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  1. #1
    Senior Member Random$$Slots's Avatar
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    Las Vegas Casinos Are Worried The Worst Is Yet To Come

    David G. Schwartz Contributor

    They say the house always wins, and they’re right almost all of the time. But in Las Vegas, for the big publicly-traded companies, just winning isn’t enough: win should be increasing at a rate that justifies optimism in the future and a higher stock price. In the third quarter, Las Vegas Strip casinos still won money from gamblers, but gaming income as a whole declined—which makes investors understandably impatient because, after all, the house is always supposed to win, and win big.

    Baccarat win was smaller for Las Vegas casinos last month. (MIKE CLARKE/AFP/Getty Images)

    Back in August, the conference calls for both Caesars Entertainment and MGM Resorts International were muted, with predictions of difficulties ahead. Those fears turned out to be justified, as the Nevada Gaming Control Board’s September revenue report, issued earlier today, demonstrated. The state as a whole showed a revenue gain, which it hadn’t done since July, but the Las Vegas Strip continued to sputter, as gaming win fell nearly four percent.

    The September disappointment caps a challenging quarter during which net gaming win decreased by over seven percent. Considering that, in their second quarter conference calls, casino executives were apologetic over a quarter that actually saw a nearly six percent net increase in gaming win on the Strip, one can only imagine the tenor of the third quarter calls when a net decline is on the books.

    Looking at the last six months, the Las Vegas Strip is still down more than one percent compared to that period in 2017, so it seems likely that this is not a blip—there is a slight but perceptible downward trend for gaming win on the Strip. And that should have casinos there worried, since even though gambling only represents about a third of their overall income, it’s a very important third, since it tends to be higher-margin than revenue from restaurants or rooms, $500 bottles of Grey Goose at nightclubs notwithstanding.

    There is an interesting pattern at work, and it speaks to a possible realignment of revenue on the Strip. The dominance of baccarat is less than 15 years old. As Wynn Resorts, and Las Vegas Sands opened casinos in Macau (starting in 2005), baccarat, the game of choice of many Chinese high rollers, became an increasingly important part of the bottom line in Las Vegas. Baccarat got more than one company through the worst of the recession. But following a 2013 Chinese crackdown on graft, the flow of high roller funds to American casinos has slowed.

    Case in point: In September 2013, Strip casinos made nearly $116 million from baccarat. Last month, they made just over $69 million—about a 41 percent decrease. And, while baccarat had been trending upward, that momentum has reversed, as total baccarat win fell to levels last seen before the recession.

    Is this baccarat decline an aberration? The numbers say that it isn’t. While the second-quarter did see some gains, the third quarter has been a tale of consistent slippage: In July baccarat win well more than 16 percent year/year; in August, nearly nine percent; and in September, a whopping 27 percent fall. That has the makings of a new reality on the Strip, which could be worrisome.

    And, if the companies that run Las Vegas casinos continue on their post-recession course, the diminishing size of baccarat win could spell big trouble. The $30 million or $40 million each month that doesn’t end up in casino cages is not chump change, and the fixed costs to attract that sort of play—private jets, overseas marketing, and posh suites with butler service—are hard to scale down proportionally. If anything, from an out-and-out trade war to simple skittishness on the part of international high rollers, is going to permanently depress high end play, the big casinos that dominate the Strip—and corporate balance sheets—could be in trouble.
    Doubtless the third quarter conference calls will speak of optimism for the fourth quarter and higher convention bookings in the coming year, which, like swallows returning to Capistrano, are paragons of predictability. And the optimism may not be far off, particularly if the summer triggers a change in how Las Vegas casinos are marketed.

    Baccarat, remember, got Las Vegas through the recession, when domestic retail play was curtailed. In 2018, though, it is that retail play that looks to be on the rebound. Total slot win on the Strip increased nearly six percent in July; fell one percent in August; and grew by five percent in September. Overall, slots showed over two percent growth for the quarter, which might not sound impressive. Baccarat, though, fell 18 percent over that quarter. So while the erstwhile one-armed bandits aren’t as glamorous as the green felt and rarefied air of the salon privee, they are certainly getting the job done for Vegas.


    Actor/comedian Drew Carey reacts to seeing his image on The Price is Right Video Slots slot machine during IGT's announcement of The Price is Right slot machines. Casinos could be relying more on similar machines if current revenue trends continue. (Photo by Gabe Ginsberg/Getty Images)

    It’s easy to see that Strip casinos less focused on chasing the high end and more committed to luring slot players and other relatively low-rolling gamblers could be more successful if domestic retail gambling continues to outstrip international high-end play.
    In order to bring these players back, casinos might have to back off some of the more aggressive revenue-enhancing elements that have characterized the Strip over the past decade, like resort fees, paid parking, and other added expenses perceived, rightfully or not, as nickel-and-diming by many loyal customers.

    So while the initial reaction to that ongoing baccarat slide might be panic, worry, or even defeatism, the continued growth of casino gaming in Las Vegas might depend on how well casinos can adapt to what appears to be a new landscape. While they’ll likely never turn away high rollers, it isn’t absurd to imagine that courting and retaining the loyalty of the gambling masses might soon be a higher priority for casino executives in Las Vegas than it has been for years.

