PokerTek Poker Pro tables: The inside scoop WHY

[*TT*]

i just spoke with a trusted adviser in the industry, who explained to me the fiscal realities of the PokerTek Poker Pro ePoker tables.

First off I'd like to remind everyone that I firmly believe there is a place for these new machines in select casino applications.

<ul type="square">[*]Municipalities where live card games are illegal, but video Blackjack and similar games are legal.[*]Casino boats, and other remote locations where staff will always be hard to find[*]Casinos that do not have the resources available to build a poker room[*]existing Vegas casinos with small poker rooms and low traffic, looking to crossgrade (this may be accurate in the future, at this point as you will see below its probably not the wisest choice for this application)[*]Temprary tables for satelites during a large tournament where staffing would be lost at the expense of cash game revenue (this includes the WSOP IMHO, they have had a problem staffing cash games until tournament tables start breaking down)[/list]
PokerTek's Poker Pro tables lease for $160/day, $58,400/year. At this point Poker Pro tables cannot be bought. This is similar to Shufflemaster's policy a few years ago (casinos no longer have to lease their Shufflemaster machines). Lets assume the dealer costs $10/hour for an average 10 hours/day - $100/day in dealer costs + taxes and insurance package - lets assume its $115/day. So yes at face value it appears that Poker Tek's Poker Pro tables are more expensive to operate per day than a live table using the equivalent space.

HOWEVER eTables don't have the inherent slowdown of dealers or (we assume) the potential mistakes. Calls to the floor will also be greatly minimized, therefore we can estimate 45 hands per hour rather than the standard 35 hands/hour commonly found with live dealers. Thats a theoretical $40/hour in revenue per table added per 10 hour session (assuming its a raked game), or $400/day - $146,000/year of found money that is left on the table when using a dealer. This equates to $340/day in ROI, or $124,100/year.

There are of course downsides. For example it will be harder to maintain the game at an eTable, and unused tables result in fixed expenses where as unused live tables are essentially just underperforming assets.

In short, from this basic analysis we can conclude its in the best interest of some casinos to consider using PokerPro ePoker tables from PokerTek provided it doesn't alienate it's existing base of customers. In my opinion they should only be used as temporary rentals for satellites where the vig is large enough to pay for it's rental in one game, or in casinos that do not have a viable poker room operation already in place.

Lets face it - this is the future whether we like it or not, many casinos to make the switch within the next few years once the price drops or a sale of the unit is lowered to 100,00 or so rather than the current leasing strategy.

[steamboatin]

I bet Harrah's in Cherokee NC will or already has them. No live card games in NC unless it has recently changed.

[Bulbarainey]

I played on these things at HP and i liked the speed of the action, the problem was no HP regulars were playing in the games, it was all 2+2'er types. I think these things will do much better in situations like you mentioned, where no alternative live dealers are available. I also don't think it would be a bad idea to throw one of these things in the middle of a casino floor, where other pit/slot games are going, i think it would attract attention

[Dennisa]

My argument for these machines is to just run them for SNG. I spoke to Jay at HP and gave him this suggestion.

2 100+9's per day hit break even according to your info TT. The avg sng is about 45 minutes. In reality you could run 24+6s and 51+9's all day without any breaks. When action is heads up, move them to the heads up table and start a new one.

[allbad]

I think it would be in PokerTek's best interest to give these things away in some venues. Let's look at the numbers:

The lifespan on computer equipment like this can be expected to be at least 2 years with *some* maintenance involved. Lets say it costs $30,000 to build one ($5K for a nice table, $15K for screens and processing unit, $10K 2 years maintenance fixing screens &amp; cosmetics).

Lets also say a poker table in the corner of a bar gets patrons playing an average of 7 hours/day. If we see 45 hand/hour with an average rake of $1/hand at low limit, that's about an average of $315/day which is around $100K/year (after subtracting the cost of hardware + maintenance).

Every one of these machines is an ATM for PokerTek and the bar (who should be negotiating another $1-2/hand + all the extra patrons)

The obvious question of "what about the development and marketing costs involved?" With each new unit sold the per unit cost of this goes down. If they get one of these machines in every little corner of the country, that's a lot of machines.

