Players place bets on brands

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Once upon a time, Circus Circus, relying on a value model of cheap rooms and food, was the most profitable casino on the Las Vegas Strip (and thus, the world). The name Sin City referred to actual sin.

Then along came Steve Wynn, establishing the luxury era in Vegas in 1989 with The Mirage. Wynn's rivals learned quickly, leading them to stockpile brands in a luxury arms race. Today, shoppers flood malls in search of Prada, Gucci and Brioni, while foodies are thrilled by a wave of Michelin three-starred chefs.

An annual study commissioned by the Las Vegas Convention & Visitors Authority revealed that visitors spent an average of $136 on shopping and $49 on entertainment last year, making them $5.2 billion and $1.9 billion industries, respectively.

And gambling? It's been pushed to the background even as gaming revenue in greater Clark County will likely top $10 billion this year for the first time in history. Fifty-five percent of MGM Mirage's revenue stems from activities other than gambling. "That's a 50% shift from 20 years ago," says Alan Feldman, the company's senior VP-public affairs.

And gambling certainly won't be the differentiator. The name of the game in Vegas today is branding. Even as the Tropicana and Stardust have been either sold off or are slated for demolition, Harrah's-owned Caesars Palace, which turned 40 this year, has survived by reinventing itself through a series of partnerships and licensing deals with Celine Dion; chefs Bobby Flay, Bradley Ogden and Guy Savoy; and the mega-mall developer Simon Property Group, which owns the Forum Shops. (Full disclosure: Caesars paid for this reporter's room.)

MGM Mirage's Mr. Feldman openly dismisses the Wynn model as "formulaic." But it's a formula that's worked to enrich its participants, even if it's once again difficult to differentiate the big players. MGM Mirage and Harrah's each posted record profits in the first quarter.
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