Corporate Las Vegas
In 1967, the year that Howard Hughes began buying up Las Vegas casinos, the Nevada legislature passed the Corporate Gaming Act. This legislation paved the way for corporations to own casinos, as it removed the background financial checks that had been previously required of all shareholders of license applicants. Coupled with Hughes' apparent success in building a casino empire, the new law lured corporate investors to Las Vegas' resort industry, which had a profound effect on Las Vegas.
Father of the Megaresort
Kerkor "Kirk" Kerkorian was an investor in the Hughes mold. Nicknamed the "Father of the Megaresort," Kerkorian bought the Flamingo in 1968, and completed the International Hotel in July 1969. At a cost of $80 million, the International was the largest in the country, with 1,500 guest rooms and three showrooms. Four years later, Kerkorian surpassed the size and scope of the International when he built the MGM Grand. The hotel had 2,100 guest rooms, five gourmet restaurants and the world's largest casino. At 26 stories high, the MGM Grand was the tallest casino in the free world.
The completion of the MGM Grand led to the corporate revolution in Las Vegas. In order to have the funds required to finance the $106 million MGM, Kerkorian sold his International and Flamingo Hotels to the Hilton Hotel Corporation, marking the first time a publicly owned conglomerate was in charge of a Las Vegas casino. By 1976, 63% of Hilton's earnings came solely from its Las Vegas establishments. The success of the Hilton Corporation spurred the interest of other businesses; soon, Sheraton and Holiday Inn were investing in Las Vegas and buying casinos.
A Big Price Tag
Kerkorkian's MGM Grand was the sole casino to be constructed on the Las Vegas Strip between 1969 and 1989. The cost of creating a resort had risen phenomenally. The MGM Grand's $120 million price tag was cost six times as much as Caesars Palace, which had been financed by Jimmy Hoffa's Teamster's Union money.
From the Syndicate to Wall Street
The Syndicate, which for decades had financed the construction of Las Vegas resorts, was simply unable to compete financially with the corporations. The new corporate owners were able to acquire sums of cash that far exceeded those capabilities of the Syndicate. As more public corporations invested in Las Vegas, the resorts that had been constructed in the boom of the 1950s and 1960s switched ownership, from the Syndicate to Wall Street.
No Need to Coddle Mobsters
This changing of the guard had a drastic impact on Las Vegas. Previously, the city had been lenient on known members of organized crime, as the casinos had relied on Syndicate members for financing. However, the mobsters in Las Vegas had always been a liability, and when the corporations from Wall Street began settling in the city, the city no longer needed organized crime. By the mid 1970s, the Nevada Gaming Control Board began penalizing and refusing gambling license applications to known mobsters. By the early 1980s, the mobsters had mostly disappeared from the city's radar.
Steve Wynn and Michael Milken
Corporations continued to purchase Strip resorts until the late 1980s, when they began to build Strip establishments for the first time in nearly two decades. Their construction was greatly enabled by the use of junk bonds, which helped them to raise a hitherto unheard of amount of capital. Investor Steve Wynn was the man who pioneered the use of junk bonds in the construction of his casinos. He began constructing a new Golden Nugget in Atlantic City in the late 1970s, and in order to finance it, Wynn took advantage of friend Michael Milken's junk bonds, raising $160 million in bonds to fund the casino. The Golden Nugget became Atlantic City's most profitable casino.
New Mirage in the Desert
After selling the Golden Nugget, Wynn raised an even greater amount of money, $535 million in junk bonds, and built the Mirage in Las Vegas. The Mirage Resort was opened in 1989, with 3,000 rooms at a cost of $630 million. More than two times the size of the MGM Grand, the Mirage was the largest casino in the world. It features a 54-foot volcano, which erupts every half hour after dark. Eventually, the Mirage exceeded the Hoover Dam as Nevada's most visited attraction. The Mirage helped to usher in the corporate era of the 1990s in which many of the iconic resorts from the 1950s and 60s, including the Dunes and the Sands, were demolished.
Profit Centers for Wall Street
In place of these older establishments, corporations began to build themed, family friendly resorts, such as Kerkorian's MGM Grand Hotel and Wynn's Mirage Resorts' Treasure Island hotel-casino and Theme Park. No longer seeking profits merely from gambling, the corporate owners of Las Vegas wanted to become a vacation resort city, where every aspect of the resort, from the food to the lavish shows to the gambling, was profitable. These new megaresorts boasted numerous options for guests to entertain themselves, and in the 1990s, the revenue earned from the resorts' attractions eventually surpassed that earned from gambling. Today, more than 38 million tourists come annually to Las Vegas.