest revisiting of the probe by Frontline doesn't appear to be generating any fresh outrage among casinos.

MGM Mirage spokesman Alan Feldman, who was interviewed for the documentary, called the piece "a bit anticlimactic" given that a Justice Department audit in March detailed improper collection of sensitive information in nonemergency situations, among other FBI misdeeds. The FBI's Las Vegas office says it held the information closely and didn't use National Security Letters, which don't require a court order, to obtain information.

For casinos, the question of whether the FBI "demanded" or simply "requested" customer lists, or whether casinos were issued National Security Letters, is moot.

"Our industry exists under a privileged license and part of that license requires us to follow all laws," Feldman said. "When a government comes to us with what their interpretation of the law is, we've got to say, 'OK.' There's very little we can do."

If casinos seem under the government's enforcement thumb, little wonder. No other industry is bound to regulations requiring it to conduct business so as not to bring embarrassment or disrepute to the state.