assignment #6

 485

C h a p t e r 11

Gaming entertainment

L E A r N i N G o B J E C T i V E S

after reading and studying this chapter, you should be able to:

• Outline the history of modern casinos.

• Describe the various components of modern casino hotels.

• explain how casinos have been integrated into larger hospitality operations.

• Understand the basic principles of casino operations.

• Discuss the different positions within the gaming industry.

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One of the most significant developments in the hospitality industry during the past three decades has been the astounding growth of the casino industry and its convergence with the lodging and hospitality industries. With its rapid expansion in North America and throughout the world, new opportunities have been created for hospitality careers within casino resorts.

Gaming entertainment While the gaming entertainment industry is a global industry, there are five types of legal gambling in the Unites States. this includes charitable gam- ing, commercial casinos, lotteries, Native american gaming, and parimutuel gaming. Some form of legal gaming exists in 48 of the 50 states, with com- mercial casinos representing the largest part of the domestic gaming market. While gaming revenues vary by the state, the industry contributes billions of dollars in tax revenue to these local governments on an annual basis. the gaming entertainment industry has seen development not only in the United States, but also internationally, particularly in the asian destinations of Macau and Singapore. the size and scope of the global gaming industry are expected to reach $117.9 billion dollars in 2015.

When a customer places a bet in any type of gaming activity and the casino guest wins the game, he or she receives a cash payout; if the guest loses the game, the money is wagered. the total amount of the bets is called the handle, and the net amount spent by the guest is called the win by the gaming entertainment industry.

What is the difference between gambling and gaming? Gambling is play- ing a game of risk for the thrill of the action and the chance of making money. true gamblers spend a great deal of time learning and understand- ing a favorite game of risk and enjoying the subtle attributes, and, in par- ticular, they find an enjoyable challenge in trying to beat the house, or win more than they lose from a casino. a gambler has little interest in anything other than a casino floor and the games it offers. It is true that of the nearly 40 million visitors who go to Las Vegas, the approximately 27 million peo- ple who go to atlantic City, and the hundreds of thousands who frequent other casino operations, they love the green felt table, the whirling roulette wheels, the fall of the chips, the lottery-like game of keno, and the thrill of the game. the rows of colorful slot machines sounding out musical tones and flashing lights, the distant sounds of someone hitting the jackpot, and the ringing bells and shouting guests create an environment of excitement and anticipation that can be found only on the casino floor. the gaming industry has exploded from just two jurisdictions in 1976 to some form of legal gambling in 48 states.

Not long ago, the presence of slot machines or blackjack tables was all that was needed to lure visitors. however, with the rapid spread of casinos through North america, this is no longer true. the competitive nature of casino business has forced the creation of a bigger, better product to meet

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the needs of its guests. this product, gaming entertainment, has evolved over the past decade.

Games of risk are only part of the total package of entertainment and leisure time activities found in gaming entertainment. Gaming entertainment serves a customer base of social gamblers, customers who play a game of risk as a form of entertainment and social activity, thus combining gam- bling with other activities during their visits. Social gamblers, by this defini- tion, are interested in many gaming entertainment amenities and take part in many diverse activities during a stay. Gaming entertainment refers to the casino gaming business and all its aspects, including hotel operations, enter- tainment offerings, retail shopping, recreational activities, and other types of operations, in addition to wagering on the gaming floor. the heart of gaming entertainment has been dubbed the “entertainment megastore” with thousands of rooms; dynamic, interesting exterior architecture; and nongam- ing attractions.

Gaming entertainment is the business of hospitality and entertainment with its core strength in casino gaming. according to this definition, a gam- ing entertainment business always has a casino floor area that offers various games of risk that serve as the focal point for marketing to and attracting guests. Next in importance to the guests are high-quality food and beverage operations.

Gaming entertainment is one of the last hospitality concepts to sup- port the full service, tableside gourmet restaurant, in addition to the lavish buffet offerings that many casino locations offer. the number of foodservices is wide and diverse—from signature restaurants featuring famous chefs to ethnic offerings to quick service, franchised outlets. the gambling entertainment industry offers unlimited career opportunities in restaurant management and the culinary arts that were unheard of just a decade ago.

