I-Team: Betting on the Future - 8 News NOW

I-Team: Betting on the Future

Posted: Updated:

LAS VEGAS --  A dramatic transformation is unfolding within the economic engine that drives Nevada, not only in the games and attractions offered, but also within the customer base itself. One way or another, the changes will affect everyone.

To paraphrase the old car commercial, this isn't your father's gaming industry anymore. The re-invention of Las Vegas is unfolding all around us, in ways that are not always easy to spot. Some of the changes seem hard to believe; the number of slot machines is way down. Ditto for table games, including blackjack. One factor behind the transformation is the juggernaut that's been unleashed in Macau.

Macau Leaves Las Vegas in the Dust

"You don't walk into one of our places, or anyone's place, for that matter, and see a group of 28-year-old's playing slot machines. You don't," said Bill Hornbuckle, president of MGM Resorts International.

Hornbuckle knows as well as anyone the importance of constantly reinventing, or repackaging his company's basic product. Gambling has been a primal urge since humans tossed bones in caves, but our attention span is fleeting and interests fickle. Few industries do a better job of anticipating or shaping what their customers might want.

"The games need to be more engaging. They need to be more competitive, and they need a sense of community about them. They need to take a new audience and invite them in and have fun with it," he said.

The revolution is already well underway. It might seem a casino sacrilege, but the number of slot machines -- one-armed bandits -- is way down. Since 2001, the number of slots in Nevada casinos dropped by 16 percent from 217, 221 down to 182,574). On the Strip, the number of slots dropped by 25 percent. Total slot revenue in the state peaked in 2007 at $8.45 billion. It is slowly inching back up, but is well below pre-recession numbers at $6.78 billion in 2012.

One reason the number of machines has dropped is because the newer machines can do so much more.

"You don't have a nickel machine, a quarter machine, and a dollar machine. One machine can serve us all," Hornbuckle said.

Table games have also changed. Blackjack or 21, long the most popular table game in Nevada casinos, has seen a noticeable decline in the number of tables. Two other table games, Caribbean stud and let it ride, are also down. For reasons not exactly clear, roulette and three card poker games are up.

"One of the reasons we see less blackjack tables around the state, a lot of casinos have closed or shrunken their floors a little bit," said gaming analyst Dave Schwartz.

He says Nevada casinos have changed, in large part, because of explosive growth in Macau. Back in 2003 when the I-Team visited Macau, only one Las Vegas operator, Las Vegas Sands, had a foothold. But, what was then a barren Cotai Strip has blossomed.

Gaming revenue in Macau first surpassed the Las Vegas Strip in 2007. Today, it rakes in four times as much revenue as the entire state. And the preferred game there has become number one here.

"Baccarat is really directly linked to Asian high rollers in Macau. If you look at revenue numbers, baccarat really starts to take off in 2005, 2006 which is when Las Vegas companies were first getting involved in Macau," Schwartz said.

Today, baccarat is the number one table game in Nevada casinos, out producing even blackjack. Explosive growth in Macau means that two Las Vegas companies, the Sands and Wynn, are more Asian than American.

They earn far more in China than in Las Vegas. MGM Mirage has a big footprint in both markets and thinks the competition has been a plus for Nevada.

"Overall it has helped our company and some of our competitors, capitalize back into Las Vegas and help us continue to grow," Hornbuckle said.

Although no new casinos are being built in Las Vegas, MGM and other companies are plowing hundreds of millions of dollars into upgrading the hometown properties, adding new amenities and attractions to keep up with the times.

Gambling's Shrinking Piece of the Pie

In Macau, 91 percent of the revenue comes from gambling. In Nevada, it is less than 50 percent. Casinos have taken space once devoted to table games or slots and installed shopping, dining, and nightclubs instead. Those revenues have doubled in the last decade, while gambling has remained flat. A revolution has occurred right under our noses. And another one is right around the corner.

"I imagine what's next is probably about technology, the way we communicate with people, the way we engage people and reach people both onsite and potentially off site," Hornbuckle said.

Are Poker Rooms Folding?

Another big change is in poker. The boom that started in 2002 caused a huge spike in the number of poker rooms and tables but has leveled off. Revenue from poker has declined five years in a row, in part because the big money pro's having gone to Macau to seek out serious action.


Powered by WorldNow
All content © Copyright 2000 - 2014 WorldNow and KLAS. All Rights Reserved.
For more information on this site, please read our Privacy Policy and Terms of Service.