A palace somewhat short of Caesar's

AS MAYOR of Las Vegas for almost 12 years, Oscar Goodman has made it his mission to personify what he calls this “adult playland” in the desert. He prances through the casinos with scantily clad showgirls draped on each arm (although he is happily married). He claims to drink a bottle of gin every night (but “never before 5pm”). In his office he sits on a carved throne and gives visitors a symbolic gambling chip that depicts him, with his trademark Martini glass, as “the happiest mayor of the greatest city in the world”.

Alas, much of this, like most things in Las Vegas, is purely show. This is not merely because the famous Strip of hotels and casinos that accounts for more than half of all gaming in the state is deliberately (for tax reasons) just outside the city limits, and thus beyond Mr Goodman's remit. More important, few residents of Las Vegas would any longer agree that their city is either great or happy.

Nevada has America's highest unemployment rate. In Las Vegas, unemployment has risen more this year even as it has flattened in the rest of the country; it peaked at 15.5% in September. Nevada also has America's highest foreclosure rate. In Las Vegas more than 70% of homeowners with mortgages owe more to the bank than their houses are worth. This desert valley, which once represented the most extreme pleasures in American consumerism, now has the most severe hangover.

There are signs of recovery, but they lag those in the rest of the country. Whether house prices, visitor numbers or gambling revenues, “the numbers are bumping along the bottom”, increasing in some months and flattening again in others, says Stephen Brown, director of the Centre for Business and Economic Research at the University of Nevada, Las Vegas.

The question is whether there will ever be a complete recovery, or whether something more fundamental has changed, threatening the existence of places that rely directly or indirectly on gambling. (Nevada has no income tax, for example, financing its services largely from gaming and sales taxes paid mostly by tourists.) Mr Goodman, typically sunny, says “We're heading back to where we were.” Others have their doubts. Las Vegas “needs easy money and easy virtue” to prosper, says Eric Herzik, a professor at the University of Nevada, Reno. Well before the last boom the state was built on excess, and with Americans and foreigners (ie, most potential tourists) “down on excess, our whole model is now being questioned.”

Once the famous Comstock Lode ran out of silver in the 1880s, Nevada made legalised sin its new foundation. It started with prizefighting, illegal elsewhere in an era of bare-knuckle boxing. Then—in 1931, conveniently pre-empting the Great Depression—the state introduced the country's laxest divorce laws to attract frustrated spouses. On the very same day it legalised gambling, which has been the mainstay of its economy ever since. It is supplemented by complementary industries, from prostitution (legal in the rural counties and allegedly available in Las Vegas) to gourmet cuisine.

Las Vegas also “thrived on irresponsibility” in a second, related, way, says Michael Green, a historian at the College of Southern Nevada. Just as the booming gambling and tourism industries provided new jobs, the parched but spacious valley provided new housing. Thus the population of Clark County, the area around Las Vegas, quadrupled between the 1980s and 2008 (before shrinking slightly in 2009), as people from southern California, in particular, fled overpriced houses and moved to Las Vegas. This caused one of the biggest construction booms and housing bubbles in the nation.

Then, in 2008, all these bubbles popped. Whether in or out of state, Americans, who had recently felt rich because of their inflated house values, suddenly felt poor and out of luck. They stopped coming or, if they came, sat for less time at the tables and gambled less. They became “gun-shy,” says David Schwartz, the director of the Centre for Gaming Research at the University of Nevada, Las Vegas.

Tourists are now returning, but in numbers too small and with mindsets too cautious to help Las Vegas much: they are spending less on each visit than before the bust. Two huge and glitzy casino-hotel complexes, both conceived before the bust, opened recently, adding yet more rooms to the city's already dire overcapacity and forcing other hotel operators to discount even more. And yet, even though Las Vegas has become “a bargain”, as Mr Goodman says, many tourists who want to gamble increasingly ignore the city (and intimate airport pat-downs) altogether by patronising Mississippi river boats, Indian casinos or the internet.

Mr Goodman, who insists that the city's only big problem is the term limits that are forcing him out of office next year, rejects all such pessimism. He wants people to be aware of the cultural offerings he has brought to the city, from classical music to a new mobster museum due to open soon (a lawyer, Mr Goodman once defended alleged mobsters in court and even starred in the film “Casino” in that role). He dreams, too, of attracting a big sports team. A new hospital has opened, and Mr Goodman predicts a boom in “medical tourism”, as boomers come for new hips while their families have fun on the Strip.

Las Vegas has never been much good at diversification. It is good at one thing, and for now the zeitgeist has turned against it. But one day flamboyant sin will be back to help Mr Goodman and his city out. Just not very quickly.