Gaming entertainment also goes hand in hand with the lodging industry because hotel rooms are part of the package. Full service hotels are part and parcel of gaming entertainment. rooms, food and beverage, convention ser- vices, banquet facilities, health spas, recreation, and other typical hotel ame- nities support gaming entertainment. Most of the largest and complex hotels in the world are found in gaming entertainment venues, a number of which are described in detail later in this chapter.

Gaming entertainment offers a place where guests can gamble (the casino floor), eat and drink, sleep and relax, and maybe do some business. But there is much more: the entertainment ranges from live performances by the most famous entertainers to production shows that use high-tech wizardry. Gaming entertainment includes theme parks and thrill rides, muse- ums, and cultural centers. the most popular gaming entertainment destina- tions are designed around a central theme that includes the hotel and the casino operations. Unlike its predecessor, the casino business, the gaming entertainment business has numerous revenue-generating activities. revenue is produced from casino wins, or the money that guests spend on the casino floor. the odds of any casino game are in favor of the house, some more

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than others. a casino win is the cost of gambling to guests, who often win over the house in the short run and are therefore willing to place the bets and try their luck.

Nongaming revenue comes from sources that are not related to wager- ing on the casino floor. as the gaming entertainment concept continues to emphasize activities other than gambling, nongaming revenue is increasing in importance. this is what gaming entertainment is truly about: hospitality entertainment based on the attraction of casino.

What form does gaming entertainment take? the mega-resorts of Las Vegas and atlantic City garner the most publicity as the meccas of the gam- ing entertainment industry. however, there are smaller properties through- out Nevada, and other casino-based businesses in 48 states and seven Canadian provinces. these casinos take the form of commercially operated businesses, both privately and publicly held. Some are land based, mean- ing casinos are housed in regular buildings. Other are in river boats that cruise up and down a river or on barges moored in water and do not cruise, called dockside casinos. Casinos are also operated by Native american tribes on their reservations and tribal lands. these are land-based casinos and are often as complex as any operations in Las Vegas. Gaming entertainment is also popular on cruise ships.

there is a strong support for gaming in the marketplace as an entertain- ment activity. patrons are required to be 21 years of age to gamble in the United States, and research shows that more than a third of americans have visited a casino in the last 12 months, and 32 percent of them have actually gambled in those 12 months. according to the market research, more than 85 percent of U.S. adults say casino entertainment is acceptable for themselves or others. eighty-six percent of americans report having gambled at least once.

Commercial casinos account for 36 percent of gaming revenue. Indian casinos and state lotteries tie for second place at 26 percent. the demo- graphic makeup of the typical gaming entertainment guest has remained consistent during the past several years. In comparison to the average american, casino players tend to have higher levels of income and education and are more likely to hold white collar jobs. the customer profile of Las Vegas is a younger demographic of guests who spend money in search of total entertainment experience.

historical review of Gaming entertainment the precise origin of gambling is still unknown today. however, according to Chinese records, the first official account of the practice dates back to as far as 2300 b.c.e.! the romans were also gamblers. they placed bets on char- iot races, cockfights, and on dice throwing. this eventually led to problems: gambling, or games of chance, was banned except for during the winter festival of Saturnalia.1

LearNING OBjeCtIVe 1 Outline the history of modern casinos.

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In the seventeenth century, casino-style gaming clubs existed in england and Central europe. a public gambling house was legalized for the first time in 1626 in Venice, Italy, and one gambling establishment, in Baden- Baden, Germany, opened in 1948 and is still open today.2 Soon the upper class met in so-called casinos to socialize and gamble. In the first half of the nineteenth century, organized gaming casinos started to develop.

Las Vegas—the name alone summons images of neon lights, extravagant shows, outrageous performers, and bustling casinos where millions are won and lost every night. Las Vegas is all of that and much more. this city repre- sents the american dream. Since the state of Nevada legalized gambling in 1931, Las Vegas has been transformed into one of the most elaborate cities in the world and one of the hottest vacation spots.

the gaming entertainment business in the United States has its roots in Las Vegas. From the early 1940s until 1976, Nevada, and predominantly Las Vegas, had a monopoly on the gaming entertainment business. Casinos had no hotel rooms, entertainment, or other amenities. the hotels that existed were just places to sleep when guests were not on the casino floor.

