Statistics are like bikinis
September 12, 2017 3:00 AM
by The Analyst
Aaron Levenstein, a former business professor at Baruch College, is attributed with saying, “Statistics are like a bikini. What they reveal is interesting. But what they hide is vital.”
While each of us can ascribe our own meaning to such a statement, I am prone to view it as a reminder to consider more than the obvious. With this in mind while studying the recently released July Nevada gaming statistics, rather than just taking for granted the declarations about the state’s Gaming Win and various games’ win percentages, I decided it was about time to look at the often ignored Handle statistics.
More years ago than I care to remember, one of the most brilliant casino developers and operators the gaming industry ever enjoyed, shared a bit of wisdom during a meeting about a particularly brutal month of gaming results. After I reported the poor results on the month, I was surprised he was not very interested in the win and game hold percentages but was most intensely interested in the games’ handle. Seeing me a bit puzzled he put it simply: “We cannot win in every game every day, but if the handle is there and growing, the numbers will always end up going our way.” He was so right.
In the jargon of the industry, “handle” basically equates to volume of activity. In games like slots it is easy to know the handle as there are meters recording all the credits wagered and all the credits paid so there is precise information on the volume of wagers through the machines.
Table games are another story, as it is impractical to try and capture every wager made. The alternative approach is to generally count all the money in the drop box along with all the credit/markers issued on the game and take the total, which is in effect the amount the customer bought into the games with, and consider that the handle for the game(s).
While these amounts are reported to the state, the state’s primary concern is tax collection so they are more interested in the games’ win and tax collected than the handle, so don’t share that. They do release enough information though such that with a little time and effort one can reasonably calculate the handle for the various reported games and get a sense of volumes.
As July of 2016 saw a mega-whale kindly donate to the Nevada baccarat tables, it was very much expected that baccarat handle and win results would be down in July 2017. The unexpected surprise was, other than in slots and craps, all major categories of gaming handle were down when comparing July 2017 to July 2016.
Comparing July 2017 to July 2015 it was an even bigger surprise that, other than in slots, craps and sports betting, all the major categories were also down. This is very surprising on many levels, the macro economy is up in 2017 vs. both 2015 and 2016, the stock market and visitor volume were up, all the normal indicators for growth in gaming volume were there, so what is causing the general decrease in game volumes. Retail pricing and shift in marketing focus?
Based on conversations with a few casino hosts and marketing executives, seems that as certain customer segments faded from the baccarat rooms and blackjack tables, casinos turned their respective marketing departments loose on going after affluent domestic players, which resulted in bumps in craps and slot play. At the same time, over the recent years room rates and prices for food, beverage and entertainment have aggressively crept up putting a dent in the disposable spending dollar available to the retail traveler for gambling.
It would be naïve to think the continued expansion of gaming around the country as well as the world has not somewhat impacted the gambling budgets for Las Vegas, but if one looks at the various regulatory trends over the last few years it seems regulations may have just as much an impact. Regulations at both the state and federal levels have amped up both cash and suspicious activity reporting, and getting credit at a casino now is almost on par with getting a car loan, all of which impacts funds available to play.
As with most things there is rarely one particular event that triggers a result and it is perhaps a combination of circumstances that has led to the decreases in July gaming volumes in certain games and the increases in surprise areas such as craps. One magic thing about Nevada gaming, though, is the properties are not married to any games or retail offerings so as goes the desires of the customers so go the offerings of the properties.