The Battle for Las Vegas

(gentle music) - When you visit Las Vegas you will have the impression that there are countless, different hotels and casinos competing for your attention. Consider this area, for example, on the southern edge of The Strip. There's The Excalibur Hotel which appears as a Medieval castle, then there is The Luxor with an ancient Egyptian theme. and a pyramid main building, and there's The Mandalay Bay Resort which focuses on opulence with its gold-colored glass facade. But anyone who chooses The Luxor Hotel and is roaming through the. casino and the various shops might all of a sudden find themselves inside one of the other two casinos. That is because all three casinos are connected by indoor walkways. You can stroll back and. forth between the hotels without setting a foot outside. A similar walkway can be found between The Horseshoe Hotel, formally known as The Bally's, and The Paris Hotel, both located roughly in the middle of the Las Vegas Strip. But why do these hotels make it so easy to stroll to their competitors? Wouldn't they do everything to keep you just within their premises? As you've probably. figured out at this point, both The Horseshoe and The Paris belong to the same parent. company, Caesars Entertainment, and the three other hotels, Luxor, Mandalay Bay, and Excalibur, also all belong together and are operated by MGM, Resorts International. In fact, the probability that your hotel belongs to one of the two. companies is fairly high since more than half of the casinos on the world-famous Strip are now operated by one, of these two companies. Now this was not always the case, though, as the current situation is the result of a fascinating development, decades of mergers and acquisitions, and to this day the battle for, Las Vegas is still ongoing. (gentle music continues) Let's look back at the year 1989, the year where The Mirage Hotel opened in Las Vegas. - Fantasy becomes reality when The Mirage appears on the Las Vegas Strip. - At this point in time, tourism growth seemed to have slowed down. For example, it had been a full 16 years since the last new casino, hotel opened on The Strip. But The Mirage became an instant success. Also due to its popular artificial volcano attraction and the hotel's magic show by Siegfried & Roy. It kickstarted an era of. construction boom and acquisitions. (gentle music) In 1990, Circus Circus Enterprises opened the aforementioned Excalibur Hotel with a family-friendly Medieval theme. - Immediately,. thousands of locals and tourists were inside, as The Excalibur is aiming their business towards families. While mom and dad gamble upstairs, their kids go downstairs to the arcade. - In 1992, Promus Companies, which already owns The Holiday Inn Hotel, renames that hotel to Harrah's. In 1993, the city gained an. additional three casinos. MGM Grand opened the MGM Grand Hotel, Mirage Resorts opened Treasure Island, and Circus Circus opened the Egyptian-themed Luxor. - It's opening day at The Luxor and thousands funnel through the entryway to see for themselves what everyone has been talking about. - Another, company, Bally Entertainment, announced the construction. of yet another casino. At this point, the company. already owned The Bally's, their name-giving hotel which, is nowadays called Horseshoe. Bally Entertainment. announced the construction of an adjacent resort which would be called Paris. Today, this resort is known for the replica of The Eiffel Tower in front of the hotel. In the same year, Promus Companies renames itself, to Harrah's Entertainment. Then, in 1996, Hilton Hotels increased, its presence in Las Vegas. The group already owned The Flamingo Hotel which to this day is the oldest still operating resort on The Strip. In addition, Hilton acquired. Bally Entertainment, gaining control over The Bally's and The Paris Resort which was still in the, planning stage at this time. With completion a few years later, Hilton now owns three casinos here. In the very same year, The Monte Carlo, a joint venture between Circus Circus and. Mirage Resorts, opened. Today, this hotel goes. by the name Park MGM. One year later, New York New York was opened by MGM Grand. It's a fascinating building with a facade that mimics, the Manhattan skyline. In 1998, Hilton decided to, spin off its casino business from the rest of the group's hotels and formed Park Place Entertainment. In the same year, Mirage Resorts opens yet another hotel, The Bellagio, which attracts worldwide attention for its famous dancing water fountain. In 1999, Circus Circus opened,

