Will B&M rake go up again?

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From gamingtoday.com

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According to recent casino revenue reports, poker continues its four-year rise in popularity, though the level of increases seems to have reached a peak.

In Nevada, for instance, card rooms generated $42 million in the first quarter of 2007, a 6.4 percent increase over 2006’s first quarter.

But the modest gains are less than half the 15 percent increase reported for 2006 over 2005.

Equally important, poker room operators have seen their "rake" – the fee (usually based on a percentage of the pot) collected from players – slipping the last couple of years.

According to the Nevada Gaming Control Board, poker rooms in the state raked an average of $17,021 per table per month in 2004, the highest amount ever.

But since then, the rake has steadily declined. Last year Nevada card rooms raked an average of $15,136.

These issues and other concerns over poker room profitability were raised in a panel discussion at last month’s Gaming Operations Summit held in Las Vegas.

Hosting the discussion was Joe Awada, owner of Gaming Entertainment Inc., professional poker player and former casino/card room manager.

"We had casino and poker room executives from around the country, and they all expressed a desire to learn how to enhance profitability and better control poker room expenses," Awada said.

The primary problem, Awada said, is that most poker rooms are still being operated as a service or convenience for the players, like they were 10 years ago.

"Poker rooms need to enter the 21st century," Awada said. "Just like slots and table games, poker must be operated as a money-making department.

"Simply stated, the poker player isn’t being charged enough for the entertainment experience," Awada continued. "Nowhere else in the casino can you play for hours at a cost of just a handful of dollars."

One of the easiest ways for Nevada casinos to increase the rake is to eliminate the "no flop, no drop" policy, which has been abandoned in most poker rooms outside the state, Awada said.

He added that comps and casino rates for poker players should be re-evaluated by casino managers.

"The cost of everything goes up – it’s supply and demand," he said. "You can’t get a hotel room on the Strip for $50 anymore, nor can you play at a $1 blackjack table or eat in a $5 buffet."

Another means of enhancing profitability is to speed up the action in order to deal more hands per hour.

"No limit hold’em is a slow game, but you can speed it up with innovative changes, which would not be difficult for poker rooms to implement," Awada said.

Those measures could easily include changing the rules to speed up play and altering the structure of the blinds to increase the action, he said.

In addition to cutting expenses and increasing revenue, poker rooms need to become more innovative in finding new fast-action games, often in a limit format, and marketing to a younger audience.

"Look at the table games pit, which has enjoyed a renaissance in recent years, mostly because of the new games that have been introduced," Awada said.

Those games, he added, often appeal to younger players, who are needed to help fill the poker rooms in Nevada.

"Now that the Internet is having less of an influence on live poker, poker rooms need to concentrate on marketing to new and younger players," he said. "There are a myriad of ways to do this, but poker room operators must recognize the value of marketing, and make a commitment to getting the most from their efforts."

Since the Gaming Operations Summit in April, Awada says he has been contacted by poker room managers seeking assistance in enhancing their operations.

"I’ll be visiting some poker rooms in Oklahoma, Canada and elsewhere," he said. "It’s refreshing to see operators who are open to new ideas.

"These are the operators who will survive and prosper into the 21st century and beyond."

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With the inevitable decline in poker room popularity and the closing of rooms in the near future, I can definately see this happening.

http://www.gamingtoday.com/index.cfm...amp;AIN=781956

edited to change title for clarity

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With the inevitable decline in poker room popularity and the closing of rooms in the near future, I can definately see this happening.

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I guess you missed my post using a quote from the same article recently, the rough answer is YES - Casinos will be forced too rethink B&M rake structures and player incentives within the next two years. The resulting effect will force some poker rooms to close of course, and others will continue to thrive regardless of the changes mandated by the higher ups. I actually agree with many of Awada's advice from the POV of management, but i think his implementation is a bit of kilter and should not apply in all situations/card rooms. Many card rooms in the Midwest have already increased rake structures, Vegas is lucky in that regard. Also although I'd like to say that NL is the culprit, in reality I think thats more a Vegas issue than it is in other markets due to the number of card room options.

On a related note, I think Vegas would be best served if MGM Mirage plans a super-card room on the scale of Commerce in City Center. Oddly consumer choice has stifled the market, a central location ala Commerce/Bike would help to power the poker economy more than it would hurt it at this stage. I know that my view on this mater would be unpopular, but in the long run I do think its better for poker than the current options we have.