You know... up until I wrote this post I hated these tables with a passion. Now, I might look into selling these things.

[allbad]

[ QUOTE ]
When action is heads up, move them to the heads up table and start a new one.

[/ QUOTE ]

Which makes me wonder why they make them 10-person "tables" to begin with. why not just put up a bunch of kiosks and you go to a lobby screen where you select your table. When your tourney is up, or you get sick of 3/6 limit and want to move to NL you just push a button instead of getting out of the seat. The real estate footprint and action then becomes equivalent to the rest of the slot machines and no more "we have to take slots out for poker tables? oh noes!!!1" This opens the door to linking your kiosks with your other B&amp;M locations so you can find a table even if you're alone in the casino. Hey... did I just invent online gambling?

[hamsamich]

Lets assume the dealer costs $10/hour for an average 10 hours/day - $100/day in dealer costs + taxes and insurance package - lets assume its $115/day.

TT.....This number is low. The overhead on an employee is higher than that, which I guess would make them even more attractive for the Casinos. I like the idea of them *IF* they could bring poker to a venue close to me that otherwise could not have it. I love AC, but sometimes the two hour drive is just more of a hassle than I can handle. If the race tracks here in NYC brought them in I would go for sure. I think you are %100 right about these things coming whether we want them or not. If this is something that the industry supported the development of it's only a matter of time before they start popping up at your local B&amp;M. At first you will shy away from them. Then on one of your visits there won't be any seats available except at the Tek table so you will sit just until a seat opens at a 'real' table. Next thing you know in a 25 table room 15 of them will be plug-ins and everyone will be talking about the old days when every table had to be dealt 'by hand'. It may take a while but big changes usually do. How many of you here remember when cars first started putting the upper brake light on vehicles? Remember how weird it looked and how people said it was a waste and would never catch on? You can't stop progress. As for software bugs, I'm sure there will be some and I'm just as sure they will work them out. They can write software now that is capable of navigating a spacecraft to the edge of the Solar system, I'm SURE they can work out the bugs for something that involves a deck of 52 cards...lol

[Clover362]

While from a pure cost analysis stand point these tables seem to make sense except for human element. I think that a fair amount of players would rather sit at a dealer table with real chips infront of them than at what is essentialy a computer screen. Why would anyone venture into a casino to play poker on an electric table when you can play the same game at home?

[*TT*]

[ QUOTE ]
Lets assume the dealer costs $10/hour for an average 10 hours/day - $100/day in dealer costs + taxes and insurance package - lets assume its $115/day.

TT.....This number is low. The overhead on an employee is higher than that, which I guess would make them even more attractive for the Casinos.

[/ QUOTE ]

The quote I used comes directly from a casino executive at upper level management (not some floor flunkie) whose job it is to make new business investments, even if its low its accurate from the POV of management as they make their projected decisions. Keep in mind that the figure is also adjusted to compensate for the possibly lower "live time" that a ePoker table will generate due to fear of the unknown. You may be right that the rate is low in some markets, but in other markets I'm positive the rate is actually a bit high because their dealers are making minimum wage or slightly better + tips.

[*TT*]

[ QUOTE ]
While from a pure cost analysis stand point these tables seem to make sense except for human element. I think that a fair amount of players would rather sit at a dealer table with real chips infront of them than at what is essentialy a computer screen. Why would anyone venture into a casino to play poker on an electric table when you can play the same game at home?

[/ QUOTE ]

No offense, but I think your a year late into this discussion. Re-read my list of valid reasons why, and you will see that the majority of casinos rolling out these machines in bulk at this stage don't have alternatives. Also keep in mind people can also play slot machines at home, and video poker at home too - but that doesnt stop them from gambling at a casino.

My friend tells me although investment in these machines appears to be fiscally sound, he expects most larger casinos to slowly test the waters ala Hollywood Park - and they may not like the results. A wise investment strategy would be to rent the machines on an as-needed basis for larger casinos such as Bellagio, Wynn, etc if that is possible (I don't know yet), thats the sure way to test the waters by only using them during major tournaments for satelites.