Professor Elam

If there is any city that mirrors or perhaps paces popular culture in America, it’s Las Vegas.  Indeed, one could argue that the emerging ‘service’ economy is not high tech but gambling.  Ben Seigel figured this out in the late 1940s and opened the first gangland financed casino.  He oversold the ownership and the Mob had him shot-a considerable shift from today’s golden parachutes for poor CEO performance.  Still the gambling mania has spread to Atlantic City and over thirty different states in the form of low end gambling and riverboat slot machines.  Indian reservations have hit pay dirt with about a fourth of overall casino earnings.  States have gotten in the act with lotteries and muscling out private enterprise in the form of poker machines. 

Station Casinos was so sure of its future that it titled its 204 Annual Report Econ 101. Station STN and Boyd BYD cater to the local gambler in Vegas.  The Vegas population is growing, inflation is up, multiply the two together and the future seemed bright for STN and BYD.  But page C1 of the 11/16/06 WSJ details that there has been more than just a bump in the road. BYD was so disappointed in their most recent casino, they promptly sold it back to the developer and took a one time $65M loss, ouch!  Station’s reduced its 4th quarter expectations after 18 straight quarters of meeting or exceeding estimates. 

Wynn’s WYNN has been touted as one of the most expensive resorts ever, and its stock is also down, with the overall market up.  It boasts one of the most lavish websites I have encountered, take a look at Wynn Resorts.   Notice the extensive investor relations information, also at the STN site.

Could this be a harbinger for things all over the US economy?  As gambling goes, so goes the US?  It was once said that what’s good for GM is good for America.  But today are we gambling on our very own success?