Around 1955, in the still-early days of the Mob in Vegas, the guys running the joints realized that business could be a lot better. What was needed was some way to get more visitors to Southern Nevada.
When someone came up with the idea for a local convention hall, the notion found support. But a problem remained: How to pay the tab? The hall’s construction, maintenance, operation and promotion costs would run several million dollars. There’d also be the interest charges.
No private businessman in Southern Nevada was eager to be on the hook for such a large sum. And while it was possible that a voluntary syndicate of businesses could have formed to share the expense, that approach—in a still timid railroad town—seemed complicated.
A simpler solution, some folks thought, was just to “use government”—in other words, harness government’s legal power to tax. That way you could force every business person in and around the gaming business in the county to contribute to the project—whether they wanted to or not.
So what if someone didn’t believe it was in his self-interest to subsidize a convention facility that would be miles away from his establishment and next door to a competitor? Because that competitor had “juice”—because he and other guys had the ear of government—the coercive power of government would be deployed to override any dissent and compel payment by the dissenters.
The words of Nevada’s first room tax ordinance are candid: “Whereas, certain operators of hotels, motels, slot machines and gaming casinos, bingo games, [and] race and sports books … have agreed that the acquisition and operation of a Convention Hall within Clark County will bring substantial benefits to … all business in Clark County in greater or lesser degree, and said operators have themselves drawn up and suggested to said Fair and Recreation board, a schedule of revenue per gaming unit, to be assessed against all Operators in Clark County….”
In one respect this collectivist tax-based solution to the perceived need for a Southern Nevada convention hall was just the same old approach that advocates of government have always used to justify coercing dissenting minorities. First, come up with a collectivist scheme where most of the benefits will flow to you. Then cry: “It’s in the interest of all of us!”
In another respect, however, this particular “solution” also reflected the larcenous ethos of the Mob. Predation, after all, has always been the reason for the latter’s existence. Thus, moving from wiseguy-style coercive larceny to government-style coercive larceny was not that large a step. In each case, what’s key is arrogating the power and right to force involuntary payments from others.
So this was the origin of what is known today as the Las Vegas Convention and Visitors Authority. Over subsequent decades, the distinct odor of predation has continued to linger. On balance, however, most large Las Vegas Strip resorts have found it more useful than not.
That era, however, may be coming to an end. The LVCVA itself reports that by 2009 about 1.7 million sq. ft. of new, private convention space will be online in Vegas. Big new players include Wynn Las Vegas, South Coast, The Grand Hyatt Las Vegas, The W Las Vegas and The Palms. Not even mentioned in the LVCVA report was the million sq. ft. of private convention space that Boyd Gaming Corporation’s $4 billion Echelon Resort promises by 2010.
Why are these resorts now so intent on constructing their own convention space? Why are they planning—and investing big bucks—for futures where they do not rely on the LVCVA’s convention center?
Everyone now knows what Sands Chairman Sheldon Adelson recognized years ago: Other things equal, exhibitors and convention-goers prefer to stay, dine and be entertained near the exhibitions.
In other words, the business model behind the LVCVA’s Las Vegas Convention Center (LVCC) is—fatally—obsolete.
Sands executives have long pointed out the injustice and economic waste inherent in LVCC’s competing head-to-head against the same hotels whose room taxes subsidize it—and allow it to continue running at a massive loss. When only Sands Expo had the convention space, and consequent business to be damaged by LVCC sabotage, those criticisms met deaf ears. Now, however, many CEOs will confront the essentially parasitic and larcenous role of the Las Vegas Convention Center.
An artifact of Mob-era predation, the LVCC should be disposed of.
And if certain hotels still want it … they should buy it.
Steven Miller is policy director for the Nevada Policy Research Institute.