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Old 11-22-2007, 07:21 AM
Al_Capone_Junior Al_Capone_Junior is offline
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Default let\'s get the facts straight: poker makes money


I've heard it so many times it makes me want to puke. People hold beliefs they think are true, but have not bothered to do their homework on the actual facts. These facts are readily apparent, accessible, clear and unambiguous, yet the ignorant keep making blanket statements such as:

Poker hardly makes any money.

There's no money in poker.

Poker is unprofitable.

Casinos lose money on poker.

Bull-pucky, bull-pucky, bull-crapola.

I wonder if these people actually like the taste of bullpucky, because that's what comes out of their mouths every time something like this is said.

A fairly busy 10 or 12 table room can easily make several million dollars a year. The costs associated with running and maintaining this room will likely not exceed 30% of their total rake. My figures come from numbers I've actually seen with my own eyes, but obviously I can't give exact numbers.

One of the most telling spreadsheets I've ever done was the minimum break even point for a typical 10 table room. I figured expenses based on wages of needed staff (by number of tables open), plus comps and peripheral expenses (electricity etc). I figured many of the expenses on the high side. The results were quite telling.

Even with one table open, the room could still make a profit. This was true even if the game wasn't taking in full average rake for the room. Even short-handed, one game would almost certainly meet costs.

With more than one table, the minimum break even rake per table goes down pretty quickly. Eventually the curve levels off. For example, a room with 100 tables would see little difference between 75 and 100 tables. Yes, this does indicate that there are limits to the profitability of poker. You simply cannot take a room that makes millions and force it to make billions by raising the rake.

So there's a limit to how much can be made with poker. So what? Are dollars earned at poker worth less than other dollars? Last I checked, no.

Let me share something a mentor taught me about casinos. He asked a group of us this question:

If you were opening a new, fairly small casino, which would you rather have - sports book or cardroom?

The answer is - cardroom. Sportsbooks take risk, one big game could cost the casino big money. This is also why smaller casinos have quite small limits on certain games, most notably craps. However, a cardroom is quite safe and pretty much guaranteed income.

So what's friggin' up with so many people thinking poker doesn't make money? I'll tell you what's friggin' up - idiots who majored in business, but have no actual life experience in the world of poker. What's worse is that these idiots took one beginning course (for non-math majors) in statistics. Now statistics have some uses, but they need to be tempered with common sense, something severely lacking in the upper management of disneyland, err, las vegas.

So one black day, long ago, one of these mega morons got ahold of a statistic. This single piece of useless and insignificant information has caused poker more harm than anything ever could again. This moron calculated the average profit per square foot of casino space for slots, table games, and poker. Poker of course doesn't compare at all in this one specific area of casino numerology.

Now if space were an issue, I could understand the desire for slots or table games over poker. But let's get real, there's no shortage of space out here in the desert. In virtually all big casinos I've been in, slot banks are spaciously spread out. Just make them all four to six inches closer and you'd have lots of space for a nice, centrally located poker room.

And speaking of centrally located, only fools bury the poker room in the back, especially near the sportsbook. Poker rooms that are buried and hard to find won't get walk-in players and won't have near the action or volume of a centrally located room.

Casino bigwigs may wish poker would go away, but they only highlight their own ignorance by doing so. The fact is poker is not going away, so you might as well face it and do it right.

Another fact that's overlooked is the considerable money spent by poker players in other parts of the casino. My estimate is that at least 30% of poker players are regulars at table games, slots, or both. Shun poker, send the money elsewhere. Although harrahs has royally screwed up the world series of poker year after year, with bigger and bigger fiascos each time, there's a reason why they went so far out of their way to get the wsop. They know how much peripheral money they're going to make from the players (not to mention the millions in poker money) . Too bad they don't give a damn about poker, or the players.

Get with the program and get the facts straight. Poker makes money. You really have to go out of your way to make poker unprofitable.

And perhaps the most important point of all - bullcrap just doesn't taste very good. So quit saying poker doesn't make any money.

Al
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  #2  
Old 11-22-2007, 08:10 AM
bkkdude bkkdude is offline
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Default Re: let\'s get the facts straight: poker makes money

what a phony argument, sportsbook or cardroom. dude , you need a new mentor.....lol. a new small casino would lose munney either way. waste of space, better to allocate square footage to something that has a chance.

slots is what makes a casino munney. cardroom and book just to keep players happy.
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  #3  
Old 11-22-2007, 09:28 AM
malo malo is offline
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Default Re: let\'s get the facts straight: poker makes money

Al, thanks for taking the time to post this. Always appreciate your willingness to share what you've learned about the poker biz, and your efforts to educate (which I'm guessing frequently feels like banging one's head against a wall.)
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Old 11-22-2007, 10:56 AM
NoRiverRats NoRiverRats is offline
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Default Re: let\'s get the facts straight: poker makes money

Reminds of a joke about statisticians.

