Future Casinos
January 16th, 2010 at 7:00:52 AM
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Just looking at the statistics for downtown Las Vegas (I chose downtown because there have been no new casinos added in the last ten years. Casino employees were 6770 in 1998 and 3413 in 2008, that is a 50% reduction in a decade. Similar reductions have happened in the other department such as food, beverage, hotel, and general and administrative. But the most radical reduction in personnel is in the casino as machines are more reliable,and table games are reduced. Efficiencies such as ticket in, ticket out cash changing machines reduce the need to interact with people.
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Payroll and benefits for the casino department are $120 million in 2008. That is relative to a total profit of $32 million. So you can see that the radical reduction in personnel over the years is one of the principal ways that the downtown casinos make money even though revenue has been flat or decreasing since 1992. I don't know where the people are employed, but there are roughly 400 table games and 130 poker tables. Keeping the casino running 24 hours a day means up to three shifts plus pit bosses should be most of the employees. I doubt that there are a lot of technicians that maintain the slot machines.
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At the same time the number of dancing girls has increased. Will the dealer become obsolete and the future casino consist of machines organized around pits with dancing girls and hostesses? I assume that there must be something to entice people away from simply gambling on their home computers.
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Downtown brought in $1.054 billion in revenue. Cost of sales (alcohol, food, and stuff for gift shops is $100M). With the new generation of networked slot machines where the house edge can be controlled without physically changing EPROM chips. Even the hotels could be modeled after the LOVE hotels in Japan where there is little or not contact with another human being as you check into your room. You could run a casino with a handful of managers and "eye candy".
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I am not sure if the traditional high end dining restaurant owned by the casino will survive either. There is a tendency to replace them with outside owned operations. Most gamblers are comped at the coffee shop or the buffet, but arrangements can be made with the outside operator of the restaurant to comp really high end players. Golden Nugget is an exception since it is also a restaurant company. Here are the remaining places left in downtown Las Vegas.
1) Don B's steakhouse - Fitzgerald's (only open 3 days a week)
2) Ranch Steakhouse - Binion's
3) The Flame - El Cortez
4) Hugo's Cellar - Four Queens
5) Redwood Bar & Grill - California
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Payroll and benefits for the casino department are $120 million in 2008. That is relative to a total profit of $32 million. So you can see that the radical reduction in personnel over the years is one of the principal ways that the downtown casinos make money even though revenue has been flat or decreasing since 1992. I don't know where the people are employed, but there are roughly 400 table games and 130 poker tables. Keeping the casino running 24 hours a day means up to three shifts plus pit bosses should be most of the employees. I doubt that there are a lot of technicians that maintain the slot machines.
====================
At the same time the number of dancing girls has increased. Will the dealer become obsolete and the future casino consist of machines organized around pits with dancing girls and hostesses? I assume that there must be something to entice people away from simply gambling on their home computers.
====================
Downtown brought in $1.054 billion in revenue. Cost of sales (alcohol, food, and stuff for gift shops is $100M). With the new generation of networked slot machines where the house edge can be controlled without physically changing EPROM chips. Even the hotels could be modeled after the LOVE hotels in Japan where there is little or not contact with another human being as you check into your room. You could run a casino with a handful of managers and "eye candy".
====================
I am not sure if the traditional high end dining restaurant owned by the casino will survive either. There is a tendency to replace them with outside owned operations. Most gamblers are comped at the coffee shop or the buffet, but arrangements can be made with the outside operator of the restaurant to comp really high end players. Golden Nugget is an exception since it is also a restaurant company. Here are the remaining places left in downtown Las Vegas.
1) Don B's steakhouse - Fitzgerald's (only open 3 days a week)
2) Ranch Steakhouse - Binion's
3) The Flame - El Cortez
4) Hugo's Cellar - Four Queens
5) Redwood Bar & Grill - California
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January 16th, 2010 at 7:54:18 AM
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One casino went all electronic in their poker room and then had to switch back to live dealers. I think players do want live dealers and a festive atmosphere, perhaps casinos will indeed become strip parlors with gambling or eventually even brothels with gambling but for the foreseeable future its going to be live dealers and attractively clad but off-limit females.
Casinos go electronic to save money and to increase the rate of play, but as more and more gambling is available on home computers or in local casinos, Vegas is going to have to do something to keep being unique.
Casinos go electronic to save money and to increase the rate of play, but as more and more gambling is available on home computers or in local casinos, Vegas is going to have to do something to keep being unique.