[Ghazban]

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On a related note, I think Vegas would be best served if MGM Mirage plans a super-card room on the scale of Commerce in City Center. Oddly consumer choice has stifled the market, a central location ala Commerce/Bike would help to power the poker economy more than it would hurt it at this stage. I know that my view on this mater would be unpopular, but in the long run I do think its better for poker than the current options we have.

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Could you expand on this? It is not obvious to me why a large, centrally located room would help the poker economy in Vegas.

[SellingtheDrama]

It would centralize the games, and because of economies of scale, it would help sustain and support games that currently have tepid or infrequent support (not Holdem, limits over 5/10L or 1/2NL).

These games are much easier to get going from a large congregated player base. Nowadays if you want to play a midlimit game such as say 15/30, you have to check 3-4 casinos to find the one spreading it today. That's alot of work for a donator to go through, and he may skip poker this trip.

Create a destination for him to go knowing he can play the 15/30 or 20/40 game he wants, and he'll happily go there.

[grdred944]

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Create a destination for him to go knowing he can play the 15/30 or 20/40 game he wants, and he'll happily go there.

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Exactly! While I would be concerned that customer service would take a major hit with just one or two mega rooms, the tradeoff of having action at all limits 24/7 is well worth it.

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Create a destination for him to go knowing he can play the 15/30 or 20/40 game he wants, and he'll happily go there.

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Exactly! While I would be concerned that customer service would take a major hit with just one or two mega rooms, the tradeoff of having action at all limits 24/7 is well worth it.

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depends what you call customer service. I think free drinks and comps aren't customer service, they are customer incentives - customer service is the best run room, the best floor staff, efficient brush system, and control of the games. For example Commerce, which is the model for my idea, has fantastic customer service. Yes its a dump (we have to ignore that for this discussion) compared to many Vegas rooms, but its run far better than any room you will find in Vegas and the game options are incredible!

[Ghazban]

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It would centralize the games, and because of economies of scale, it would help sustain and support games that currently have tepid or infrequent support (not Holdem, limits over 5/10L or 1/2NL).

These games are much easier to get going from a large congregated player base. Nowadays if you want to play a midlimit game such as say 15/30, you have to check 3-4 casinos to find the one spreading it today. That's alot of work for a donator to go through, and he may skip poker this trip.

Create a destination for him to go knowing he can play the 15/30 or 20/40 game he wants, and he'll happily go there.

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I'm not coninvced this would happen even if such a room were built. Is everybody playing midlimit (limit and NL) from the Bellagio suddenly going to move to the new gigantic room? What's their motivation? Venetian is trying (or has tried) to get these games and they just don't go. Why would they go in a brand-new gigantic room? If you closed all the individual rooms in town and opened up this mega-room, I think you'd get this effect for sure but I don't see why people would leave the room(s) that already spread the games they want to go to a new one just because it's large and centrally located.

[SellingtheDrama]

If the room is good enough, games will move. Atlantic City is an example with the advent of the Borgata over the last few years.

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It would centralize the games, and because of economies of scale, it would help sustain and support games that currently have tepid or infrequent support (not Holdem, limits over 5/10L or 1/2NL).

These games are much easier to get going from a large congregated player base. Nowadays if you want to play a midlimit game such as say 15/30, you have to check 3-4 casinos to find the one spreading it today. That's alot of work for a donator to go through, and he may skip poker this trip.

Create a destination for him to go knowing he can play the 15/30 or 20/40 game he wants, and he'll happily go there.

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I'm not coninvced this would happen even if such a room were built. Is everybody playing midlimit (limit and NL) from the Bellagio suddenly going to move to the new gigantic room? What's their motivation? Venetian is trying (or has tried) to get these games and they just don't go. Why would they go in a brand-new gigantic room? If you closed all the individual rooms in town and opened up this mega-room, I think you'd get this effect for sure but I don't see why people would leave the room(s) that already spread the games they want to go to a new one just because it's large and centrally located.

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Bellagio is expected to lose it's poker crown in two years when City Center opens. Obviously the ideal solution is to have City Center open this mega poker room. But realistically if someone like Chip if Doyal put their name on the room as a competitor to Bellagio - and they took someone of Doug Dalton's caliber it could happen. It wouldn't be easy and timing would be critical, but it is possible.

[redfisher]

Given that MGM/Mirage owns Bellagio and Mirage and numerous small rooms, this would be very easy to achieve. Close all your other rooms and move the employees to City Center.

I'm not convinced that MGM cares to do this. My obviously not very informed opinion is that the large California card rooms exist essentially because poker is one of the few forms of non-Indian gaming allowed there. Given that all the major Vegas operators have licenses for almost any kind of gambling game, I think they would rather concentrate on the games they like.