The changing face
of Nevada gaming

Apr 4, 2006 3:44 AM

Over the past several years, gaming analysts have hypothecated about Nevada’s evolving gaming industry — the resurgence of table games, the influence of younger players, slumping slot play and the skyrocketing popularity of poker, among other trends.

But a detailed analysis of gaming revenue from 2000 to 2005 reveals there were very few significant changes in the way Nevada tourists and locals gamble.

Instead, there’s been a kind of shift to games that have a lower house edge, plus a reinforcement of what has always been popular with players.

For instance, slot machines continue to be king in Nevada casinos. Over the past five years, slot revenue in Nevada increased 25.5% from $6.1 billion to $7.7 billion. That increase accounted for most of the 21.3% increase in overall gaming revenue from 2000 to 2005.

Table game revenue grew by only 11.7%, from $3.3 billion to $3.7 billion, over the past five years.

Not only has slot revenue increased, it now accounts for a larger portion of the pie. Last year, slots accounted for 66.7% of all gaming revenue; in 2000 slots accounted for 64.4%.

Of course, the make-up of slot revenue has changed markedly since 2000. Five years ago, there wasn’t even a category for multi-denomination slots, which last year raked in the largest amount of revenue of any gaming category — $2.7 billion or 23.5% of total revenue.

Five years ago, 25¡ slots were the top producing category, garnering $2.4 billion or 25.7% of total revenue. In 2005, quarter slots accounted for 12.9% of revenue.

Casino operators point out that the proliferation of multi-denominational machines will account for the apparent declining popularity of quarter slots — the games have simply been piggybacked with other games in multi-denomination machines.

The same could be said for $1 and 5¡ slots, which experienced declining revenues of 26% and 44%, respectively: many of those dollar and nickel games are now part of multi-denomination machines.

Another category that didn’t exist five years ago is 1¡ slots. Last year, penny slots generated $950 million in revenue, a solid 8.1% of all gaming revenue.

On the table game side of the ledger, blackjack continues to be the most popular game, though its grip on the green felt is slipping.

Blackjack revenue increased a modest 5.9%, from $1.1 billion to $1.2 billion, over the past five years, although its share of overall gaming revenue dropped from 12.2% to 10.7%.

Some players say they’ve shifted away from playing blackjack because of the advent of poker and other hot new games such as 3-Card Poker and 3-5-7 Poker, as well as the movement toward paying 6-5 instead of 3-2 for a natural blackjack.

In its defense, some table manufacturers are hopeful that new side bets will help to refuel and interest in blackjack.

Other table games that seem to be losing interest with players include craps, whose revenue slipped 4% from $491 million to $471 million, Let It Ride (down 15.65% from $76.3 million to $64.4 million), and Caribbean Stud (a decline of 46% from $57.7 million to $30.8 million).

The latter table games, experts say, simply have such a high house edge — between 25% and 30% — that they’ve become too costly for astute gamblers to play.

Games that fared well over the past five years are baccarat, which enjoyed a 22% increase in revenue from $541 million to $665 million, roulette (an increase of 12.6% in revenue), and mini-baccarat (revenue increase of 44%).

One of the most popular games to evolve out of nowhere — it didn’t have its own category five years ago — is 3-Card Poker, which last year generated $175 million in revenue.

The skyrocketing popularity of standard poker was reflected in the 122% increase in revenue, from $63.1 million to $140 million, over the past five years.

Yet, some experts point out that poker is a labor-intensive activity that relies on a "rake" or percentage of the pot for revenue, and, therefore, may not be as profitable as some banked casino games such as 3-Card Poker or Pai Gow Poker.

"You’ll notice that it took about 720 poker tables — each equipped with a live dealer — to generate the $140 million," said a floor supervisor at a Strip casino. "On the other hand, it only took 234 3-Card Poker tables to generate $177 million, and 288 Pai Gow Poker tables to generate $139 million.

"There’s no question poker has become popular," the supervisor continued, "but paying a dealer out of a relatively small rake can become a burden for the house."

Rounding out the major gaming categories are race and sports betting, which remained relatively flat for the past five years. Sports betting increased 1.8% from $123 million to $126 million, while pari-mutuel betting increased 6.8% from $92.9 million to $99.3 million.

While some critics believe that Nevada has squandered its exclusive right to offer sports betting in the U.S. by not aggressively expanding the market, those with cooler heads point out that Nevada did well to retain its share as Internet/off-shore sports betting has skyrocketed over the past five years.

"We’d all like to grow our business," said the sports director at a Stations casino. "But we have to be realistic in today’s market, and work within the guidelines of our mandate from the state. It’s not easy to compete with online gaming, but we do the best we can for our customers."