What’s in keno’s future?

Sep 14, 2004 4:49 AM

There has been some discussion of late among keno players about the future of keno in Nevada casinos. Some casinos in Las Vegas have eliminated their keno operations completely over the last couple of years, and players are concerned that their beloved game will someday disappear completely.

The immediate question is "Why is this happening?" I believe that it is happening mainly due to the shortsightedness of some casino operators. It is true that traditional keno is a labor-intensive game, compared to slot machines, and therefore when the cost of wages and benefits for employees is figured in, keno will in the short run be less profitable than a slot machine.

Casino managers who think only of the bottom line (especially in the short term) are heading for trouble in the long term. Gambling is a business, an entertainment business, like the movie business or the television business, it is not really an industry, since nothing is really produced except for entertainment. Imagine if you would a movie company that sought only to minimize expenses while producing their movies. The movie company might maximize profits for a short time, but the movies it produced would in the long term become formulaic, stale, and irrelevant. The same is true of a casino. For long term success the casino should offer it’s customers a variety of experiences, not just a big barn full of slot machines. Anyone can offer their customers slot machines.

Take the example of 21 for instance. Blackjack machines have been available for over 20 years, but they have never become popular, and the reason is that once the human element has been removed from this simple game, there is precious little entertainment value in it.

Keno machines are slightly more entertaining but the same holds true. For many keno players the enjoyment of the game comes from the interaction with the keno writers and their fellow players, and not from the game itself, except for the fascination with numbers, which must be shared to be enjoyed.

Keno has also paradoxically suffered from computerization, the process that has made it more efficient has also caused the dumbing down of the keno crews. These days it can be rare to find keno employees who are truly knowledgeable about the game, and thus the players have fewer people to share their love of the game with.

Keno managers can fight this trend. There are some profitable keno games, and the key to profitability is to maintain a high average ticket price. This can be done in several ways, by encouraging the play of higher priced way tickets, by encouraging the play of higher priced special tickets (like the 20 spot) or by encouraging the play of multi-race tickets. Unfortunately there are some keno managers who just don’t get this.

It is possible for a keno game to write millions of dollars worth of tickets each year and still lose money, even if they don’t get hit for any big winners. There is a break even point in the average ticket price for every keno game, and it is easily calculated. If the keno game’s average ticket price falls below that average, then every ticket written produces a net loss for the keno game. If the average ticket price is above the break even point, then every ticket written will produce a net profit for the game. This is a law, a natural law. It’s like gravity.

That break even point is certainly above $2 per ticket in Nevada, and it may be as much as $3 per ticket in some casinos. There are keno games with ticket averages above $5 per ticket. These keno games make a profit. There are keno games that write millions of tickets per year with ticket averages below $2 a ticket. These games will probably never show a profit. It’s time to get a little smarter.