Posts Tagged ‘recession’

Blackjack No Longer King of Vegas

Thursday, March 17th, 2011

For years, seemingly forever, blackjack has been known as king of the casinos. While slot machines were the most popular game overall, due in part to the sheer number of games, blackjack was always the biggest table game. All of that is changing, though. Last year, for the first time blackjack was passed by another table game for Las Vegas revenue.

Last year, baccarat brought in $1.2 billion of revenue for Nevada casinos, making it the first time that blackjack had been outgained by another table game. The trend doesn’t seem likely to reverse anytime soon, either. Baccarat brought in $279.9 million more in revenue than during Las Vegas’s peak in 2007. Meanwhile, blackjack revenue declined by 31% during that same time period. This is despite the fact that blackjack is found at virtually every Nevada casino, while baccarat is only at a small number of resorts. In the last decade, casinos have added 149 baccarat tables, while blackjack tables have decreased by 815.

Experts think they know the reason for this change. Blackjack and baccarat attract different types of players. Blackjack is a mass-market game that is popular with mid-rollers. These are middle-class people who want more strategy and higher stakes than penny slots but don’t want to get into high stakes games. Certainly there are high-stakes blackjack games, but most blackjack players wager around the middle of the spectrum. That adds to the mass appeal of the game.

Baccarat, however, is more of a niche game that is favored by upper-class high rollers, especially Chinese players. Those players like the exclusivity of the game and its high stakes. People who have enough money to play high-stake games of baccarat are not as affected by the recession as players of mid-level games like blackjack.

When the recession hit, people had less disposable income because they had less overall income or feared losing income (such as by losing their job). That hurt the main crowd of blackjack: tourists who have enough money to enter a casino and play some table games, but not enough to throw down big money. The high rollers, however, still have plenty of disposable income, despite the recession, and are therefore still able to play baccarat. As the recession continues, this trend will likely continue. If the economy improves, the game of choice may shift back to blackjack.

Atlantic City to Add Smaller Casinos?

Tuesday, March 23rd, 2010

As business in Atlantic City’s casinos is down, some lawmakers want to add more casinos to the mix in what would be the biggest gambling expansion in the city since gambling was legalized 32 years ago. On Monday, a state law allowing the expansion could hit the floor. It is already facing stiff opposition, though.

Proponents of expansion say that adding more casinos to the market would increase demand and give people who haven’t been to Atlantic City, New Jersey, in a while a new reason to visit. Opponents say that adding more casinos would dilute the market and take business away from the established casinos in the city. On that note, the main opponents of this bill are the current casinos and their unions.

There is also another variable to consider: casino size. Currently, state law requires that casinos have a minimum of 500 rooms, with many having well over 1,000. The result is that all of the casinos are large, fancy establishments that you would expect from fine Atlantic City resorts. Under the proposed bill, the room minimum would be dropped to 200.

Proponents of the bill say that allowing smaller casinos will bring more variety to Atlantic City, which would help them compete with the smaller casinos in Delaware and Pennsylvania. The current casinos, however, disagree and say that it will do two things: 1) take business away from the existing casinos, and 2) lower the standard of the casinos in the city. They equate it to having a bad neighbor moving a trailer into their high-class luxury community. Adding smaller, cheaper casinos to the mix would change the image of Atlantic City from being one of only first-class establishments.

Bob McDevitt, president of one of those unions (Unite-HERE), says that if the bill is passed they would be “cheapening the billions and billions of dollars already invested in Atlantic City, and changing the definition of what gaming in New Jersey is.” He also said that anyone who wants to enter the nation’s second-largest gambling market (to Las Vegas), “better be able to pony up the money to do a first-class facility. Otherwise, you have no business being here.”

Proponents of gambling expansion say that adding smaller casinos will bring more people to the city, which will help all businesses, even those not related to gambling. Adding new attractions to an area is a proven way to make money, but the question about lowering the standards is a valid one. A reason given for lowering the size standards is an attempt to match the standards in competing areas in Philadelphia and Delaware, where new casinos can be added for considerably cheaper.

There’s also a question of how much money business owners are willing to pay out in advance. State Senator James Whelan, a former mayor of Atlantic City who will introduce the legislation, says that times have changed and in order to compete they need to allow smaller casinos. He says that in Philadelphia and Delaware “you can get in for tens of millions of dollars. In Atlantic City, 500 rooms costs you $800 million, minimum, and nobody’s writing checks for $800 million or $1 billion nowadays.”

Therein lies the main debate at issue. In the middle of a recession where the Atlantic City casino industry is hurting, would it be good or bad for the economy to add new, smaller casinos? Would the added variety bring new people to the area or would it make current Atlantic City customers think that their scene is no longer better than the competition? If Whelan is right, the legislation could revive a struggling economy. If he’s wrong, however, he could further hinder an economy that is already in had shape.

Blackjack Revenue Dropping in Vegas

Wednesday, February 17th, 2010

When you think of gambling on the Vegas Strip, you think of blackjack. The game of blackjack has always been the most popular casino table game and for many is the first thing you think of when you think of Vegas. However, revenue from blackjack has taken a hit recently, and it’s not the money maker that it has been in the past.

In 2009, the amount of money won by casinos in blackjack dropped by 20% and the amount wagered on the game fell to its lowest amount ($8.917 billion) since 2003. In 2009, money made from blackjack made up just 9.7% of all casino revenue, which is the first time in history that it has been below 10%. In addition, the hold percentage, which is the percentage of money won compared to money wagered, fell to 11.3%, also the lowest in the history of Las Vegas.

So what happened? Well, the most obvious reason for revenue being down is the recession. Tourism in general is down, including visits to Vegas. Fewer people visiting Vegas means fewer people gambling at casinos. However, that doesn’t explain why blackjack is making up a smaller percentage of casino revenue.

The reason for that, according to some experts, is that casinos have shot themselves in the foot. In a quest to make more money, many casinos have tightened the rules on their blackjack games, putting in place stricter rules on splitting and doubling, having the dealer hit a soft 17, and in some cases making a natural blackjack pay out 6:5 rather than 3:2. In addition to tilting the odds more in favor of the house, many casinos have raised the minimum wager requirements and gotten rid of the $1 tables and in some cases even the $5 tables.

But how would that cause the casino to make less money? Well, getting rid of the low-limit tables has caused some of the inexperienced gamblers to stay away from blackjack and play other games instead. Newer gamblers want games with lower limits because they seem like lower risks. Those same players are more likely to play with bad strategy, which gives the house better odds of winning. Eliminating those bad players means a larger percentage of the people playing blackjack do play proper basic strategy, which lowers the house edge.

In addition, the tightening of the rules has caused some of the high-end players to play different games instead. One of the biggest beneficiaries of that is baccarat, which has seen an increase in popularity at the same time that blackjack has had a down tick.

So what does this all mean? Getting greedy can end up costing you money. That is true for players and it is true for casinos as well. It’s worth remembering, especially during tough economic times.