I-Team: High-Priced Gifts Lavished on High Rollers - 8 News NOW

I-Team: High-Priced Gifts Lavished on High Rollers

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LAS VEGAS -- Nevada's gaming industry is still trying to climb out of the hole created by the recent recession, which means the competition among casinos for the loyalties of so-called whales is ferocious.

Whales is the term for the highest of high rollers. How far will casinos go to land a whale, and what is Las Vegas doing to cater to less-wealthy visitors?

Here's a trivia question. Which casino game had the lowest win percentage for the house last year? The answer is bingo. Nevada casinos won a mere 3 cents for every dollar wagered on bingo, a game often played by small stakes gamblers. At the other end of the spectrum, the game that won the most money for casinos is baccarat, which is now the most lucrative table game of all and a favorite of high rollers.

Bingo's Your Best Bet

The gambling explosion in Macau has created a whole new customer base for Las Vegas. Asian high rollers are the ultimate whales and Las Vegas casinos will do almost anything to bag them.

Baccarat Dethrones Blackjack as King of the Strip

"They come specifically to party. They come in groups. It's a very social scene," said Bill Hornbuckle, president of MGM Resorts International.

A new generation has discovered Las Vegas. They come, not for the gambling, but for the nightclubs, or dining or shopping.

Hornbuckle said his company's data base now has 60 million names, and knows 5 million of those pretty well. The biggest change over the last decade is that the average age of a Las Vegas visitor has dropped by six years. Casino companies have hired armies of data crunchers to try and predict what the younger want.

"It's being predictive. We've gotten very sophisticated about predictive analytics. We have a couple of PHD's who work for us, trying to grind out, not what's happening historically, but what you are going to do next," Hornbuckle said.

The new visitor will plop down thousands for a table in a nightclub, whether able to afford it or not.

"This group, this dynamic is, I've got $30,000 to my name. If I go to Vegas and spend $10,000, meh, I'll make some more."

But the money won't necessarily be splurged on gambling. The numbers show the gambling budget for an average visitor was $236 last year, down from a high of $277 dollars in 2007. The low-end customers, so called grind players, have returned but are spending less, so budget properties like Circus Circus or the Riviera are still struggling. Mid-level properties have recovered, Hornbuckle said, because corporate America is back, spending money on conventions and the high roller customers never left.

Here's an astonishing number -- in the MGM's vast array of gaming properties, a mere 4 percent of the customers account for 65 percent of total gaming revenues. Four percent of the gamblers generate 65 percent of the take.

"And of the 65, one percent create 90 percent of the 65. It is staggering, a staggering piece of business," Hornbuckle said.

The competition between rival casinos for the play of the so-called whales, the highest of high rollers. Is intense, Hornbuckle said. Macau sees far more gambling action than Las Vegas, but Las Vegas is still the ultimate challenge for Asian whales.

Macau's Explosive Growth

"A whale to Las Vegas is not an unknown commodity. Some of these individuals are prepared to lose millions of dollars in any given weekend. So whether that is an airplane to get them here, or a special suite, or dinner with someone unique that they want to have dinner with -- a celebrity -- whatever it takes -- that is legal -- we're in," he said.

In general, casinos don't say much about the special treatment they lavish on high rollers, but some stories leak out. A Chinese businessman from Mexico named Mr. Ye lost $120 million in one year at the Venetian. He was treated like royalty and was showered with gifts including a Lamborghini and a Rolls Royce.

Casinos also cater to gambling superstitions. Remember the gigantic lion that used to be the entrance to the MGM Grand? It was torn down because Chinese gamblers considered it unlucky. Hotels are designed with customers' peccadillos in mind.

"They hire fung shui experts to see how Asian players will appreciate their surroundings. The number 4 is unlucky in China so a lot of buildings don't have 4th floors," said Dave Schwartz, a gaming analyst.

Whether it's a millionaire gambler from Iowa or a billionaire whale from Shanghai, the trick is to make them all feel welcome and spoiled, whether that means special mansions or villas, discounts on gambling losses, it really boils down to service.

"These places aren't built on us giving away the store where we can't expect a reasonable return," Hornbuckle said. "Whether it's a cup of coffee or a Ferrari, a cup of coffee is a cup of coffee and a Ferrari is a Ferrari, but I can get them a lot of different places. It's about how I make you feel when you come here."

Although personalized service is considered to be of extreme importance in making customers happy, in some ways, Las Vegas has less of it than before. Technology changes, combined with the recession, caused a major drop in the number of casino employees on the Strip.

Between 2001 and 2012, the number of jobs have dropped from 60,000 to about 43,000 and those jobs won't be coming back.

 

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