Chapter 1: What historical context is provided about Las Vegas and its consolidation?
We'll be in Las Vegas. Welcome to Vegas. Las Vegas functions on a 24-hour-a-day schedule. The pools. The casino. Big volcano out in front. That's the Eiffel Tower. The Mirage. Riviera. The Mirage.
Chapter 2: How did Howard Hughes influence the gaming industry in Las Vegas?
Flamingo. Sahara. The MGM Grand. This isn't the real Caesar's Palace, is it? On a gamble. They always put the machines that pay off the most right in the front. Good luck. The Strip is just the most amazing stretch of road, I think, probably anywhere in the world. Kickin' ass in Vegas. Vegas, baby.
Chapter 3: What was the significance of Hilton's acquisition of the International and Flamingo?
Vegas, baby. Welcome to Las Vegas. Since the creation of modern Las Vegas, there have always been people lamenting the good old days, whatever that means to that individual at that time. Determining what is considered good is about as subjective as subjective can be.
Most people today will point to the time before the Strip was primarily owned by two companies, MGM Resorts and Caesars Entertainment. While the benefits of consolidation are obvious, potentially the best thing about it is the story of how it all happened.
To do that, we're going to have to trace back to how these assets exchanged hands before finally ending up in the corporate portfolios that they're currently a part of. To keep the story clean and the timeline defined, we are only going to focus on the majority owners and only their moves in Las Vegas. We're calling this the Great Consolidation of Las Vegas.
When corporations moved into the gaming industry, most of the individual properties had different owners, and few owned more than one.
Chapter 4: How did Kerkorian's return to Las Vegas impact the gaming landscape?
While there were casino acquisitions as far back as the mob days, Howard Hughes is technically the first time a company, or in this case a man, that made his name outside of gaming, Las Vegas, or even the hospitality industry, bought into the market with his purchase of the Desert Inn in 1967.
Due to Hughes' reclusivity and armed with millions to spend and the desire to do it, the way gaming licenses were awarded had to be changed. Previously, an individual applied for a license and was required to appear before the board in public. New legislation changed these requirements to not only accommodate Hughes, but to make casino ownership something a corporation could do.
It would be logistically impossible to ask all stockholders of a company to apply for a gaming license. Companies need to be awarded gaming licenses, not individuals. So that's exactly what they did. But Howard Hughes was really just one man. His legendary land grab only consolidated the properties he purchased for a time.
After his death, the Sumer Corporation, a company created to handle his vast assets after he sold the Hughes Tool Company in 1972, began to sell off his Nevada assets to various parties beginning in 1977 and continuing through the 1980s.
Chapter 5: What role did MGM Grand play in the evolution of Las Vegas casinos?
The first corporation to buy into the Vegas market was a fast food restaurant chain named Lums. In 1969, they bought Caesars Palace from Jay Sarno for $58 million. In 1971, Lum's owner decided they wanted to focus on being a gaming company. They sold off their 350 restaurants to the owner of Kentucky Fried Chicken and renamed themselves Caesar's World.
Now, let's set up the stage for all the players that would reshape Las Vegas ownership. It can be argued that the Hiltons started the Great Consolidation when they bought the International and the Flamingo from Kirk Krikorian in 1970. After encountering financial troubles shortly after the International opened, he decided to sell to Hilton.
This was the first time a company who didn't already primarily do business in Las Vegas, or the gaming industry, made its introduction into the market by purchasing two existing properties. Hilton renamed the International after themselves, and Flamingo became Flamingo Hilton.
In 1988, Hilton closed a portion of Flamingo's parking garage next to Imperial Palace and built a new casino named O'Shea's.
Chapter 6: How did Wynn's vision for Bellagio reshape luxury in Las Vegas?
Kerkorian didn't stay out of Las Vegas or the gaming market long. He returned in 1973 and built the first MGM Grand on the corner of Las Vegas Boulevard and Flamingo Road. Seven years after it opened, the property experienced the deadliest fire in Las Vegas history in 1980. Wanting to distance himself from the tragedy, Kerkorian decided to sell the property to Bally's in 1986 for $594 million.
Bally's was a company that made their name in other industries, but had a diversified portfolio. Their introduction into gaming started in Atlantic City. The MGM Grand, which they would rename Bally's, would be their first casino in Las Vegas.
While Bally's was continuing to expand their brand, not only into other industries but in gaming, they announced their plan to build a Paris-themed hotel casino next door to their Las Vegas property for $760 million in 1995. It opened in 1999. In 1937, Bill Harrah opened a bingo parlor in Ringo and went on to build a Nevada gaming empire.
