Come mid-December, Las Vegas will be one casino richer and the Deutsche Bank will have officially planted a large and very expensive foot in the Nevada desert. But do banking and gambling make a happy marriage?
Money, money, money makes Vegas go round
If the $4 billion hotel-cum-casino's advertising slogan is to be believed, the brand new 3,000 bed Cosmopolitan is "Just the Right Amount of Wrong." It has been pipped as one of the most expensive projects ever in the history of Vegas and, judging by its promotional pictures, is a place of grandiose luxury.
But visitors to the complex might be more comfortable in one of its almost 3,000 beds than Deutsche Bank appears to be in its own. In declining to make any official comment relating to its desert foray, the mighty German financier lends weight to the idea that the amount of wrong is, in fact, not quite right.
In fairness, the bank did not actually set out to be put its name on the Strip, or at least not so boldly. The venture started in the hands of a developer, Ian Bruce Eichner, who convinced the big lender to stump up $1 billion for his dream casino.
At the time, the term global financial crisis had not yet been coined. But it came, wrought havoc and rendered Eichner unable to meet his loan payments. The only way out was a forced sale.
Place your bets please...
Rather than let the construction - little more than a shell at the time - be sold off for a song and thereby walk away from the situation out of pocket, Deutsche Bank went along to the auction and came away with a half-built casino in need or financial commitment far exceeding the original loan.
It was, and remains, a risk, but expert Martin Ruckes told Deutsche Welle that such action is quite common when debtors default on their payments.
"It's all about minimizing losses," he said. "It can make sense to become the outright owner for a while until the market environment has picked up and the object can be sold for a profit."
The new casino has 1474 slot machines and 83 gambling tables
Exactly when that might be in the case of the Cosmopolitan is impossible to judge, and Deutsche Bank is certainly not hazarding a guess on record. Fact is that the Nevada town has been struggling to keep a stronghold on its popularity in recent years. Where it was once synonymous with affluence and decadence, the gambling capital of America is now gaining notoriety as a microcosm of economic woe.
Not only have the nation's casino-lovers had less to spend on roulette and the like since the financial downturn, but when they do gamble, they are now more likely to do it closer to home at one of the country's hundreds of Native Indian casinos.
But even if the Cosmopolitan proves to be a poorly-timed venture, Ruckes says it is not one that will break the bank.
"With real-estate, you have the land and the building, so you're not talking total loss," he said. "And long-term casinos are a relatively low-risk sector."
Looking for a buyer
Coldplay could help to put the Cosmopolitan on the map
That is what the Cosmopolitan, which is not going to be operated by Deutsche Bank, is putting its money on. That, and the fresh life it hopes the two-tower development will breathe into a stale scene. The casino's chief executive, John Unwin, told the Wall Street Journal that he expected people to want to come and see it "because it is truly something different."
It's not only different from existing establishments such as Caesars Palace, but also from the original plans as laid out by Eichner. His visions of giant-sized robots and leopard-skin print wallpaper have been replaced by sleek glitz, glamour and glass.
And just days after opening on December 15, the casino will host a grand New Year's Eve party with guests Jay Z and Coldplay providing the entertainment. It promises to be a big night and, Deutsche Bank hopes, one of many more to come.
The sooner it is a success, the sooner it can be sold off and the respectable Frankfurt financial house can return to the business of respectability.
Author: Tamsin Walker
Editor: John Blau