The Year of Hope and Holding Steady

The people who run Las Vegas casinos were expecting a lot in 2012: a return to prosperity on the Strip, a revival downtown and a federal framework for online poker. They didn’t get everything they wanted, but at the end of the year, they’re still in the game, which might be a victory in and of itself.

Many observers thought this would be the year when the Strip finally shook off the Great Recession gloom. But through September (the last month for which numbers are available), it seems that it’s been a year of treading water, with perhaps a 4 percent increase in revenues for the year if things break right in the fourth quarter.

There was some progress, to be sure: MGM Grand completed a massive expansion project, and Caesars Entertainment’s Linq broke ground next to the Flamingo. But as November turned to December, work on SLS Las Vegas—SBE’s just-below-luxury resort planned for the former Sahara—was nowhere nearer starting than it had been in January. Boyd Gaming announced that any development of the Echelon (former Stardust) site is years from commencing, and the property’s planned $4 million landscaping job confirms that it will be some time before the Strip returns to growth mode.

It almost goes without saying that the Strip’s other two recent busts, the Plaza (at the former New Frontier site) and the hulking, broken Fontainebleau, are still in development purgatory. Carl Icahn hasn’t started dismantling the Fontainebleau yet, which is, in a sense, simply progress delayed.

Downtown Las Vegas made a little more headway in its revitalization. The transformation of Fitzgeralds into The D is largely complete, and the Golden Gate’s renovation highlights the modern retro vibe Fremont Street is shooting for. The Smith Center and the Mob Museum opened early in the year, two nongaming cultural attractions that aim to give downtown a stronger identity outside of its casino cluster. (This could benefit those casinos if visitors spill over onto Fremont Street.) But Binion’s hotel remains closed, and the renovation of the former Lady Luck seems to be moving along slowly—signs that true improvement hasn’t yet arrived. Yes, the announcement of SlotZilla is nice, but despite impressive crowds, downtown’s gaming numbers remain well off their peak. Downtown seems to be holding its breath, waiting for Zappos to arrive in full force and take up residence in the old City Hall. That will shake things up, to be sure, and it might be prudent to wait before making final judgments about what role casino-hotels will play in the repurposed urban core.

Both locally and nationally, online poker was this year’s dog that didn’t bark. With no federal legislation, the game remains illegal on the national level, freeing states to legalize it within their own borders. So far, Nevada is the furthest along, but the rollout of the Internet card rooms has taken longer than expected. Back in January, insiders said rooms would be live by late spring. In September, South Point Poker COO Lawrence Vaughan was confident his pay site would be up by Halloween.

Testing continues, regulators are erring on the side of caution, and the industry doesn’t seem to mind. Everyone involved realizes that these are complex systems, and no one wants to be the one responsible for the decision to go live with a site that accepts the first underage bet from Utah. So both the operators and the regulators are proceeding with an abundance of caution here, which is why 2012 isn’t a year for the history books where online poker is concerned.

It now looks like (in the absence of federal action) Nevada-only online poker will be up in the spring. In that case, 2012 will be remembered as the year when the foundations were poured for the next stage of the state’s gaming history. Even that is a half-measure of sorts, since without bets flowing in from across Nevada’s borders, online poker will be more of a sandbox where operators prepare for a one-day influx of out-of-state bettors, rather than a robust contributor to the local economy.

And that seems to be 2012 in a nutshell: a year in which major breakthroughs remained frustratingly out of reach, and most operators looked to consolidate their positions and plan for the future rather than reach for the stars.