The Mandalay Bay Resort, the one with the gold-colored facade. The group also changed its name to Mandalay Resort Group. Then, in the year 2000, the consolidation really got going. Park Place massively expanded its portfolio by acquiring the large Caesars Palace Hotel, and MGM Grand acquired Mirage Resorts, renaming itself to MGM Mirage. The competition for supremacy in Las Vegas was in full swing. In 2003, Park Place changed its name to Caesars Entertainment, a more well-known brand due to the popularity of The Caesars Palace Hotel. With four companies, competing for supremacy, 2005 would become the. year of mega transactions in Las Vegas. (gentle music) MGM Mirage took over Mandalay Resorts and thus bundles all the properties in one single company. It became the largest, gaming company in the world. However, only for a brief moment in time. Just two months later, driven by the knowledge of this merger, Harrah's Entertainment and Caesars also reconsidered their position and agreed on a deal that allows Harrah's to take over Caesars Entertainment. Much of The Strip was now controlled by these two companies. In the same year, Harrah's also bought The Imperial Palace, a casino that is now known as The Linq. They also purchased The Barbary Coast Hotel, now known as The Cromwell. In 2009, MGM Mirage sold. The Treasure Island Hotel to businessman Phil Ruffin and opened a giant new. complex, The CityCenter, consisting of a shopping, center, residential towers, and various hotels. Harrah's Entertainment expanded further by purchasing The Planet Hollywood Hotel and both companies, again,. changed their names. Harrah's Entertainment reverted back to Caesars Entertainment and MGM Mirage became MGM, Resorts International. Two giants had grown, exercising enormous control, over the gambling capital. Today, all these casinos on the south end of The Strip are run by MGM, and the middle of The Strip is firmly in the hands of Caesars Entertainment. Only the northern part is, characterized by other operators. In total, of the 27 famous casinos here, 17 are operated by MGM or Caesars. Both companies have built, customer reward programs that work across all their resorts, so whenever you spend, money in one of the casinos belonging to the respective group, you receive points. And depending on the number of points, you are classified in a rewards tier, which is associated with various benefits. A system designed to retain customers and prevent them from going to their competitor. But the map as we see it here, only tells part of the story, because if you look at the ownership of prominent resorts, you will often find that. a completely different company name appears, VICI Properties. VICI, as in "veni, vidi, vici," a reference to Caesar. VICI Properties is listed as, the owner of the MGM Grand which is operated by MGM, the direct competitor of Caesars. So, what is VICI Properties? While in 2010 MGM and Caesars appeared like strapped giants, behind the scenes Caesars was crumbling. Amidst all these acquisitions, Caesars Entertainment had undergone a complex transformation itself as the investment companies Apollo Global Management, and Texas Pacific Group jointly took over Caesars Entertainment and privatized the publicly-traded company with a leveraged buyout. This means that a large part of the takeover amount is financed by debt with the assets of Caesars. Entertainment acting as security. The $13.7-billion deal was the fourth largest leveraged, buyout ever at the time, and what followed were. controversial restructurings that made creditors feel betrayed as well as large amounts of. debt that had to be managed, all at a time amidst the. global financial crisis of 2008 and weakened consumer behavior. in the years that followed. The leveraged buyout. turned into a disaster. - Breaking overnight, Caesars Entertainment filed for Chapter 11 bankruptcy protection. - Hoping the, court agrees to its plan to get out from under. $18.4 billion of debt. - With Caesars, Entertainment Operating Company, the largest subsidiary of Caesars, put into Chapter 11 bankruptcy, the company began a more than two-year-long. process of reorganization and a compromise between,

creditors and owners was being negotiated. In the end, Caesars creditors acquired approximately 2/3 of Caesars Entertainment while Apollo and Texas Pacific Group had to reduce their stake in Caesars Entertainment Corporation initially to 16%, a little later dropping out completely. The real trick, however, is that Caesars Entertainment was split into two completely separate companies, and this is how VICI Properties was born, a pure real estate company that would simply own the casinos. So while VICI Properties. owns the land and buildings of the hotels and is less dependent on the fluctuations of the gambling business, Caesars Entertainment can. focus entirely on operations and is lightened of assets. In addition, VICI Properties can benefit from a massive tax break due to the company being a real estate investment trust, also called REIT, which are exempt from federal income tax. A similar step also had been taken at MGM Resorts, and this is how MGM Growth Properties was formed that owns the hotels and, leases them back to MGM. By selling the real estate, these operating companies can gain money which they can invest in future growth, especially important considering the changing gambling market, because while the focus of this video is on the battle over Vegas, these companies are operating, nationwide, internationally, and increasingly digital, for example, in the growing sports betting business. The local gambling halls, had long transformed into major global corporations, as visible by Caesars. revenue breakdown from 2015 at the time of Chapter 11 bankruptcy which shows that Las Vegas business only accounted for 35%, of the company's revenue. (gentle music) - El Dorado Resorts is buying Caesars Entertainment, creating a major casino giant. - So the deal is worth $17.3 billion. - With Caesars, Entertainment growing even more by merging with El Dorado Resorts, 2022 would see yet another mega transaction that would once again bundle ownership in Vegas as VICI Properties acquires MGM Growth Properties, giving the company control over, a large part of real estate in Las Vegas. The battle for Las Vegas is won on two fronts. While this map, which we looked at earlier, depicts the operating business of the casinos, ownership of the real estate is often in someone else's hands. These are all of the properties on The Strip that are owned by VICI Properties at the time of making this video. Alongside some former. Caesars and MGM properties, VICI also owns The Venetian Hotel and the land under The T-Mobile Arena. With the real estate business. of Vegas now opened up, conventional big players. such as The Blackstone Group are investing into the city as well with purchases such as The, Bellagio, The Cosmopolitan, and The ARIA and Vdara Hotels in CityCenter. The battle for Las Vegas has fundamentally changed, now split into real estate competition and into the casino-operating business. And just like the city never sleeps, the battle is unlikely to ever end. (gentle music) For quite a while I have been working on an extensive new project, and if you enjoyed this video then I'm sure you would love this. I created an in-depth documentary about the fascinating 2018 rescue of a Thai football team trapped deep inside a cave. - The team, consisting of 11-to-16-year-old boys, had explored the caves when suddenly heavy. rainfall flooded the cave, trapping them inside. - We knew that if all of. the children remained, they would die. - Back then, the. story went around the world, but by revisiting it, I was stunned to learn just how difficult this operation was. You can watch this video right now on my streaming service Nebula where I am posting all my videos early. And not only that, you also get access to all of my exclusive Nebula content. I have produced videos about the raid on Bin Laden's compound, about the construction of. the iconic Twin Towers, or about the investigation. into the crash of Flight MH17. Nebula was founded by. online creators like me so that we could build our own platform with a subscription model that allows us to turn higher-budget ideas into reality, ideas that just couldn't be made with YouTube ad money alone. And what happens when, creators are given the chance to make their dream projects has been absolutely astounding to see. - What were the defining steps of our evolution? - The team was, trapped inside the cave. - The Russian armed an all-scale invasion of Ukraine. - (indistinct) so illegal. - We gotta go. Go go go! - If you sign up using my link on screen right now, you will get a $20 discount a year, which means it'll cost just 2.50 a month. That way you will support. the ambitious project that me and my friends have embarked on of building our very own streaming site. Thank you so much for watching. (gentle music continues),