#35 The Business of Casino Food

Food Non-Fiction

In this Food Non-Fiction podcast episode, we tell the story of how Las Vegas became a destination market for gambling, how the nature of destination markets created competition amongst the many casinos, how casino food amenities were used as a competitive tool, and how casino restaurants have changed over time from buffet to gourmet.

In October of 1929, the stock market crashed. October 29th was the worst day of this crash. It was named “Black Tuesday”. On Black Tuesday, over 16 million shares were traded on the New York Stock Exchange. Billions of dollars were lost and the economy was on a downward spiral into the Great Depression of the 1930’s. So, in 1931, Phil Tobin, a 29 year old freshman member of the legislative assembly introduced a bill to legalize gambling in Nevada. He wasn’t a gambler himself, in fact, he was a cowboy, but he knew that legalizing gambling would bring the state of Nevada some much-needed revenue. The revenue would come from gaming taxes.

At this time, in 1931, the Hoover Dam was scheduled for construction. It was built between 1931 and 1936. This meant that thousands of workers would be coming to Nevada. And these would be federal workers, so it was likely that a lof of the illegal casinos would be shut down. So instead, of having the casinos shut down when the workers came, legalizing casinos would bring in a ton of tax revenues.

Phil Tobin’s bill made financial sense. So, on March 19 of 1931, the Governor signed Assembly Bill 98 into law.

Assembly Bill 98 legalized the following games:

Faro Monte Roulette Keno Fan-Tan Twenty-One Blackjack Seven-and-a-half Big Injun Craps Klondyke Stud Poker Draw Poker Slots

The bill is also known as the “Wide Open Gambling Bill”.

After World War II, there were strict gambling laws in most states, so Nevada really became the center of gambling in the U.S. - especially, of course, in the Las Vegas strip - which is, by-the-way, located south of the actual city of Las Vegas.

The Las Vegas strip was, and still is, a destination market. People travel there specifically to experience the gambling and entertainment. Destination markets offer a lot of the same thing. For example, you go to Hawaii to surf so there are a lot of surfing schools and they need to compete.

Same thing with going to Las Vegas to gamble - there are so many places you can gamble that these places need to compete for your dollars. So casinos, over time,

have offered more and more amenities.

Casino resorts started popping up in the 1940’s. You could go to a casino resort, and not only gamble, but have your hotel, live shows and food, all in one place. Casino restaurants were designed to bring people to the casinos. The strategy back in the middle of the 20th century was to offer cheap food, sometimes even free food. The logic was that if you could offer great price value for food at your casino, then people might choose to come to your casino, rather than go to a standalone restaurant or another casino.

So casino restaurants used to operate as what is called “loss leaders” - casino restaurants would lose a little money, but then gain that money back and more when customers played the gambling games.

There are 2 ways that having a restaurant at a casino can increase revenue. One - is that the restaurant draws in more players Two - is that it gets each player to spend more while they’re at the casino.

The Vegas strip is the ULTIMATE gambling destination, but the relationship between casino restaurants and gambling spending is different in Vegas. Certainly, your average Vegas casino restaurant is not operating at a loss anymore. This shift in Las Vegas from the days of cheap casino buffets, designed for the convenience of gambling clients, to high end, big profit restaurants has been gradual.

Thank you to our interview guests:

Dr. Sarah Tanford

Dr. David G. Schwartz

Thanks to the Looperman Artist for the Music:

Chillwave bass and synth by djpuzzle