The numbers are in for November 2012, and Las Vegas doesn't have much to be joyous about. The first story is from the Las Vegas Review Journal, cited by CDC Gaming reports. Nevada year over year gaming revenues dropped 11% for November, to just over $782 million for the month. In Las Vegas, the percentage drops were worse, with the Strip down 12.8% and Downtown down 17.2%. The November reversal countered two previous months of year over year increases. Could it be a quick reaction to the election results? Perhaps, but I don't think that's a key driver. It likely shows that the economy is still weak and we indeed could be headed for another recession dip.
The second story is from the Las Vegas Review Journal that shows some good news for Las Vegas. Visitor attendance for November 2012 was 3.1 million, up from 3 million from November 2011. That is good news. Some of the increase was due to a couple of conventions making reappearances and existing conventions having slightly larger attendance.
This is interesting in that in the same month, there were approximately 100,000 more visitors to Las Vegas, but Las Vegas gaming revenue was down almost 13% on the Strip and over 17% downtown. People showed up, but were not gambling as much. The story does talk about hotel average daily room rate (ADR) being up 0.6% to $104 for the month and occupancy rates at 79.7%, up from 78.3% in the prior November. Again, not too bad, but the story provides enough information to dig deeper and learn more.
The story provides comparisons to the highs enjoyed by Las Vegas in 2007 before the economy soured. During the boom, occupancy was higher at 90.4% and ADR was $146.53. Those numbers are much better than the current 79.7% / $104. But this isn't all the bad news in the numbers. The story provided the number of rooms in 2012 and 2007, which allow estimation of a different metric, revenue per available room or RevPAR. RevPAR is a better measure than ADR since revenues are measured against the total number of rooms available, as opposed to ADR, which measures revenues against the number of rooms sold. If you had a 100 room hotel and just sold one at a rate of $1,000, the ADR would be $1,000 but RevPAR would be $10.
So the estimated RevPAR for November 2012 was $82.89 and for 2007 was $132.46, based on the occupancy rates, ADR and number of rooms in the Las Vegas market at the various times. So, estimated RevPAR is still down about 37% from the peak. If you look at ADR, Las Vegas is down about 30%. But look at room revenue and you'll see just how much money that isn't coming in. If occupancy and ADR had stayed at the 2007 levels, Las Vegas would have brought in about $155 million more in room revenue, just for the month. That would have more than made up for the lower gaming revenues. Las Vegas has hopeful signs, but they've still got a long way to go to where they were before the economic downturn.
Showing posts with label Las Vegas. Show all posts
Showing posts with label Las Vegas. Show all posts
Friday, January 11, 2013
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.
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.
Saturday, June 2, 2012
NFL Betting Season Has Arrived
Cantor Gaming, a leading sports wagering bookmaker, has published initial over/under lines for regular season NFL wins for each team. They vary from 12 wins for the Packers and Patriots to 5 1/2 for the Browns, Colts and Jaguars. You can see the initial lines at this link from Yahoo.
It might be a bit too early to make any selections at this point as the initial mini-camps are just finishing up, with regular training camp and preseason activity not starting in earnest until early July. However, if you feel that no way that the Colts will win more than 5 games this year, go ahead, get to Vegas and put down $135 for a chance to win $100!
It might be a bit too early to make any selections at this point as the initial mini-camps are just finishing up, with regular training camp and preseason activity not starting in earnest until early July. However, if you feel that no way that the Colts will win more than 5 games this year, go ahead, get to Vegas and put down $135 for a chance to win $100!
Sunday, March 11, 2012
Singapore's Airport Sets Passenger Record in 2011
The Casino Journal reported in its February issue that Singapore's airport passenger traffic rose 11.4% in December, continuing the positive trend since the opening of their two casino resort complexes. For the entire year, Singapore's Changi Airport handled 46.5 million passengers. As a comparison point, Las Vegas McCarran Airport handled 41.4 million passengers, well off its high of 47 million in 2007, before the financial meltdown.
