Earlier today, a colleague sent me a link to an article on The Motley Fool written by Jeff Hwang a few months ago, entitledThe Millennial Problem: Why We (Don’t) Gamble. One of the questions that was being asked a great deal at last week's Global Gaming Expo (G2E) was regarding the millenials and how to get them into the casinos to play. As a father of one of these millenials, I get a lot of first-hand input on this topic. I think this article covered alot of the same points that my son makes regarding what it would take to get his generation into the casino AND PLAYING.
I could probably write a month's worth of columns on the topic of millenials and gambling, but that isn't my topic today. I think Mr. Hwang did an excellent job of presenting some of the issues. There was one line in his column that stood out in my mind. He discusses how gaming in Las Vegas has been on an overall decline and puts the cause as less favorable paybacks over the last several years. His overall conclusion on this topic is essentially that Players can find better places to gamble closer to home. This is not to say that he feels that Las Vegas is doomed, but rather people come here for ALL that Las Vegas has to offer and not necessarily the gambling.
As I read this line, my first reaction was "NO WAY". Las Vegas is Video Poker Heaven, how could it not be best the place in the country to gamble? Of course, my father gave Las Vegas that moniker about 20 years ago. A lot can change in 20 years. So, I gave it a bit more thought. Is Las Vegas still the best place to gamble in the country?
As I thought about it, I was no longer so sure. The article brought up a few valid points and some pointed statistics. Slot payback over the last several years has decreased steadily over the past decade. At the same time, the number of spins per hour has nearly doubled. The net result to the Player is more money lost faster. In the video poker arena, it has gotten harder and harder to find 100+% games, which were never in abundance on the strip anyhow. Finding even full-pay machines on the strip has gotten harder.
Then it hit me. "On the Strip". Let's face it. Most visitors to Las Vegas spend their time on the strip, which has NEVER really been 'Heaven' for gamblers - at least not advantage gamblers. 10-20 years ago, many of the Strip casinos switched to paying 6 to 5 on Blackjack from 3 to 2. Players were getting better and the hold on tables was shrinking. Turning games to 6 to 5 completely eliminated the counters as well. No counter can overcome the extra house advantage of a 6 to 5 game. A 3 to 2 game can have a house advantage of a measly 0.5%. This more than triples to 1.8% on a 6 to 5 game. Of course, when the continuous shufflers came out, which also eliminated counters, the payout did not return to 3 to 2.
But 3 to 2 did not become a nationwide standard. It didn't even become a Las Vegas standard. Downtown and in the local casinos off the strip are still almost entirely 3 to 2. But this isn't where most of the tourists go to play. So, now we see that over the past 10+ years, slot machines, video poker machines and blackjack have all gotten a little worse for the Player in the major tourist area of Las Vegas.
Another major change of the past ten years are the proliferation of all the proprietary table games. For the most part, these games have lower paybacks than blackjack or require significantly more units as an average wager. In blackjack, you wager about 1.14 units per hand. So, a $10 table is really an $11.40 average wager table. But, a $10 Three Card Poker is really a $16.67 average wager table and that doesn't include Pair Plus and/or the 6-Card Bonus Sidebet. Despite all this, though, these table games has been one of the bright spots of growth in the casino market. So, this would seem to throw a wrench into the argument that it's all about the payback. Playing most proprietary games will cost you more money than playing blackjack, baccarat or Pai Gow Poker. Yet, they are more popular.
Perhaps, the lesson to be learned is that most gamblers recognize that all games have a house advantage. There are limits to how quickly Players are willing to lose money which can lead to reduced play. But, if you increase the fun factor, which I believe many of these newer table games have done, then Players are more apt to accept a higher loss rate. I use the term loss rate, because many of these new games have higher payback but also higher average wagers. The two combined determine how much money a Player will lose on average per hand.
And that brings me back to the original topic of how to get the millenials into the casino and playing. To do this, I think it is fairly clear that we cannot simply do what we did with the prior 2 or 3 generations. We need to ask the millenials what they want and do our best to deliver it. I think many of them would love to come to the casino and play, but they want to play the way they like to play and not the way their parents do! It's kind of like that old car commercial - It can't be your father's Oldsmobile.
The premier consulting firm that has been demystifying casino gaming math for more than two generations.