Chapter 7: What challenges did Beau Ravage face after its opening?
Interestingly enough, when E. Perry Thomas spearheaded the movement to change Nevada gaming regulations to become more corporate friendly, its biggest opponent was Bill Harrah. At the time, Harrah was potentially the most respected casino owner in the state, if not in history.
It was only after his long-time lawyer and close friend convinced him that becoming a corporation was the only way he could protect his company's legacy in the event of his death did he begin to support the legislation. In 1980, years after his death, Holiday Inn bought Harrah's. In 1990, Holiday Inn spun off some of its assets, including Harrah's, into a company called Promus.
In 1992, Harrah's would make its debut in Las Vegas when the Holiday Casino at Holiday Inn was remodeled from its riverboat theme into a Mardi Gras-inspired motif and renamed Harrah's. In 1995, Promo spun off all its gaming entities into Harrah's Entertainment.
In 1999, Harrah's Entertainment relocated their corporate office from Memphis, Tennessee to Las Vegas and were looking for more appropriate space to set up. With Bellagio recently opening and Mandalay Bay under construction, Harrah's needed a foothold in the high-end market.
Buying Rio would not only give them that, but it would also be a far better place to call the corporate headquarters than the Harrah's property on the Strip.
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Chapter 8: How did the Great Consolidation change the ownership of Las Vegas resorts?
So they bought the Rio for $888 million. After selling the first MGM Grand to Bally's, Krikorian again didn't stay at a Las Vegas gaming market long. He returned in 1987 and purchased Sands and Desert Inn. He would go on to sell Sands to Sheldon Adelson in 1989 for $110 million. That same year, he would buy the Marina Hotel and the 100-acre Tropicana Country Club next door.
After running Desert Inn for five years, he sold it to ITT in the early 1990s. ITT was acquired by Starwood Resort shortly afterward. on the property he acquired on the corner of Las Vegas Boulevard and Tropicana, he built the MGM Grand we know today, opening in 1993. Okay, now that you know the players, we can explain their role in the Great Consolidation of Las Vegas.
1996 can be pointed to as the time when the Great Consolidation began. That's when Hilton announced their purchase of Bally's and the under-construction Paris property next door in an all-stock deal valued at more than $2 billion. The acquisition made Hilton the largest gaming company in the world, owners of Flamingo, O'Shea's, Bally's, Paris, and Hilton in Las Vegas.
It also allowed them to expand into the mid-market without degrading the Hilton name. In 1998, Hilton spun off its casinos into a company named Park Place Entertainment. While MGM Grand was under construction, Krikorian bought the land across the street. In 1994, MGM partnered with Prima Donna Resorts to build New York, New York Hotel and Casino on the land.
MGM decided to buy Prima Donna Resorts and all their assets in 1999. However, the acquisition of the 90s pale in comparison to what happened in the new millennium. We've already told you the stories of Bill Bennett, Steve Wynn, and Kurt Kerkorian in previous Vintage Vegas installments. But before we get into their consolidation, let's recap.
By the end of the 90s, Hilton was now a company called Park Place Entertainment. They owned the Las Vegas Hilton, Flamingo, O'Shea's, Bally's, and Paris. Circus Circus Enterprises was now called Mandalay Resorts. They owned Excalibur, Luxor, Mandalay Bay, Circus Circus, and half of Monte Carlo. Golden Nugget Companies was now Mirage Resorts.
They owned Bellagio, Mirage, Treasure Island, The Boardwalk, Golden Nugget, and the other half of Monte Carlo. MGM owned MGM Grand in New York, New York, while Harrah's owned Rio and Harrah's. Now the real fun begins. In 2000, Hilton Park Place Entertainment bought Caesars World for $3 billion.
The reason we've not mentioned much about Caesars Palace until this part in the story is because they weren't interested in expanding in the Vegas market. As legalized gambling expanded all over the US and Canada, Caesars moved into eight different markets. Harrods was doing the same thing, which is why they also only had two properties in Vegas at this point.
In fact, most gaming companies were doing the same. Mirage Resorts' expansion into Biloxi, Mississippi can be pointed as one of the reasons why they were in a position to be acquired by MGM. But to tell that story properly, we need to take a step back to 1995. Mirage Resorts was arguably the best gaming company in the business, and Steve Wynn was looked at as the king of the gaming industry.
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