A large difference, of course, is that Singapore is a key air traffic hub in south Asia, with a large amount of business being conducted in Singapore proper. Las Vegas' key attractant is the tourist/gaming industry.
Regardless, it is another point of proof to show that expansion of gaming to Singapore was a smart move, paying immediate dividends. You can reference other posts regarding Singapore gaming here, here and here.
A large difference, of course, is that Singapore is a key air traffic hub in south Asia, with a large amount of business being conducted in Singapore proper. Las Vegas' key attractant is the tourist/gaming industry.
Regardless, it is another point of proof to show that expansion of gaming to Singapore was a smart move, paying immediate dividends. You can reference other posts regarding Singapore gaming here, here and here.
Wednesday, February 29, 2012
History of Las Vegas in a Cool Graphic
The Las Vegas Sun has a great graphical history of Las Vegas on its website. You can find that link here. Now the time period covered by the map ends in 2007, so it misses some of the new facilities, such as the Aria, Cosmopolitan, Encore, etc., but the early days of Vegas are captured quite well. That is the real value in the map - the history and seeing how the facilities evolved over time.
The map covers the strip, downtown and the valley, and in each decade tab, there is a time period overview that has bullet point historical items of note. It's definitely worth a look! Kudos to the Sun for putting this together.
The map covers the strip, downtown and the valley, and in each decade tab, there is a time period overview that has bullet point historical items of note. It's definitely worth a look! Kudos to the Sun for putting this together.
Saturday, February 11, 2012
Nevada Super Bowl Betting Results Good
In addition to New York, Nevada also won the Super Bowl this year. Nevada sports books (with the majority of the action of course in Las Vegas) pulled in just shy of 94 million dollars in wagers ($93.8 million), "winning" $5 million. The hold percentage was 5.4%, which beat the theoretical hold percentage on typical 11/10 straight wager sports bets of 4.54%. Part of that could be due to slightly more money wagered on the losing side of the point spread, but most likely that is due to the books actually coming up short on the point spread portions of the wagers, but making that money back on losing parlay and proposition bets, which have better hold percentages for the sports books.
The Las Vegas Sun article also touts that this year's handle was the second-largest Super Bowl handle in the last decade. Before too many champagne corks pop, do realize that what is wagered legally in Nevada is but a small fraction of illegal sports betting in the United States. My estimate that for the Super Bowl, the illegal betting was about ten times the legal betting, or about ONE BILLION DOLLARS (now put your pinky to your lips like Dr. Evil).
As part of the National Gaming Impact Study Commission effort, the FBI estimated that one billion dollars was illegally wagered each week of the NFL regular season. That study was published in 1999 - this is 2012. Yahoo has a decent overview article regarding sports wagering and the position that legal sports betting should be expanded in the United States. I agree.
If interested, other previous posts on sports betting are available for view, with my recommended choices here, here and here, with the first post discussing the softening view of the NBA to potentially expanded sports betting.
The Las Vegas Sun article also touts that this year's handle was the second-largest Super Bowl handle in the last decade. Before too many champagne corks pop, do realize that what is wagered legally in Nevada is but a small fraction of illegal sports betting in the United States. My estimate that for the Super Bowl, the illegal betting was about ten times the legal betting, or about ONE BILLION DOLLARS (now put your pinky to your lips like Dr. Evil).
As part of the National Gaming Impact Study Commission effort, the FBI estimated that one billion dollars was illegally wagered each week of the NFL regular season. That study was published in 1999 - this is 2012. Yahoo has a decent overview article regarding sports wagering and the position that legal sports betting should be expanded in the United States. I agree.
If interested, other previous posts on sports betting are available for view, with my recommended choices here, here and here, with the first post discussing the softening view of the NBA to potentially expanded sports betting.
