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May-24-2007,
To Hell In A Handbasket - Poker-Room Rake Rates, and Vegas Casino-Hotel...By Nelson Lardner

You knew Las Vegas would start turning the handle on the wringer with all deliberate speed when the publicly-held corporations took command from the storied previous proprietors. In the Good Old Days, the pit and the slots subsidized the inexpensive buffets, bargain restaurants and relatively-low room rates. "Drive foot traffic . . . get 'em in the door . . . and we'll take 'em . . . ummmmm, it . . . from there," was the motto of the wise old operators, who had no multiplicity of investment house shareholders to which to answer.

Now? Forget it. Midweek room rates aren't too bad at the lesser-light properties, these days, but if you're walking in off the street and nobody knows your name, you'll part with your firstborn for a Saturday-night room at any of the top-shelf Strip joints. Expanding national population and the broadening acceptance of the "Vegas experience" as a legitimate travel/dining/entertainment option for many who previously never considered it has developed the potential client pool, so Vegas execs feel they can get away with tightening the screws.

The house can always resort to further chiseling the moronic subset, those oblivious to percentage's effects, and resigned to losing their money. But when you start looking to diddle with the equations affecting the sharpest of Vegas visitors - those adept at harvesting bucks speculating on poker and/or sporting events - you'll hear screaming, and not only from players crying out solely and entirely from self-interest.

This week's edition of Gaming Today, the popular giveaway sheet founded by the late Chuck DiRocco and hanging around for the asking at a number of Vegas casino/hotels, leads with a poker-profitability story, noting that the raw dollar earn enjoyed by casino cardrooms was never higher (taken in toto), but the rate of increase is slowing, and - the apparent sticking point - the dollars collected by the rooms from pots (the player "rake") has declined by more than 11% over the past two years.

April's Gaming Operations Summit in Vegas hosted a forum regarding poker room operations and returns, led by Joe Awada, owner of Gaming Entertainment, Inc. You're probably most-familiar with Awada as a well-known poker tourament participant. What you may not know about the ex-circus juggler is his deep, diverse background and experience within the industry, and his development of a number of casino table-game concepts boasting decent entertainment values - and house percentage holds higher than those enjoyed at the craps and '21' tables.

What raised such ruckus was Awada's pronouncement that " . . . the poker player isn't being charged enough for the entertainment experience. Nowhere else in the casino can you play for hours at a cost of just a handful of dollars." In other words . . . tweak up the rakes to rake it in, boys.

Established casino managements love to hear someone like Awada roll out this brand of philosophy. Many can pretend they thought of it themselves . . . many will rejoice in the fact that someone else said it, so that they themselves can't be blamed/abused for bringing it up . . . and many, frankly, can't see the forest for the trees.

I don't blama Awada for stating the proposition. That's what he's paid to do when he puts on his casino-consultant hat. But like many in both public and private life today, Awada is presenting a false choice in this case, rather than the demonstrable, proven rationale behind the established state of affairs.

Much like the sports books, the poker rooms are valuable to joints because they create a special caliber of traffic. Put another way, their presence can keep many a high-rolling pit player from wandering too far afield (or even across the street) from where management wants him - married to the property, on the floor, thinking about where he/she wants to risk money, next. Many world-class poker and sports players have very bad habits in other areas, which are exposed for all to see whenever they wander anywhere near a craps tub or a '21' table.

Awada's squeeze'em'tiltheyscream urgings can and will work, at the nation's lesser poker outposts, who are bucking limited competition as they seek to gather in a neighborhood's discretionary poker dollars. There's a limit to extortion, no matter where you try to work it, but it's tougher in Vegas, with so many properties looking to lure each other's prize poker-room action-generating attractions.

Vegas' best near-term chance to raise rake revenues is to attempt to implement steeper blind structures in no-limit games. This would result in more hands coming to swifter conclusions, and would keep things hopping. The other temptation might well be to begin raking pots decided prior to the flop - common practice in competing California rooms now, but something that would be wicked- bad PR in Vegas for any empty suit who decided to step out and be the first room to try to get away with this particular snatch-and-grab.

Or, hell, they could simply gouge the electronic slot players a little more. They'll never notice the difference, right?

05-24-07
Nelson Lardner
MajorWager.com
lardner@majorwager.com



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