Hospitality, Lodging and Food Services Operations Gaming Entertainment John R. Walker Chapter 11
Chapter Objectives • Outline the History of modern casinos • Describe the various components of modern casino hotels • Explain how casinos have been integrated into larger hospitality operations • Appreciate the spread of casino gaming throughout the world • Understand the basic principles of casino operations • Discuss the different positions within the gaming industry
The Casino Resort: A Hospitality Buffet • Twenty of the thirty largest hotels in the world are casino resorts on the Las Vegas Strip • Today, many casino resort presidents and key executives have come up through the lodging or food and beverage side of operations
What is Gambling? • Gambling is the act of placing stakes on an unknown outcome with the possibility of securing a gain if the bettor guesses correctly. • To be considered gambling, an act must have three elements: something wagered (the bet), a randomizing event (the spin of slot reels or the flip of a card), and a payoff
What is Gambling? • There are two basic categories of gambling: Social gambling and mercantile (or commercial) gambling. • Social gambling is conducted among individuals who bet against each other • In mercantile or commercial gambling, players bet against “the house,”
What is Gambling? • The house edge is what makes casinos possible • The house edge allows casinos to offer their customers honest games, fairly dealt, and still remain in business. • The house edge is defined as a mathematical formula that allows the ‘house’ to keep a small percentage of every bet made by a player. The player may have some ‘luck’ in the short run but the house ‘advantage’ usually prevails over the long run.
What is Gambling? • The handle is the total amount of money bet at a game. • The win is the handle minus the money paid out on winning bets—essentially, what the casino keeps. • The hold percentage is the percentage of the total handle that is retained as win.
What is Gambling? • Just because the casino department is reporting a net loss for a shift does not necessarily mean that the department is inefficient or incompetent; it may just be an expression of volatility. • Over time, gaming wins will tend towards their historical average (house advantage). • Because of volatility, even a busy casino can end up in the red for a shift or even a weekend if one high-stakes player has a run of good luck.
Comps: A Usual Part of an Unusual Business • Comps are complimentarygoods and services offered to casino patrons in order to attract their business • Comps are distributed as a usual part of a casino’s operation. • The value of comps varies; generally speaking, higher-producing players are given higher-value comps
Comps: A Usual Part of an Unusual Business • Casinos, with thousands of guests on any given day, rely on customer loyalty programs to track patron play • Casinos use the information they gain about a player’s gambling patterns to offer him or her comps, based his or her expected levels of play. • Most loyalty programs have tiered rewards structures, giving patrons an incentive to play more and unlock more rewards.
Types of Casino Operations • Nevada-style gaming tavern, which is a typical bar and restaurant that has less than sixteen electronic gaming devices • Stand-alone casinos usually consist of only slot machines • Indian reservation may be bingo parlors in prefabricated buildings to fully functional casino resorts • Riverboats are usually permanently moored casinos with F&B facilities, and a hotel
Components of Casino Resorts • Destination resorts, such as those found in Las Vegas, are centered on casinos that have several types of games available: • Slots • Table games (21, craps, roulette, baccarat, etc.) • Race and sports books • Poker rooms
Components of Casino Resorts • In most parts of the United States, slot machines produce the bulk of the revenue • Among table games, blackjack is most popular nationally • Casino resorts also include the following components: • Lodging • F&B • Entertainment • Retail shopping • Convention facilities • Nightclubs
Evolution of Gambling and Casinos • Gambling is among the oldest of human behaviors • Purpose-built dice have been discovered at sites dating back to 7,000 years ago • Casino resorts, as they are currently operated, are much younger, dating back only to 1941
Evolution of Gambling and Casinos • By 1910 gambling had been outlawed in the United States • In the midst of the Great Depression, in 1931, Nevada legalized gambling in order to increase tourism • The El Rancho Vegas, was the first casino resort on what would become the Las Vegas Strip
Evolution of Gambling and Casinos • In the 1970’s casinos were being purchased by corporations, integrating them into the national economy and initiating new regulatory scrutiny • In 1976, New Jersey voters legalized casino gambling in Atlantic City • Riverboat gambling debuted on the Mississippi in 1991
Evolution of Gambling and Casinos • In the 1987 Cabazon decision, the Supreme Court affirmed that if a state allowed betting on bingo or card games, Indian tribes could offer these games without limits imposed by state regulators • Today, there are more than 200 Native American tribes operating casinos in more than 30 states with revenues of more than $25 billion
Evolution of Gambling and Casinos • American-run casino operators have found that Asia is an even more lucrative market for casinos than the United States. • Both Macau (2004) and Singapore (2010) have become casino powerhouses • Since 2008, Macau’s casino industry has become a world-wide leading gaming center with increasing revenues surpassing Las Vegas by nearly 400%
Working in a Casino Resort • Hotel operations: • Much like the career opportunities in the full-service hotel industry, with the exception that food and beverage can be a division of its own and not part of hotel operations • Food and beverage operations: • High-quality food and beverage service in a wide variety of styles and concepts • Some of the best foodservice operations in the hospitality industry are found in gaming entertainment operations
Working in a Casino Resort • Casino operations: • Gaming operations • Casino service • Marketing • Human resources • Finance and administration
Working in a Casino Resort • Retail operations: • Increased emphasis on nongaming sources of revenues • Gaming entertainment business demands an expertise in all phases of retail operations • From store design and layout to product selection, merchandising, and sales control
Working in a Casino Resort • Entertainment operations: • Because of the increased competition, gaming entertainment companies are creating bigger and better production shows to turn their properties into destination attractions • Production shows have climbed into the multi-million dollar range, with special entertainment venues built for superstars
The Mirage Effect • Since the 1990s rooms have become a major revenue center • Gourmet cuisine was introduced in 1992 when Wolfgang Puck opened Spago in Caesar’s Palace • The quality and cost of entertainment has skyrocketed • Full-fledged malls inside casinos have seen retail spending climb
Sustainability in Gaming Entertainment • Gaming entertainment companies continue adapting their operations and practices to fit “green” standards. • Many well-known companies in gaming entertainment are leading the way to establish sustainable initiatives • Harrah’s Entertainment Inc. has undertaken a sustainable initiative in several areas of operation, including energy, waste and water conservation, as well as climate control
Career Information • The growth of the gaming industry has resulted in a variety of new job openings. • People choose to work in the industry because it is known to place people first, whether they are employees or customers • Most careers include impressive benefits packages and offer many career advancement opportunities
Trends in the Gaming Entertainment Industry • Gaming entertainment dependent less on casino revenue and more on room, F&B, retail, and entertainment • Gaming and lodging are converging • Continued scrutiny(inspection) by government • Exceptional service will drive the entire industry • Continued improvement in managementcareer opportunities