Las Vegas casinos are stacking the deck, figuratively speaking, in a bid to cater more exclusively to high rollers amid a flood of visitors to the gaming mecca.
According to the Wall Street Journal, the industry believes it has so many gamblers coming to the Strip to lose their money that if can afford to weed out the undesirables by lowering the odds and shrinking the payoff.
“You’re kicking out the lowest end,” explained Caesars Entertainment CEO Tom Reeg during a call with analysts this month. “I see no reason that that needs to stop or would stop.”
Casinos in the city raked in a record $8.3 billion in revenue from card games, slot machines, and other forms of table betting like roulette last year, even as the number of visitors failed to reach the 2019 pre-pandemic levels.
Las Vegas is awash in revenue, allowing it to even finance a Major League Baseball stadium, after officials clinched a deal with Oakland Athletics owner John Fisher. It would be the second time the Bay Area city opposite San Francisco lost a professional sports team to Las Vegas.
With the draw of stars like Taylor Swift and K-pop sensation BTS playing in Allegiant Stadium, the new home of the Raiders NFL football team since 2020, casinos can apparently afford to be picky with the kind of gamblers they want.
“Reeg believes that these events are bringing in kind of a higher-tier clientele, if you will, that’s replacing maybe lower tiers or mid-tiers, and that’s what’s adding to the sustainability of these gaming revenue numbers,” Michael Lawton, a senior economic analyst with the Nevada Gaming Control Board, said earlier this month.
New normal as Nevada’s monthly gaming revenue exceeds $1 billion
According to the WSJ, analysts at Vegas Advantage estimate that more than two-thirds of all blackjack tables on the Strip are now only offering only 6:5 payouts as opposed to more favorable 3:2 ratio they have historically offered when a player hits 21 on the first two cards.
That means a $10 bet only nets an additional two in winnings instead of the traditional five dollars—and it’s not just card games like blackjack that are exhibiting signs of deteriorating odds for gamblers.
Vegas Advantage also estimates the number of so-called “triple zero” roulette tables that feature an extra slot, thereby mathematically lowering the chance of winning, has soared. Whereas once these harder tables were a rarity with only a few in operation back in 2016, they hit 78 last year and are quickly encroaching on the 111 double-zero tables that are slightly more favorable for participants.
Finally, casinos are also shutting down table games, citing the rising costs for paying their dealers, in favor of more automated electronic games.
The good times may be over, at least temporarily. Fitch Ratings forecast in January a demand pullback in the U.S. Following last year’s “exceptionally strong performance” for the industry that is traditionally led by Nevada and more specifically by the Strip.
Going forward, monthly comparisons will become tougher, as gaming revenue either hit an all-time high or marked its second best result ever. Data for March, the most recent period reported, showed Nevada gaming revenue edged lower by three-tenths of a percent on the back of lower intake from baccarat.
Lawton remains bullish thanks to convention attendance, special events, and sports teams moving to Las Vegas, which accounted for 95% of Nevada’s growth in gaming revenue in 2022.
“A year ago we had done 13 consecutive months [of $1 billion dollars in statewide revenue] and I was concerned about the sustainability,” he said. “And here we are now, we’re at 25, and it’s not a fluke, it looks like that is the new baseline.”
One of those high rollers the Strip wants to cater to could be LeBron James: Earlier this year the basketball star expressed interest in owning an NBA team in Las Vegas.