#326 - Ed Pitoniak - CEO @ VICI Properties ($VICI) - From the Slopes to Leading a $50B Gaming, Hospitality, and Entertainment REIT

Chris Powers: A line when we had a call a couple of weeks ago that I wrote down; you said I had no plan, and I executed it. And so where I want to start the conversation is you're now the CEO of VG, one of the largest REITs in the country, but you started as an editor for a ski magazine. That's an expansive career.

So, let's start back to how you even became an editor of a ski magazine.

Ed Pitoniak: Yeah, gosh, Chris, well, I suppose it starts in a way with being an English major in college, back in the seventies when people generally weren't under the quite same pressure to be careers that they are now, went to New York in the summer of 79 after messing around in the mountains for about a year.

Then, I might go into book publishing and even in 1979, people in book publishing were saying, don't come into this business. It's dying. It's still here, so I decided to give the magazine business a shot. Before I got Ski magazine, I had a very trippy first couple of years because Cosmopolitan was the first magazine I worked at as an editorial assistant.

I got hired on the spot because the female editor thought it'd be fun to have a young male editorial assistant, and I confess I didn't last her all that long; I left after ten months. But it was an excellent learning experience because the woman who ran Cosmopolitan then, Helen Gurley Brown, was a certified genius, right?

And I'll tell you what kind of genius she had, but not until I tell you who the next person I went to work for, and that was Nora Vincent Peale, you know, the creator of the whole idea of the power of positive thinking, so from Helen Gurley Brown in Cosmopolitan to Norman Vincent Peale in a magazine called Guideposts.

What both people were about and what both publications were back was self-improvement. And self-improvement is the United States' unique selling proposition against all other nations worldwide. Right? We are a country that believes so fiercely in self-improvement, and that can manifest itself in all kinds of ways.

I had the good fortune of working at Guideposts for a brilliant man who taught me so much about magazine making and communication—and figuring out how to tell the story you want in terms as simple as possible. And challenge yourself on whether the audience understands what I'm trying to say.

And I carried those skills to Ski Magazine and had enormous fun at ski. It was the first real opportunity in life to combine a vocation with avocation. I'd grown up, loved skiing, and just felt like I'd died and gone to career heaven because I was getting to work with brilliant people around a subject we were all passionate about.

And I did that for eight years, no, nine years, but then came the opportunity, which I can elaborate on in a moment, to work in ski resort operations with a company called Intruest for a brilliant man named Hugh Smythe. And that was the progression from magazines to ski resort operations.

And then, over time, in this discussion, we can talk about how you go from ski resort operations to running hotel REITs and then eventually running a REIT that owns gaming and real estate. 

Chris Powers: I want to talk about all that. Can you? Maybe you answered it, and I just missed it. Why was she a certified genius?

Ed Pitoniak:  Because she understood, um, the desire of American working class and middle class, but especially American working-class women, to improve their station. And that came at a time when women were, in a meaningful way, leaving the house to pursue careers in the wider world, right? She started as a secretary.

Right, and she was a secretary who made her way to running what was probably one of the most profitable magazines in the world at that point. Because she tapped into the women's desire to figure out how to improve my life, what resources and skills can I call on to do so?

And people tend to oversimplify what she was doing and say, Oh, it was all about, you know, playing off a sex appeal and everything else. It was not that right. The editorial content of Cosmo was way better than people understood. And it was about improving this complete suite of life skills that a woman, especially a working-class woman, could call on to improve a lot.

Chris Powers: The other thing you said, I just found interesting. You said back then that younger folk's obsession with careerism was not what it is today. What did it look like back then? How would you frame it today for anyone who can't reference that period? 

Ed Pitoniak:  Well, it's manifested in a few different ways. One of the ways it manifested itself is when you were in high school and college back then, and I'm talking about the 1970s; I graduated from college in 1978. Almost no matter what income level your family was at, it was understood that you got a real job doing real work in the summers.

And it was usually frontline work of one kind or another, right? You know, you might've worked on, uh, on a farm. You might've worked, you know, behind a counter, you worked with, No matter, even if you're upper middle class, even if you're going to an Ivy League college, you worked with working-class people, and working-class people might have supervised you.

It was doing what the military historically did: bringing people of different classes and education levels together and forcing them to figure out how to work together. Right. And it was a way, especially for those going on to high-powered educations and high-powered careers, to learn how to lead people of all different kinds.

Right, so fast forward now, 40, 50 years, if you're in high school anymore, and if you come from an upper, you know, quintile, upper deciles, income levels. You start getting internships after ninth grade, right? You start resume building and career building, and once you get into college, God knows you're not working behind a counter anywhere, right?

You're trying to intern for an investment bank, a consulting firm, somebody, or some firm representing the career you will build. And a hothouse environment has caused us to suffer as a country. And, you know, if you want to, I think you want to understand how we've evolved over the last, especially the last 20 years; I think it's that to such a great degree, certain educated elites have lost, totally lost touch with the lives led by working-class people, especially between the coasts.

Right, because everybody's either working in finance or consulting or maybe tech, and they're not on a factory floor, you know, engaging with the workers on the floor to understand the lives they're living, the work workers are doing and, what state of mind they're in, right? It's, and it, again, it all goes back to this careerism and the degree to which, uh, not only are people more careerist now but the careers people are interested in have gotten so narrow.

Chris Powers: Right. Interesting. Is there any sign that we'll go backwards, or are the tailwinds at this careerism as we sit?

Ed Pitoniak:  I don't know. There is an increasing recognition that this career relentlessly careerist approach and this relentless drive to achieve the elite status of one kind or another is not improving the health of our country.

And you do hear rumblings, and this is one thing Jamie Dimon talks about as an example, very powerfully, the degree to which, you know, we need to start thinking about forms of service. Not just military service, which is, I believe, a very healthy way to develop an ethic of service, but you know, I look back.

I'm going to ramble a little bit. I look back at the great financial crisis and regret that the Obama administration didn't look back to the 1930s. And go, you know what? The WPA and the civilian conservation corps did an enormous amount of good during a time when the economy of the country was in a shambles, and it was right around that time that my wife and I got to stay in the Timberline Lodge in Mount Hood, Oregon, which the CCC built.

And this legacy of the CCC represents the civic wealth we still all benefit from today. Any of us who can get to go there, and it's not wildly high priced, it's, it welcomes the whole of the country, and I hope over time, you know, we can develop more of an ethical service so that it's not a case where, if I don't get hired by Goldman or Morgan Stanley or JP Morgan or McKinsey or Bain right out of college, my career is lost.

I should do something for a couple of years to further educate myself on how people live and work and what can be done to improve how people live and work. 

Chris Powers: What was the CCC? I'm sorry. 

Ed Pitoniak:  Civilian Conservation Corps. 

Chris Powers: And what did it do? 