Las Vegas is rich with tales of Benjamin hymen Siegelbaum, better known as Bugsy Siegel. Siegel was born February 28, 1906, in Brooklyn, New York, to a poor jewish family. It is said that he began his career at a very young age by extorting money from pushcart peddlers. eventually he turned to a life of bootlegging, gambling rackets, and murder-for-hire opera- tions. In 1931, Bugsy was one of four men who executed Giuseppe “joe the Boss” Masseria. Several years later, he was sent out West to develop rack- ets. In California, Siegel successfully developed gambling dens and ships. he also took part in narcotics smuggling, blackmail, and other question- able operations. after developing a nationwide bookmaking wire operation, Siegel moved on to build the well-known Flamingo hotel and Casino in Las Vegas. the casino ended up costing over $6 million, which forced Siegel to skim profits. Siegel subsequently died in Beverly hills in june 1947, hit by a barrage of bullets fired through the window of his home. the day after his death, three mobsters walked into the Flamingo hotel and announced that they were the new owners.3

During the 1970s, atlantic City was in an impoverished state, with high rates of crime and poverty. In an effort to revitalize the city, New jersey vot- ers, in 1976, approved casino gambling in atlantic City.4 Later casino gam- bling was legalized in the state of New jersey by the Casino Control act. the state looked to the casino industry to invest capital, create jobs, pay taxes, and attract tourists, thus revitalizing the economy and creating a financial environment in which urban redevelopment could occur.

the act initiated a number of fees and taxes specific to the casino hotel business that would provide revenues to support regulatory costs, fund social services for the disabled and the elderly through the state, and pro- vide investment funds for the redevelopment of atlantic City. the Casino Control act created the Casino Control Commission, whose purpose was not only to ensure the success and integrity of the atlantic City casino industry, but also to carry out the object of reversing economic futures of cities.5

Sensing that the objectives of the Casino Control act were being fulfilled in New jersey and wanting similar benefits for its state, but not wanting

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land-based casino gambling, Iowa legalized riverboat casinos in the early 1990s. Illinois, Mississippi, Louisiana, Missouri, and Indiana followed suit in rapid succession. as the casino industry spread throughout the United States and Canada, its competitive nature created a need for what is now known as gaming entertainment and added to non casino attractions. Gaming enter- tainment is, therefore, a natural evolution of the casino industry.

Native american Gaming In California v. Cabazon Band of Mission Indians, et al. (1987), the Supreme Court decided 6 to 3 that once a state has legalized any form of gambling, the Native americans in that state have the right to offer and self-regulate the same games without government restrictions. this ruling came about after the state of California and the county of riverside sought to impose local and state regulations on card and bingo clubs operated by the Cabazon and Morongo bands of Mission Indians. the Court clearly recognized the rights of tribes with regard to certain gaming activities.6

Congress, which some observers say was alarmed by the prospect of losing control over tribal gaming, responded to these court decisions by passing the Indian Gaming regulatory act of 1988 (IGra). the IGra provides a framework by which games are conducted in a way that protects both tribes and the general public. For example, the IGra outlines criteria for approval of casino management contracts entered into by tribes and establishes civil penalties for violation of its provisions. the act is clearly a compromise in that it balances the rights of sovereign tribal nations to conduct gaming activities on their lands with the rights of the federal and state governments to regulate activities within state and federal borders.7 the three objectives of the IGra are as follows:

1. provide a statutory basis for the operation of gaming by Native american tribes as a means of promoting tribal economic development, self-sufficiency, and strong tribal governments;

2. provide a statutory basis for the regulations of gaming by the Native american tribe adequate to shield it from organized crime and other corrupting influence;

3. establish an independent regulatory authority, the National Indian Gaming Commission (NIGC), for governing activity on Native american lands.8

IGra defines three different kinds, or classes, of Native american gaming activities:

• Class I gaming, consisting of social games played solely for prizes of minimum value or traditional forms of Native american gaming

• Class II gaming, consisting of bingo, games similar to bingo, and called games explicitly authorized by the laws of the state

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• Class III gaming, consisting of all forms of gaming that are neither class I or class II gaming, and therefore including most of what are consid- ered casino games.9

the significance of the definition of class III gaming activity is that it identifies the games that must be located in a state that permits such gaming for any purpose by any person, organization, or entity and are conducted in conformance with compacts that the states are required to negotiate “in good faith” with the tribes.