    History shows this kind of realignment is to be expected. Slots saved Las Vegas once before, in the 1980s. It’s not so hard to believe that they may do it again—if casino operators have the vision to see that it’s possible.

    David G. Schwartz is a historian, Director of the Center for Gaming Research & instructor at UNLV, and former casino employee who writes about casinos, gaming, tourism, & Las Vegas.
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  2. #2
    Senior Member flyguy's Avatar
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    They should be worried. Actual gamblers are going elsewhere due to the poor odds offered on the strip. Slot returns down, lousy table odds and then the nickel and dime antics the corporate owners introduce turn off those who come to gamble. Often they can find better games for them closer to home.
    I bet you I can stop gambling!

  3. #3
    Senior Member Slotspert's Avatar
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    Interesting article. I no longer go to Vegas just for slot play. There has to be another incentive (shows, friends, events) for me to go.
    Avatar photo is image of Slotspert on "Dancing in Rio" Slot Machine.
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  4. #4
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    After a VERY losing trip to the Strip, I will never go there with the focus to gamble again. The slots were virtual vacuums... not even offering any play for enjoyment or entertainment.... nope... no bonuses, and when you finally did get one, no pay at all. I am totally done. I experienced this at every casino we visited except for those off strip. I can go to my local casino here in Minnesota and enjoy 8 hours of play for about $200.00..... and at times, even come home with what I went with or more. I have never experienced that in Vegas. It is now a place to go to see shows and eat expensive food. I go to gamble, and because of my last experience, I will not be gambling if I go again.... if I ever do. With so many other options, I do not need all those extra "bells and whistles". A slot machine is a slot machine.... and, a free room in my local is just as good.

  5. #5
    Senior Member MuffinCups's Avatar
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    Great read. Las Vegas companies need to realize gamblers have so many local options closer to home. I live in Southern California, used to go to Las Vegas at least twice a year for a full week each visit. Have not been since 2008 and have no desire to return, that sense of excitement when the plane is approaching the city, you see the lights and can't wait to visit different casinos is gone. It is only an hour flight or four hour drive for us, but need to book a flight, find room, rent a car, find parking for each casino, as I get older seems like too much hassle. If I get on a plane I'd rather go to Hawaii or visit family.

    Just got back from a 3 night trip to our local casino, plan to stay longer next time. There are not as many hassles at the local casinos...don't have to wade through the homeless, people selling water, flyers to god knows what, find parking, walk down a too crowded and narrow strip. I could go on and on...

    I often wonder why large corporations don't conduct focus groups for former players...It could be online, sigh.

  6. #6
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    (1)Resort fees, parking fees, airlines charging high prices, make Las Vegas less and less interesting a place to visit for the "small time" gambler.
    (2)Conventions may offset problems LAS is encountering; convention people are in many cases on their employers "dime".
    (3)All Casinos realize that the market is over-saturated...too many Casinos not enough gamblers.

  7. #7
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    CET Vegas keeps bombarding me with the same offers over and over again. I asked my host to opt me out of the emails from Vegas. If they want me to come back they need to step up theirs offers.


    Sent from my iPhone using Slot Fanatics mobile app

  8. #8
    Senior Member thelma's Avatar
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    Quote Originally Posted by MuffinCups View Post
    Great read. Las Vegas companies need to realize gamblers have so many local options closer to home. I live in Southern California, used to go to Las Vegas at least twice a year for a full week each visit. Have not been since 2008 and have no desire to return, that sense of excitement when the plane is approaching the city, you see the lights and can't wait to visit different casinos is gone. It is only an hour flight or four hour drive for us, but need to book a flight, find room, rent a car, find parking for each casino, as I get older seems like too much hassle. If I get on a plane I'd rather go to Hawaii or visit family.

    Just got back from a 3 night trip to our local casino, plan to stay longer next time. There are not as many hassles at the local casinos...don't have to wade through the homeless, people selling water, flyers to god knows what, find parking, walk down a too crowded and narrow strip. I could go on and on...

    I often wonder why large corporations don't conduct focus groups for former players...It could be online, sigh.
    Add this to your list (I'm sure it's part of your "on and on...")

    https://twitter.com/LVMPD/status/1060248419619328000

    Hope they get those thugs.

  9. #9
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    They caught the suspects. Police need to look the other way and get someone to beat them before they take them to jail. That poor elderly gentleman.

    https://www.fox5vegas.com/news/las-v...508e4e61f.html

  10. #10
    Senior Member Scorcho's Avatar
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    Vegas Strip, giant resorts:

    $.01 payback: 88.21%
    $.25 payback: 89.47%
    $1 payback: 92.49%

    Reno, largest resorts:

    $.01 payback: 92.97%
    $.25 payback: 93.11%
    $1 payback: 96.18%

    For a $5,000 coin-in per day player, the pennies will theoretically cost you $589 per day in Vegas. In Reno, it's $351.

    For a 4 day gambling vacation, that's $952 cheaper, theoretically.

    If you're going to Vegas with other things like shows and restaurants in mind, great, but you'll be paying a gambling premium to do so. But if you're going strictly to gamble, why bother?

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