Ed Pitoniak:  Principally, during the 19 thirties, it engaged in civil construction projects. There was a distinction between the WPA and the CCC, but I need to remember what it was. Still, you know, whether it was building assets like the Timberline Lodge, whether it was trail building and national parks, whether it was making, you know, concession and service buildings and national parks, whether it was creating public artworks and monuments, this is the kind of thing they did.

And what they did was create, again, civic wealth. And we have a lot of civic wealth in this country, but we don't take the pride in it that we should. And we're not creating new forms of civic wealth to the degree we should. And I didn't see it manifest itself in terms of the term we now use to describe what used to be called public works.

We used to call them public works, whether it would be roads, water, sewer, electric or gas, because it was understood that we, as the public, own them; we're accountable for their health and their upkeep by using the term infrastructure. We've depersonalized at all. Well, who's responsible for infrastructure? Well, not me, especially not me. If my taxes are going to have to pay for it, right?

Chris Powers: So we could have called it the public works bill. The 7 trillion public works bill might have been issued differently. 

Ed Pitoniak:  Yeah, you know, if more had gone to, you would learn to improve our infrastructure. Is that suitable? And God knows we've wasted a lot of money as a nation on public works projects that weren't managed properly.

But we also know that the ones managed properly are what our economy relies on to work. 

Chris Powers: One thing you said that came to mind that I thought was interesting. I was in Kentucky yesterday, and the gentleman I was with. He owns a hospitality company that serves the small town he lives in in Kentucky, with 3700 people, but he's brought it back to life.

And I said, what'd you do last night? And he said, well, my family and the company's owners, we served all the hospitality workers pizza, food, and a massive party for him. And they do that multiple times a year so that ownership can get a little idea of what it's like to serve, make pizza, throw stuff away, and clean tables. And I mean, he just said, we've been doing, it's a tradition. We've been doing it forever. And it's his way of reminding people across the organization what it's like to serve. 

Ed Pitoniak:  Yeah, you know, what was this show? CNBC used to run, and they may still do.

Undercover boss. And you know, I remember giving full marks to one of the tissues. I think it was Jonathan, the family that owns Lowe's hotels. And come to appreciate that when you got to wrestle a mattress around, it's a lot of work.

It's a whole lot of work. And if you have to do it for 14 or 15 rooms a day, it begs the question, are we supporting, resourcing, and paying these people what they deserve? 

Chris Powers: Yeah, my buddy got into the senior housing business, and the way he started it, he reached out to a giant in the industry who said, you know what, I'm going to teach you this business. Come to my, you know, the story comes to my facility.

We'll start, you know, in a couple of weeks. So my buddy gets in his blazer, brings in a tie, and prepares for senior housing. He walks them straight into the room and says, these are the people you'll give showers to today. These are the bathrooms that you'll be cleaning up. And if you can make it through this, you will be cut out for this industry.

And it was the opposite of how he thought about the industry, but you got to do the work. 

Ed Pitoniak:  Yeah, you know, I used to run a couple of hotel real estate investment trusts, and when I would do property tours, I got bored pretty quickly with just looking at the rooms and all that stuff.

One thing I was intent on was that I always wanted the GM to bring me to the employee cafeteria. And I wanted to see two things. First of all, is the employee cafeteria in good shape? More than two things. Is the employee cafeteria in good condition? Is the food being served good? But most of all, how do the people react when the GM walks in?

Do they react as if what is he doing here? He never comes in here. He doesn't know how to talk to us. We need to learn how to speak to him, or when the GM walks in, do the eyes light up, right? And, oh, you know, someone, they, who understands us, who supports us, who resources us properly, who knows us as people, ask about our kids, questions about the sport we might play, you know, the difference a GM like that makes is it is almost immeasurable, suitable?

But it all comes down to understanding that as a leader of the property, you get to know everybody who works in it, understand their work and  judge whether they're doing a good or a bad job. Still, no matter what, make sure they have everything in you to do the job well. And that they're fairly compensated, but even as importantly, emotionally balanced.

Chris Powers: Yup. Oh, I love it. All right, we've set the stage. I want to go back in time again, back to leaving the editorial to get into operations and learn how ski mountains run and. It's my understanding that you have a lot of knowledge and history on just how the ski industry in America shaped and came to be.

Ed Pitoniak:  Yeah, it's, and it was, you know, one of the fortunate experiences for me in the ski businesses that the founders mainly were still alive, right? The American ski business dates back to the 1930s; the first ski hill in America opened in Woodstock, Vermont, in 1934 with a rope tow.

And to talk about high-velocity change within a couple of years, Averill Harriman was opening Sun Valley. in Idaho with a chairlift derived from these lifts that Union Pacific used for their banana boats coming out of Central America, right? It was a privilege to get to know the founders and understand how they had built the sport from ground zero in only 50 years.

And it's an incredible community of people; the ski community was then and is still alive today. But it's also a sport, an experience for which the economy has no inherent demand. And its market only exists to the extent that you are excited. Need for it every day, and the people still, you know, running the sport and the people who founded the sport understood that back then.

And we're always looking for ways to animate the experience, bring it to life, such that it attracts people. And yet, as we got into the early nineties, the ski sport hit an air pocket, which couldn't be entirely explained by it. It's not snowing here or not snowing there. Economic conditions couldn't explain it.

And so I struggled to try to understand it. And I came up with a theory that I shared with the ski industry in either 94 or 95. It was a theory I developed out of a very rudimentary understanding of demographics. And if you look at the demographic age waves of our country. The most significant number of baby boomers were born in 1960.

The American ski industry peaked in 1986 when most baby boomers were 26. No kids finally got a little bit of money, got some freedom. So they would go to places like Mammoth in California, Killington in Vermont, and Keystone, Breck. Copper, Bale, and Colorado ski their brains out and party them out.

But by 1990, the most significant mass of baby boomers had an enormous number of kids because they were symmetrical. If the baby boom's peak was in 1960, the rise of what we would now call the millennial baby boom was in 1990. So the negative aspect of that for the ski industry is that there were too many families with kids too young to come skiing.

And so it was my theory that within the next few years. These kids will be ready to go skiing. We, as an industry, need to prepare for them. Our kid's programs suck, you know, our lodging product isn't designed for families; we really should figure this out because if we can capitalize on this age wave.

Everybody will benefit. A few people from a company called Interwest were in the audience. When they heard this, they asked me to give the presentation to their executive team. Long story short that eventually led to a job offer. So in 1996, I left my position as editor-in-chief of Ski Magazine to go to work for Interwest based in Whistler, moved my family from the New York area to Whistler, BC, and got to work for eight years for one of the most brilliant people I'll ever work with, a man named Hugh Smyth. I can talk more about what I learned from Hugh because it relates to my love of gaming. 

Chris Powers: Please do. 

Ed Pitoniak:  Yeah. Well, Hugh was one of those people who knew at a very young age what he wanted to do in life.

