THE MEN WHO MADE LAS VEGAS

–the 11TH in a 12-part series by BYRON CRAFT

THE WINNER - STEVE WYNN

30 years ago, the words “class”, “culture” and “elegance” were not
used to describe Las Vegas. Vegas was about excess. It was about ogling cocktail waitresses in fishnet stockings. The food was thick steaks and the drinks were Scotch. Then along came a casino resort developer who spearheaded the dramatic resurgence and expansion of the Strip. Few before him have had a greater impact on the contemporary Las Vegas industry. He created some of the largest and most successful hotel-casinos in the world.

Even though class, culture and elegance are his contribution to Sin City, on the night before Thanksgiving, November 26, 2008, in an act of marketing excess, he climbed to the top of the 48-story Encore at Wynn Las Vegas, without any special effects or stunt men, and filmed a television commercial promoting its grand opening. This wasn’t a new tour de force for Stephen Alan “Steve” Wynn; he had done it three years earlier atop the Wynn Las Vegas Resort.

Stephen Alan Weinberg was born on January 27, 1942, in New Haven, Connecticut. His father, Michael, changed the family’s last name in 1946 from “Weinberg” to “Wynn” when Steve was six months old to avoid anti-Jewish discrimination.

Michael Wynn ran a string of bingo parlors in the eastern United States. Unfortunately, he squandered his profits on the gambling tables of old-time Vegas. Steve Wynn started coming to Las Vegas when most Americans hadn’t been there yet. He was 10 years old, and his dad, “used to go to bed with me and then sneak out at night and shoot the dice at the Flamingo and The Sands,” Wynn revealed to an interviewer. He recalled Las Vegas as a place one rode horses through the desert and tied them to hitching posts at a casino’s back door. “It was like stepping back into the frontier,” Steve Wynn said. “Casino owners were king; they owned the town. They were glamorous; they had beautiful women and lots of money.”

The elder Wynn moved his family to Las Vegas in 1952 to operate a bingo establishment at the Silver Slipper Casino. Faced with the competition of bingo games at the Golden Nugget downtown, and unable to obtain a gaming license, he was forced to close after only six weeks of operation. He returned to the east coast and reared Steve and his younger brother Kenneth in an atmosphere of affluence. Steve Wynn attended a military prep school at the University of Pennsylvania, and took classes at Wharton Business School. While studying he met and later married Elaine Pascal and they spent their weekends learning his father’s bingo business.

Just before Steve graduated with a Bachelor of Arts degree in 1963, his father died of a heart attack. Steve Wynn had considered a medical career, but in a sudden move that would foretell his future, he decided to take over his father’s business. He called the numbers for players’ cards and Elaine oversaw the cash. Steve also got to know some of the old friends and contacts of his father. Michael Wynn was a longtime gambler who owed $350,000 to several illegal operators when he died. Steve Wynn decided to pay off his father’s old gambling debts. Through these contacts, Steve met one of his father’s friends, Maurice Friedman of Las Vegas, later identified as an associate of a Detroit organized crime group. Though state and federal authorities never tied Wynn to organized crime, his early link with Friedman and speculations about associations to other underworld figures would be a source of controversy for him in years to come.

With Friedman’s help, in 1965, and a $30,000 loan from a family friend, Wynn spent $45,000 on a 3% investment in the New Frontier Hotel and Gambling Hall on the Las Vegas Strip. In addition, he borrowed another $30,000 from a Las Vegas bank to buy two more percent. The total number of shares qualified him for a portion of the Frontier’s profits. The Frontier was attached to the Silver Slipper, where his father had gone out of business. Wynn later said that watching his father and others lose money gambling “showed me at a very early age, that if you wanted to make money in a casino, the answer was to own one.”

Wynn moved his wife and two daughters, Kevyn and Gillian, to Las Vegas in 1967. He became the Frontier’s slot and keno manager. Within weeks, Friedman’s association with a card cheating scandal in California was revealed, as was his association with Detroit mobsters. Though Wynn was never accused of wrongdoing, several of his associates in the hotel were mob connected. They were not merely people who had formerly been in illegal gambling, but they were involved in a hidden ownership and skimming scheme. Wynn had been there less than a year when image-sensitive state authorities persuaded billionaire Howard Hughes to buy the Frontier, hoping his security people would clean up the problems. Steve Wynn claimed that he made no money on the deal. Hughes brought in his own people and consequently Wynn was out of his job as keno and slot manager. Several years later, Maurice Friedman, in exchange for immunity, gave grand jury testimony that helped convict three organized crime associates for holding hidden interests in the Frontier. Wynn also testified but was never charged with any malfeasance.

After leaving the Frontier, Wynn co-produced lounge acts in Las Vegas, but yearned to do more. A meeting in 1969 with Las Vegas banker E. Parry Thomas permanently changed Steve Wynn’s life. The president of the Valley Bank, Thomas had been granting loans to Strip and downtown casinos for years, while other banks resisted. Thomas admired Wynn’s enthusiasm and helped him become the Nevada liquor distributor for Best Brands, a subsidiary of a national company, Schenley Industries. Thomas allowed Wynn to buy Best Brands on credit. Wynn provided wine and spirits to Strip casinos, but not for long.