While the federal gaming law precludes state taxation, the tribes in sev- eral states have voluntary payments and also negotiated payments to state governments under certain circumstances. Often tribes give local govern- ment voluntary payments in recognition of services the tribe receives, and some pay revenues in exchange of permissions to maintain a casino gam- bling monopoly in a state. In Michigan, Connecticut, and Louisiana, tribes have agreed to make payments to the state as a part of their comprehensive compact for casino gambling. In almost all the states, the tribes make pay- ments to the states for costs incurred by the states in regulating the casinos as provided in the negotiated agreements.

there are over 400 gaming facilities on reservation lands in 28 states, and Native american gaming has been one of the fastest growing sectors of gam- ing in the United States. Foxwoods resort Casino in Ledyard, Connecticut, operated by the Mashantucket pequot Indian reservation, is one of the larg- est casinos in the United States with more than 6,300 slot machines and 380 table games.10

the Casino resort: a hospitality Buffet today, casino resorts are among the most visible hospitality businesses in the world. twenty of the 30 largest hotels in the world are casino resorts on the Las Vegas Strip.11 the size and scope of the global gaming industry are expected to reach $117.9 billion dollars in 2015. those aiming for careers in hospitality, even if they have no special interest in working on the gambling side of the operation, may find themselves considering a position in a resort that has a casino, but also a full spread of lodging, food and beverage, enter- tainment, and retail offerings.

even if you don’t plan on working on the casino floor itself, a rudi- mentary understanding of the nature of gambling—and the specifics of casino gambling—is an essential tool for those who want to pursue careers in casino resorts. today, many casino resort presidents and key executives have come up through the lodging or food and beverage side of opera- tions; a solid understanding of what’s happening in the casino—and how casino guests are different from other hospitality patrons—makes advancing through the ranks that much easier.

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What is gambling? In its broadest definition, 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 (e.g., the spin of slot reels or the flip of a card), and a payoff.

this broad definition of gambling includes many dissimilar activities: contests between animals (horse racing, cockfighting) and between humans (team and individual sports); lotteries; and games of chance played with cards, dice, and other randomizing elements. Some of the best-known games fall into the last category: poker, blackjack, and baccarat are played with cards, and craps with dice. Slot machines, which were originally mechanical (but now are electronic) devices, award prizes based on the random stop- ping of reels, are also popular, and are typically the most-played games in most casinos today.

how do casinos make money from gambling? the answer lies in the kind of gambling they offer. 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; mathematically, each player has the same chance of winning. poker is a classic social game: every player is drawing from the same deck and has the same opportunity to check, raise, or fold. Other social forms of gambling include dominoes and Mah jongg.

In mercantile or commercial gambling, players bet against “the house,” a professional gambler or an organization that accepts wagers from the gen- eral public. Mercantile games have a mathematical advantage for the casino, or a house edge that lets professionals profit from them while still offering fair games. all lotteries are mercantile games, and every game found on the casino floor is a mercantile game. there is a small guaranteed bias toward

the house that, over time, ensures the casino will win more than it pays out.

the house edge is best explained by looking at the game of roulette, which fea- tures a wheel with 38 slots numbered 1–36, in addition to a single zero and a double zero. On each spin, a small ball falls into one of the 38 slots. If you bet “straight up” on a number, you win 35 units for each one unit you bet. So if you bet one dollar straight on, you’d end up with 36 dollars: the one dollar you staked, plus

A casino area with slot machines.

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35 more. Since the wheel has a 1-in-38 chance of hitting any number, you should be paid off at a rate of 37:1, not 35:1. that extra two dollars is the house edge; it seems slight, but over time, it adds up.

the house edge is what makes casinos possible; without it, the only way to offer games of chance to the public that can generate an income would be to cheat. the house edge allows casinos to offer their customers honest games, fairly dealt, and still remain in business.

the game of poker is an interesting exception to the rule that all casino games have built-in house edges. Many casinos have poker rooms, in which players bet against each other using a table, cards, and a dealer supplied by the house. the casino has no direct stake in the outcome of each hand but instead takes a small percentage of each pot (the rake) to defray the costs of operating the room. though it is a popular game, poker makes little money for casinos. poker instead is offered as an amenity for those players who will also play straight-up mercantile games or for those who are visiting with slots or table games players. the house edge is a theoretical number; it describes the amount of money wagered (handle) that the casino should keep over time. For tables and slots, casinos track the hold percentage to better understand how well the casino is performing.

to understand the hold percentage, we need to understand two other terms: handle (or buy-in) and win. 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 percent- age is the percentage of the total handle that is retained as win. On slot machines, the hold percentage tracks very close to the theoretical house edge. On table games, however, the hold percentage is usually consider- ably higher than the house edge.

though the games offered in casinos have a statistical bias toward the house, they are still games of chance. In the short run, players can get lucky and walk away with the house’s money. In small-stakes games this isn’t a problem, since the sheer number of bets taken tends to drive the hold percentage toward its histori- cally expected value.

