Thursday, February 25, 2010

Nevada Casinos Post Rare Loss

KNXT reported that for only the second time in history Nevada casinos lost money on an annual basis. The first year that happened was in 2003, while the economy was recovering from the dot-com bust and 9/11. In that year, the 260 largest Nevada casinos lost a total of $33.5 million.

This year?

This year, the 260 largest Nevada casinos lost $6.8 billion, 202 times as much money as they lost in 2003. Huge loss. $4 billion of that loss was by casinos on the Las Vegas Strip. President Obama telling people to stay away from Las Vegas wasn't helping things any. Now you know why the mayor of Las Vegas was so peeved.

The Record-Courier reported additional data concerning the Lake Tahoe and Stateline area, which lost $19.3 million. They define large casino as an operation that earn revenues of over $1 million, so the smaller operations aren't counted in this metric.

Who says that gambling is recession-proof? Not any more. Not that this was completely unforeseen. Nevada gaming revenue had been declining for a while, but to actually incur a loss of this magnitude has to shake up Nevada. You can read previous posts on this topic here and here.

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Sunday, February 14, 2010

First Casino in Singapore Opens

February 14th marked the opening day of the first full-blown casino resort on Sentosa Island. Resorts World Sentosa, operated by the Genting Group, beat the Marina Bay Sands for the honors of being the first integrated casino resort open. The Marina Bay Sands should be open in the May timeframe. Perusing the website, the resort is not done. The resort will also be home to Universal Studios Singapore, opening on March 18th. Singapore is a great locale and this casino does nothing but enhance the attractiveness of Singapore.

Singapore licensed two large casinos in order to satisfy the growing gaming market, but only two in order to balance the benefits of gaming with the potential for abuse. An interesting wrinkle is the selective cover charge levied on Singapore citizens and permanent residents. Singaporeans and permanent residents pay a $100 Singapore dollar cover charge to enter the casino. No charge for visitors/tourists naturally.

In addition, a previous post discussed how Singapore is going to the extent of excluding patrons from the casinos that are on public assistance or have unresolved bankruptcies. That post is here. Overall, Singapore is entering the gaming market in a very measured, but well thought out manner. With Singapore's excellent central location in Asia (few major cities longer than a 7 hour flight) and excellent economy and business focus, I expect the casinos to be a success.

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Thursday, February 11, 2010

Las Vegas Sportsbooks "Win" Super Bowl

The Super Bowl scoreboard is final and so is the Las Vegas sportsbooks'. Las Vegas also won the Super Bowl, with winning (i.e. keeping) 8.3% of all the sports bettors' money bet. The details are in the linked Las Vegas Review Journal article. Due to the variances inherent in sports betting, there is a chance the house doesn't win. I discussed when that actually happened a couple of years ago with the Giants-Patriots Super Bowl in a previous post. The Review Journal article actually reports the handle and win percentage from the last 10 Super Bowls - you can see that there is a wide range of results. Over the last 10 years, Las Vegas sportsbooks had a win percentage on Super Bowl bets of 9.6%.

With typical spread betting, where the objective is to balance the amount of wagers on both sides, the theoretical win percentage is about 4.5%. What happens is that both bettors wager $11 to win $10. The winning bettor wins $10 plus gets his $11 back. The losing bettor loses his $11 and the sportsbook keeps the remaining $1. So 1/22 is 4.54%. But the sportsbooks are winning at a higher percentage. Why? There are a couple of reasons.

One is that the books don't exactly have even amounts of wagers on both sides. They will tend to let more wagers fall on one side or the other. If they can set a spread where the general public will bet more on the side that should have a lower probability of covering, the books will win more. They will lose more if the game doesn't go their way, but they are pretty sharp at figuring games.

Another reason is that sportsbooks offer other kinds of betting options that have a higher hold (win) percentage, parlays and propositions. Parlays are a means of having multiple bets where all have to be selected correctly in order to win. So, during the regular season, you may bet a few games, but if all of them are selected correctly, you would win perhaps $60 on your $10 bet as opposed to $11 on your $10 bet. But if you don't select all correctly, you lose. Sportsbooks do very well on parlays. Propositions are those kind of bets that seem more like coin flips if anything. You can bet on who wins the coin toss, who will score first, whether the first score will be a safety, etc. The sportsbooks also do well on propositions. The article touches on "ties lose" parlay cards, where if the books are smart (they are), they may place propositions on those cards where there is a very reasonable chance that one of the underlying propositions will land on the predicted number of the card such that all bets will lose and the sportbook wins all the money.

Add up all these things, and just like New Orleans, Las Vegas wins the Super Bowl.

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