MGM MIRAGE Inc.’s MGM Grand and Park Place Entertainment Corp.’s Caesars Palace each plan to open private gambling rooms in the fall. Such salons had been illegal in Nevada, where state law requires gambling to be public and accessible to regulators. But in 2001, the Nevada legislature heeded the cries of casinos struggling to compete with private salons overseas and voted to allow the closed-door rooms. “The persuading argument was there was a whole potential market of players that would not otherwise come to Vegas,” says Dennis Neilander, chairman of the Nevada Gaming Control Board.
The board authorized the first private gambling room, at the MGM Grand in June. It will require private salons to operate around-the-clock video surveillance cameras, so that regulators in their offices can observe the play in real-time.
Private gambling is the most deliberate effort so far by U.S. casinos to harpoon more “whales,” players with $500,000 in cash or credit who fuel casinos’ lucrative high-end games, where betting starts at $500. The Strip has been losing international whales for years to private casinos in burgeoning gaming markets such as Macau, Australia and elsewhere in Southeast Asia. For Caesars Palace and the MGM casinos, where high-end play contributes as much as 25% of revenues, overseas competitors have made the game even more volatile and risky.
Whales nearly disappeared from the Strip after Sept. 11 brought travel complications; with the stock market sputtering, they are staying away. Bear Stearns analyst Jason Ader estimates that high-end gaming by international players in Las Vegas is down 15% to 20% this year, still not fully recovered from the 75% plunge in September. Money wagered at baccarat tables — most popular with Asian high rollers — was down 62% in June compared with a year earlier, the Nevada gaming board says; casinos’ baccarat winnings for June were down 84%.
Undaunted, the MGM Grand is still hunting whales. It is remodeling its Mansion Casino wing and expects to start offering private gambling there in September. Among the changes: thick doors to keep oglers out. (Casino executives note, however, that even in high-roller …