Sunday, April 10, 2011
Not A Surprise, Las Vegas Gambling Numbers Drop in 2010
The Las Vegas Convention and Visitors Authority published its 2010 visitor profile which indicated the continued downward trend in gambling, due to the economy. From the report, "eighty percent (80%) of 2010 visitors said they gambled while in Las Vegas, down significantly from 87% in 2006, 84% in 2007, 85% in 2008, and 83% in 2009."
The report is quite extensive, and I encourage you to download and peruse as it contains information on gambling, entertainment, demographics and traveler statistics. The report can be found at this link. Although the report is focused on Las Vegas, in my opinion, the information contained should have some utility for any venue with brick and mortar casinos.
The report is quite extensive, and I encourage you to download and peruse as it contains information on gambling, entertainment, demographics and traveler statistics. The report can be found at this link. Although the report is focused on Las Vegas, in my opinion, the information contained should have some utility for any venue with brick and mortar casinos.
Saturday, February 26, 2011
Singapore Casinos Post Solid 1st Year Numbers
AsiaOne News reports that for the first year of operation, the two licensed casinos in Singapore, Resorts World Sentosa and Marina Bay Sands have done quite well. Although specific casino revenue isn't directly reported by the Sentosa resort, estimates for combined casino revenue likely exceed $2 billion US dollars. This is a very nice result for just the first year of operation.
From the article, "PricewaterhouseCoopers predicted that Singapore would overtake South Korea and Australia this year to become the second-largest Asia-Pacific casino market behind traditional leader Macau." If accurate, Singapore is becoming a big Asia-Pacific casino player at breakneck speed.
Out of curiosity, I wanted to see how Singapore casino revenue compares to Nevada. I reference an article in the Las Vegas Sun, which states that Nevada gaming revenue to recover to pre-recession levels by 2014. From the numbers in the article, Nevada gaming revenues for 2010 are likely in the $10 billion to $11 billion range. Singapore, with just two properties, is already about one-fifth of Nevada's gaming revenue. Singapore has done quite well.
From the article, "PricewaterhouseCoopers predicted that Singapore would overtake South Korea and Australia this year to become the second-largest Asia-Pacific casino market behind traditional leader Macau." If accurate, Singapore is becoming a big Asia-Pacific casino player at breakneck speed.
Out of curiosity, I wanted to see how Singapore casino revenue compares to Nevada. I reference an article in the Las Vegas Sun, which states that Nevada gaming revenue to recover to pre-recession levels by 2014. From the numbers in the article, Nevada gaming revenues for 2010 are likely in the $10 billion to $11 billion range. Singapore, with just two properties, is already about one-fifth of Nevada's gaming revenue. Singapore has done quite well.
Thursday, January 6, 2011
Conventional Wisdom Now Figuring Out Las Vegas Needs To Do Something
The Las Vegas Sun had a recent article discussing how Las Vegas had to "reinvent the wheel" in order to adapt to the current economic and demographic reality. Here's the key quote from Bill Eadington of the University of Nevada, Reno:
“Newness, which has long driven Las Vegas growth, will not be part of the immediate future,” said Bill Eadington, director of UNR’s Institute for the Study of Gambling and Commercial Gaming. “Las Vegas may become yesterday’s news unless it can figure out a new way to reinvent itself.”
Let's take a peek at a few of the issues facing Las Vegas:
1. Beaucoup hotel rooms built during the boom added to a large existing base
2. Economic recession/depression (depending on if you have a job or not)
3. Competition for US casino patrons from tribal and other casinos closer to home
4. Competition for Asian casino patrons from newer, closer venues in Macau and Singapore
5. Vegas prices aren't all that inexpensive anymore like the old days
Other than that, what's the problem, right? We won't even mention the competition from online gambling.