And he wanted to work on Ski Mountains. He joined the Whistler Mountain Ski Patrol at 17. By the age of 19, he was a mountain manager, but by the time he was in his early 20s, which was an age at which I was still trying to figure out, like, you know, how to cross the street safely. He decided I wanted my ski area.

So, he managed to get his hands on a small ski area in Alberta. He ran that for a few years, and then came the opportunity to develop Blackcomb Mountain in Whistler, BC. He managed to secure backing from the Alberta Development and Investment Bank, and believe it or not, the Aspen Skiing Company, at that point, was owned by 20th Century Fox.

And 20th Century Fox was acquiring assets like Pebble Beach and the Aspen Skiing Company because it needed to figure out what to do with all the cash flow from Star Wars. Right? Think about it. 

Chris Powers: I did not know that. 

Ed Pitoniak:  Yeah. And, so, Aspen Ski Company agreed to put money behind Hugh's building Blackcomb, which he did with his bare hands.

The bad news was that he opened in the winter of 1979 or 80, which happened to be one of the worst snow winters in North America in about 40 or 50 years. So it was a near-death experience, but he fought his way through it. And he carried through that time. And then, through all the years I worked with him, he carried what the great peacemakers and experienced creators have with them, which is a combination.

This almost ecstasy every day is a chance to put on a show and the terror of the perishability of inventory, right? Because when you're in a business, whether it be the gaming business, the lodging business, the ski business, or any business that sells a ticket, proverbially speaking to an experience that takes place on a given day, if that ticket goes unsold, that day, it stays unsold forever.

Right? And so for him, it was always, and including again, the years I worked with him, it was, oh my god, we get a chance to put on a great show today, and oh shit, if we don't put on a good show like What we're going to that what we lost today, we will lose we will have lost forever, right? It manifested itself one day when we had these regular operational update calls with the GMs of all our resorts, and we were on a Conference call one day with a small ski area. We are in Quebec, and you asked the general manager about the weekend's outlook. And the general manager says fantastic snow's excellent. The weather forecast is good. It's going to be a great weekend. And Hugh goes, have you pushed the snow banks back? And the GM goes, I said, he again, repeats.

Have you pushed the snow banks back now for the sake of your audience? I won't duplicate the profanity that you could operate at when he got riled up. But he said I'm asking if you push the bleeping snow banks back because you just said you're going to have a huge day, and you shouldn't need me to tell you that one of your constraints on maximizing the day is parking lot capacity.

So get some dozers, payloaders, get whatever you got to contract and push those bleeping snow banks back because if you can get, you know, another 50 or 100 cars and do the math and how much revenue that represents, you otherwise would never get. And, you know, to me, that was just breathtaking, as well as understanding how, in almost any business, you make every day matter because every day does matter, especially in a company with highly perishable inventory. It was a great lesson, too, in reducing any place-based hospitality, leisure, or entertainment business. To its essence, you envision, create, and operate the guest experience of time and space. That's what it's all about.

The only two dimensions of existence are time and space. And what I have come to love about the gaming business, which I'm now involved in ways we can talk about in a moment, I recognized in the gaming operators I met what I valued so much in Hue, which was constantly challenging ourselves and challenging ourselves.

And what is the guest experience of a given increment of time? And a given increment of space. So if you think about gaming operators, a few years back, 10, 15 years back, they looked at the guest experience, the daylight hours. As a result of time , I realize we're not offering much. Then they looked at the guest experience of the swimming pool complex and experienced the space and went; you know what, that's lame, too.

And, you know, enough people involved in Vegas had been to places like a beat set to understand what a day club was. They realized we needed to import the day club concept to Las Vegas to enrich the guest experience of time the daylight hours. We'll improve the guest experience of space in the swimming pool, and not only will we create more value in the guest experience but also make a whole new revenue centre. There are day clubs in Las Vegas That, you know, can clear almost a hundred million a year.

Chris Powers: Like an Encore win.

Ed Pitoniak:  That's one of the most famous and certainly one of the most productive. 

Chris Powers: I mean, I've been there on a day, like, a Tuesday, and it is wild.

Ed Pitoniak:  Yeah. And it didn't exist 20 years ago.

Chris Powers: Okay. And so let's take any hospitality arrangement. The teams constantly examine what areas of this physical property need to be maximized. Is there another example? A day club is fantastic. Is there another one that comes to mind that has developed or one that used to be great? That's not great anymore.

Ed Pitoniak:  Yeah, well, you can go way back, obviously, in the history of Vegas. The whole concept of residency wasn't born with Celine Dion.

It was probably, you could say, reborn with Celine Dion at the Coliseum Theater in Caesars Palace because you can go back to the days of the rat pack and realize, okay, you know, we can't offer just gambling, right? People will want to have different experiences, including even those who gamble.

Let's fill time and space with music. But then, as time passed, the Vegas operators took Cirque to a new level, right? And it enabled a magnitude of investment that Cirque du Soleil was never capable of when travelling from city to city and operating in a tent. The car theatre at MGM Grand, which we own, was created for Cirque du Soleil about 20 years ago.

And the original build-out cost was almost 200 million bucks. And today, that space is still as vital and mind-blowing as ever. Right? And then, you can look at it in terms of programming, like, okay, what do we do to get F1 here? What do we do to get the NBA Final Four here?

What do we do to get the Super Bowl here? What do we get? How do we get the NHL, MLB, the NFL, and the NBA? How do we redefine the dining experience? About 20-odd years ago, the Las Vegas operators and the world's leading chefs realized this was a place to take dining to a new level. So again, you can take, catalogue, or inventory the 24-hour experience and learn, okay? They've been designed, either invented or not in all cases, but redefine what an experience can be by taking advantage of the incredible Olympian economics of Las Vegas and its assets.

Chris Powers: And we're talking Vegas, and we can stay on that. I would get to this quickly, but it's prudent now. Are people craving real-life experiences, maybe more than ever? Because the argument would be that everybody's got an iPhone. It's a digital world; how, if I said to you, are they craving it more?

Are they willing to spend more? Is that trend still on the rise, or is technology putting a meaningful dent in people's desire to go to physical locations to do something? 

Ed Pitoniak:  It's interesting that if you looked at it globally, there is evidence worldwide that technology isolates people, right?

And I can't give you the exact statistics, but you know, you hear, especially in places like Japan and China, about young people, especially young men, who become hermits. Interestingly, my sense- please don't ask me for the facts to back this up is that net technology has led to more, not less, gathering here in America.

People ask us what speech is in the business of, and you know, in a way, we own a real estate where people gather. Right. And it's that urge to pick. It has yet to lessen and has benefited the whole human practice of gathering in the United States because technology can facilitate people coming together.

You know, you look as an example at live music. I think back to mine, my teenage self and, like, what a big deal it was to come up with the money to buy an album and, you know, in inflation-adjusted terms. Purchasing an album would cost me 40 bucks today.

And now I get it all. I don't get it free. I don't know what's; I don't even know what Spotify charges me, right? 

