pacomartin
pacomartin
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March 26th, 2011 at 12:40:22 PM permalink
Quote: FleaStiff

Its odd, I've heard that Sic Bo is in such decline that it is difficult to find. Sure its a terribly high house edge but I guess social trends affect Las Vegas too.



Nevada does not report revenue for SIC-BO. It is lumped into "other games". CARIBBEAN STUD is down to 5 locations and 8 games in the whole state. Normally that wouldn't be worth reporting, but at one time it was supposed to be the game of the future. Once the NGC makes a decision to report something, they have a had time changing their mind.

Locations and tables

TWENTY-ONE { 147 } 2,835
CRAPS { 128 } 396
ROULETTE { 121 } 463
3-CARD POKER { 110 } 252
BACCARAT { 21 } 266
MINI-BACCARAT { 44 } 125
KENO { 60 } 102
BINGO { 36 } 36
CARIBBEAN STUD { 5 } 8
LET IT RIDE { 73 } 105
PAI GOW { 22 } 41
PAI GOW POKER { 89 } 287
RACE BOOK (1) { 95 } 95
SPORTS POOL (2) { 184 } 185
OTHER GAMES { not reported } 283



Quote: FleaStiff


I think there are two ways to analyze the numbers: Absolute decline in gambling time/dollars/bang-for-buck, etc. and relative decline in such numbers. I've long suspected that there should be an Index of Expenditures in order to shed better light on the gambling profits. Casinos make a big thing about a reduced room rate but forget that their customers will also be spending money on arcades, movies, restaurants, shows, ... and as these seem to be taking increasing time and cost bites, that might just be the reason for the decline in the gambling.




There is such a thing. It is called the Gaming Abstract and it is published once a year in February for the fiscal year past (July 1 to June 30). So it is 7-8 months after the fact. It does include hundreds of expenditures, and tells you information about investment, return on money, and departmental profit or loss. They do a great deal to protect the information so that you have little insight into the performance of an individual casino.

For example, monthly gaming revenue is reported individually for Reno & Sparks, but for the non-gaming revenue they push the two cities together. Since Sparks has a single dominant casino, you could infer to much about that casino from the overall Sparks data.

In a similar manner they lump North Las Vegas, Mesquite, and "Rest of Clark County" together as one group, otherwise you would have too much insight into the dominant casino in North Last Vegas, and Mesquite.

You can get simple conclusions, like that the casinos are trying to make up some of their lost profits in alcohol sales, or more complex conclusions.

Room rates have long ceased to be a minor revenue source like they were in the 1970's, but are usually the main determinants now in determining the financial success of a location. The drop in room rates have been more catstrophic than the drop in gambling.

From my Blog for Downtown Las Vegas in the last 4 years
$133.5 m drop in gaming revenue
$152.5 m drop in non-gaming revenue
$71.7m reduction in expenses
=
$214.4 drop in income

In general "the casino departments" have radically dropped their expenses over the last 20 years. They now have more than double the revenue for every person employed that they did 20 years ago.

In 2010, "casino departments" on the strip employed 24,061 people and revenue was $214,748 per person
In 1990, "casino departments" on the strip employed 21,868 people and revenue was $104,201 per person

The casino department does not make jobs, it just gets more automated. The food, beverage, entertainment, rooms department makes jobs, but not very many relative to the growth in population of Nevada.

But the real death knell has been "back room" expenses like interest from all the buyouts and acquisitions, and rising land costs. That's where expenses have soared.
FleaStiff
FleaStiff
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March 26th, 2011 at 1:18:00 PM permalink
Quote: pacomartin

There is such a thing. It is called the Gaming Abstract and it is published once a year in February for the fiscal year past (July 1 to June 30).

I was thinking more of the expenditures by the players. Its sort of the situation with those Thousand Dollar Coupon Books that contain coupons that only appeal to distinct segments of the customer base. No one ever uses ALL the coupons in the book. I guess the "average" visitor may not really exist. Some visitors never go to a Show or a high end restaurant. More and more seem to go for nightclubs and gourmet restaurants and specialty cocktails. Some might take notice of twenty dollar decrease in a room rate but simultaneously take notice of a five dollar increase in the arcade fee and consider it a wash.

>The drop in room rates have been more catastrophic than the drop in gambling.
Only to the casinos who considered their rooms to be a source of room rental income rather than a source of gamblers.
pacomartin
pacomartin
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March 26th, 2011 at 1:49:16 PM permalink
Quote: FleaStiff

I was thinking more of the expenditures by the players.

>The drop in room rates have been more catastrophic than the drop in gambling.
Only to the casinos who considered their rooms to be a source of room rental income rather than a source of gamblers.



The abstract does have revenue by department, so that you can see if players spent money on food, beverages or shows. The increase in alcohol sales is the most notable change across Nevada.

The problem is that there are now almost no casinos that use the old business model where gaming is the only source of income that matters, and everything else is just to get you there and keep you coming back.

Downtown pretty much held that business model until after 9/11. Rooms rates and other revenue only slightly changed for years and years. The slow downturn in gaming revenue was compensated for by automation improvements keeping the properties in the black. After 9/11 most of the casinos were sold, and acquired huge new long term debt, and/or they did expensive renovations. Finally in 2005 and 2006 they capitalized on the huge run up in room rates on the strip, and the tear downs of the old strip casinos. Suddenly they were showing record profits on higher room rates. Most of them acquired more debt as they improved or were sold. Now even though room rates are still higher than they were in 2005, they are sinking in red ink.