With regard to the number of hotel rooms, I found this document on the Las Vegas Convention and Visitors Authority website. In Las Vegas, the current estimated number of hotel rooms is 150,732. That is a LOT of rooms. How many? Here's how many... If the hotel rooms in Las Vegas were its own city, it would be the 158th largest city in the United States, just ahead of Alexandria, Virginia (based on 2009 Census data). As another reference point, there are 276 cities in the United States with populations over 100,000. This is just assuming one person per room. Assuming 1.5 people per room, Las Vegas hotel rooms would be the 87th largest city in the US, just ahead of Lubbock, Texas. Assuming that a hotel needs 70% occupancy to break even, Las Vegas needs on average over 105,500 of those rooms to be filled every night. That is a tall order.
I've posted quite a bit on Nevada, the impact of the economic downturn and increased competition. For those interested, you can read the most recent of the related posts, here, here, here and here.
The article discusses in very general terms what Las Vegas needs to do. The aforementioned Las Vegas Convention and Visitors Authority conducted a survey. The findings? Customers want transparency, value and variety. Forgive me for being obtuse but what the heck does that mean? Quoting again from the Sun article, "research indicated Las Vegas should focus its scarce marketing dollars on people who need an excuse to travel here and those interested in the city who don’t know much about it and need more details to be persuaded..." Who doesn't know about what Las Vegas is about? Go ask people at random, "what's Las Vegas all about?" You really think they'll say, "gee, I don't know anything about Las Vegas?"
Las Vegas needs to get back to fundamentals. What is Las Vegas' nickname? Yep, Sin City. The three B's - Booze (lots of it and low or no cost), Babes (see link to post below) and Bucks (good games, low takeout/don't nickel and dime your gambling patrons). That's what Las Vegas needs to get back to in order to survive, in my opinion. Unlike the experts, I give you concrete and thought out recommendations! I posted about this type of approach with regard to how the Reno and Lake Tahoe markets could combat increased competition from tribal casinos in Northern California. It may be time Las Vegas considers something similar.
“Newness, which has long driven Las Vegas growth, will not be part of the immediate future,” said Bill Eadington, director of UNR’s Institute for the Study of Gambling and Commercial Gaming. “Las Vegas may become yesterday’s news unless it can figure out a new way to reinvent itself.”
Let's take a peek at a few of the issues facing Las Vegas:
1. Beaucoup hotel rooms built during the boom added to a large existing base
2. Economic recession/depression (depending on if you have a job or not)
3. Competition for US casino patrons from tribal and other casinos closer to home
4. Competition for Asian casino patrons from newer, closer venues in Macau and Singapore
5. Vegas prices aren't all that inexpensive anymore like the old days
Other than that, what's the problem, right? We won't even mention the competition from online gambling.
With regard to the number of hotel rooms, I found this document on the Las Vegas Convention and Visitors Authority website. In Las Vegas, the current estimated number of hotel rooms is 150,732. That is a LOT of rooms. How many? Here's how many... If the hotel rooms in Las Vegas were its own city, it would be the 158th largest city in the United States, just ahead of Alexandria, Virginia (based on 2009 Census data). As another reference point, there are 276 cities in the United States with populations over 100,000. This is just assuming one person per room. Assuming 1.5 people per room, Las Vegas hotel rooms would be the 87th largest city in the US, just ahead of Lubbock, Texas. Assuming that a hotel needs 70% occupancy to break even, Las Vegas needs on average over 105,500 of those rooms to be filled every night. That is a tall order.
I've posted quite a bit on Nevada, the impact of the economic downturn and increased competition. For those interested, you can read the most recent of the related posts, here, here, here and here.
The article discusses in very general terms what Las Vegas needs to do. The aforementioned Las Vegas Convention and Visitors Authority conducted a survey. The findings? Customers want transparency, value and variety. Forgive me for being obtuse but what the heck does that mean? Quoting again from the Sun article, "research indicated Las Vegas should focus its scarce marketing dollars on people who need an excuse to travel here and those interested in the city who don’t know much about it and need more details to be persuaded..." Who doesn't know about what Las Vegas is about? Go ask people at random, "what's Las Vegas all about?" You really think they'll say, "gee, I don't know anything about Las Vegas?"
