Are Gamblers a Dying Breed?

I’m very intrigued by the entire casino industry and how they make decisions on the best way to separate me from my money.  One recent line of discussion that I’ve been following is the consistent stream of news about the declining role of gaming as a percentage of casino revenue and the challenges this is posing to destinations that haven’t diversified.

Atlantic City is on the verge of shuttering casinos, regional casinos are not growing at their pre-recession pace, and on the Las Vegas Strip the revenue composition has changed from roughly 60% driven by gaming down to roughly 40% in 2013.  With all this news you’d think that gaming is going extinct.  The truth is a little more complicated.

If you look at total gaming revenue the current environment is slightly below the pre-recession levels, but it has grown from the late 90s and early 2000s.  When I talk to my inside sources – dealers and cab drivers in Vegas – they are fairly pessimistic.  Their general view is that Vegas and other gaming destinations have turned a corner and have decided that night clubs and entertainment are their future rather than the hard-core gaming crowd.

My personal opinion is that the gaming industry is poised for a growth spurt.  Macau is booming, Japan may open up, and Las Vegas has tons of upside if the average American can just add a few extra bucks in their pockets they want to blow it in Vegas – and the average American doesn’t hang out at high-end night clubs with $20 Bud Lights.

I do think that the Vegas Strip and regional casinos could do themselves a favor and make a little more room for the lower rollers – my friends don’t play as much as I do and feel like even a $15 blackjack table can be a bit expensive so when they get on the floor and can’t find a seat at the lower limit tables or sometimes even find a table that is in their price range.

I’m sure super analytical people are crunching numbers and making these decisions, but in my casual observers opinion the big casinos are pricing out the casual player in many occasions.  Next time I meet a casino exec at a conference I’m very interested to hear their POV on this theory.

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Will the Cosmopolitan Casino Make Money Now?

The Cosmopolitan casino in Las Vegas sold for $1.7 Billion yesterday.  That’s actually a pretty good deal for the buyers since they bought it for less than the original development cost.  How could this happen?  You take a center strip location, do some amazingly creative advertising, and host some of the most beautiful people on the planet on a nightly basis and lose money on gaming.

This is a great example of how positioning your brand as an upscale nightclub and party environment can make you a very successful hotel and nightlife scene while ruining your bottom line in a city that builds billionaires on gaming.

I spoke with a casino industry executive at a conference recently who was incredulously talking about Cosmo and how they have missed the mark.  I was surprised since every time I had visited the place was jumping and beautiful people were overflowing out of every bar and restaurant at all hours of the day and night.  His response was ‘exactly they make $100 a head for a 2 hour dinner and $30 for a couple of drinks, we make exponentially more every 15 minutes someone sits at our boring  tables’.

My mini-review of Cosmo is that I love the vibe as a nightclub – great food, great bars, great people watching, amazing atmosphere and a terrible place to play blackjack.  When there are major events like CES they break out additional tables staffed by beautiful young women who have the personalities of beautiful young women who know they are the center of attention so you lose money and feel worse about yourself when you do.  On a regular traffic night at Cosmo the atmosphere in the building is great, but everyone is there to party so most of the players at the tables are LA D-bags who just want to impress the actress/model they met at the bar.  The dealers tend to have fairly bland personalities and the floor is cramped so you end up watching the party rather than playing your game.

I hope the new owners make some money and find a way to combine the nightclub atmosphere with a winning gaming environment so I can add another solid casino to my Las Vegas rotation.