Corporate Raiders Play Monopoly in Las Vegas

At the height of the great depression, an unemployed Pennsylvania man named Charles B. Darrow invented the popular board game which later became known as "Monopoly." The object of the game was simple - to own every property on the board, get all the money, and leave everyone else bankrupt. The name was perfect. Essentially a "monopoly" occurs when one entity becomes so big and powerful that it is able to dominate the market.

Although Monopoly is based on a succession of narrow streets along the famous Boardwalk in Atlantic City, if the game were to be reinvented today, I suspect that game makers would probably use Las Vegas instead. The older and smaller casinos near downtown would likely substitute for the low end properties Baltic and Mediterranean. Newer and bigger casinos along The Strip would be updated adaptations of Boardwalk and Park Place. Las Vegas even has a monorail which could replace the Reading Railroad.

The fact is, Monopoly is being played here in Las Vegas, albeit for much higher stakes. For many people, this is not just a game of recreation. Lives, careers, families, and even the future of Las Vegas and gambling could very well be on the line.

You may have heard by now about MGM Mirage's efforts to gobble up the rival Mandalay Resort Group. This $8 billion buyout will give one single company control of a whopping 33 casinos (18 in southern Nevada alone) and will create the largest gambling company in the world. Think about that for a moment. Consider what this means for the gambling industry and the thousands of people who work for casinos and the millions of tourists who visit places like Las Vegas every year.

The two combined companies will control over half of the hotel rooms on the Las Vegas Strip. To put this into perspective, what if one airline controlled over 50 percent of the flights? Or one single car-rental company owned over half of the market? How would this affect consumers? Alarm bells should be ringing - loud and clear. When Treasure Island, Mirage, Bellagio, Monte Carlo, MGM Grand, Excalibur, Luxor, Circus Circus, Mandalay Bay and nearly two dozen other casino and resorts fall under the control of a single corporate entity, you can be sure Vegas will never be the same again.

Given the size and scope of this merger, and what it potentially means for millions of people, I'm surprised - no SHOCKED is more like -- by the lack of public discussion and concern. The silence is deafening. Few gambling journalists, and certainly no poker writers, have brought up the subject (to my knowledge). Even those who are most directly impacted by the merger of these two corporate giants have been mute, perhaps so petrified at the ramifications of raising serious questions, that they are afraid to even discuss it. This goes for unions too, including the powerful Culinary Workers Union (CWU), presumably a staunch defender of workers' rights. Oblivious to the notion that multiple employers and healthy competition in the marketplace is always better for workers, the Nevada CWU hasn't said a disparaging word about the biggest deal ever in gambling history. One might think that one of the state's largest unions would be the first to raise serious questions about that this all means for thousands of its workers.

Don't count on the Nevada Gaming Board or the Federal Trade Commission (FTC) intervening in the public's best interest either. A deal of this magnitude doesn't happen without the ending being a foregone conclusion. Never mind that the FTC was seriously concerned last year when Harrah's Entertainment tried to acquire Horseshoe Gaming (fearing, of all things, that it could become a "monopoly") in places like Bossier City, LA, Hammond, IN, and Tunica, MS. Although the deal went through on July 1st, the FTC held up the deal for at least six months.

By contrast, the MGM/Mirage takeover of the Mandalay Group makes the Harrah's-Horseshoe deal seem like a putting a couple of green houses on Marvin Gardens. No one dares to speak out about the blockbuster deal, until now.

Here are what I believe to be the big losers and winners in the new MGM/Mirage monopoly:

THE LOSERS:

Casino Workers -- Casino employees will have fewer options about where they want to work. If an employee quits or is dismissed from the MGM Mirage casino group, he or she will have far fewer opportunities to find a job elsewhere. In fact, ex-employees could be blackballed. Wages and benefits will be less competitive for the 88,000 employees expected to fall under the larger MGM/Mirage umbrella. With fewer casinos and hotels forced to compete for workers via competitive salaries and benefits, salary rates will be dictated by the single most powerful company. The biggest losers of all are likely to be middle management in both companies. Several of these jobs will be combined and many people will be laid off.

Casino Customers - Prices will increase all along The Strip. This goes for hotel rooms, meals, entertainment, and other services. Since the vast majority of high-end amenities and services will be controlled by one big company, former rival casinos will not be forced to compete openly in the marketplace. Referring to the merger, one corporate executive candidly remarked, "The days of $29 hotel rooms in Las Vegas will come to an end." With fewer hotels competing for guests, Internet specials and other bargains which attract tourists will decrease. In addition, player comp systems will be combined, which effectively ends some of the marketing gimmicks which are so inviting to novice gamblers and newcomers. In the end, this means fewer giveaways, buffet comps, and other perks which attract many tourists. There's also the potential for monotony. Another anonymous casino executive said it best: "It's all the same corporate blanket; it's too many properties in the hands of the same management."

Las Vegas - This biggest loser in this mega-deal is Las Vegas itself. Local vendors who provide vital goods and services like linens, food products, repairs, and hundreds of other essentials to the casinos would be forced to adhere to MGM/Mirage terms, or (likely) go out of business. Even more alarming to residents here, the city is no longer controlled by people who actually live (and work) in Las Vegas. Say what you want about the old days when the Mob, Howard Hughes, and (later) Steve Wynn all came to dominate the Las Vegas landscape with their unique influences, the "new" Vegas answers to Wall Street - a far more frightening swarm of corporate raiders. The latest MGM/Mirage deal means that at no other time in history will so much of this city be in the hands of people who understand so little about Las Vegas, its unique character, or the industry that makes it special. That should be frightening to everyone.

THE WINNERS:

Mandalay Group Executives and Shareholders - Never mind nearly 90,000 workers, the casino industry, middle management types, millions of consumers, and the overall landscape of Las Vegas - all that seems to matter here is what's in for the executives and shareholders. They stand to make a killing. According to projections, Mandalay Group executives Michael S. Ensign--Chairman and CEO, and Glenn Schaeffer--President and CFO, are expected to walk away with at least $40 million each on the deal. Corporate shareholders - perpetually oblivious to labor and community anxieties - got their cut of the deal, too. Shares of Mandalay stock increased about 15 percent during the course of the takeover bid. Terri Lanni, Chairman and CEO of MGM Mirage said afterward: "The combination of these two great companies will provide Mandalay shareholders with a premium price for their shares as well as providing several strategic benefits to shareholders in MGM/Mirage." No doubt, Mr. Lanni got that right.

By my estimate, there are a perhaps few thousand "winners" (shareholders) in this deal, versus millions of potential "losers" -- including workers and consumers. A recent Letter to the Editor in the Las Vegas Review-Journal summed up it all up best:

Oh, how I wish the mob was back running Las Vegas. The streets were safe, dining and shows were cheap, and occasionally a gambler came out a winner. Not so since the mega-corporations have been running things. They have an insatiable appetite for money; the more they make, the more they want. At one time, the locals could go to a local casino and get a fair shake and some perks for being a loyal customer. But now even they have banded together..... I wonder how long it will be before the visitors get tired of being ripped off and stop coming?

Instead of "What happens in Vegas stays in Vegas, our newest motto should be taken straight from Monopoly: Do not pass 'go,' do not collect two-hundred dollars.

Note: Harrah's has just announced plans to acquire Caesar's, which will make it the largest gaming company in the world.

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Nolan Dalla can be reached at: nolandalla@aol.com