Chris Powers: It's like 1499 a month.

Ed Pitoniak:  For every song in the world, every song in the world, right? And yet, live music is as vital as ever, right? The desire to gather around live music is as crucial as ever.

And we're seeing that. On our land, the Venetian with the opening of the sphere. 

Chris Powers: Yeah. Oh my gosh. So you, the sphere is on the Venetian's land, still like a land lease.

Ed Pitoniak:  Yes. And I'll tell you something neat. And that is that if you've been to the Venetian there, which is 7 100 rooms, the biggest, most prominent hotel in America, it has rooms with a view of the strip and rooms that previously looked basically on parking lots.

Our operating partners at the Venetian now get a premium for severe view rooms because it's a 24-hour animated feature, redefining who comes to the Venetian, how, what they experience, and what they spend. I was just with our Canyon Ranch partners whom, you know, well, given your friendship with John Goff.

And the Venetian also has within it a Canyon Ranch Day Spa, America's largest day spa. And they see when you two are in residence is the fear at the sphere, Canyon Ranch benefits enormously. And it's, again, all about people coming together. Another example of that, Chris, is the fact that.

Las Vegas is a madhouse during March Madness. Because people travel to Las Vegas to watch basketball on TV, you can look at that in an icy, objective way and go; that is irrational behaviour. You're spending much time and money watching a basketball game on a screen when you could stay home and do it for free.

Why do they do that? Because they want to be part of the buzz, and they could try to get tickets for, you know, for, you know, a regional, you know, opening round quarterfinal, what have you, but they're only going to see so many games. When they go to Vegas, they can see every game.

Yeah, and they can watch games from, you know, whatever, nine o'clock in the morning Pacific time till midnight Pacific time, and it's all about being together to do that. 

Chris Powers: This must come from the Venetian on social media. I didn't realize that's what the property was on, but most of the videos you see, I guess the sun rises in the morning, must be coming out of hotel rooms, and people saying at the Venetia, that's the most often one I see is that the sun coming up.

Ed Pitoniak:  Orb upon orb. 

Chris Powers: Yeah. And I remember playing golf in the wind maybe two years ago, and it was being constructed. And I was like, this is the dumbest thing I've ever seen. What is this? It happens only in Vegas. And now it's the most popular thing in the world.

Ed Pitoniak:  It's gone crazy. Seeing the lead into the sphere opening and all the negativity was exciting. Oh, it's over budget. It won't work, which was massacred by all the negativity going into F1. Oh my God, you know, it's too expensive. Nobody's going to go. Who the hell wants to watch a race at that hour?

Oh my gosh. You know, it sucked up a, you know, water main cap, and then once the race happened, it was like you had drivers and team owners going, my gosh, that's the best race of the year. Right. So anyway, I think what's remarkable is when you got people like Dana White going, I want to have the first sports event sporting event in the sphere, which he's not going to do in September, though, technically, you could argue is it going to be the first sporting event?

Because the NHL will do their graft, they are in the sphere, right? And, you know, Fish is going to go in April, and you hear all kinds of rumours about, you know, who else might want to go in. And, it's also part of the, you know, the continuing growth of the residency in Vegas, right? Again, we can go back to Celine Dion for basically reviving the whole idea of residency amazingly at Caesar's Palace.

And since then, you've had the likes of Elton John, Rod Stewart, and now more recently, you know, Lady Gaga plays at our asset, the Dolby Theater at Park MGM, along with Bruno Mars and Usher, you had, you know, Pink recently say after a Legion Stadium show, you know, basically I want a residency, and I want it now.

For artists, it's a virtuous way to share their music without going through the brain damage of 40 or 50 semis. You know, packed with equipment and everybody moving every day or every couple of days. Right? When you think about what U2 does at the Spear, when it comes to the production, there are not 40 semis.

There's a laptop. Because it's all about what the projection shows, right? But you only needed 40 semis of speaker equipment, lighting equipment, pyrotechnical equipment, fog machines and all the usual stuff. That goes into putting on a rock concert. 

Chris Powers: You were right. I think I watched a short on YouTube the other day where Dana White said this is like the pinnacle, not the pinnacle of his career.

It is the most important project he's ever worked on, throwing the greatest; he said the MMA fight in the world's history leads to this event in this sphere. Is it fair to say I mean just America, or maybe the world is the world? Is it Fair to say people are trying to figure out how to build more of these around the country, or is it?

Ed Pitoniak:  Well, MSG Madison Square Garden, which developed a sphere and owns a sphere and has created a, pretty much a separate company around the globe, has talked, uh, about creating spheres, in global cities, the full-size spheres.

Right. So, cities like London and Tokyo used to be speaking. I wonder if they still do; they used to talk then about having something of a scale-down sphere for other large cities less global than New York, London or Tokyo.

And they would still be, nonetheless, an opportunity for artists to take the content they created For the giant sphere and take it on the road to smaller ones, and again, I haven't shame on me. I have yet to check in to see if that's how they're still thinking about the growth of the brand and the network.

Certainly, the way things have gotten. The way things have started in Las Vegas, you would hope there's some promise of that. 

Chris Powers: And what does it tell us about what hospitality people know that the general population doesn't know that you were kind of describing, you know, F1 is not going to work? It isn't going to work.

That's not going to work. But clearly, the people in hospitality are putting billions of dollars behind projects like this. They know that it's not 100 per cent going to work, but they're pretty convicted. So what does that say about what hospitality people like and how they think versus how the general population generally receives this kind of new project?

Ed Pitoniak:  I ought to be precise at the risk of overgeneralizing. But it's the media that, you know, from which you tend to get that negativity, and then many people can feed off the negativity and echo it. Still, having spent, you know, the first 17 years of my career in media, and I don't mean to sound patronizing. Still, it saddens me, too, to see how the media business has evolved. It doesn't look like it's fun for anybody anymore, right?

It takes a lot of work to hold an audience. The economics have gotten very challenging, and you can't help feeling at times that negativity seeps through to the front line of reporting right, and what it comes down to is, is this scepticism around and just general negativity around risk-taking.

Right, and I think, you know, for us as a country, one of the things we're divided around is risk-taking and, and giving people the liberty and the freedom to pursue risk responsibly, not irresponsibly, not at the harm of others and wish them well, as opposed to the schadenfreude of, Oh, look at that person taking a risk. I hope they feel miserable.

Right? You should think about something other than their risk and consider what trouble you might responsibly take. You know, to bring more excellent value and meaning to your life. 

Chris Powers: All right. I want to talk a little bit more about Beachy and get a little more into this. So, the largest real estate owner on the Las Vegas strip, which I read, is the most economically productive street in America.

It makes sense. I didn't know that. I was fascinated to read that owning the Venetian Caesar's palace, MGM Mandalay Bay. There's probably more I left off. And then you partner with a lot of folks. But to set the context, what do you all do, and what do you all not do? Because many people sometimes think, as I did initially, that you own the gaming businesses, so perhaps just set the context. What does Vici do, and what does it not do?

