Exclusive Content   Join Now

Casino cutbacks lead
to more revenue!

Apr 8, 2003 7:59 AM

After a string of annual increases, the number of slots and table games in Nevada shrank last year.

"Gaming positions" fell from 230,169 in 2001 to 219,329 in 2002, according to an analysis by CB Richard Ellis’ Global Gaming Group. That 4.7 percent drop contrasted with a 10.3 percent gain over the four previous years.

Likewise, Clark County’s gaming positions ”” a formula calculated on individual slot machines and six seats per table ”” tumbled 4.59 percent after rising 14.5 percent since 1997.

But while gaming positions declined in almost every county, gaming win actually increased in some jurisdictions.

"There appears to be no straight-line correlation between the change in gaming positions and the growth or decline in gaming win,’’ said Carlton Geer, director of the Global Gaming Group.

Geer’s in-depth, market-by-market study showed that:

”¡ Rural counties fared better than the urban centers of Washoe and Clark counties last year.

While Clark County’s gaming win slipped 0.07 percent and the Strip dropped 1.01 percent, seven outlying counties posted improved revenues, ranging from a 2.41 percent increase in Douglas/South Lake Tahoe to 5.47 percent in Nye County.

”¡ Mesquite was the only Clark County jurisdiction to record a bigger gaming win in 2002. Its 7.18 percent increase came even though the town’s casinos actually reduced the number of slot machines.

”¡ North Las Vegas took the biggest percentage hit in Clark County, with its gaming win declining 4.12 percent. Market analysts are hopeful that the new Cannery Casino there will improve those numbers this year.

"The smaller areas tended to be the areas of growth,’’ Geer told GamingToday. Indeed, Lyon and Churchill counties were the only two counties that registered increases in both slot and table games. They enjoyed gaming win increases of 3.51 percent and 2.87 percent respectively.

Geer’s analysis also detected an inverse relationship between gaming positions and gaming win in other areas.

Douglas/South Lake Tahoe, for example, had 11.47 percent fewer table games and slots in 2002 but increased its gaming win.

Elko County’s gaming positions slipped 0.73 percent but bolstered its gaming win 2.68 percent.

Nye County’s slots and tables declined 5.45 percent but revenues rose an almost identical 5.47 percent.

Similarly, White Pine 6.61 percent decrease in gaming positions translated into a 5 percent increase in gaming win.

Those revenue gains were not enough, however, to overcome the $1.749 million year-to-year decline posted by Clark County casinos.

Geer credits new technology for part of the revenue gain in the cow counties. As smaller, outlying clubs introduce ticket-in/ticket-out systems, their "earning power" increases, he said.

"Earning power is time, times game pace per hour, times average bet, times house edge,’’ he explains. "Systems like EZ Pay reduce hopper fills and hand pays and increases the time a machine stays on line. It makes play more efficient.’’

Las Vegas casinos, which are farther along in implementing ticket-based systems, have reaped resultant revenue from the increased velocity of play. But those gains stalled last year in the aftermath of the Sept. 11 terrorist attack.

"Areas that are more tourist-dependent have had declines in gaming win,’’ Geer noted.

As the Iraq War continues to constrict leisure travel, Las Vegas casinos may further cut costs by closing off more gaming areas.

Geer’s analysis indicates that this strategy could boost the bottom line, if done selectively. Indeed, Strip resorts last year reduced their table games by 4.31 percent and their slot machines by 4.75 percent — and gaming win dipped only 1.01 percent.

Two of Clark County’s newest casinos — the Cannery and Tuscany — make liberal use of ticket slots.

But Geer cautions that wholesale shutdowns or changeovers to paper-based gambling devices will not necessarily enhance revenue. For example, he warns against using ticket systems as a strategy to lay off floor employees.

"Done properly, it will change the nature of the labor and the duties assigned to workers. There still needs to be focused attention on the customer,’’ he says.