Dec. 2, 2008 -- To the naked eye, Las Vegas may appear as it always has -- a shimmering metropolis in the Nevada desert. But even in the fantasy capital of the world, economic reality is gusting through.
For the last 10 years, legendary Las Vegas Mayor Oscar Goodman has seen nothing but growth. The city's population doubled to almost 2 million people, casinos raked in huge profits and hotels hosted more conventions than anywhere else in the world. But then, over the summer, things changed.
"I was sitting down having lunch with a casino executive," recalled Goodman. "And he was telling me that he had a loan for $250 million that was going to be authorized that day to make a small improvement to the casino property. And he says, 'Excuse me for second.'"
"He left, went to answer the phone, and when he came back he was absolutely ashen. I said, 'What happened? Maybe it was a personal problem?' And he said, 'No they are not lending us the money, the credit markets dried up overnight.'"
Now the entire city appears to be in recession. To find out how bad it really is, "Nightline" went on a fact-finding tour of Sin City.
Economic Crisis: 'People Are Anxious'
Beneath the neon lights, there are signs of decline at almost every famous venue. Ticket sales, gambling receipts and hotel occupancy are all going down, and even the biggest casinos are struggling.
Harrah's has laid off 2,000 people since January, and the renowned Sands Casino is also teetering, its stock price dropping 95 percent in the last year. Sands owner Shel Adelson spent $475 million of his own money to keep the company afloat.
George Maloof made his name by attracting A-list celebrities to the ultrahip hotel-casino, the Palms. But even there, the good times couldn't last forever.
"We've been so used to growth, so much growth in the last 15 years, so when it slows down it puts people in a different mood," said Maloof. "So we're not used to this slowdown. … People are anxious; I think the whole country is anxious."
Desperate Times, Desperate Action
Until recently, owning even a small casino, like the Speedway Casino off the Las Vegas strip, seemed like a license to print money. But times have changed.
"The guy who came in with 50 bucks in his pocket six months ago maybe has $20," said Seth Schorr, owner of the Speedway Casino. "So they're still looking for a form of entertainment. They still want to escape the day-to-day grind; they simply just don't have as much money to spend."
The drastic fall in spending hurts everyone. Not just the owner but cocktail waitresses like Sandra Harvey.
"Well, I used to take a food tray out and maybe 20 or 30 drinks on my tray, and I'd probably get a $1 for each of my drinks," said Harvey. "But now I'll be out there with a tray of 20 or 30 drinks and I'll come back with $4 or $5. So it's a big difference."
The desperate times called for drastic action. "We've had to lower prices, give more value -- cheaper beer," said Schorr. "We have a great, great steak and shrimp special for $3.99."
Even the world-renowned Cirque du Soleil is experiencing a downturn. Until recently Cirque du Soleil's "O" show was sold out, playing to packed houses twice a day. But now there's a palpable sense of deja vu.
"For us, the climate here in Vegas, it's similar to right after Sept. 11," said Jack Kenn, Cirque du Soleil manager. "There was that very uncertain time, and nobody knows what's going to happen. It's a very vulnerable position."
Foreclosure Crisis 'Very Severe'
Throughout the last 10 years, every acre of the strip has been developed.
The City Center -- one of the largest construction projects in the world -- began in the boom year 2005. But costs have risen from $4 billion to $11 billion, and when the funding for the project ultimately dried up, the city needed bailout funds from Dubai.
And this is nothing when compared to the real estate market overall. Twice a week, Barbara Zucker takes potential buyers on a tour of foreclosed properties, and "Nightline" took a trip on her Las Vegas Foreclosure Express.
Nevada has the highest number of foreclosed homes in the country.
"It's very severe," said Zucker. "It's freefall for everyone, for lenders, the agents, the homeowners -- there are no knowns anymore."
All the houses seem the same: recently built, once proudly owned, now taken back by the bank.
Maloof is encountering his own problems with the property market. He's just completed a tower of condos that he hopes to fill in January.
"Well, we've had a lot of closings," said Maloof. "We have about 10 percent that haven't closed, that we took back their units. But we still have a small portion that is waiting to close."
Maloof is also fighting hard to sell his existing product, the Palms Hotel. In an effort to beat fierce competition, Maloof has introduced one-of-a-kind facilities to the most expensive rooms, including a spinning bed.
Ideas like this may be a humorous diversion, but Maloof admits the economic crisis has affected his sleep.
When you're in the service business, you always worry the next day that no one's going to show up," he said. "I've never been a big sleeper as it is."
He wants all casino owners to pull together for the good of the city.
"We want everyone to do well," he said. "We want the new places opening up to do well. Traditionally, that's what happened in Las Vegas. We want new casinos; we want to hire more people. We need those things."
Back at the Speedway Casino -- with its $3.99 steak and shrimp -- business is still sluggish.
"I have confidence that the market will come back," said Schorr. "I can't tell you when. I don't know if it'll be six months, nine months or two years. But we've been able to get lean enough that we can survive at least two years in today's economy."
For now, the city of Las Vegas is holding its breath, praying that the sins of the past will be forgiven and the good times will soon return.