Las Vegas model becomes even worse gamble for Miami
Written by Michael Lewis on August 8, 2013
As we await a casino-ready resort to replace the vacant Miami Herald building on Biscayne Bay, a timely New York Times report should make even casino backers cringe.
The Herald sold out the site to casino giant Genting and decamped in May for Doral. Genting said it would build a luxury resort while it awaited legislative OK to make a casino the resort’s raison d’tre.
Then came word that the Herald building couldn’t be razed until it was freed of asbestos. With demolition now approved, we’d bet the resort would rise precisely when the legislature OK’d massive casinos. Then resort plans that were scaled back when the last casino bill failed would rapidly expand.
That new casino legislation could be on the table shortly.
But a New York Times report last week should jar even those who have defended casinos as dirty but useful economic engines.
The Times found a Las Vegas post-recession revival that at first glance seems to validate the Genting game plan for Miami. At the unveiling of Genting’s plan, the Malaysian giant’s leaders touted a massive casino as an economic savior for us because it would lure the Northeast’s gamblers then flying to Las Vegas.
Miami, they told us, could be the next Las Vegas.
If Vegas is recovering, that could be good if you believe that gambling solves all problems and creates none of its own. But the nature of the Las Vegas recovery shows otherwise.
Visitors are back from a disastrous Las Vegas recessionary slide. But those returning spend far less on gambling. Before the recession, the Times says, the average Vegas visitor put aside $650 for gambling; it’s now down to $480.
Ask yourself if even $650 a head would be the windfall that Miami would want in selling out to gambling. Really, is that all there is?
Then ask, is this a continuing trend? The reason Las Vegas is Las Vegas is gambling. Will that 26% loss of gambling spending per person slide to even bigger losses as habits shift? An economic researcher in Las Vegas said he sees a permanent slide.
But the Times did find big visitor gains in Las Vegas — a record 39.7 million in 2012, though many surely came only for the day.
Miami-Dade by comparison had 13.91 million stay overnight last year, also a record, according to the Greater Miami Convention & Visitors Bureau.
So Vegas has all these so-called high rollers. Before the recession, in 2007, they spent $1,318 average per visit — but that number fell to $1,021 per visit last year even as visitor totals rose.
Is that what we seek by adding gambling? If so, it’s a losing game.
When Las Vegas hit $1,318 per visit in 2007, Miami-Dade was already getting $1,430.56, the Greater Miami Convention & Visitors Bureau says. And when Vegas totals in 2012 had fallen to $1,021, ours had risen to $1,568.22.
A gambling visitor industry in Las Vegas shrank while ours, always better per capita, rose despite a recession. Why swap our bigger spenders for theirs?
Both Las Vegas and Miami got hammered as home prices fell in the recession, but the Times reports Las Vegas single-family prices are still 56% below 2007 despite some recovery.
Miami prices too have yet to fully rise to the average for a single-family home of $531,112 in June 2007. But at $509,515 in June 2013 according to the Realtor Association of Miami, our prices are off just 4% while theirs are off 56%.
That’s not gloating. It’s just comparing what Genting’s grand plan offers Miami to what we already have without the painful side effects of massive casinos.
As the Times paints the picture, gambling is far less important to Las Vegas today than entertainment, clubs, shopping and dining — all of which are already strengths in Miami.
Just because Las Vegas is edging into our model doesn’t mean we should pick up their role, burdening ourselves with casinos. We’re doing just fine with our own brand — and bringing in visitors who spend far more than Vegas averages.
Miami lures higher rollers globally who aren’t gambling at casino tables but on Miami land prices and condo values and the longevity of high-ticket fashion purchases — and aren’t being drawn to Las Vegas.
Construction by Swire in the Brickell area, Dacra in the Design District, and others shows confidence that we already have the right quantity, quality and permanence of customers for high-end environments.
This is a time to stand pat with a winning hand, rather than throw in our winning cards for whatever Genting is dealing as an economic, social and cultural future.
Before your legislator sells out, point out what’s happening to Las Vegas, note what’s cooking in Miami, and assess who has the winning hand. If there were five aces, we’d hold them.