Games played for high stakes, such as baccarat, are different. Because there are large amounts of money being spread over fewer decisions, these games have a great deal of volatility; in a given month, the hold percentage for a bac- carat game in a single casino can fluctuate wildly.

as a manager of a casino resort, it is important that you have an appreciation of the nature of volatility. just because the casino department is report- ing a net loss for a shift does

This resort on the Las Vegas Strip models itself after New York City.

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not necessarily mean that the department is inefficient or incompetent; it may just be an expression of volatility. Over time, gam- ing wins will tend toward their historical average.

Managers also need to understand that, because of volatility, casinos are not like other hospitality businesses. a typical hotel, running at 95-percent occupancy for the weekend and with full restaurant book- ings, will certainly make a profit. Because of volatility, however, 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 Volatility isn’t the only aspect of the casino business that makes it different from most other hospitality businesses. Comps are another area that set casi- nos apart.

Comps are complimentary goods and services offered to casino patrons in order to attract their business. Comps are found in virtually every casino, and any casino “guest of consequence” has expectations of receiving comps. Unlike in other hospitality operations, where comps are given primarily as part of service recovery to compensate for a customer service failure or other miscue, comps are distributed as a usual part of a casino’s operation.

the value of comps varies; generally speaking, higher-producing play- ers are given higher-value comps. For example, a small-stakes slot player might receive an offer for a discounted or free buffet; a baccarat-playing high roller, betting $10,000 a hand for several hours, might receive a full rFB (room, food, beverage) comp, with all expenses in the casino’s most lavish accommodations paid for. Casino guests might also receive comps for entertainment or other gifts. Many slots players receive cash back when they reach certain play thresholds.

Casinos, with thousands of guests on any given day, rely on customer loyalty programs to track patron play. patrons who wish to receive comps and other offers join the casino’s player loyalty club (e.g., Caesars’ total rewards, MGM resorts’ M life, Wynn resorts’ red Card). Slot players insert the card they receive into the machine they are playing; the card then tracks money played and won. table games players have a pit manager swipe their card, tracking their time of play and average bet size.

Casinos use the information they gain about a player’s gambling patterns to offer him or her comps, based both on theoretical wins by the player and 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.

Casino Win Defined

Let’s say you buy into a roulette game for $100 in $1 chips. You place 100 even-money bets, winning 94 and losing 6. In this case, the following are true:

The handle is $100. The win is $6. The winning percentage is 6 percent.

This is very c lose to the theoret ical house edge of 5.26  ­percent.­ But­ if­ you­ continued­playing­ for­ another­ 100 bets,­you­might­lose­another­6.­In­this­case,­the­handle­ would still be $100, but the win would be $12, and the hold percentage 12 percent.

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Loyalty programs are an essential part of casino marketing; many guests base the money they spend gaming upon where they receive the best comps. Good casino managers know they must send out good offers to qualified play- ers. Casinos also use sophisticated software to monitor and deliver bonuses to slot patrons as they are playing on machines. recently, some casinos have begun tracking and rewarding nongaming spending as well, a reflection of the broadening of the casino resort revenue stream. For example, some casinos offer rewards on dining, shopping, and even staying at their hotels.

I’ve been fortunate enough to work at three of the largest and most successful Las Vegas casino resorts. This experience has allowed me to interact with very diverse clientele from towns and cities from around the world. The gaming floor of a casino is buzzing with patrons enjoying the varied product offerings that most casino mega-resorts possess around the clock every day of the year.

