Nevada revenues declining with drop in poker playing

Jul 1, 2008 7:06 PM

By David Stratton | A decline in poker playing – both online and in live games – by young Americans has signaled that the poker boom of the last few years has ended, according to a report released last week.

The report, from the Annenberg Public Policy Center at the University of Pennsylvania, found that poker playing among college-age men has declined to the same level of high school students – 4.4 percent last year, down from more than 16 percent in 2006.

At the same time, weekly Internet wagering among college-age youth was also falling – down to 1.7 percent in 2007 from 5.8 percent in 2006.

"This year’s strong drop in weekly card playing among college-level youth indicates that the fad has peaked," said Dan Romer, who directed the Annenberg survey.

Romer added, however, "Whether this will last remains to be seen."

A GamingToday study of Nevada poker rooms seems to confirm the Annenberg report’s findings.

The study, based on Gaming Control Board revenue reports, found that Nevada poker revenues – based on a percentage or "rake" of all poker pots – began dramatic increases in 2003, but have flattened over the past two years.

Beginning in late 2007, poker revenues have actually begun to decrease, based on month-over-month reports.

For the first four months of 2008, revenues from poker tables have declined by an average of about 7 percent per month – about double the rate of overall casinos revenues’ decline.

If the trend continues, tables in 2008 will rake about the same amount, per table, as they did in 2003.

Whether the decline is based on waning interest in poker, or – like other segments of commercial gambling – it is feeling the effects of a slowing economy, it is difficult to pinpoint.

Nonetheless, poker rooms in Nevada – especially the major operators in Las Vegas – will most likely begin to remove tables from the floor as the number of players decreases.

"We’ve seen a steady decline in the number of players over the past few months," said the poker room manager at a Las Vegas Strip casino. "As a result, we don’t open as many tables as we did, say, a year ago."

The manager, who asked that his name be withheld, added that the poker room hasn’t laid off any dealers, though their hours per week has been "cut minimally."

The number of Nevada poker tables reached a peak of 911 in 2007, when they earned about $507 per table.

In April of 2008, there were 905 tables operating, but they earned only $451 per day on average.

At current revenue levels, Nevada poker rooms would have to remove 90 tables from operation, or about 10 percent of the total, in order to maintain a $500 rake per table per day.

Since the turn of the century, poker has been a volatile casino commodity (see accompanying chart).

At the start of the current decade, poker revenue declined steadily and many casinos shut down their poker rooms.

But everything changed in 2003, when revenues took a dramatic upturn and casinos began to add tables.

Many observers believe the turnaround was fueled, at least in part, by Chris Moneymaker’s heralded victory in the World Series of Poker. An amateur who qualified for the championship event through an online poker room, Moneymaker and his success seemed to inspire poker players around the world.

In the years following Moneymaker’s feat in 2003, players flocked to the World Series – and to Nevada poker rooms. In the two years following his win, Nevada poker rooms nearly doubled the number of tables in the state.

The trend continued through 2006, but in 2007 there were signs that the boom had peaked.

As noted, in 2008 the trend has been toward declining poker revenues, though the slumping economy may also be having an effect.

Copyright 2008 GamingToday
Nevada Poker Revenue, 2000-2007
(Source: Gaming Control Board Revenue Reports)