For downtown the Boyd properties are the big exception. They lost revenue, but not nearly as bad as the other places. In addition they haven't been sold for at least 18 - 35 years so they never acquired any debt. The problem is that the company is a lot more than downtown now.
FleaStiff
FleaStiff
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March 26th, 2011 at 4:27:44 PM permalink
Quote: pacomartin

The problem is that there are now almost no casinos that use the old business model where gaming is the only source of income that matters, and everything else is just to get you there and keep you coming back.


Perhaps it time that they dusted off that model and decided its still useful.

Do you think that the recent announcements and slot signage at Las Vegas Club indicates a shift back to that model?
pacomartin
pacomartin
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March 26th, 2011 at 5:34:37 PM permalink
Quote: FleaStiff

Perhaps it time that they dusted off that model and decided its still useful.

Do you think that the recent announcements and slot signage at Las Vegas Club indicates a shift back to that model?



Basically the competition is too broad anymore. There are too many places to gamble, and too many that you can drive to as well. The business model worked well when there was only a handful of places to go. Long term employees at Binions tell stories of guys who would belly up to the snack bar for red beans and rice, and then throw down tens of thousands of dollars, when money was worth five times what it is today. The story below is roughly 20 years old.

It was only 20 years ago that they would let you play quarters at table games, and they had the dealers to handle the action. No one has that kind of payroll anymore.

You can still find cheap rooms in Vegas, and the nicer places are going to be cheaper than a major metropolis. But nobody is going to simply shower you with stuff unless you are a known quantity.

Quote: Las Vegas Legendary Lore: Binion's Horseshoe Casino

Ground zero for plenty of Las Vegas legendary lore was Binion's Horseshoe Casino, a favorite amongst folks whose preference was no-frills gambling with some of the best odds in town. One factual account at this grind joint on Freemont Street was that of an adventurous gambler named William Lee Bergstrom from Austin, Texas. Bergstrom heard that Benny Binion's latest gimmick was that the sky's the limit" when it came to maximum betting amounts at the Horseshoe. Bergstrom called to ask Binion if he would really accept a bet of a million dollars. Binion assured Bergstrom he would book a million dollar wager, so long as it was his first bet. So one day in comes Bergstrom with $777,000 stuffed into a suitcase, plopped it down on the crap table (they never bothered to convert the money into chips) and told the dealer to put the entire amount on the Don't Pass line. On her third roll, cinco dos, adios, an elderly woman sevened out. Bergstrom was handed an additional $777,000, then walked straight out the casino front door escorted by Benny's son Ted.

continue story ...




In November 2010 LVC slipped below an average of $1M per month. The NGC site says they have 700 slots there, 18 tables, and bingo. That means the slots are making just above $40 a day per machine. That is a very low number even for downtown. They have turned over most of the casino floor to make a club where bands perform.

It's a desperate measure. Plus the owner is a multi-billionaire. He only wants the property to break even as he is hoping for a long term increase in land value. I don't think the model will be copied widely.

PaulEWog
PaulEWog
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March 27th, 2011 at 2:55:08 AM permalink
Quote: pacomartin

They have turned over most of the casino floor to make a club where bands perform.



Are you referring to the north end of the property that used to be a casino and then was a karaoke bar and was then an adventure show and was then a nightclub? Because since November its been a bingo hall.
pacomartin
pacomartin
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March 27th, 2011 at 3:23:47 AM permalink
Quote: PaulEWog

Are you referring to the north end of the property that used to be a casino and then was a karaoke bar and was then an adventure show and was then a nightclub? Because since November its been a bingo hall.


Yes, I did not realize that it had turned to Bingo. They must have relocated it from The Plaza.


The percentage of downtown revenue that is from non-gaming is still below 50%, whereas the strip has been majority non-gaming for almost 10 years. Back in the 1980's the non-gaming revenue was only important in that it was a way to get people there. These are the number of casinos that made over $12 million in gaming revenue for the fiscal year.

( 2010 ) 43.8% ( 11 )
( 2009 ) 43.7% ( 11 )
( 2008 ) 44.4% ( 11 )
( 2007 ) 43.1% ( 11 )
( 2006 ) 46.5% ( 11 )
( 2005 ) 41.0% ( 12 )
( 2004 ) 39.9% ( 13 )
( 2003 ) 39.8% ( 13 )
( 2002 ) 39.3% ( 13 )
( 2001 ) 39.2% ( 13 )
...
( 1990 ) 32.3% ( 11 )
FleaStiff
FleaStiff
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March 27th, 2011 at 4:06:34 AM permalink
So in days of old people put an entire suitcase of cash on the line in Vegas. Now they go to some nearby casino and put a whole twenty dollars on the line! Or save up for a trip to Vegas where they will splurge and go for broke with fifty dollars on the line after the nightclubs, gourmet restaurants and shows. And if the least thing goes askew, they will take their winnings and go play elsewhere!

Ah well, maybe its time for me to recognize that the days of old are long gone...and won't be coming back.

People with a whole suitcase full of money now avoid downtown. So whatever business model is employed at Las Vegas Club, its really just a holding action while the real estate value is the only bottom line that matters. Sort of similar in Reno where casinos have become nightclubs while value is determined by location and parking lots rather than rolling the bones.

Where are the snows of yesteryear? In the bottled water hawked by the homeless!!
HKrandom
HKrandom
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March 27th, 2011 at 9:44:23 AM permalink
On a slightly related note I have seen people with plastic bags full of cash in Macau. Not as stylish as a suitcase but still somewhat awesome.

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