Ed Pitoniak:  Yeah. So we are, at the highest level, a real estate investment trust. Real estate investment trusts have been meaningfully present in the U. S. since the early nineties. They started earlier than that, but that's when the reading industry grew.

Our mutual friend John Goff created 1 of the early REITS and Crescent; the purpose of a real estate investment trust is to own real estate and distribute the cash flow of the real estate. To invest, the equity investors in the REIT, in a tax-advantaged way, do not pay corporate income tax.

So, we take the cash flow we generate upon rent receipt and deduction of general administrative expenses and our interest expense. We must broadly deliver that cash flow and distribute a certain percentage of that cash flow to our investors as dividends.

We at Vici, in particular, are known as a net lease REIT. What it means to be a net lease REIT or a net lease landlord is that while we own the building and the land underneath it, we sign a lease with the occupant, who is then entitled to operate their business without our involvement or intrusion, right?

They own the economics of their operating business and pay us to rent out of the economics of their active business; they're responsible as operators and occupants of the building for everything. They pay for the upkeep of the building. They spend the real estate taxes on the building; they're liable for anything and everything that happens within the building.

They're responsible for ensuring the building. It means that every dollar we collect is rent that we can then distribute to our investors after death service and GNA. So, no, we don't operate a darn thing within the REIT, and we trust our operators to manage their businesses well.

And we look for opportunities to help them succeed in their business operation. But those opportunities are around the margins in terms of Potentially helping them with capital. Still, we never get involved in the form of saying, Hey, you know, we think you ought to charge this on Saturday night instead of that, or, yeah, you know what, we don't like that restaurant.

It would help if you did that restaurant. We don't do that. 

Chris Powers: Okay. And before we get a little bit further. How did Vici come to be? That's an important story.

Ed Pitoniak:  Yeah. So, we are the result of a bankruptcy, which is the bankruptcy of a particular entity within Caesars.

Caesars was taken private by Apollo and TPG, the private equity firms, in 2007. They did an excellent job of managing the business. Still, unfortunately, they bought the company and put the debt on the industry at what turned out to be a highly inopportune time. And so, by 2014, a particular business entity was in bankruptcy.

Eventually, the owners of Caesars agreed with the creditors or a key creditor group that the credit of this entity would largely be satisfied by conveying the real estate from Caesars to the creditors. The creditors would then be responsible for setting up a REIT to own the real estate and collect rent from Caesars as the occupant of those assets.

I first got involved in early 2017; I'd had REIT experience and ran two hotel REITs after leaving the ski business. I looked at this opportunity and thought, Oh my God, this could be one of the best opportunities When it comes to value creation that I've ever seen because I was beginning to learn about the economic dynamism of gaming and how much revenue and profit it produces and thus how valuable the actual estate ought to be given the incredible life of the businesses that take place within it.

And in real estate investing, this can be called an institutionalization story. You take a category of real estate that institutional capital has yet to understand fully, and you help them know it because they will only invest in it once they understand it. So, it was an opportunity to create a story.

It goes back to my early magazine career and learning how to tell a story as simply and clearly as you can and design your deck to yield key takeaways that people can remember because if people don't remember an account, it wasn't a whole lot of value in telling them that. And so we put together a report for institutional investors that helped them understand how incredibly dynamic the operator's business was and, thus, how valuable the real estate should be.

We IPO'd in February of 18 and went into that IPO with an equity value of about 4 billion. And over the subsequent now, almost six years, we've grown the company from an equity market cap of 4 billion to whatever we closed out today, probably around 32 billion, and have really just gotten up excited every day to tell the world about this incredible gaming real estate, but also increasingly about stunning experiential real estate that they will also benefit from our investing in. And that includes real estate like Canyon Ranch. 

Chris Powers: And we are going to talk about Canyon Ranch. We're going to have a nice little chat on that. Before, I want to go further as it relates to just casinos. One, there's only, there's a finite amount of them. What makes a good buy for you all?

What boxes have to be checked? Is it city-based? Is it the size of the property? The economics have to work, but what's your strike zone? 

Ed Pitoniak:  It's the conventional real estate underwriting criteria. Is it a good market? Is it a good market with fundamentally sound demographic and economic trends?

If it's a good market, is it in a good location in that market? Right? Is there a good catchment area? Is it easily accessible? If it is in a good call or place, is it fundamentally a good asset? Right? Does it have curb appeal? Does it have good accessibility? Was it built well? Has it been maintained well?

Can the occupant of that asset be competitive in their marketplace? And then, finally, and critically, is it a good operator? Right? Do they know their customers? Do they serve their customers? Well, do they make money? Can they have strategies to continue growing the business and sustain or increase market share?

And then, finally, is the operator a good credit? Can we rely on them to pay the rent reliably based on the quality of their profit and loss statement and balance sheet? 

Chris Powers: And I'm assuming these are long leases. If a casino goes out, it's different from a hospital can move into some of these properties or some other type. It's either gaming or nothing for most of these. 

Ed Pitoniak:  It is, and it cuts both ways, right? At times, we would get questions from investors like, Oh, gosh, it's a single-purpose asset. Like, you know, if you can't do gaming and you can't do anything, that is true, but on the other hand, for gaming operators, it's a unique purpose asset built to suit their needs.

They have a limited number of choices. You know, one of the I don't know if you've, you're probably familiar with the term Chris white box, right? And whenever you're in a real estate category where tenants can choose among white boxes, you're in an inherently challenging class. And you know, you go back to COVID and the degree to which some very, very good companies with all the cash resources and liquidity in the world would tell landlords, I'm not going to pay the rent.

Landowners go, what do you mean I got to pay the rent? You got all the money in the world. Yeah, we got all the money in the world, but the guy with a vacant white box three doors down has said he'll give us two free years of rent if we move down there. So, play ball because we have choices.

Gaming assets are of a magnitude and complexity that will never be vulnerable to white boxing. 

Chris Powers: And the structure of the leases, their long term in nature, is it, are they absolute net leases or does VG benefit when a resort goes, Hey, we're building a day club, and that's going to generate a hundred million more in revenue.

Do you all have any profit interests in additional revenue, or are they usually just straight absolute net leases or fixed costs? 

Ed Pitoniak:  As documented, they're absolute, at least. But what we have with our partners is the opportunity to invest capital through our property partner growth fund.

So the operator could decide I'm going to invest, I'm going to fund this investment entirely off my balance sheet, and I will collect every single dollar of profit that comes from that investment, or they can come to us, or we can go to them when we hear they're considering it, they can come to us and say, hey vici why don't you fund it? It's going to deliver a healthy return. You'll take some of that return, which is rent, in return for our investment in that improvement, and they'll get to take the rest, so we have done some of that. It's dependent on the situation.

Chris Powers: Okay. Then this came in from, I asked, my Twitter following.