By 1970 Steve Wynn had bought ten acres off of the Vegas Strip for $154,000 and then persuaded E. Parry Thomas to lend him $400,000 to build a liquor warehouse on the site. A year later, he sold the warehouse to Schenley Industries for $700,000 and he also sold Best Brands, netting $170,000. Thomas then gave Wynn another loan for $1.2 million which was guaranteed by liquor executive Abraham Rosenberg.

Then came Steve Wynn’s seminal moment in his career. There was a narrow, one-acre slice of the Strip next to Caesars Palace along Flamingo Road that Howard Hughes owned, and he refused to sell it to Caesars. Wynn bought it from the Hughes Tool Company. Part businessman part huckster, he announced that he would build a casino there to compete with Caesars. It was really a way to get Caesars Palace to buy him out. By 1972, Wynn and Rosenberg got the deal they wanted. They sold the land to Caesars for $2.25 million. Wynn’s share, after repaying the Thomas loan, was $687,000. This gave Steve Wynn enough money to partner with Thomas in the most famous bloodless coup in Las Vegas casino management. The Golden Nugget had one of the most desirable locations on Fremont Street, but was managed by a group of old-timers who were content to coast. Their stock was undervalued and the managers didn’t own much of it. Wynn and a group of new investors bought enough to get elected to the board of directors. Next they documented mismanagement which included employee thefts from the casino. Not too long afterwards, Wynn called on the Golden Nugget President, Buck Blaine, and threatened to sue if Blaine didn’t resign.

“We can do it easy or we can do it hard,” Wynn recalled telling Blaine. He then related: “Bucky, sitting in that office of his, just caved in.” Blaine bailed out with a $30,000 a year not-so-golden parachute labeled as a “consulting fee.” With his younger brother Kenneth assisting him, Wynn made sweeping changes to the casino, and profits grew steadily. When August of 1973 rolled around, Wynn was running the company, and a year after that, he increased the net profits from $1.1 million to $4.2 million.

Vegas made a big impression on Wynn at the young age of 10 :

“ Casino owners were king;
they owned the town.
They were glamorous;
they had beautiful
women and lots of money. “

To a downtown that had become content to live on local business and spillover from the Strip, Wynn in 1977 added 579 rooms, some of them the finest Las Vegas then had to offer and the Nugget was soon raking in $12 million a year. The Golden Nugget became the downtown area’s fanciest hotel-casino and Steve Wynn had begun to make his mark on the Strip.

A few years later, he used Golden Nugget profits to buy an aging hotel in Atlantic City, where gambling had just become legal. Wynn had it torn down, and by 1980, had built another Golden Nugget with 522 rooms. He lavished money on the resort, paying $10 million for Frank Sinatra to perform at both the Las Vegas and Atlantic City Golden Nuggets for the next three years. The deal brought wealthy high rollers and their gambling revenues to both casinos. He also raided competing casinos for proven employees and lavished money to keep them. By 1984 his net worth was estimated at $100 million.

While planning a new 18-story hotel tower for his Las Vegas casino, Wynn ran into licensing trouble with the New Jersey Casino Control Commission, whose investigators claimed to have evidence linking him and his aides to New York mobster, Anthony Salerno, and other organized crime figures. They also alleged that one mobster, Anthony Castelbuono, was permitted to launder money through Wynn’s Atlantic City casino. No direct link was ever established, but Wynn, disgusted by the charges, opted to leave Atlantic City. He sold the Golden Nugget Atlantic City to Bally’s Entertainment Corporation for a reported profit of $260 million.

Wynn turned his attention back to building on the Strip, which by the 1980’s consisted of aging properties. He obtained a then unheard of $1 billion in credit, about $160 million of it from Wall Street lender Michael Milken, who lent Wynn the money through the use of “junk bonds.” With his Wall Street credit, Wynn set about building a new kind of hotel-casino, the Mirage, which cost a Las Vegas Strip record of $620 million.

It was an enormous gamble; the new hotel would have to make a million dollars a day to service the debt. While it had 3,000 rooms to do it, nobody really knew if there was enough business to fill that many

new rooms, particularly rooms that had to rent for more than the city average. Nobody had built a major new hotel on the Strip since 1973. Some thought that the market was saturated. Casino revenues had actually fallen in the early 1980’s, with competition from Atlantic City. Other states were also flirting with casino gambling, so corporations were nervous about investing further in Nevada. The city was stuck in the doldrums, but Wynn towed it out. The Mirage opened in 1989 and became an immediate tourist attraction and a financial success.

Steve Wynn’s Mirage was the Strip’s first so-called “mega resort”, and it sparked a new era of casino gambling and entertainment that drew national attention to Las Vegas. The Wynn-infused new age required bigger and bigger investments in hotel-casinos to pay for higher quality standards in décor, hotel suites, restaurants, entertainment and other attractions – all intended to impress both middle and upper class tourists. Mirage’s success inspired other companies to construct competing mega resorts on the Strip, and so Excalibur, the new MGM Grand, Luxor, Venetian, and others followed. A new psychology of pride and growth took over the town. A maverick spirit evolved… building the new Nevada.

