VEGAS INC Magazine - Latest Las Vegas business news, features and commentaries about gaming, tourism, real estate and more
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VEGAS INC las vegas institute is where ideas are dreamed, realized BERNHARD, From page 1 the state championship at Barnson Field. I played in the soccer state championship in a field that I overlook from my office. I had graduated from Bonanza High School and went back east to college. One of my professors said, "Hey, you're from Las Vegas, you should study this gambling thing." It was the mid-'90s and we were just starting to see literature on this. So I was inspired. What were you going to study? I was headed toward law school, because that seemed like the catch-all that everybody did if you weren't sure but were reasonably certain you wanted to head into a more-or-less white collar career. Teaching was always noble in my family because everybody was a public school teacher somewhere in Southern Nevada. Every Thanksgiving gathering, every birthday party, devolved into a debate over how to reach kids and how to teach. But in a million years, I didn't think I was smart enough or had enough to say to be a professor. Your father, Peter Bernhard, is chairman of the Nevada Gaming Commission. Do you talk shop at family gatherings? We really don't very much. We go to Rebel games together, we go to ball games together and mostly what we talk about is sports. Having said that, there's an interesting parallel — gaming regulators and gaming academics are both very much involved in the industry but provide an important neutrality and objectivity. Both of our roles require that in different ways. We talk on a general level about how you weigh evidence and think through problems. It's something he's really good at. He is as good a judge as I've ever seen. What's the purpose of the International Gaming Institute? This place was founded in 1993 to serve as an intellectual hub, not only for the local industry but for the global industry and to be the place where the gaming business world comes to learn and get better. As such, the world comes to our doorstep. Any given week, we might have the Korean gaming management association or the Australian club executives or the Swedish gaming control board. We take this show on the road to every continent. A year ago, we did a pan-African gaming regulatory seminar. It was an eight-day program teaching the next generation of industry leaders. It doesn't appear that there will be federal online poker legislation anytime soon. Why didn't that happen, and is 20 20130415_VI01_F.indd 20 there any chance of a bill in the future? When you look at the gaming industry around the world, you see a lot of nations where the gaming industry has difficulty getting on the same page. Australia is a perfect example. The guys who run the smaller clubs think the casinos are arrogant, and the casino guys think the sports bookies are lowlifes who aren't worth coming to the table. What happens is that you don't have a unified approach to issues that affects them all. Undoubtedly, this is part of why we don't have a federal answer right now with Internet gaming. The lotteries, in particular, rebelled against a version that seemed to favor the casinos, specifically Nevada-based casinos. When those entities rose up against this, that became a major hurdle. Will Nevada's online gaming legislation work? It has to work, because Nevada is too small a market for poker to really be a viable business. It could be a small business, but it won't be something that is terribly significant until you can partner with California, New Jersey and other major population centers. Online poker is about liquidity. It's about making sure you have a large customer base. A lot of people have pointed out that the reason eBay is so popular is not necessarily that it's the finest product ever devised, but it's where the whole world of consumers go to engage in buying online. That's the model for online poker. Do you think the U.S. Justice Department will try to block its implementation? That's a good question. What the state Legislature has done is gone back on its original mandate that we wait for the federal government to act. But I'd also like to think that our leaders have been in contact with the federal government as they begin to negotiate this terrain. What do you think about New Jersey moving toward online gaming? Gov. Chris Christie's conditional veto of the initial legislation led to a more focused bill. New Jersey is moving forward in a way that's almost reminiscent of the early days of gaming where different states started to legalize gaming and adopt lotteries and casinos and their spreads. We're back to the exact same phenomenon. Is New Jersey's approval good or bad for Nevada? It's probably one of those situations where the answer is both. To the degree that we can enter into compacts and take advantage of a sizable population, that's a great thing for liquidity and that's the business of poker. On the other hand, this is something where it remains to be seen the degree to which Nevada can take advantage of that market and whether those who were already there are better positioned. Those are questions that have yet to be answered. Do you think safeguards for online poker are sufficient? Something that is new about the current situation is that in contrast to, say, 2005, we now have a track record in Europe with a number of these technologies. There hasn't been the massive scandal where a kid got a hold of his mom's credit card and gambled away his college fund. The problem gambling numbers haven't seen an epidemic increase. We haven't seen this epidemic of youth gambling that everybody feared. Those were legitimate and real unanswered questions in 2005. They're not answered today, but we have a lot more data and I feel a lot more comfortable as an academic looking at these issues. What other states have significant online poker plans, and how will they affect Nevada? California is the beast. And California has its own complexities. California's challenge is the tribes, the card rooms, the lottery – all of these different interests are either going to rally and come to some unified position or they're not. We can take advantage of this because California has always been such a massive tourist feeder market. Assuming that we can enter a compact with California and cater to the massive numbers of online gamblers, can we market to what amounts to a nation of 40 million people? To what degree can we convert those people into brick-and-mortar customers? To what degree can we incent a poker player who happens to win a tournament and then gets a seat in a tournament at the poker room at the Wynn? Is Las Vegas still the center of the gaming universe? Yes. Understand that I'm from here and tend to be an optimist. But there's nobody who comes to Las Vegas and says, "Boy, I've crossed that off my list … now I really need to go to Macau." You're now starting to see more of the Indian or Russian gambler, but Macau is primarily a place for the Chinese gambler. What you hear very often is, "Now that I've seen this Macau thing, I've got to see Las Vegas." Our baccarat numbers have seen increases in these past few years, and those numbers aren't coming from Des Moines or the Bible Belt. The idea that Macau is king simply because it generates more revenue is really sort of a narrow view. Of course they're going to earn more revenue. It was a mathematical certainty given the demographics of that region and given the size of that populace. But what's notable is that a good chunk of those revenues are traceable to a company with a Las Vegas address. And it's even more pronounced when you look at the tech sector, which you could argue is even more important than the conventional brick-and-mortar sector ... because the gaming product is going to be delivered in more technologically sophisticated ways. So when you look not at the shiny Strip on Las Vegas Boulevard but at the far less sexy but arguably the more important area behind the airport, the strip of technology companies, virtually all of those revenues are traceable to a company with a Las Vegas headquarters. Las Vegas effectively is the Houston of the gaming industry. Houston went through a really rough patch, but right now, it's an economic darling. It was the first major city to come out of the economic recession, and it's doing fantastically well. There are huge skyscrapers in downtown Houston and the decisions that are made in those skyscrapers dictate the way the global energy industry plays out. That's true here as well. The sprawling buildings behind the airport and the corporate headquarters often in the bowels of these hotel-casinos are where decisions are made that drive this dynamic and global industry. There's a tendency to argue that Las Vegas is down for the count. But what's important to recognize in this shift is that Las Vegas has become an intellectual capital of a global industry, from the invention of the games, the products that drive gambling, all the way up through the corporate level. What the executives of this town decide on is allocation of capital in Massachusetts, Macau, South Korea, Japan and which of those should go first. That level of executive decision making is exactly what's happening here. What are your impressions of Macau? As a kid who grew up in Las Vegas, you're used to understanding the way that a casino works. You have large numbers of slot machines in neatly organized banks covering a huge portion of the real estate with a handful of tables that aren't as important to the bottom line but are there to provide a total entertainment product. In Macau, it's almost like the casino is a photo negative of the typical casino floor in Las Vegas, in that you have a sea of tables that are so crucial to the bottom line and a smattering of slot machines around the | 15 APRIL 2013 | 4/11/13 4:00:55 PM