I asked him if there was anything I should ask him. One tracked the stock closely and said Vici had the highest gross margins of any public company in the general market. The highest. How did he do this? Any specifics that he can share would be significant.

Ed Pitoniak:  Yeah. So we have, and this is all public information.

We have about 50 billion of enterprise value. We will collect close to 3 billion dollars of rent this year across our portfolio, rent and interest income because we also have a credit book and run these 50 billion assets. We collect 3 billion in rent with 27 people. 

Chris Powers: That was the next question. How do you do it with such a tremendous but lean staff? 

Ed Pitoniak:  Well, two reasons. Because we're a net lease rating because we don't have to operate anything, we don't need the personnel and the overhead that would go with a heavy-duty asset or property management function; the other part of it is maybe I'm cheap, you know, the first REIT I ran, I think, as I was becoming CEO, one of the board members said, you know, thing I've learned about REITs and this is in Canada, so you'll understand, the saying you need to squeeze a dime so tight. The queen gets a headache because every dime you save goes to the bottom line and gets multiplied.

In terms of determining your value, and thus you want to manage this as efficiently as possible and, you know, we've got 27 people, we have had people in the last couple of years, but, you know, we realized that you know, as shareholders in the company ourselves, we get way more value out of saving money where we responsibly can driving into the bottom line and have it multiplied by whatever multiples in place at the time, whether it's 14 or 15 times.

Chris Powers: So for every essentially billion and a half to billion seven, they might be an extra. 

Ed Pitoniak:  Well, yeah, although, you know, it's interesting, we go through periods where we don't add anybody. We did $21 billion of transactions in 2021. We bought the Venetian real estate for 4 billion. We purchased a large part of the MGM portfolio for 17.2 billion.

And at that point, we only had 20 people, and we didn't immediately add anybody. And yet we, you know, we were soon collecting between the two assets, whatever it was, you know, almost a, I want a billion more rent a year. 

Chris Powers: Is your largest competitor Blackstone? 

Ed Pitoniak:  Blackstone does, and we love Blackstone.

We're in business with them through other investment vehicles like Great Wolf and Doorwater Park Resorts. Still, we were appreciative when they came into Las Vegas, first by buying the Bellagio, then doing a joint venture with MGM's REIT MGP, which we now own, a joint venture on Mandalay Bay and MGM Grand.

Then, they also bought Aria and converted Cosmopolitan, which they'd done a great job of turning around from the great financial crisis into a home-run asset that they now own the real estate of in partnership with a couple of other parties. So their competitor, Realty Income, another very good REIT, has moved into gaming.

They bought the Encore property in Boston, and then they bought an interest in the Bellagio. And so, capital recognizes this is tremendously valuable real estate, whether it's in Las Vegas or elsewhere. But we're benefiting now that we own ten assets on the Las Vegas Strip, benefiting from the fact that Las Vegas and this was true going into COVID. However, to your point earlier, Chris, it's accelerated since COVID.

Las Vegas is now universally recognized as the global epicentre of experiences.

Chris Powers: All right. You're not getting away with saying, telling me the story of project shit go. 

Ed Pitoniak:  Yeah. Well, as many of your listeners may know, Wall Street investment banks love to give names to projects. Right, and in fact, I remember reading at one time that Goldman even invented a computer program that would randomly name tasks so that the name wouldn't ever be a giveaway as to what it was. Still, as we were born, we had a rather ugly balance sheet.

We were going to have a whole lot of debt, and it was going to be very expensive. And Wall Street had a certain amount of scepticism that we would succeed. So it was never the official project name, but a few banks could not help calling us Project shit go because they didn't think we had a chance.

And they weren't unreasonable in thinking we didn't have a chance because, on paper, it didn't look good. Still, we acted out of our conviction that this is incredible real estate. As soon as we can tell a good part of the world about how good it is, we will get the capital support that will enable us to improve our balance sheet, grow the business, and attract a premium valuation.

Chris Powers: Let's go to the Canyon Ranch investment and describe before that. So, you all own real estate. Then you partner with these great brands, how did and experiential is essential. How did this one start percolating? And what's the thesis there from your perspective?

Ed Pitoniak:  Sofor Canyon Ranch and our golf investment habit grew from my experience in the ski industry during my involvement with Canadian Mountain Holidays, the world's first and still today the world's biggest heli-ski company. And what I witnessed in the heli-ski business is that it is built around the whole pilgrimage experience.

People make pilgrimages to experience things like CMH and heli-skiing. They're willing to pay a lot of money. They're eager to go a long way and endure specific amounts of discomfort and unpredictability because it is the apex of the ski experience. And so I started sharing with my team back in probably 19 or so the idea that, you know, we should look, and maybe I should just quickly say, Chris, we have a secular thesis around experiences generally, we believe the consumer economy has increasingly gravitated to a preference for experiences over things.

It has cultural waves behind it; we believe it'll have demographic waves behind it. Thus, we identified pilgrimage-type experiences as experiences with incredible customer loyalty, strong pricing power and good economics that could support our model.

And so, the first pilgrimage category we explored was golf. We now partner with an incredible golf placemaking and operating company called Cabot, which is genetically related to Mike Kaiser's creation. Mike supported Cabot's founder, Ben Callen Durr, in creating the first Cabot resort in Cape Breton, Nova Scotia.

And now, subsequently, we're growing together with Cabot in places like Florida and their new asset, Cabot Citrus Farms. So Cabot was our first pilgrimage experience investment. And then it was late 20, or Was it late 21? 

Chris Powers: And quickly, we're getting late 21 the way that work is. You'll buy the golf property, all the physical real estate, and then lease it back to the golf operator or is that different?

Ed Pitoniak:  The more or less, the same model, within Cabot, in the case of Citrus Farms, it, we initially lend the money to develop the resort and then, that loan, a large part of it will convert to real estate ownership, which will lease back to them.

So, no, it was January 21; a dear friend, Guy Metcalf, the global chairman of real estate at Morgan Stanley, said, Hey, you want to go to Fort Worth and meet John Goff? And I said, you're damn right I do, and we're not going to leave there without figuring out a way to get into business with John Goff and Canyon Ranch.

So we came down here in January of 21, had an enjoyable meeting, and John and I hit it off. We agreed; let's figure out a way to work together. And we eventually found a way to work together through our financing of the development of the Canyon Ranch that will be developed in Austin.

Then, in the last year, we expanded that partnership so that we're now a financing partner through Preferred Equity into Canyon Ranch Operating Company. We're also the mortgage holders on both Tucson and Lenox with those, turning into a sale, these bags in the future, and again, I wanted to meet John because I had this conviction. The Canyon Ranch is a brand of already great power and meaning in the marketplace. Still, that power and purpose will only grow as more and more of the world, not just Americans but more and more of the world, recognizes that if you pursue wellness to the fullest.

