Sheldon Adelson and Steve Wynn are legends in Las Vegas, but they publicly disagree on Miami’s casino potential. Wynn is bullish; Adelson cautious. Both still want in.
Casino magnates Sheldon Adelson and Steve Wynn disagree on at least one thing: Miami’s potential to emerge as a Las Vegas East.
The two CEOs famous for outlandish Vegas hotels and oversized personalities both have their eyes on opening massive new resorts in the Miami area should Florida loosen gambling laws. But in recent remarks to investment analysts, Adelson and Wynn take opposite positions on how much new gambling tourism Miami can support.
Adelson, the CEO of the Las Vegas Sands casino company, sees Miami capable of supporting a single casino resort. But Wynn, who named his signature 4,750-room Vegas property after himself, describes Miami as a place where competing casinos can thrive.
The conflicting views from two of the most colorful icons in Vegas offer another sign of just how quickly Miami has become a hot topic for the gambling industry.
A leading analyst this week warned Las Vegas could lose as much as 15 percent of its business to South Florida if the Sunshine State allows three new casino resorts to open in the Miami and Fort Lauderdale area. At the center of the debate is Genting, a Malaysian casino giant that promises to revolutionize South Florida tourism with a $4 billion waterfront casino resort in downtown Miami.
Wynn seems to agree with Genting.
“Miami is a fabulous place, and if it were done right, in my opinion, Miami would take off and become one of the two or three greatest destination resort cities in the world,” Wynn said in an Oct. 19 conference call on his publicly traded company’s third-quarter results. “Florida has everything going for it.”
In a September gathering of many of the same casino-industry analysts, Adelson sounded far more dour about South Florida’s gambling future.
“As far as Miami is concerned,” Adelson said , “there’s not enough casino business either mass [market] or at the high-end even on a ramped-up, stabilized basis to support multiple locations.”
Genting, which has already bought up about $500 million worth of downtown Miami real estate, insists the opposite is true. Genting executives say Miami’s strong ties to Latin America, easy access to the Northeast and strong potential to lure sun-seeking Asians will dramatically expand the region’s tourism.
The company plans the world’s largest casino on the property, which includes the current Miami Herald headquarters. The Herald sold the property for $236 million with the provision that it could remain in the building rent-free through 2013.
Genting’s Resorts World Miami would boast about 5,200 rooms slightly larger than the biggest hotel in Vegas, the MGM Grand. Genting, whose parent company owns half of the Norwegian Cruise Line company, says it can attract a broad range of travelers by offering a wide range of shopping, dining and entertainment options while positioning its casino on upper floors, away from the hotel lobbies and public areas.
“The Genting Group’ Resorts World Miami will be the anti-Vegas,” company spokesman Tadd Schwartz said in a statement Friday. “While Las Vegas casinos thrive on casinos, Resorts World Miami is a mixed-use entertainment destination that will complement Florida’s existing tourism infrastructure and boost local businesses. The Resorts World brand has its roots in the cruise industry, where gaming is an amenity not the focal point of the cruise experience.”
Current plans would put about 50 restaurants in the Genting complex and 8,500 slot machines. That’s far more gambling space than the typical Vegas casino the MGM has just 2,500 slots but Genting says it would need more offerings as one of only three large gambling resorts in the area.
A new report out this week concludes that while South Florida has Vegas potential, it can’t support the three casino resorts allowed under the bill.
“Watch out, Las Vegas! Miami is a threat!” the report states.
Analysts at Bernstein, a leading watcher of gambling stocks, calculated South Florida’s gambling potential by meshing Las Vegas statistics with Miami’s strong appeal with international travelers. It estimated the Miami area could siphon off about 15 percent of the Las Vegas market, and generate between $2 billion and $3 billion in new gambling revenue a year.
The legislation requires developers to spend at least $2 billion on each property, which Bernstein estimates would require about $4 billion in new gambling revenue to remain profitable.
One challenge is that Florida’s existing Indian casinos and racetrack already generate about $3 billion in gambling dollars a year, meaning the state would need to become a $7 billion gambling market under the three-resort plan bigger than both Vegas and Singapore.
“Possible? Yes,” the report states. “Probable? No.”
Adelson cites economics in minimizing Florida’s gambling potential, even as his lobbyists and lawyers are pushing to expand gambling in the state and secure a Miami location.
His lobbyists want Florida to allow a single South Florida casino, with Sands beating out Genting for the license. Sands is reportedly in talks with owners of a Miami site near the Genting land, while Wynn’s name has not yet surfaced with a potential site.
Privately, Genting sees Adelson’s strategy as defensive. Genting has no Vegas presence, so any business Miami can steal from Sin City would be a windfall for the Malaysian company. Wynn faces the same downside as Sands but has shown no hesitation about the South Florida market. He recalled for analysts his fondness for Miami Beach, where his parents had a home on Pinetree Drive when he was young.
“The core question is, can they support three of them?” Wynn asked of the South Florida market. “If they’re done well, if they’re positioned properly, if they’re managed intelligently, absolutely. It could become a $2 billion or $3 billion market.”
He also touched on his rival’s bearishness toward Miami.
“Now I had a conversation with my neighbor, Sheldon Adelson, who was a little bit more conservative in his view,” Wynn said. “But I think both of us agree that Miami has the opportunity of becoming something quite extraordinary.”