Handle sounds simple, but there are many elements to factor
January 02, 2018 5:23 PM
by The Analyst
The gaming industry has occupied the vast majority of my professional career and I have always been fascinated that gaming is one of the few businesses you can go to your owners, Board of Directors or shareholders and straight-faced proudly say, “We had one of the best and busiest months (or years) ever but the ‘gods of luck’ were against us and we lost money.”
In some ways that was the story for the Las Vegas Strip for November. The best gaming entrepreneurs rarely start a meeting by asking their operating staff “what was our win” but instead ask what the handle was, then ask about the win or loss. Handle suggests volume of business and the best gaming execs know as long as the handle is there the games will eventually deliver the win.
November is a good example of this. It’s factually true, as a number of gaming writers were quick to note, the Las Vegas Strip’s Table Game revenue was down compared to the same month in the prior year. However, most of those writers failed to note that if November 2017 had enjoyed the same game hold percentages as were present in 2016 it would have been a different story.
In gaming the notion of handle is to estimate the volume of business on a particular game. It sounds simple but there are a lot of elements that factor into determining handle. In general handle represents the amount the gamblers bought into the game with; if they are winning or playing even then there is no need to buy into the game again with more money. So this tells us that when the hold percentages on a game are lower than usual, the handle will also be lower than if the game hold percentages were higher. Simple enough in concept, but for the novices it is just easier to focus on the win and miss the real story.
On a raw win basis, State Gaming Revenue for November was down $21,418,000 from the prior year. However, State Slot revenue was up $21,474,000 up over 3.55% beating inflation rates and the Strip Slot revenue was up $12,221,000 up over 4.74% indicating a solid return of gaming customers. What drug the State’s November results down was the poor win results on the Las Vegas Strip. November Strip Table Game revenue was down $43,460,000 all due to low hold percentages predominately led by poor results in Baccarat and Sports Books. If November had enjoyed the same game hold percentages as in the prior year or even comparable to the Year To Date averages the November 2017 Table Game win would have been on par with November of 2016 and as higher hold percentages usually means higher handle the volumes were such that November of 2017 would have likely beat November 2016 by somewhere between 5% to 7.25%. What all this really means is that the gaming business volumes are back and were not deterred by the horrific event of October 1, 2017.
Separately the Nevada Gaming Commission recently approved the Westin as a restricted route location. The Westin which is a stone throw or two from the Las Vegas Strip is the renovated version of the old Maxim hotel. In its day the Maxim enjoyed a blend of locals and tourist and had a lively casino and nightlife. Back then casino dealers kept their tips and the Maxim was a popular place for locals, mostly made up of dealers, show people and cocktail servers, to congregate after their shifts, blow off steam and have some fun.
As the town matured and tip distribution policies changed the locals faded from the property and the property became dependent on tourist. Successive owners failed to make a go of the property and now the property has reduced its gaming operations to that of a restricted location, typically maxed out at 15 slot machines. In the old days the idea that an over 800 room hotel with a national hotel flag operating the hotel could not sustain a casino would have been laughable. The lesson for operators though is that you cannot just rely on your hotel guest to support your casino but need other enticements, shows, food, shops, night clubs, etc to attract outside traffic and hold your in house guest on the property. None the less another piece of Las Vegas history finally fully fades.
In closing, 2018 in the Chinese calendar is the year of the Dog and in keeping with that spirit I hope 2018 is a year one and all can howl about.