Grinning Bandits

Why is that man smiling? Well, he’s probably contemplating the profit margin on $50 pizzas and $13 Snickers bars, among other MGM Resorts International affronts to decency. To be fair to CEO Bill Hornbuckle, not all the pizzas at MGM Grand are $50. Some sell for as little as $47.95. And people in the industry wonder why the Las Vegas Strip is struggling.

Now, Hornbuckle and Caesars Entertainment CEO Tom Reeg and Las Vegas Convention & Visitors Agency President Steve Hill will likely beat their breasts in faux outrage and say that “the media” (that catchall whipping boy) is taking an extreme anomaly out of context, business has never been better, we wouldn’t dream of screwing our customers, blah blah blah. But the ‘anomalies’ (like the $26 bottles of water or $25 for room-service cutlery) are really starting to mount up. And what initially looked sly and sleazy now appears to be concerted managerial price-gouging. Nor has a 7.5% dropoff in tourism gotten the message home to Big Gaming. Is it too soon to get out the pitchforks and storm the castle?

This hasn’t been a good month for Hornbuckle, unless you count his pay packet. The Nevada Current exposed that MGM was paying poverty-level wages to some of its employees and counting on federal relief to bail them (the workers) out. That’s disgraceful and inexcusable, especially coming from a company that had the reputation of enlightened management. Now it’s on the S&P “Low-Wage 20,” according to the Institute for Poverty Studies. “MGM was the only company listed in the report that is headquartered in Nevada,” reported the Current. Meanwhile, Hornbuckle pulls down almost $16 million a year while the median wage at MGM languishes at $59,600/year. The average MGM worker makes one 332nd of what Hornbuckle does (or $47,662). Yup, every time you earn a buck working for the Green Monster, Hornbuckle pockets $332 for doing much less.

Median wages at MGM are just barely enough to keep workers’ families out of Medicaid eligibility, putting the company down there with such nightmare employers as Amazon, Walmart and Costco, whose employees are living on foot stamps despite holding down jobs. When the social safety net is rapidly fraying (to put mildly), this is where private industry should step up, not shirk its responsibility. Not for the first time, trickle-down economics—as practiced at MGM—is looking and smelling a lot like not-so-warm piss. As the IPS wrote, “It means taxpayers are subsidizing business models based on poverty wages.”

Not content to screw customers and workers, MGM may have been doping gamblers as well. Judge Mirnada Du ruled that there is sufficient probable cause to take the company to a jury trial. It involves player Dwight Manley, who says MGM slipped him ketamine (Elon Musk‘s drug of choice, you may recall) while he was gambling, raising his line of credit from $1 million to $3.5 million. The latter act alone is a bit eyebrow-raising. In the context of an impaired gambler, it reminds one of Caesars casinos plying Terrence K. Watanabe with booze and taking him for everything he had.

Even more disturbingly, plaintiffs’ attorney, Paul Hejmanowski asserts that “we got 11 examples from the MGM of patrons who said they were drugged by employees of the MGM.” Make note of the fact that’s information MGM volunteered and yet it makes them look mighty suspicious, if not downright culpable. Typically, the captive, compliant Nevada Gaming Control Board has done nothing, despite the Manley Matter being brought to its attention. It’s a good thing that Judge Du is not so flippant about such things.

Our Boardwalk correspondent is back with a smattering of news. For instance, in a battle of the Atlantic City grind joints, the Golden Nugget is outdoing Bally’s Atlantic City. The former’s food credit for frequent players in April is $75 for two, plus a $100 Easter bonus. Bally’s counters with a paltry $35, good for pizza or Dunkin’ Donuts. If you want to eat at Bally’s after 3 p.m. on weekdays those are your only choices, by the way. And to think that this is the casino Bally’s Corp. calls its “flagship.”

Another intramural squabble involves the Sheraton in A.C., which wants to convert 130 hotel rooms to senior housing. In petitioning the Casino Reinvestment Development Agency to make the change, ownership said the hotel has been losing money for at least 20 years. Seems like it took them a long time to wise up … not a ringing endorsement of the current management! Saying they can no longer compete with the casinos, who are accused of giving away room nights, Sheraton said it would take down its flag if the change is not made. It’s also holding a renovation (the first in 27 years) hostage. Hmmmm. What is the CRDA to do? That’s a real poser.

There’s an interesting Atlantic City sidelight to the struggle for the soul and body of Caesars Entertainment. Evidently already bored with being ambassador to Italy, plutocratic Tilman Fertitta has trained his gaze upon the other Roman Empire, the one here. He’s trying to outbid that notorious coupon-clipper, Carl Icahn. If Fertitta wins, Caesars will have A) a crippling amount of debt and B) four casinos on the Boardwalk, as the modest (by casino standards) Golden Nugget would be folded in with Harrah’s Resort, Caesars Atlantic City and Tropicana Atlantic City. Even if regulators didn’t pressure for one of them to be sold (and they probably will), Caesars is overexposed in Atlantic City already. Still and all …

Better Fertitta should win than Uncle Carl. Mr. Carpet Barn has had one run in Atlantic City (at what used to be Trump Taj Mahal) and it was an unequivocal disaster. Icahn has shown some savvy for the casino business in Las Vegas but he has the mentality of a grind-joint operator. It would be a fiasco for Caesars’ upwardly mobile aspirations if Icahn got his mitts on the company. And if you doubt us, just take a stroll past the crumbling ruins of Trump Plaza (above), Uncle Carl’s one lasting legacy to the Boardwalk. Thanks, Carl.