New deal for poker

May 22, 2007 3:10 AM

According to recent casino revenue reports, poker continues its four-year rise in popularity, though the level of increases seems to have reached a peak.

In Nevada, for instance, card rooms generated $42 million in the first quarter of 2007, a 6.4 percent increase over 2006’s first quarter.

But the modest gains are less than half the 15 percent increase reported for 2006 over 2005.

Equally important, poker room operators have seen their "rake" — the fee (usually based on a percentage of the pot) collected from players — slipping the last couple of years.

According to the Nevada Gaming Control Board, poker rooms in the state raked an average of $17,021 per table per month in 2004, the highest amount ever.

But since then, the rake has steadily declined. Last year Nevada card rooms raked an average of $15,136.

These issues and other concerns over poker room profitability were raised in a panel discussion at last month’s Gaming Operations Summit held in Las Vegas.

Hosting the discussion was Joe Awada, owner of Gaming Entertainment Inc., professional poker player and former casino/card room manager.

"We had casino and poker room executives from around the country, and they all expressed a desire to learn how to enhance profitability and better control poker room expenses," Awada said.

The primary problem, Awada said, is that most poker rooms are still being operated as a service or convenience for the players, like they were 10 years ago.

"Poker rooms need to enter the 21st century," Awada said. "Just like slots and table games, poker must be operated as a money-making department.

"Simply stated, the poker player isn’t being charged enough for the entertainment experience," Awada continued. "Nowhere else in the casino can you play for hours at a cost of just a handful of dollars."

One of the easiest ways for Nevada casinos to increase the rake is to eliminate the "no flop, no drop" policy, which has been abandoned in most poker rooms outside the state, Awada said.

REVENUE (RAKE) PER TABLE

Year

Revenue

Revenue

 

(annual)

(monthly)

1st Q 2007

$47,519

$15,839

1st Q 2006

$49,263

$16,421

2006

$181,635

$15,136

2005

$200,034

$16,669

2004

$204,260

$17,021

2003

$181,234

$15,102

2002

$149,717

$12,476

2001

$125,627

$10,468

He added that comps and casino rates for poker players should be re-evaluated by casino managers.

"The cost of everything goes up — it’s supply and demand," he said. "You can’t get a hotel room on the Strip for $50 anymore, nor can you play at a $1 blackjack table or eat in a $5 buffet."

Another means of enhancing profitability is to speed up the action in order to deal more hands per hour.

"No limit hold’em is a slow game, but you can speed it up with innovative changes, which would not be difficult for poker rooms to implement," Awada said.

Those measures could easily include changing the rules to speed up play and altering the structure of the blinds to increase the action, he said.

In addition to cutting expenses and increasing revenue, poker rooms need to become more innovative in finding new fast-action games, often in a limit format, and marketing to a younger audience.

"Look at the table games pit, which has enjoyed a renaissance in recent years, mostly because of the new games that have been introduced," Awada said.

Those games, he added, often appeal to younger players, who are needed to help fill the poker rooms in Nevada.

"Now that the Internet is having less of an influence on live poker, poker rooms need to concentrate on marketing to new and younger players," he said. "There are a myriad of ways to do this, but poker room operators must recognize the value of marketing, and make a commitment to getting the most from their efforts."

Since the Gaming Operations Summit in April, Awada says he has been contacted by poker room managers seeking assistance in enhancing their operations.

"I’ll be visiting some poker rooms in Oklahoma, Canada and elsewhere," he said. "It’s refreshing to see operators who are open to new ideas.

"These are the operators who will survive and prosper into the 21st century and beyond."