Examining the Link Between Poker Room Business Volume and Gaming Activity in Slot and Table Games: A Closer Look at a Key Assumption in the Full Service Theory
2013; Volume: 17; Issue: 1 Linguagem: Inglês
ISSN
1531-0930
Autores Tópico(s)Sports Analytics and Performance
ResumoAbstractResults from three different Nevada hotel-casinos failed to support the popular notion that poker rooms drive business to the slot and table game areas of the casino floor. This result not only questions the validity of a key and somewhat bold operating assumption, it casts a shadow of doubt on the broader Full Service Theory, as applied to the casino floor. Additionally, this work extends Ollstein (2006) by empirically examining the relationships between the daily business volumes of poker rooms and both critical gaming centers (i.e., slots and table games). Five of six key results question the wisdom of offering live poker, based on the assumption of indirect revenue contribution to slots and table games. Double-log time series models are advanced to analyze the daily operating results of three casinos over a seven-month period, offering a rare and insightful look at actual casino performance data.Keywords: Poker room operations, casino management, slot operations, table game operations, operations analysis(ProQuest: ... denotes formula omitted.)IntroductionThere is no shortage of claims that poker rooms drive business to key casino profit centers such as slots and table games (Cosgrove-Mather, 2005; Grochowski, 2005; Legato, 2010; McGowan, 2010; Taucer, 2004; Walters, 2003; Wiser, 2004). However, there is a shortage of compelling empirical support for these claims. Only one published study has examined the relationship between the business volumes of the poker room and the slot floor (Ollstein, 2006). Worse yet, no studies have examined the relationship between the business volumes of poker rooms and table games.Poker rooms are somewhat notorious for their inability to produce competitive levels of profit per square foot (Grochowski, 2005; McGowan, 2010; Taucer, 2005). Others have described live poker as something of a loss-leader (McGowan 2010; Grochowski 2005), existing only because of assumed revenue contributions to slots and table games. This assumption of contributions to other gaming areas is absolutely critical. For some, insufficient profits from operations combined with the weakly supported assmnption of external revenue contributions makes the poker room worthy of a closer look.Although there are Las Vegas poker rooms that continue to draw crowds, several operators have begun to question the wisdom of offering live poker, in spite of the widely held assmnption of external revenue contributions. For example, in 2011, casino executives at the Gold Coast closed the poker room, using the floor space to accoimnodate additional slot machines (Sieroty, 2011). In 2008, the Las Vegas Hard Rock constructed an extravagant $30-million, 18-table poker lounge (Boncek, 2008). By 2010, the poker lounge was closed, with live poker relegated to a far less glamorous location that accommodated only eight games (Ameh, 2010). This downsizing occurred following a major hotel and casino expansion, suggesting the decision was not driven by a shortage of gaming space. Other notable poker room closures included the Paris Hotel Casino in 2008, and the Tropicana, Aliante Station, and Silverton, all three of which were shuttered in 2012 (Mehaffey, 2012). While live poker rebounded from near extinction in the late nineties to reach unimaginable heights in the mid-aughts, it would seem as though some are once again beginning to wonder whether it is the best use of casino floor space.An improved understanding of the poker room's contribution to the casino is a particularly important issue for operators who (1) manage space-constrained casinos with viable alternative uses for the poker room's floor space and (2) are considering the addition of a poker room to an existing property. Developers would also benefit from such knowledge, as they must decide whether to include a poker room in the plans for a casino expansion or an entirely new property. These operators and developers cannot afford to assmne that poker rooms supply significant revenue contributions to slots and table games, based on lihle more than popular opinion. …
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