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The Biggest Bet in Vegas

Impresario Steve Wynn has broken ground on a $1.95 billion hotel, Le Reve
Michael Kaplan
From the Print Edition:
Steve Wynn, Jan/Feb 03

Steve Wynn is back. Steve Wynn is back. This is the hopeful drumbeat that echoes from one end of the Las Vegas Strip to the other. Nervous competitors -- hotel executives who've seen their fortunes take a post-9/11 tumble, initiated massive job cuts, and watched seemingly unbridled construction grind to a halt -- have good reason to pin their hopes on Wynn.

If history is an indicator, his return augurs well for the renewed growth of Vegas -- especially since Wynn (no bluffer when it comes to these sorts of things) vows that his next project, a $1.95 billion mega-resort called Le Reve, or The Dream, will be his greatest accomplishment yet. It's three years away from completion, and already Vegas is in a tizzy. The buzz on Wall Street isn't far behind. Wynn will use proceeds from a recent $450 million initial public offering, loans from private investors, and some of his own money to finance his newest, innovative twenty-first-century concept for Las Vegas.

The comeback mega-deal isn't bad for the son of a gambler who owned a chain of bingo parlors and died thousands of dollars in debt. It's doubly not-bad when you consider that the 60-year-old Wynn, who graduated from the University of Pennsylvania with a degree in English and married his one-and-only at age 21, originally came to Vegas in 1967 through a fluke offer to own a small piece of the Frontier Hotel.

Less than a year later, however -- following some messy business when it came to light that the Frontier's main backers were Detroit mobsters -- Wynn pleaded ignorance, cashed out and parlayed the Frontier stake into a parcel of property near Caesars Palace. He flipped the land for a cool $1 million profit and used his cut of that money to buy a 5 percent share of the Golden Nugget. By age 31, in 1973, Steve Wynn was the majority shareholder of the Nugget and the youngest casino owner in Las Vegas.

Despite years of success that followed, in 1989 -- just before Wynn's completion of the Mirage kicked off Vegas's decade-long boom of building and prosperity -- he had plenty of detractors. They mocked his ambition to open a world-class resort at a time when Las Vegas was dead, when it was little more than a city dominated by grind-joints where a high-end hotel seemed an ill-fated nightmare. "Everybody was skeptical," remembers George Maloof, owner of the recently opened Palms Casino Resort and a longtime student of Wynn. "He was spending $600 million on a resort that would need to do $1 million a day in business. Nobody had ever come close to that. People thought he wouldn't make it. But he opened his doors and never looked back."

More importantly, for the bigger picture of Vegas as a whole, Wynn tilted the playing field in an intense way. "Once Steve opened the Mirage, he put pressure on other companies to open mega-theme resorts," says Maloof.

Seemingly overnight, Vegas went from bust to boom. Wynn was the match that lit a powder keg of growth in a city that, just a year earlier, seemed hopelessly dated and written off. "People had to grow to compete with the Mirage," adds Maloof, "and suddenly Vegas became cool again."

By 1998, when he launched the greatest gambling hall of the twentieth century, the Bellagio, Wynn was a certified Vegas big shot and the head of the hottest gaming stock on Wall Street. He was lauded as a pioneer, viewed as the Nevada equivalent of his boyhood hero Harry Mufson, the man who built the Eden Rock -- a lavishly stylized, wedding cake of a hotel in Miami Beach, where Wynn and his parents spent their winters. His $1.67 billion Bellagio was as cool and idiosyncratic and stylish as Mufson's masterpiece. It also raised the bar on what a Vegas resort could provide and spawned other luxurious palaces like The Venetian and Mandalay Bay. In short, Wynn inspired the transformation of Las Vegas into America's greatest destination.

Then, in March 2000, Kirk Kerkorian smelled weakness. With Mirage Resorts' stock price declining, he swooped in and forced a purchase of the company for $4.4 billion. In one of his first moves, Kerkorian replaced Wynn with J. Terrence Lanni as chairman and chief executive officer. Edged out of his own company, Wynn cashed in his stock for $500 million, took $11.3 million in a severance package, and, suddenly, the most influential man on the Strip was without his landmarks of high-rolling hospitality.

Just one month later, however, clearly unable to stay out of the game, Wynn laid down $270 million and bought Vegas's beloved Desert Inn, a classic property that boasted the city's only remaining public 18-hole golf course, and a place where Howard Hughes had slept and Frank Sinatra had performed. Cagey about what he'd do with it, Wynn holed up with a coterie of advisers, designers and architects. He brought in Japanese pachinko king Kazuo Okada and Baron Asset Fund as investors.

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