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

[*TT*]

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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.

[AngusThermopyle]

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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.



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Wynn (QI-07):
Table games win per unit per day was $12,794
Slot machine win per unit per day was $268 or $8040 per month.


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The LV model is clearly inferior (from a profit perspective) to the California model, and even to LV's own table games and slots.

$4 drop-if-flop and $4 BudLights make the San Jose cardrooms much more profitable than their LV cousins.

[afish]

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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.



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Wynn (QI-07):
Table games win per unit per day was $12,794
Slot machine win per unit per day was $268 or $8040 per month.


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The LV model is clearly inferior (from a profit perspective) to the California model, and even to LV's own table games and slots.

$4 drop-if-flop and $4 BudLights make the San Jose cardrooms much more profitable than their LV cousins.

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There's a big difference between average revenue per table, and marginal revenue from an additional table. Also, if the "San Jose model" would be more profitable in LV than the current LV model, it would be there. I think that if a LV casino tried to implement those policies, they'd have no players.

[Rottersod]

Instead of the rake/drop going up again I'd rather see a 3 blind game and maybe a no chopping rule. Having the 3rd blind would prevent the blinds seeing a flop by themselves and having it all eaten up by the house. It would also encourage action and personally I believe that action helps the better players over time.

[pig4bill]

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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.



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[ QUOTE ]
Wynn (QI-07):
Table games win per unit per day was $12,794
Slot machine win per unit per day was $268 or $8040 per month.


[/ QUOTE ]

The LV model is clearly inferior (from a profit perspective) to the California model, and even to LV's own table games and slots.

$4 drop-if-flop and $4 BudLights make the San Jose cardrooms much more profitable than their LV cousins.

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Tell that to Garden City.

[Clarkmeister]

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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.



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[ QUOTE ]
Wynn (QI-07):
Table games win per unit per day was $12,794
Slot machine win per unit per day was $268 or $8040 per month.


[/ QUOTE ]

The LV model is clearly inferior (from a profit perspective) to the California model, and even to LV's own table games and slots.

$4 drop-if-flop and $4 BudLights make the San Jose cardrooms much more profitable than their LV cousins.

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Comparing the average of all poker tables in the entire state of Nevada to one specific casino which happens to have the highest win per table per day in the entire country is kind of silly.

[Siegmund]

Seems like the drop relative to the last couple years is a reflection of the fact that there are now enough tables to serve the demand, whereas in years past rooms were full to the brim with three-hour-long waiting lists...

Also seems to me like the casinos have a sense of entitlement to huge profits that the rest of us in other businesses do not share. I'd be delighted to own a business that brought in that kind of cash flow. But then I also happen to be predisposed to prefer small friendly cardrooms over gigantic casinos, and think the rest of the country could learn something from Washington and Montana. Including the $3 rake.

[bav]

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"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."

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Oh! What a fibber he is! I can get a gambling entertainment experience a lot cheaper than sitting at a poker table.

How much does the casino make from a craps player who stands at the table betting $5 on the pass line? They win about 1.4% of that $5 each point. Dunno how many points per hour a craps table averages, but it's not huge. 20? So they make 7 cents per point, 20 points per hour, or $1.40/hr from a craps player betting the minimum. Maybe $2/hr if they get closer to 30 points/hr? They make a lot more than that from every poker player using probably fewer resources to handle 'em.

Or I can sit in the Keno lounge and play a $1 ticket every 10 minutes. If they take 30% of that they're making $1.80/hr.

I'm less familliar with the speed at which bacarrat and pai-gow play, but someone sitting at a table betting the minimum isn't making the house very much.

[pokerswami]

I've never been involved in casino management, but, of course, I still have a strong opinion on this.

In Las Vegas, I think poker room profit per square foot or per table or per employee shouldn't be compared to other casino operations. There is no great shortage of square footage or employees.

If a casino completely filled it's non-poker gaming area with all the gaming activity it could fit and it couldn't expand and each activity was more profitable per square foot than poker then the comparison with poker room profitability would be understandable.

In this discussion I'm leaving out the obvious considerations that a casino has regarding keeping a big enough variety of pit and slot games to try to attract and keep a wide spectrum of players/family members happy.

My point is that in a casino whose size is not limited by legal or geographic constraints, as with a river barge or a limit as to area or number of games, then poker should be considered a separate profit center that can be operated for that profit regardless of how it compares to the profit of other casino gaming.

Just think of it as extra profit. Not every business activity will return the same profit per square foot, but if it's profitable and if your higher profit areas aren't saturated and therefore in need of expansion and if it doesn't hinder your other activities, then engage in it.

Also, if you increase your take per player for poker it opens up the real possibility of newer, much better venues for poker taking away your poker business plus whatever extra you make as a result of having poker, such as spouse/friend play and poker players blowing their money off in the pits/slots.

Who among us wouldn't want to own a Las Vegas "Poker Palace", even with a $4. max rake? (Remember the point of the article was the advice to operators to increase their take per table.) I could handle the profit from a busy room, even if it had considerably less profit per square foot than that of a typical casino. I could handle it just fine, thank you very much.