These casino operators go to great lengths to attract and retain casino players. The first step in this process is often getting the player signed up for the casino players club, also referred to as a rewards program. Very similar to frequent customer programs at airlines or hotel chains, casinos use their player’s club memberships to track, analyze, and market to their various players. In many cases, these clubs can track players across multiple casinos within the company’s portfolio. For example, M life, the rewards program for MGM Resorts, tracks casino patron play at all 15 of their destination resort casinos. Similar programs exist with competing companies such as the Total Rewards program at Caesars Entertainment and the Wynn Las Vegas & Encore Red Card.

Traditionally, when joining one of these clubs, a player receives a membership card (similar in size to a credit card), which can be used to track play. When playing a slot machine, the card is inserted directly into the machine and can track how much money is spent and won, and for what duration the machine was played. Tracking play at casino table games, such as blackjack and roulette, is a little bit more hands on and requires a casino supervisor or host to monitor betting quantity, frequency, and duration. As a result of play, custom- ers are tiered and awarded points and/or comps. To encourage this play, there are a myriad of ways that the casino markets to individual players. Casinos can send very specific marketing collateral customized to play- ers’ particular interests, via traditional mail or e-mail, in order to entice players to visit and play. For example, customers who are interested in country music may be invited to Las Vegas during the National Finals Rodeo held in the city every year. Some strategies also include sending promotional material to customers reminding them of how much they have won in the past, or how much someone from their town may have won recently.

When casino players reach a certain level of play, they are likely to be assigned a casino host. The casino host is a great resource in building a relationship with casino customers, and can usually be a wonderful tool to get players to visit and gamble. Casino hosts can encourage more gambling by providing comps to the customer in the form of discounted (or free) food, beverages, hotel rooms, show tickets, and other desirable incidentals. The more valuable a player is to a casino (valuable in terms of how much money is potentially gambled), the more comps a host could potentially extend. This may include the use of private jet travel to pick up players from their homes and bring them to the casino.

H O W t O b U i L d s U c c e s s f U L L O n g - t e r m r e L a t i O n s H i P s W i t H c a s i n O r e s O r t c U s t O m e r s

Courtesy of Nicholas Thomas, assistant professor and Director of the Depaul Center for research and education in hospitality Leadership

(Continued)

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types of casino Operations there are several different kinds of casino operations, operating on vastly dif- ferent scales. at one end of the spectrum is the Nevada-style gaming tavern, which is a typical bar and restaurant that has less than 16 electronic gaming devices, usually bar-top video poker and slot machines. at the other is a fully developed casino resort, with (on average) a 100,000-square-foot casino that features thousands of slot machines and dozens of table games, approximately 3,000 hotel rooms, at least a dozen bars and restaurants, meeting and conven- tion facilities, entertainment venues, retail shopping, and pool and spa facilities.

Between these two extremes, which are both found in Las Vegas, there are several other kinds of operations. Stand-alone casinos are not very com- mon in the United States or elsewhere in the world. Where they are found, they usually consist of only slot machines; this type of operation might be called a slot parlor. In europe, the Middle east, africa, and South america, casinos located in hotels might be extremely small and ancillary to the general hospitality operation.

In the United States, casinos on Indian reservations can take many forms, from bingo parlors in prefabricated buildings to fully functional casino resorts with lodging, dining, and entertainment that are indistin- guishable from resorts on the Las Vegas Strip. Some states allow gambling only on riverboats, which originally cruised the waterways but today are

According to Dr. Lisa Thomas, a hospitality marketing researcher, slot tournaments create vibrant social scenes for customers to interact with each other, and of course, enjoy gambling. A slot tournament is held in a special roped-off area of the casino or in the casino’s ballroom space. Event décor is used to enhance the slot tourna- ment’s specific theme around rows of identical slot machines programmed to generate high jackpots and point accumulation rates, which increases the excitement for the tournament experiences.

Slot tournaments are traditionally divided into several sessions with machines that start with a preset number of credits. Each time the spin button is hit, the maximum bet is deducted from the starting credits. The credits won are shown on a separate meter, with the player unable to replay those credits. Once the tournament session time limit is up, the machine will lock, and any original credits not played are lost. The goal is to accumulate the most points in the won meter during each of the slot tournament sessions.

Most slot tournaments end with a player award party, which increases the ability for casino hosts to strengthen their relationships with their slot clients. The top prize goes to the participant who accumulates the highest point total during the slot tournament’s duration. Prizes can range from a few thousand to over several hundred thousand dollars. Customized tournament participation gifts are typically given to all participants as an event memento so that everyone walks away a winner. These events are often held in conjunction with national holidays­(the­Fourth­of­July),­sporting­events­(the­Super­Bowl),­or­cultural­festivities­(Chinese­New­Year).

