Las Vegas and Niagara Falls originated in two different ways and are fundamentally two different beasts because of this, coming at entertainment from different directions. Funny enough though, despite their differences, both have their origins in hydroelectric development.
The gambling/entertainment scene in Las Vegas originated in the 1930s as a symptom of demand for entertainment by the workers that had migrated to the area to build the Hoover Dam. There was already lots of illegal gambling/entertainment put on by the mob occurring in the area at the time amongst the migrated worker population, so Nevada legalized gambling at the local level, which Las Vegas/Paradise took advantage of to capture that market. Being amongst the first in the country to do this, the gambling scene exploded due to the mob and organized crime groups across the country using it as a new legal income source. Modern Las Vegas is built upon almost 100 years of this legacy, and is now only within the last decade or so starting to shake the image of being Sin City and is starting to round out with a higher variety of family-oriented options and sports franchises.
Niagara Falls, contrarily, has its origins in industry and manufacturing due to the hydroelectric developments at the Falls, in addition to tourism due to the natural setting and natural beauty of the falls. Marineland seems to have been one of the earliest forays into entertainment in the 1960s, and it doesn’t seem like there was any particular reason that Niagara Falls was chosen. The current entertainment and gambling boom was initiated as a strategy to combat economic decline when manufacturing and industry began moving out in the 1970s and 1980s due to the recession. The casinos are still a relatively new thing for Niagara Falls, being built in the 1990s and 2000s. The NF Convention Centre wasn’t built until 2011, and OLG Stage only opened a couple of years ago so it only recently gained capabilities to host proper events. Niagara Falls is also a lot more family friendly than Vegas at this time with Clifton Hill and the natural tourism aspect.
It does ultimately seem like Niagara Falls has been heading on this path to resembling Las Vegas for a while, just in a different way and with different priorities. In my opinion, there is still a lot to be desired in the way of entertainment options in Ontario as well as Canada as a whole, and there is certainly value in building out a true entertainment-focused city. Niagara Falls is probably the closest thing we have to one so I think it makes the most sense to continue to build on what has been started.