You significantly improve your life, but if you pursue wellness to the fullest, you must go somewhere that understands fitness fully, right? Physical wellness, psychological health, and spiritual wellness. And have you been to a Canyon Ranch? 

Chris Powers: I've been; I'm a member of the one in Fort Worth. And I'll be going to Tucson next year.

Ed Pitoniak:  Yeah. So, Tucson will be the complete revelation of what wellness can mean. And again, our need for it and our appetite for it is only growing culturally. And especially for my generation, the baby boom generation, because, you know, we do intend to be here forever. As depressing as that may sound to younger people, Canyon Ranch is one of the key means we'll do it. 

Chris Powers: Okay. And to what extent can you share? So you came in January 2021 and said you had a fun conversation, but to be clear, it was January 2021. It was a different world.

And this was a business where you're putting your hands on people, massaging them, acupuncture, and all these things you left that meeting. How does a deal like this get put together? You both wanted to work on it. What were the things that mattered to you to go? Like, we're good.

You believe in the concept, but how do you go from us like this to making a deal? 

Ed Pitoniak:  Yeah. So, we believe in the brand, and our belief in the brand only grew as we got to know John and the team more. We quickly gravitated to the Austin Opportunity, which, at that point, John was already trying to figure out the funding strategy for.

We looked at that particular opportunity and greatly valued that John already owned the wonderful land outside of Austin and a chance to invest in the Austin marketplace. Because we may get around to this later, we cannot support in Texas through gaming.

And yet, we recognize Texas as one of the most dynamic economies in America and the world. And we're not serving our investors well if we can't figure out how to invest in Texa's economic and cultural dynamism. So, we also put a lot of value on the Austin opportunity for that reason.

And so it didn't take much convincing for us to believe. Okay, this is an excellent opportunity to work together. What are your financing needs? What will the business be, and what kind of financing and long-term real estate ownership and rent could it support? And we quickly developed.

The high conviction around that is because John has a team working for him that we have a lot of confidence in when it comes to underwriting the business. It took us trying to remember when we announced it. We announced it on October 22.

As you've probably seen, he and I went on Kramer together on Mad Money. And I wonder if it took us that long to develop so that it might have been. It might have been; it was now that you mentioned it. It took us ten months, short in the grand scheme of things.

Chris Powers: And there's a big, fantastic ranch, canyon ranch being built outside of Austin, Texas. That might be one of the best health and wellness properties, not just in the country, but definitely, that's the point. While we were talking about this, I read a headline the other day, and as I was researching you, you all are the lender on a hotel in Vegas owned by the Koch brothers.

Is this that building that's, or has never been completed? It just, It's like a blue building. It's been around for 12 years. It's been slowly getting completed. 

Ed Pitoniak:  The story behind this building is that it was identified as a development site many years ago. Then, in the early 2000s, Jeffrey Sofer, who did a brilliant job reviving the Fontainebleau Hotel in Miami, committed to developing a Fontainebleau Casino Resort on the Las Vegas Strip.

Then, the Great Financial Crisis hit, and his banks got cold feet. Pull the rug out from under him, and the building goes into receivership. Carl Icahn ended up buying the building for 600 million and mothballed it. He has no intention of ever completing it.

He just wanted to wait for the market to improve and then sell the development opportunity to somebody. That development opportunity got sold to a New York developer, and unfortunately, COVID undid him. Then, at that point, Jeffrey Sofer partnered up with Coke Real Estate to buy the asset and commit to its full development.

And we are a financing partner in that development. We're happy that tonight is opening night, and Coke and Coke Real Estate is a great partner.

Chris Powers: That's cool. I've seen that building again playing golf in the wind. It's all you see from going to ICSC in 2012 and 2013; it's just been limping.

Okay, here's another question on Vegas that was interesting. They said that Nelk and Dana White seemed to live at Red Rock, which isn't on the strip, making me wonder if Red Rock has seen a legit benefit, basically the impact of influencer marketing on in-person casino experiences. Do you think about that at all?

Ed Pitoniak:  Oh, yeah. I mean, so Red Rock, which is also known as Stations Casinos, is, I shouldn't say, owned. It's a public company, but Frank Lorenzo Fertitta, who partnered with Dana on the creation of UFC, is a great operator and brand, and they know the appeal in Las Vegas is known as the local market.

So, the Las Vegas gaming ecosystem has three main components. It has the Las Vegas strip. It has Las Vegas locals, generally assets in the suburbs serving Las Vegas locals. The third market is Las Vegas downtown, the old historic downtown of Las Vegas, which is a market that is popular, among other things, with Hawaiians.

It draws from both the local market and a tourist market, but there's no question that, You know, social media helps those with a story to tell, and Red Rock knows how to tell a perfect story. Let me give you an example. It returns to managing time, space, and the gaming operators' expertise.

So it was a couple of years ago when the Golden Nights were in the playoffs. They won the Stanley Cup this year. They're in the playoffs against the Winnipeg Jets, and the game was going to be held in Winnipeg on a Saturday. Red Rock uses social media and its email database to send out a note to its clientele saying we will have a viewing party at the pool on Saturday afternoon.

4, 000 people showed up. I don't know how you would have rallied people before social media and the internet 30 or 40 years ago. You couldn't have done it. You needed to buy more radio ads to pull something together quickly. And so, the transformative effect of social media for businesses with a great story is potent.

And again, it just goes back to the negativity. Suppose you're going to read old-line media About social media. In that case, chances are old-line press is going to crap all over social media Because social media, to a degree, is eating old media breakfast, lunch and dinner. 

Chris Powers: We will bring it home on Texas because I'm a Texan. You're in Texas.

We don't have a casino of any proportion, and it's on everybody's mind what's going on? Oh, and by the way, Mark Cuban just sold the Mavericks to the Las Vegas Sands family, and they just bought a vast site, the old Dallas Calvary site. We talked about this; it's been in Austin for several years. What's going on in Texas? 

Ed Pitoniak:  I wish I could tell you, but here's what I want to say to you could too; here's where I'd like to start, and that is, I find Texas fascinating, and I find Texas fascinating because I think Texas like certain other states, including the one I now live in Rhode Island, are kind of like.

They embody America's essential characteristics and all of the contradictions that go with it. The slogan of my state, Rhode Island, is the lively experiment. Texas is a very lively experiment. It's a very rowdy experiment; the world finds Texas fascinating. 

The world finds Texas fascinating, but Texans find Texas highly fascinating. It is highly engaging to the point of being inward-facing instead of outward-facing. So, it does somewhat baffle me. John Goff and I discuss this, especially concerning our opportunity with Canyon Ranch Austin.

Name me a Texas resort. That would be genuinely world-famous.

Chris Powers: I can't. It would have been like Barton Creek or something in Austin at one point, but I can't think of anything iconic here and not one thing. 

Ed Pitoniak:  And why is that?

Chris Powers: I don't know. Do you know?