Las Vegas needs to get back to fundamentals. What is Las Vegas' nickname? Yep, Sin City. The three B's - Booze (lots of it and low or no cost), Babes (see link to post below) and Bucks (good games, low takeout/don't nickel and dime your gambling patrons). That's what Las Vegas needs to get back to in order to survive, in my opinion. Unlike the experts, I give you concrete and thought out recommendations! I posted about this type of approach with regard to how the Reno and Lake Tahoe markets could combat increased competition from tribal casinos in Northern California. It may be time Las Vegas considers something similar.
Saturday, June 12, 2010
Tropicana Adding Cantor Gaming's Mobile Product
The Las Vegas Sun reports that the Tropicana is the latest casino to add Cantor Gaming's mobile wagering system. Cantor's system is already installed at the Palazzo and M Resort. I believe that Cantor has an agreement with the Hard Rock, but the system may not be installed yet. Cantor isn't exactly taking Las Vegas by storm, but they are making progress and picking up casino installations.
The Sun story reports the deal to mobile gaming for the Tropicana's upcoming revamped race and sports book, as well as other public areas, such as pool areas, restaurants and bars. This installation is part of the Tropicana's $165M renovation. The Las Vegas Review Journal reports the deal is larger - that Cantor will actually RUN the renovated Tropicana sports book when it opens this fall.
If the Review Journal story is accurate, Cantor running the sports book is a bigger deal. Selling a wireless network coupled with their proprietary games is one thing; taking the responsibility and potential liability of operating a sports book is another. Cantor, if successful, will provide new competition to Leroy's and Lucky's, the two major sports book operators in Nevada. Cantor's mobile gaming system would be a differentiator.
Cantor is the only mobile gaming system approved by state regulators, so they are in the first-mover position in this application area. If Cantor indeeds leverages this and also enters the sports book market, they could easily become a real threat to Leroy's and Lucky's. With regard to the other nascent mobile gaming providers, they are definitely in the rear and losing ground fast.
The Sun story reports the deal to mobile gaming for the Tropicana's upcoming revamped race and sports book, as well as other public areas, such as pool areas, restaurants and bars. This installation is part of the Tropicana's $165M renovation. The Las Vegas Review Journal reports the deal is larger - that Cantor will actually RUN the renovated Tropicana sports book when it opens this fall.
If the Review Journal story is accurate, Cantor running the sports book is a bigger deal. Selling a wireless network coupled with their proprietary games is one thing; taking the responsibility and potential liability of operating a sports book is another. Cantor, if successful, will provide new competition to Leroy's and Lucky's, the two major sports book operators in Nevada. Cantor's mobile gaming system would be a differentiator.
Cantor is the only mobile gaming system approved by state regulators, so they are in the first-mover position in this application area. If Cantor indeeds leverages this and also enters the sports book market, they could easily become a real threat to Leroy's and Lucky's. With regard to the other nascent mobile gaming providers, they are definitely in the rear and losing ground fast.
Tuesday, May 25, 2010
Tropicana Undergoing Facelift
The Las Vegas Sun reported that the Tropicana will be undergoing a renovation that will cost upward of $165 million. Part of the thrust of the article is that the Tropicana will be losing some of its history, which is accurate. Of course, recent history for the property hasn't been that good, as it emerged from bankruptcy just last summer.
What the management team wants to do is retheme the Tropicana to a South Beach theme from the mix and match of decor installed over the 50 year history of the property. This is actually a very good thing. As the article states, often properties get "renovated" by blowing them up and rebuilding from scratch. The Tropicana will spend a fraction of the cost of a new build to refresh the property.
In addition, management is focusing the market position to a "best in class" position, which means that in their market tier, they are tops. That is also a good thing. The Tropicana isn't going to be able to compete with Wynn or the Bellagio, but they can compete with the mid-tier properties. Also, since the Tropicana is on the northern end of the Strip, their close competition, the Sahara, Circus Circus, Stratosphere (and the Las Vegas Hilton to the east), appear to be beatable properties. The makeover could put the Tropicana as the top property in this area.
