A small blurb from a June 24 Morgan Stanley gaming research report discussing EDC Las Vegas 2013 revealed a shocking observation:
“There were supposedly 135k revelers at the festival. However, the table/bottle service area looked loosely populated. While the majority of club revs come from a small # of patrons, it makes us wonder how much incremental benefit the high-end (casino) properties get from this type of event.”
EDC began its Vegas incarnation in 2011. Over the past three years, it’s become one of the Neon Desert’s top weekends for partying; right there with Memorial Day, Labor Day and Independence Day. Every big name DJ makes an appearance and they all seek to pick up a few side bucks playing pool parties and nightclubs. High-end party options are abundant. The casinos salivate anticipating the arrival of high rollers with money to blow on Blackjack and bottle service.
Though bodies abounded this year, reports say the clubs – a new but important source of profits for the casino industry – underperformed relative to expectations. Due in part
to Insomniac (the organizer of EDC) stepping up its VIP game (they hired Marquee to manage the VIP section), many of the high rollers spent their dollars at the festival grounds and not in the clubs. Several popular venues saw tumbleweeds blow past their premium tables. It got to the point where a few clubs opted to grab girls from the crowd to fill the tables so they wouldn’t look empty.
Why does this all matter? ADANAI wrote an article about Insomniac’s fight with the state of Nevada over taxes and how this could cause EDC to return to Los Angeles. The story states that part of the reason Insomniac may eventually win the fight is because they could leverage the political support of the major casino companies. However, if the casino companies are not benefiting from the high roller crowd during EDC, they may not be very good allies for Insomniac.
Where oh where have the high rollers gone? Some of them stayed out at EDC all day and night enjoying the show – Insomniac did a pretty good job of persuading real spenders to invest in VIP packages. A high-end package included a $5,000 round trip helicopter ride to the festival and a table minimum in the $15,000 – $20,000 range. Dropping $5,000 on a helicopter ride leaves little in the budget for another $10,000 at Hakkasan or Wet Republic.
Perhaps clubs overpriced tables thinking people would forfeit their college tuition to see Calvin Harris or Tiesto. Whatever the cause of the soft numbers, the fight between Insomniac and the state of Nevada will be an interesting one to watch over the course of the next few months.