Ed Pitoniak:  I don't know. I could start guessing, and it would be wild-ass guessing of the wealthiest sort that's probably facilitated if we could share some mezcal or something else. But part of it is that there are celebrations of what it means to be a Texan, but they're geared more toward Texans, as opposed to celebrations of what it means to be a Texan that the world gets invited into. 

Chris Powers: Interesting. Do you want to know something crazy? Of all the hotels in Texas that I've stayed at, the one thing that comes to mind most often is this might be just bizarre, but it's what came to my mind.

The St. Regis in Houston, an old hotel, needs a lot of updating, but their bar is a hangout area; I went to so many weddings in Houston over the years. It's one of the best hotel memories I have in Texas. I don't know why I'm telling you that, but tell your team to check out the St. Regis bar area in Houston at an otherwise older hotel. That is what comes to mind most when I weirdly think of Texas hotels. Now, this puts Fort Worth in the spotlight. The Drover, Hotel Bowie, Bowie House, and the Crescent are incredible new hotels that have come out in the last three years.

Ed Pitoniak:  Well, here's the other thing. It's not that you don't have a story to tell, because I also think in the cultural district of Fort Worth, you have one of the wealthiest cultural districts in America, not the world, right? My wife and I love art museums, and I would say the Kimbell has now supplanted the Frick in New York as our favourite museum pound for pound.

And we can't wait to return to the modern and the Amon Carter. So, I bring all this up because when it comes to gaming, you know, to what degree could a first-class gaming resort, right, you know, of the kind that a Las Vegas Sands or an MGM or a Caesars or a Wynn can build, what could it be as an expression of Texas in a way distinct To Texas and in a way that invites the world in, to celebrate Texas and give Texans another way in which to celebrate Texas.

Now, of course, gaming is problematic for many people, right? 

Chris Powers: Yeah, because it's addictive. 

Ed Pitoniak:  Well it can be addictive, but here's the thing, and this has come up for us in dealing with some of our investors, in places like Europe, where, you know, I'll cite the example of a European pension fund that said, oh, we can't own you anymore, we decided we can't invest in gaming, and I couldn't help myself, and I said, so let me get this straight, in your country, is there a national lottery?

Yes, who owns it? The government, do you have procedural gaming in this country? Yes. Who is the principal economic beneficiary of gaming in this country? National government. So, have you stopped buying the bonds issued by your federal government? Because you don't believe you should be participating indirectly in the economics of gaming?

Well, no, of course, you won't do that. And so, there's a lottery in Texas, right? What is a lottery? 

Chris Powers: It's a total gamble. It could be the worst one you could imagine.

Ed Pitoniak:  Yeah, because there's only a little experience buying a lottery ticket.

The odds are not great, either. And there aren't a lot of jobs associated with the lottery, and I don't think casino gaming is by any means an inherently evil thing. And it's a place where people can pursue risk. They can exercise their freedom to pursue a chance. And it is one of the more problematic things in our country. We talked about this already, Chris. Is this tendency to want to de-risk life, and, you know, I think there's an opportunity for Texas to define what Texas gaming could be all about; I don't think the state would go to hell in a handbasket. Still, I also can't predict precisely how this will work out. You've designed your legislature, so it takes a lot of work to get anything done, right?

And there are some good reasons behind that. But when you're going to make transformations in legislation truly, it will be challenging based on, and correct me here if I get this wrong, the legislature meets every two years. 

Chris Powers: Yeah, that's correct. 

Ed Pitoniak:  And then only for a little bit of time.

Chris Powers: No. And it's by design. 

Ed Pitoniak:  Yeah. Right. Exactly. So we'll see, you know, we're going to invest in Texas come hell or high water in every way we can. 

Chris Powers: Well, you own the, you're a real estate guy. And I won't put words in your mouth. I've heard over the years that five big gaming licenses will be spread across Texas, Houston, El Paso, a couple in DFW, and San Antonio, or I can't remember.

That doesn't matter. But it isn't lovely when I hear Las Vegas Sands bought the old Cowboy site, which you might be familiar with. It's in the middle of a bunch of highways. There's a bunch of commercials around it. When I picture this unique gaming resort, I think we're on Broadway.

From a real estate perspective, a site like that is Broadway because of its access. What would be required of a place in Texas to make it functional for a big gaming resort? Is there a specific size? How do you look at it from that perspective? And it couldn't be out like in the hilly country of Austin, where it's beautiful. It's got to be in the urban core.

Ed Pitoniak:  Well, not absolutely and inherently. Being highly proximate to an urban core, being at the intersection of two big highways is always advantageous, and I wouldn't underestimate the ability of peacemakers like Las Vegas Sands. To take a rather unattractive piece of land and do something dazzling.

If you've never seen it, Google image, a Marina Bay Sands in Singapore, Las Vegas Sands property there, I don't think that was a highly compelling piece of land when they got there, but what they've done architecturally is like among the most amazing, exercises in placemaking in the world.

So, with the kind of capital Las Vegas Sands would put to work, they could create something dazzling to transform that area. 

Chris Powers: And to confirm, the thing Texas needs to get approved is, for a fifth grader, the same law that Vegas has that would allow an entire 360 gaming operation.

Ed Pitoniak:  As I would understand it as well, yeah. So, it typically means slot machines, table games, and everything around it. And recognizing, too, that if Texas gaming were ever anything like Las Vegas gaming, actual gambling revenue might end up being, you know, somewhere between 35, 40 per cent of the revenue mix.

There would be a lot of money spent on lodging, dining, entertainment, retail, and recreation, so it's not. And Governor Abbott has been talking about it correctly, in that these should be resorts, right? These should be more complex slot boxes. People should be able to go there and be entertained and have an enriching experience.

Chris Powers: Would that equal the same revenue stack experienced in Vegas, where it's 35 to 40 per cent gaming? Or would Vegas be a different mix?

Ed Pitoniak:  That would be the revenue mix in Vegas. And, you know, a fully developed resort in Texas could come close to that. Now, generally, regional casinos don't. Regional casinos tend to be much more gaming-heavy, but if you look at how leaders like Governor Abbott talk about gaming, both. If you asked the would-be gaming developers in this state how they envision these assets, it would be more in the Las Vegas model than in the conventional, regional casino model.

Chris Powers: If we're talking about risk-taking and Texas, they should keep Midland, Texas, the oil capital filled with risk-takers. That would be the best-performing casino.

Ed Pitoniak:  Yeah. You know, the first hotel rate I ran owned a hotel in Fort McMurray, Alberta, the capital of the Alberta oil sands.

And airlines flew direct flights from Fort McMurray, Alberta, which is, like, a long way toward the North Pole, and direct flights to Las Vegas. Because those guys would come out of the camps, they were ready to rumble.

Chris Powers: Southwest runs like a constant. It's Las Vegas every hour on the hour from Dallas.

Ed, this was an incredible conversation. I appreciate you joining me today. 

Ed Pitoniak:  Chris, I enjoyed it a lot. 

Chris Powers: That was great.