Bacc talk in LVBP, thoughts on empiricism

This week’s Las Vegas Business Press column takes a closer look at the game of baccarat, which is becoming more and more important on the Strip:

At the level of the individual casino, there are even greater swings of fortune. Unlike Nevada, New Jersey discloses separate results for each of its casinos. This allows analysts an eye into what can happen in a given month.

via Las Vegas Business Press :: David G. Schwartz : Baccarat and its wild swings crucial to Nevada.

You can read the original baccarat longitudinal microstudy here, if you want to see the numbers behind the column.

One question I sometimes get is what the value of all of these statistical studies are. The answer is that they add a very important dimension to understanding what’s happening around us, which gives us better insight into how to change it for the better. Becoming more reliant on baccarat–as its currently played in Nevada–has definite consequences for the industry and the state, some good, some bad. It’s important to talk about this as the trend is unfolding, rather than waiting until after it’sp already arrived. If everyone had been looking closer at the revenue jumps in 2005-2006, we’d probably had reacted much better in 2007 and 2008.

But numbers never tell the whole story, which is one of my issues with the “purely empirical” approach outlined by Gary Loveman in this Bloomberg profile. Gambling and tourism are hospitality industries, which start and end with customer interaction and creating an experience for the guest. Metrics are an important part of running the business, but they should support, not define, the approach. Whether you call it action, fun, or excitement, that’s what your “core message” should be.

In other words, it’s not “gamble at our casino, because we’ll offer you a competitive package of comps to get your $529 theoretical loss per trip.” It’s “come here and have fun.”

I’ve been thinking a lot about this angle because I spent much of the week at the Star Trek convention at the Hilton, where I was able to really immerse myself in fandom and talk to the people running the show. I’ll be spinning Vegas Seven and Business Press pieces out of my observations, which will also relate back to the “empiricism vs customer-centered” argument.

There were really a ton of great stories there, from both the fans and the actors.

4 Responses to 'Bacc talk in LVBP, thoughts on empiricism'

  1. FoolsGold says:

    I would imagine that craps used to be the big draw as far as floor space, personnel and hold went. Then it seems blackjack took over somewhere around the Thorpe Era. All this time those much-maligned slots were gaining ground, if not respect, in the casino boardrooms.

    If Baccarat is really on an ascendancy so be it. If its a flash in the pan, so be it. I just don’t see how hold can vary so much when in most other games it simply doesn’t vary significantly.

    The real problem is that once something is a fad, then its subject to that fickle finger of fate which determines the next fad to come along. Baccarat right now is largely Asians. There seems to be an inexhaustible supply and they all have big bankrolls. Long term prospects? In the long term, we are all dead.

  2. Thanks for posting the article about Gary Loveman. It’s interesting that you mention the slot revenue has been down in Las Vegas the last 2-3 years and slot revenue makes up a large percentage of Harrah’s gaming revenues. According to David McKee and Jeff Simpson another problem Harrah’s has (in Las Vegas anyway) is that there casinos are not that clean. Hopefully Mr. Loveman will hire some more people to take care of this problem.

  3. Dramman says:

    A few thoughts after some consideration. I think if you take a broader view of operations, the numbers are useful. I would assume the casino industry has formulas to calculate the amount of cash needed on-hand to cover daily fluctuations wins/losses, likewise the optimal number of tables to have per game. Studies like this allow for Casino’s fine tuning of the formula, or at least give an outsider some information on how to measure casino best practices.

    I hate to defend Loveman (I have some qualms with his managment style), however they cant all be Wynn, Adleson, or even Ruffin. While Harrah’s does not push the boundary in style or luxury, it does in operations and marketing. Pushing on either front raises the bar for the other operators, thus creating an overall rise in quality over all. In a similar vein, so Harrah’s goes after volume and mid-to-lower market segments. That too expands the market. Las Vegas as a city, and Nevada as a state, needs that volume for all the other industries directly or indirectly connected to gaming.

    I am not sure about your posit that metrics should not be a defining approach. While I can agree of a more bland experience if everyone did so, I think there is a opening for such, especially in Harrah’s case. Its about volume. Drive the people into the door with carefully crafted marketing. Sure, they may go to other places, but they will spend a good bit in your own. And to make sure they do spend that fraction at your properties, you need amenities within their budget (e.g. not the best buffet, but a good one). It is about numbers, but again thats not a bad thing necessarily.

    That said, I am a little worried about market concentration on the strip. Harrah’s has been key driver in consolidation focusing on buying up smaller strip operators (Imperial Palace, Planet Hollywood, and Barbary Coast in a way). Not only the consolidation, but the significant barriers to entry (e.g. land prices and related capitalization needed). I don’t want to start sounding like a conspiracy monger, but such can lead to collusion. While Harrah’s has made a stand, note how quickly and uniformly the resort fee spread. Or, generally, look at the “european” pools with their similar fees. It makes me wonder about other “cooperation” in room rates or other amenities in less obvious ways.

  4. WestVegas says:

    Very interesting points made in the comment above. Which is why I like coming here…so I can absorb the different viewpoints.