Tuesday, July 24, 2012

Nevada Casino Revenue Drops

Bloomberg Businessweek reports an AP story about the 10% year over year drop in Nevada casino win for May.  The state's casinos earned $885 million in May 2012 vs. $984 million in May 2011 - a good size difference.  The Gaming Control Board couched this bad news by stating that this month would have had a tough comparison due to the very good May of 2011.  Still, a 10% drop is tough to explain away that easily.

The "explanation" given by the spokesman actually makes a better argument as an indictment.  The spokesman called this May's numbers a "statistical anomaly," given that there was a strong events calendar, particularly in Las Vegas.  This May, downtown Vegas casino revenue dropped 2 percent, but strip revenue dropped a whopping 18 percent.  How is that an anomaly where you admittedly had a good calendar to draw visitors, but your gaming win drops 18 percent?  I suppose an anomaly, but not in a good way and should raise more red flags rather than less.

Not all regions dropped, however.  Laughlin had a 20 percent gain and Boulder had a 9 percent gain.  So, that puts to rest the "bad month for comparison purposes argument."  The true disasters in my opinion were up north in Reno and Lake Tahoe.  Reno only dropped 6 percent year over year, but Lake Tahoe dropped a unbelievable 27 percent.  Reno and Lake Tahoe have suffered due to the expanded tribal gaming operations in California for a while now, and it is not going to improve unless those regions do something drastic.  You can read posts on California tribal gaming here and here and my post with regard to what Reno and Lake Tahoe should do here.  A post regarding actions with regard to Las Vegas can be found here.

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Saturday, July 14, 2012

Poll Finds Californians In Favor of Sports Betting

Hot off the presses, a poll by the Field Research Corporation found that by a wide margin, Californians were in favor of legalizing sports betting and by a much smaller margin were in favor of legalizing online poker.  This poll was likely commissioned as there are a couple of bills working their way through the legislative process to legalize these exact things.  The sports betting bill is much further along in the process, having passed the Senate and is now in the Assembly Appropriations Committee, already having passed the Assembly Government Organization Committee.  A recent post on the sports betting bill can be found here.

The poll results were clear.  Any way you cut the population, a majority favored legalizing sports betting.  Republicans, Democrats, Independents, every age group and every geographic location is in favor.  Here is a snippet of the overall results:

Group / Favor / Oppose / No Opinion

Republicans  49/45/6
Democrats    64/31/5
Other            58/31/11

Male             61/34/5
Female         54/37/9

18-39            70/24/6
40-64            53/39/8
65 +              48/45/7

All                58/35/7

This is huge.  For any politician putting his/her finger in the wind, this makes no doubt about the will of the people of California - GIVE THEM SPORTS BETTING!  Oh, and by the way, the question was worded to ask if the person was in favor of sports betting AND having the state tax its proceeds.  So, not just sports betting, but sports betting and taxing it.  I would be shocked if the sports betting bill did not pass and get signed into law, setting up California to join New Jersey in a showdown with the unconstitutional federal PASPA law.  That being said, there are a couple of bills in Congress that would ease the PASPA restrictions, so that states could add sports betting in the next few years if they desired.

The results for legalizing online poker weren't quite as decisive, with a slight overall majority in favor.  The results for sports betting were far more positive - again, a majority of every demographic breakdown in favor.

The details on the poll results can be found here.

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Thursday, July 5, 2012

Two "Must Read" Horse Racing Blog Posts

There are a couple of recent horse racing blog posts that are so good, that I'm plugging them here.  As readers can easily glean from other racing posts, racing has issues.  These two posts emphasize that and bring some additional statistical and anecdotal evidence to back up that assertion.

The first post is from the CANGAMBLE blog, which focuses on topics of interest in Canadian gambling.  The story discusses some of the history how racing's former monopoly has changed and how that is being manifested today with current issues.  Topics such as takeout, bet types and demographics are discussed, among others.

The post suggests several fixes such as:
  1. Lowering takeout
  2. Eliminating track-focused "jackpot" bets
  3. Adding a nationwide "jackpot" bet
  4. Implementing exchange wagering
I won't quibble with these fixes except for one - exchange wagering.  Exchange wagering isn't going to bring new horse players.  It will, however, be of benefit to a portion of the current wagering base as the vigorish on exchange wagers will generally be a lot lower than the takeout on pari-mutuel wagers.  The players will definitely benefit, but the money that will be generated for racing itself will likely be much lower.  That revenue shock I don't think the industry can handle.  If pari-mutuel takeout was lowered, I think that would be a superior approach.  There are other potential issues with exchange wagering that could manifest if not implemented well, such as "bot" wagering hogging the good wagers for the exchange operator, not the player, as well as the potential for profitable race fixing.  Overall, the post is a winner and is recommended.

The second post is from the Horseplayers Association of North America.  Their post asked the question of poker players and sports bettors why they don't bet on horse racing.  The comments were very frank and generally fell into these categories:
  1. Takeout or vigorish is too high, so too difficult to make money
  2. Conduct that impacts the integrity of the race
  3. Not interested in the sport
The last one is the one I'm interested in and I think is key, although the other two should not be ignored.  You bet on what you know and what you are interested in.  Some people bet baseball, but not football.  Some bet football, but only college football.  Why?  They're interested in it and they know it quite well, so they think they can win.  Or, they are interested in it and having some money on a game increases their fan experience.

If you could bet on soap operas, would you?  Probably no.  Why not?  Most likely because you couldn't give a rat's rear end about soap operas.  Since racing is no longer a monopoly, and most betting now is done off-track, people don't go to the races as often.  Also, that means that parents aren't taking their kids to the track.  Kids grow up not knowing anything about horse racing, except occasionally hearing about the big races, or when a horse breaks down and is euthanized or a racing official is accused of wrongdoing or there is a horse drugging scandal.  What do you think gets the most press and what do you think folks tend to remember?  Not rocket science.  Like the CANGAMBLE post, this one is very informative and highly recommended.

In reality, nothing the current geniuses running racing have come up with in the last 30 years have done much to reinvigorate the sport and stem the slow, steady decline of the horseplayer base and wagering handle.  Last year, the Jockey Club chartered a study by the McKinsey consulting firm.  The study showed that racing was losing 4% of its fan base per year.  What was shocking to me is that half of that loss was due to people dying.  Racing's fan base is literally dying off.  The joke I say to people is that you need an AARP card before you're allowed admission to a racetrack.  That isn't that far off as the average age of a horseplayer is 50, which is the age people start getting AARP cards in the mail.

So how to get the younger demographic interested in horse racing?  I've got a pretty good idea about that, so if you're in the racing industry and want to know, drop me a line - my consulting rates are very reasonable!

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