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Monday, February 22, 2010

Causality Center Stage at the Tables

Last week it was reported that in 2009 the game of blackjack slipped in popularity (and revenue) to Las Vegas casinos.

"blackjack’s share of the casino revenue pie was just 9.7 percent of all revenue, the first time its slice ever dropped below 10 percent. And the win or "hold" percentage last year was just 11.3 percent, the lowest level ever recorded in Nevada." says the article.

It is no shock that revenue would have went down with the economy, but why is blackjack less popular as compared to some other games? Why has their hold percentage gone down?

It appears it is due to changes in the game which has made it more difficult for both professionals and casual players to leave with more money than they came with.

"Casinos in recent years have tightened the rules on blackjack – the payoff for a natural blackjack has been reduced from 3-2 to 6-5 at many tables, dealers often have the option of hitting a soft 17 and the rules governing splits and doubling down are less liberal than in the past – all of which should result in a higher hold percentage for the house."

So, the game was made harder and the "takeout" was increased. The result of that has been the opposite of what was expected.

"In a sense, the casino’s desire to squeeze more money out of the blackjack tables has actually backfired, with the result having an opposite effect," said a floor supervisor at a casino on the Las Vegas Strip. "In addition, many casinos have raised the table minimums, which have driven away the casual players, and the tighter rules have pushed high-end players to other games, such as baccarat."

According to the floor supervisor, these changes hit smaller players hard. They did not make a conscious decision to quit, they just quit; and they were important.

"Those players were crucial to the casino’s bottom line," he said. "When you have every seat filled at a table– even if they’re only $5 players – you have a steady income stream subject to the 12 percent hold."

We don't hear much about that in racing, even though we directly parallel the blackjack experience. We know, because mathematics and the laws of economics says so, that the increases in take the past 40 years in racing has slowly driven players away. In addition, we have made the game more difficult to win with subtle changes, as well. Exotics have been pushed hard and those are harder to hit than in the 1970's where win betting was more prevalent, as an example.

Horseplayers did not draw a line in the sand loudly proclaiming they were leaving; they simply had no more money to play. It's the affect to the cause.

While we in racing, with literally hundreds of horsemen groups, governments and tracks, are unable or unwilling to respond to this problem, it will be interesting if the large casino's lead the way and change their blackjack rules to the way they were. After all, one thing we know about casino's: they like money. And right now they are not seeing that from blackjack.

6 comments:

Scott Ferguson said...

so basically the only house casino game where the player can win has upped the takeout so that it's nigh on impossible.

At least casinos have other products willing to divorce you and your cash. What else does racing have?

Anonymous said...

Good column that would have been made excellent if you laid out a roadmap for how to pressure the powers that be to lower takeout. Rather than getting readers angry, tell them how to get something done. Thanks, either way, though.
J.S.

Anonymous said...

I read the same article and i read it a bit different in that I think you left out a bit of information, I suspect to prove your point on the effects of higher takeouts.

As I read it I focused a bit more on other information such as the migration of the bigger players to other games such as baccarat which has just about doubled in half the time period (5 years) when comparing the 1 % or so increase in takeout at the blackjack table (the blackjack time frame was 10 -15 years). As I read it, the article actually does not say "According to the floor supervisor, these changes hit smaller players hard. They did not make a conscious decision to quit, they just quit; and they were important." Some of what you wrote was quoted but you took some liberties here – again if I am reading it right. It does not say anything about them making or not making a conscious decision to quit.

Your emphasis is on the hold but I as read the article there were more contributing factors that have HELPED cause this downturn or defection of the smaller players and the move of the bigger players to other games. A major factor could be (as detailed in the article) the fact that they have taken away the low end players ability to play by eliminating almost 1/3rd of the low end tables, the $ 1 and $ 5 tables). This in my opinion would force some of the low end players to move to higher end tables, thus forcing high end players to play with those that are less skilled (thus affecting their high end play).

Not to say takeout does not affect play but let’s report all the contributing factors to give the article a fair shake and teh reader of just your blog a complete picture.

http://www.gamingtoday.com/industry-news/story.bv?storyid=24644

Anonymous said...

How about adding curling as an event at the racetracks. I have been watching alot during the olympics and think it can be the next Poker of 2010.

HANA said...

Anon,

We have blogged about this before, so for some background you can have a look at this post regarding the hike in slot takeout.

http://blog.horseplayersassociation.org/2010/02/big-squeeze.html

We have also spoken about baccarat: "Moreover, baccarat accounted for nearly 10 percent of all of the state’s gaming revenue, up from 5.7 percent just five years ago.

Experts say baccarat has gained in popularity for two primary reasons: tighter blackjack rules have driven players from the 21 tables, and baccarat enjoys the lowest house edge of any casino game."

I think our thesis in this post and others is the following:

Blackjack: Non-customer centric ideals, hike in prices: Less revenue

Slots: Non-customer centric ideals, hike in prices: Less revenue

Baccarat: Lowest prices in the casino, deemed customer friendly - increase in revenue.

Although yes I agree there are other factors at play and thank you for your opinion on them, the theme is clear: High prices and poor service is costing the casino's money, and have cost racing money for some time.

HANA

Anonymous said...

HANA,

I do not disgaree with you on your counterpoints particularly "higher prices and poor service" will cost a business money, ANY business not just racing and casinos. But that is the world we live in at this point. Most businesses are started to make money and in this day and age of stock share prices and big executive salaries (see recent articles on NYRA's top two)the bottom line is all that counts TODAY, not tomorrow, not a year from now. Not to mention what the above mentality does to our customer services as we all know. My point however was that "it is not all about price as that particular blog post implied but instead the article depicted numerous contributing factors which I felt should have been mentioned.