Each new mega resort had unique attractions. The MGM Grand had an attached amusement park. Others relied heavily on escapist, imaginative themes. Caesars stuck with its Roman motif in the Forum Shops. Excalibur, built to look like a castle, revived the romance of the Arthurian legend. The Mirage, of course, used lush indoor landscaping, waterfalls, and a manmade volcano, to create the illusion of a lush South Pacific paradise in the Mojave Desert.

Wynn used a section of Mirage’s parking lot to erect the 32-story Treasure Island, which evokes visions of pirate movies set in the Caribbean. Treasure Island captures your imagination with a live, simulated pirate ship battle involving climbing and falling acrobats which is performed every fifteen minutes in front of the property.

In the late 1990’s, Wynn prepared to build another Strip mega resort. This location included the former Dunes Hotel, which Wynn arranged to have imploded on national television…always the marketing genius. In 1998, he opened the Bellagio on the site, setting a new record for construction costs on the Strip: $1.6 billion. Like the Mirage, the Bellagio raised the standards for new hotel-casinos. By including a fine art gallery that features works he had collected, Wynn’s Bellagio also introduced yet another attraction to the Strip, but this time with a unique cultural connection. Soon, another casino boom period followed in Las Vegas with new mega resorts such as Paris Las Vegas and Mandalay Bay.

In 1999, amid cost overruns on a $700 million Mississippi casino, shareholder criticism of his spending, and worries on Wall Street, the once-high value of shares in Wynn’s company, Mirage Resorts, began to fall significantly. The MGM Grand owner, Kirk Kerkorian, launched a bid to take over Mirage Resorts and Wynn agreed, not happily, to the buyout offer. In 2000, Wynn’s corporation became the subject of what was then the biggest buyout of a hotel-casino corporation in history, when Kerkorian paid $6.7 billion for the Mirage. Wynn grossed about $500 million from the deal and said he would never again go through the hassles of owning a public company. He used his part of the windfall to buy the forty-year-old Desert Inn on the Strip.

Wynn closed the Desert Inn and later imploded it in favor of yet another venture he called Wynn Las Vegas. The mega resort opened in 2005 at a cost of $2.7 billion. It features 2,716 hotel rooms, a Broadway-sized theater and the only golf course left on the Strip.

Next, Wynn again looked outside of Las Vegas, where he saw a huge opportunity in Macau. For years, Macau had been Asia’s top gaming destination, but only one operator, Stanley Ho, was permitted to own casinos. In 2002, the Chinese government allowed new owners to build casinos there and Wynn was among the first to be approved. He spent $1.2 billion to develop the 600-room Wynn Macau and opened it in 2006.

In 2008, in the midst of the nation’s worst recession in generations, Wynn opened yet another Strip mega resort: the $2.3 billion Encore. It is located next to Wynn Las Vegas and has a similar curved brown-glass-tower exterior. But while the Wynn is themed after New York neighborhoods, the Encore, with its natural light and large windows, reflects the sunbathed ambience of St. Tropez in southern France. Its 2,034 rooms are all suites. It also offers five restaurants, the most prominent of which is Sinatra, featuring Frank Sinatra memorabilia, including his Academy Award for best supporting actor in From Here to Eternity. Elsewhere there is a nightclub with a 10-foot rotating chandelier (XS) and Switch restaurant, featuring changing walls and ceiling.

Today Steve Wynn suffers from retinitis pigmentosa, a genetic disorder that has slowly robbed much of the vision of the casino mogul. Even so, it doesn’t seem to impair his business acumen. He serves as Chairman of Mirage Resorts Inc. He has been an Executive Director of Wynn Macau Ltd. since September 4, 2009. He has been a Director of WRM since October 2001. He serves as an Officer and/or Director of several of Wynn Resorts Ltd. and its subsidiaries. He serves as a Trustee of the University of Pennsylvania, and he served as a Director of the American Gaming Association until May of 2010.

On October 20th of 2011, Steve Wynn didn’t hold back as he discussed the state of the U.S. economy… the President’s handling of economic issues. Wynn called the Obama administration, “the greatest wet blanket to business, and progress and job creation in my lifetime.” He added, “I’m telling you that the business community in this country is frightened to death of the weird political philosophy of the President of the United States. And until he’s gone, everybody’s going to be sitting on their thumbs.”

Currently Mr. Wynn is married to the lovely Andrea Hissom. They were joined on April 29, 2011 at the billionaire’s Encore casino. Actor Clint Eastwood was the best man. Prior to that, Steve Wynn was married to Elaine Paschal, the daughter of one of his father’s gambling buddies. The two were divorced in 1986, but remarried briefly in 1991. When asked why he remarried his wife at the time he replied, “The divorce just didn’t work out.”

The Men Who Made Las Vegas is a twelve-part series by Byron Craft, chronicling the growth of Sin City and the men who made it possible. SLV

Issue 67 featuring: Veronica Ricci, Raven Alexis & Georgia Jones