Three of them are out hunting deer. They spot a huge buck at the same time, so the first one shoots and misses 10 feet right. The next lines up the buck and misses 10 feet left. The third one just stands there, jumps up and down and says "I hit it"
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  #5  
Old 11-22-2007, 11:03 AM
Don Olney Don Olney is offline
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Default Re: let\'s get the facts straight: poker makes money

Sad part is, it may not come down to revenue per square. Often times business will go towards path of lest resistance.
Poker rooms are very labor intensive when compared to slot space. And the players card in the slot area is (i think) worth more $$ wise than the poker player.
While I think you are right about $$ generated from poker rooms, slots are just a whole lot less trouble to the casino.
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  #6  
Old 11-22-2007, 11:11 AM
Matt Flynn Matt Flynn is offline
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Default Re: let\'s get the facts straight: poker makes money

Al,

What did you calculate for space overhead? $40/sqft/year? What's the right amount?

My guess is poker will be given a broad exception in some states as gambling laws relax. Cardhouses will spring up to meet the demand. A medium-sized room in an outlying county here (outside of the Triangle) would do well, especially since building and land costs would be low. Figure overhead of about $12/sqft for building and land costs with utilities. Not sure what the tax rate would be.

If there were 12 tables with 40% occupancy and the rake were, say, $4 per hand, what kind of money would we be talking after paying everyone? Let's say 5000 sq ft to start, so about $70,000/year in building and grounds.

Also, how do you feel about living in North Carolina? ;-)

Matt
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Old 11-22-2007, 11:40 AM
nineinchal nineinchal is offline
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Default Re: let\'s get the facts straight: poker makes money

No one's saying poker rooms don't make money.

Its just that the casinos have the mentality that slots make the big money, so let's direct our efforts there.

I believe if gambling enterprises treat the poker players better they would have much higher revenues overall. I figure more players would bring their wives and girlfriends, and they would be exposed to gambling, just maybe would drop a few on slots, if only they would do better on room rates and comps for poker players.
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  #8  
Old 11-22-2007, 11:57 AM
Moneyline Moneyline is offline
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Default Re: let\'s get the facts straight: poker makes money

I've played a few sessions of poker with the former manager of a small poker room that was in a more-or-less locals casino in Vegas. He claimed the room netted a little less than 500K a year in profit, and that was with less than 10 tables and a $3 max. rake.

There's no way that particular casino would have made more money if they replaced the poker room with slots and video poker, as there are at any time already dozens of unoccupied machines in the casino. Poker is clearly profitable and good for the financial health of casinos.
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Old 11-22-2007, 12:55 PM
RR RR is offline
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Default Re: let\'s get the facts straight: poker makes money

There was a time not long ago that I worked in a poker room that was making a small profit. The casino decided to give up that small profit to replace it with empty space to get poker players out of their casino. The demographics have changed enough that casinos suits (for the most part anyway) aren't concerned about poker players scaring away their other guests.

Sometimes a poker room will lose money on paper. Not because having poker costs the casino money, but they choose to move the profit to some other department. That same poker room that closed to get poker players out of the casino had put up a lot of red ink before getting to the black. The red ink came from food and beverage charging full retail price for drinks. The hotel greatly over charging for hotel rooms. Even stuff like having signs made for in the cost more (out of the poker budget) to have done internally rather than going to an outside vendor. The poker room generated revenue for the casino, but still had plenty of red ink in the budget.
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  #10  
Old 11-22-2007, 01:36 PM
psandman psandman is offline
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Default Re: let\'s get the facts straight: poker makes money

[ QUOTE ]
Sad part is, it may not come down to revenue per square. Often times business will go towards path of lest resistance.
Poker rooms are very labor intensive when compared to slot space. And the players card in the slot area is (i think) worth more $$ wise than the poker player.
While I think you are right about $$ generated from poker rooms, slots are just a whole lot less trouble to the casino.

[/ QUOTE ]

Slots may be less trouble, but does taking out a poker room and putting in slot machines really make the casino any money?

When was the last time you walked into a casino and saw every machine in use? Or even 75% of the machines in use. If you add more slot machines are you going to get more slot play? Or are you going to simply spread your slot play over a wider numkber of machines?
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