Are Gamblers Really That Bad?
by Sudhir Kale, Ph.D.

I don’t know about you, but as a casino scholar and industry consultant, I get a wee bit uncomfortable when casino owners and senior executives express disdain or disrespect for gambling and gamblers. Then there are others who openly voice their embarrassment regarding the unfortunate accident that they are working in casinos. In a recent press conference, casino mogul Steve Wynn said, “Slot machines and blackjack have no power at all,” “what we are not building is a box of slots. We’re building a beautiful hotel that just happens to have a gaming room at the back.” If this does not sound somewhat apologetic, I don’t know what does. Don’t get me wrong, I, like most casino professionals, admire Steve Wynn. But I have always been somewhat perplexed by his apparent lack of reverence for the industry that has made him so wealthy.

I have never understood the attitude of many casino owners and executives toward their business. They never stop talking about the wonderful “non-gaming amenities” that their facility offers. They wax eloquently about the iconic architecture of their hotels and about the numerous signature restaurants on their property. They pay millions of dollars to bring in top performers and performances from the world over. And yet, when it comes to gambling and gamblers, they seldom exude any enthusiasm or appreciation. Never mind that it is gambling that provides the financial underpinning of casino resorts around the world.

Would Steve Wynn have opened his resorts in Macau if there was no gambling in the facilities? Would Las Vegas Sands have invested over five billion in Singapore if it weren’t for the expectation of surfeit casino revenues? Would Adelson stake $35 billion in ten integrated resorts in Spain if they did not offer gambling? Clearly, gamblers—the customers, and gambling—the product are the key drivers of revenue and income for casinos, and they seldom get the respect they deserve from their beneficiaries.

Let’s get a bit more specific. For the first quarter of 2013, Wynn’s Las Vegas properties generated $8,519 per table per day, and $215 per slot per day. In comparison, his hotel rooms generated $258 a night with an occupancy rate of 83%. For Macau, the figures are even more striking: $25,550 in revenues per table per day and $809 in revenues per slot per day. And the average hotel room rate in Macau? $315 a night. In other words, a slot machine in Macau generates more than two and a half times what a hotel room generates. Would you, based on these numbers, conclude that “slot machines and blackjack (or baccarat) have no power at all?” And, if you visit the Wynn or the Encore in Macau, you will find that hotel guests generally get better treated than the customers on the main gaming floor. By the way, this observation will apply to many other casino properties around the world.

What accounts for the widespread derision among industry professionals toward gambling? Is it rooted in religion? Is it some ingrained guilt as to how one makes a living? Is it the realization that millions of people will lose all they have at the altar of these new temples of capitalism? Or is it simply the jadedness that comes with seeing punters lose obscene amounts of money, day in and day out?

I am never quite sure what to attribute this negative attitude to. What I do know is that it cannot be very healthy for the attitude bearer to come to work every day knowing that you are not enthused either by your core product or by your core customers. It is reminiscent of Ayn Rand’s novel, The Fountainhead. Gail Wynand, the powerful publisher of vulgar tabloids hires Howard Roark, the protagonist architect to build the Wynand Building. Of course, Mr. Wynand knows fully well that money for the project, “the fertiliser” as he calls it, comes from activities he holds in total contempt. Sadly, the same perceptions may be held by some casino owners and executives. Those who have read The Fountainhead already know what happens to Mr. Wynand in the end.

Date Posted: 29-Apr-2013

Sudhir Kale, Ph.D., is an occasional consultant to the gaming industry. He also works as Professor of Marketing at Bond University in Australia. Professor Kale has written close to a hundred articles on the marketing and management of casinos. He always welcomes comments from readers. You can contact him at skale@gameplanconsultants.com.

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