I, for one, look forward to visiting after the renovation is complete.
What the management team wants to do is retheme the Tropicana to a South Beach theme from the mix and match of decor installed over the 50 year history of the property. This is actually a very good thing. As the article states, often properties get "renovated" by blowing them up and rebuilding from scratch. The Tropicana will spend a fraction of the cost of a new build to refresh the property.
In addition, management is focusing the market position to a "best in class" position, which means that in their market tier, they are tops. That is also a good thing. The Tropicana isn't going to be able to compete with Wynn or the Bellagio, but they can compete with the mid-tier properties. Also, since the Tropicana is on the northern end of the Strip, their close competition, the Sahara, Circus Circus, Stratosphere (and the Las Vegas Hilton to the east), appear to be beatable properties. The makeover could put the Tropicana as the top property in this area.
I, for one, look forward to visiting after the renovation is complete.
Tuesday, March 16, 2010
Las Vegas Construction Meltdown Details
To say that Las Vegas' construction has taken a hit is one thing, but to see the details of the crisis makes it quite poignant. The Las Vegas Review Journal as a great article that discusses the current status of several large construction projects halted mid-construction due to the economic downturn.
What drives the point home are the pictures of project after project showing building frames and skeletons. One of the buildings looks more like something you would see from a war photograph rather than Las Vegas. Very sad.
Las Vegas gaming revenue is still down significantly, with Nevada casinos actually posting a loss last year (you can see the blog post here). I don't see the Las Vegas construction situation improving anytime soon unfortunately which is disappointing because Las Vegas is a great town.
What drives the point home are the pictures of project after project showing building frames and skeletons. One of the buildings looks more like something you would see from a war photograph rather than Las Vegas. Very sad.
Las Vegas gaming revenue is still down significantly, with Nevada casinos actually posting a loss last year (you can see the blog post here). I don't see the Las Vegas construction situation improving anytime soon unfortunately which is disappointing because Las Vegas is a great town.
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.
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.
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.
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.
Thursday, August 13, 2009
Las Vegas Gaming Revenue Hasn't Hit Bottom
The struggling economy continues to pound Las Vegas as well as Nevada overall. Las Vegas isn't the only gambling center suffering - Atlantic City and Macau are also suffering revenue declines. The advantages of those other venues is their close proximity to very large populations. Nevada is still a draw, but not a quick commute from Southern California as Atlantic City is from New York. The Bloomberg article has the full details.
With jobless claims still rising, the economy has not bottomed. The temporary slight drop in the unemployment rate is just that, temporary. Do not be surprised if unemployment doesn't break the 10% level or higher before the economy turns.
Perhaps the folks in Las Vegas should read an earlier post concerning what Nevada can do to exploit a latent sustainable competitive advantage. What Vegas can't do is think they can just ride out this storm. There are secular trends that are impacting Nevada that can't be ignored. If they just keep offering what they offer, or cut prices, that will easily be matched by competing venues and the final result will be worse than the situation before the price cutting.
However, if you would like to visit Las Vegas, you are likely not going to get any better deals than now.
With jobless claims still rising, the economy has not bottomed. The temporary slight drop in the unemployment rate is just that, temporary. Do not be surprised if unemployment doesn't break the 10% level or higher before the economy turns.
Perhaps the folks in Las Vegas should read an earlier post concerning what Nevada can do to exploit a latent sustainable competitive advantage. What Vegas can't do is think they can just ride out this storm. There are secular trends that are impacting Nevada that can't be ignored. If they just keep offering what they offer, or cut prices, that will easily be matched by competing venues and the final result will be worse than the situation before the price cutting.
However, if you would like to visit Las Vegas, you are likely not going to get any better deals than now.
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