January 16th, 2010 at 5:14:37 PM
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I agree, but what constitutes something extra.
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There is a locals casino in Vegas called Arizona Charlie's Decatur . It offers a cafe, a buffet, a Noble Roman's Pizza, and a Subway for dining. They have 12 tables with standard games (one craps table, one roulette, and a bunch of blackjack tables, and a pai-gow poker) and a bar where they play oldies. There are dozens of casinos with more varied dining, entertainment, and gambling options within a mile or two of driving distance. In addition Arizona charlies is in a bombed out mall with half the stores empty.
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Yet Arizona Charlie's Decatur cleared $72 million in gaming revenue in fiscal year 2008. Whereas Hard Rock Casino had $50 million in gaming revenue in the same fiscal year. Now Hard Rock clears well over $100 million in non-gaming revenue. But that requires a huge operation in restaurants and clubs and swimming pool parties. I know Arizona Charlies had a healthy profit (before it got sold) which may have been higher than Hard Rock.
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Sometimes the simple concepts actually make a healthy profit.
It seems as if Shufflemaster should try to adopt their tablemaster product. Right now it seems as if mostly people play the game if they want to gamble very small amounts of money. But it still pays 3:2 for blackjack. However it could be adopted to work without the hokey video dealer. Ideally the video screen could be "pushed down" and someone could work 12 seats, as if they were a dealer/bar tender.
The "restricted license" that is commonly given in Nevada for up to 15 slot machines might work with this concept. Right now this license is most often used for 15 machines of either the in bar variety or for a special room off a store with 15 full size slot machines. You might be able to create a pit type atmosphere that would earn more than 15 bar slots that pay 1:1 for blackjack.
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There is a locals casino in Vegas called Arizona Charlie's Decatur . It offers a cafe, a buffet, a Noble Roman's Pizza, and a Subway for dining. They have 12 tables with standard games (one craps table, one roulette, and a bunch of blackjack tables, and a pai-gow poker) and a bar where they play oldies. There are dozens of casinos with more varied dining, entertainment, and gambling options within a mile or two of driving distance. In addition Arizona charlies is in a bombed out mall with half the stores empty.
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Yet Arizona Charlie's Decatur cleared $72 million in gaming revenue in fiscal year 2008. Whereas Hard Rock Casino had $50 million in gaming revenue in the same fiscal year. Now Hard Rock clears well over $100 million in non-gaming revenue. But that requires a huge operation in restaurants and clubs and swimming pool parties. I know Arizona Charlies had a healthy profit (before it got sold) which may have been higher than Hard Rock.
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Sometimes the simple concepts actually make a healthy profit.
It seems as if Shufflemaster should try to adopt their tablemaster product. Right now it seems as if mostly people play the game if they want to gamble very small amounts of money. But it still pays 3:2 for blackjack. However it could be adopted to work without the hokey video dealer. Ideally the video screen could be "pushed down" and someone could work 12 seats, as if they were a dealer/bar tender.
The "restricted license" that is commonly given in Nevada for up to 15 slot machines might work with this concept. Right now this license is most often used for 15 machines of either the in bar variety or for a special room off a store with 15 full size slot machines. You might be able to create a pit type atmosphere that would earn more than 15 bar slots that pay 1:1 for blackjack.
January 17th, 2010 at 6:08:32 AM
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There is a market for these AZ Charlie's kind of places. I like AZ's because it is clean, offers a good gamble, a nice hotel room and has good food options. And it's cheap. Some people (not even locals) like this more than the froo-frah of the strip. If you are well-managed, you can have a healthy profit margin. Stations I think tries to do this and fails most of the time. Downtown used to be like this but is too crowded and dirty/dangerous now (or this is the prevailing wisdom at least). Eastside Cannery is very good, as is Joker's Wild (although they have no hotel), and select other Boyd properties. This is the model people should be using, imo. If you notice, these are the properties in healthiest financial shape in LV today.
"Dice, verily, are armed with goads and driving-hooks, deceiving and tormenting, causing grievous woe." -Rig Veda 10.34.4
January 17th, 2010 at 9:14:47 AM
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I have to agree with Teddys. While I love the main strip due to its excitement and attractions, I will not go downtown because I find it too dirty, dangerous and smelly. Yes, downtown has great value currently, but if they were able to clean it up and place a dozen Arizona Charlie type hotels up there, I would consider staying.
