Nevada casinos battle recession … and Lady Luck!

Mar 12, 2009 6:44 PM
by David Stratton |

As Nevada casinos struggle to overcome the effects of a slumping economy, a new enemy has surfaced to take a bite out of revenues … Lady Luck.

Despite January’s 14 percent drop in gaming revenues, and a 17 percent dip in the number of visitors to Las Vegas, gamblers bet just 3 percent less in Nevada’s casinos than they did a year ago.

The total handle – the amount bet by gamblers – was $12.33 billion in January, just 3 percent less than the $12.72 billion they bet in January 2008, according to the state’s Gaming Control Board.

The problem for casinos is they just didn’t win or "hold" as much as they did 12 months ago.

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For instance, more money was actually bet at Nevada table games, $2.73 billion, in January, than was bet a year ago, $2.54 billion.

But the collective hold percentage this year was only 11.67 percent versus 13.96 percent in January 2008.

Hold percentage is defined as the amount of money left after all winning bets are paid off.

The apparent bad luck at the tables resulted in a 9.2 percent drop-off in revenues, even though players bet nearly 7 percent more this year than a year ago.

Moreover, the bad luck plagued all the major table games – blackjack, craps, roulette, 3-Card Poker, baccarat and pai gow – all of which had lower hold percentages this year.

Only three games – keno, Let it Ride and pai gow poker – had a better hold percentage this year.

The trend was just as acute for slot machines, which account for nearly 64 percent of casinos’ total revenue. January’s slot revenues were off nearly 18 percent compared to last year, even though the total amount bet, $9.6 billion, was just 5.6 percent less than the $10.18 billion bet a year ago.

The culprit once again was a collective 6.03 percent hold percentage, which was about 12.6 percent less than the 6.90 percent slots held a year ago.

While the difference may not appear significant, it is actually quite huge. For each one-tenth of a percent that the hold declined, the casinos lost about $9.6 million in revenue, based on the total amount bet.

Finally, Nevada’s sports books probably had the worst luck of all the casino entities as their revenues were off nearly 59 percent from a year ago.

But it wasn’t for a lack of players; the total handle in January, $236.9 million, was just 2.4 percent less than the $243 million wagered a year ago.

The amount held by sports books this year, 3.3 percent, was less than half the 6.9 percent they held a year ago.

Underscoring the bettors’ good fortune, or the inability of line-makers to post proper lines, was the books’ parlay card business in January.

Although the total amount played on parlay cards, $3.6 million, was virtually the same amount as wagered a year ago, the win amount slipped by 27 percent because the hold percentage plummeted to 12.8 percent, about half the books are accustomed to holding.

Perhaps the casinos’ only bright spot was the poker rooms, whose revenues were just 0.77 percent less than a year ago.

Of course, luck isn’t involved in dealing poker. The casinos "rake" a fixed percentage of every pot, regardless of how the cards fall.