January 17th, 2010 at 10:32:50 AM
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"...a locals casino in Vegas Arizona Charlie's Decatur offers a cafe, a buffet, a Noble Roman's Pizza, and a Subway for dining. They have 12 tables with standard games and a bar where they play oldies. ..."
This sounds a bit like a neighborhood bar versus glittery nightclub. The neighborhood bar survives because of a loyal following. Sounds like the type of casino where all the craps dealers and players know each other. The casino meets a need and doesn't try to be all things to everyone. I've noticed that Vegas seems to have quite a few yuppie burger bars with slot machines, but Arizona Charlies seems to be a full casino that simply just stays a no-frills, bare-minimum type place.
This sounds a bit like a neighborhood bar versus glittery nightclub. The neighborhood bar survives because of a loyal following. Sounds like the type of casino where all the craps dealers and players know each other. The casino meets a need and doesn't try to be all things to everyone. I've noticed that Vegas seems to have quite a few yuppie burger bars with slot machines, but Arizona Charlies seems to be a full casino that simply just stays a no-frills, bare-minimum type place.
January 17th, 2010 at 11:47:42 AM
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Still, I was shocked that AZ Charlie's Decatur brings in that much money. There is simply no frills, and the surrounding shopping center is decaying. Palace Station, Texas Station, and Suncoast are all within about 2 miles and have much more elaborate choices. Decatur street is sort of the main avenue for low cost ethnic places to eat.
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Likewise it shocks me that Hard Rock Casino brings in so little money in gaming revenue ($50 million). It has very expensive places to eat, pricey rooms, and get nationwide exposure for it's parties. It has only 550 slot machines (deliberately), but one of the most extensive inventory of blackjack , baccarat, etc. on the strip .
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End of 2009
WYNN LAS VEGAS TOTAL GAMES 270
VENETIAN CASINO RESORT TOTAL GAMES 243
MGM GRAND HOTEL/CASINO TOTAL GAMES 172
CAESARS PALACE TOTAL GAMES 169
BELLAGIO TOTAL GAMES 168
ARIA RESORT & CASINO TOTAL GAMES 147
HARD ROCK HOTEL & CASINO TOTAL GAMES 130
MANDALAY BAY RESORT & CASINO TOTAL GAMES 120
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In their SEC filing for calendar year 2008 they comment on their $53 million in casino revenue verses their $70 million in food and beverage. Once again they had less than 90 games operating at the time. But increasing tables doesn't automatically increase revenue. When Wynn opened the Encore the combined casino with the original Wynn and the Encore made less money than the Wynn made by itself. They did greatly expand the hotel in 2009.
We derive significant revenues from non-gaming operations. Our hotel, beach club, retail, food and beverage, and other operations allow us to market the resort as a full-service destination. Our diversified revenue base should allow us to be less dependent on the casino as a source of revenues and profits. We believe this diversified revenue base may result in less volatility in our earnings.
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Likewise it shocks me that Hard Rock Casino brings in so little money in gaming revenue ($50 million). It has very expensive places to eat, pricey rooms, and get nationwide exposure for it's parties. It has only 550 slot machines (deliberately), but one of the most extensive inventory of blackjack , baccarat, etc. on the strip .
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End of 2009
WYNN LAS VEGAS TOTAL GAMES 270
VENETIAN CASINO RESORT TOTAL GAMES 243
MGM GRAND HOTEL/CASINO TOTAL GAMES 172
CAESARS PALACE TOTAL GAMES 169
BELLAGIO TOTAL GAMES 168
ARIA RESORT & CASINO TOTAL GAMES 147
HARD ROCK HOTEL & CASINO TOTAL GAMES 130
MANDALAY BAY RESORT & CASINO TOTAL GAMES 120
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In their SEC filing for calendar year 2008 they comment on their $53 million in casino revenue verses their $70 million in food and beverage. Once again they had less than 90 games operating at the time. But increasing tables doesn't automatically increase revenue. When Wynn opened the Encore the combined casino with the original Wynn and the Encore made less money than the Wynn made by itself. They did greatly expand the hotel in 2009.
We derive significant revenues from non-gaming operations. Our hotel, beach club, retail, food and beverage, and other operations allow us to market the resort as a full-service destination. Our diversified revenue base should allow us to be less dependent on the casino as a source of revenues and profits. We believe this diversified revenue base may result in less volatility in our earnings.