H O W t O b U i L d s U c c e s s f U L L O n g - t e r m r e L a t i O n s H i P s W i t H c a s i n O r e s O r t c U s t O m e r s (Continued)

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usually “boat in a moat” operations that are permanently moored and con- nected almost seamlessly with a hotel and resort facility. Other states allow slot machines at racetracks (called racinos), and in some cases these have evolved to include hotel and resort operations as well. Finally, many cruise lines have casinos as part of the amenities available to guests on their ships.

David G. Schwartz, Director, Center for Gaming research, University of Nevada, Las Vegas

Casino resorts combine virtually every strand of the hospitality business. They’ve come a long way since the dusty saloons of frontier Nevada and the grimy illegal slot routes and bookmaking operations of American cities. Today, funded by mainstream capital, staffed by trained hospitality managers, and promoted globally, there is little that one can’t find in a major casino resort.

It’s important to note that casino resorts are so all-inclusive because it makes good eco- nomic sense. Originally, most revenues were generated on the casino floor. Yet the nature of casino gambling— games that, over time, have a slight bias in favor of the house—demanded that casinos offer more than just gambling. To discourage spot play, in which a lucky player cashes out and leaves, casino resorts developed a number of attractions to lure and keep players near the casino. Lodging, food, beverage, and entertainment were offered as “loss leaders” to get players through the doors.

In the 1990s, following the opening of Steve Wynn’s Mirage, the rules of the game changed. Though the old approach—offering loss leaders and focusing on gaming revenues—was profitable, there was more growth potential in a more balanced approach. Shifting the revenue center from exclusively gaming to also including rooms and particularly restaurants proved to be a lucrative decision. Guests got the chance to stay in more luxu- rious accommodations and sample a variety of dining experiences. Now,­major­casino­resorts­earn­most­of­their­money­from­things­other­than­gambling.­But­gambling­is­still­

central to their identity, and many high-value guests are primarily focused on gambling. Even if your job isn’t directly on the gaming floor, it’s important to remember that without gambling, the resort wouldn’t exist.

At the same time, many smaller resorts still get most of their revenues from gambling, so managers of other departments may face an uphill battle for respect—and resources. If this is the case, it will be important to remind everyone that your department can help increase revenues, both by earning money itself and by contrib- uting to an environment to which gamblers will flock.

At the end of the day, despite the sometimes obscure jargon and hard-to-figure-out gameplay, casino gam- bling is really no different from other hospitality operations: The idea is to help guests enjoy themselves. Guests pay for that privilege, and there are many other places where they can do so.

That’s an important fact to remember: Today there are a wealth of choices for casino customers; any over- sight or cut corner gives your customers an excuse to spend their money with your competition, who will gladly take it. A good casino manager, no matter what the department, will never lose sight of that fact, and will start and end each day with a single question: “What can I do to help my guests have a better time with us?” Anyone who can continue to come up with innovative but not budget-busting answers to this simple question will enjoy a long, successful career in the gaming and hospitality industry.

f O c U s O n c a s i n O r e s O r t s

Casino resorts and hospitality

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components of casino resorts the best example of the modern casino resort can be found on the Las Vegas Strip. these destination resorts are centered on casinos that have sev- eral types of games available:

• Slot machines

• table games, including twenty-one (blackjack), craps, roulette, baccarat, and carnival games such as three-card poker

• race and sports books, which accept wagers on horseracing and sport- ing events

• poker rooms, where players bet against each other and where the house only keeps a portion of each pot

• Live keno games

In most parts of the United States, slot machines produce the bulk of the revenue; on the Las Vegas Strip, due to high-stakes table play, it is closer to a 50/50 split. among table games, blackjack is most popular nationally, while on the Strip baccarat has recently become a favorite. In Macau casi- nos, nearly all revenue comes from high-stakes baccarat; slot machines are negligible.

Casino resorts also include the following components:

• Lodging (on average, 3,000 hotel rooms)

• Food and beverage outlets, ranging from fast food to gourmet eateries

• entertainment venues, including lounges but also purpose-built theaters for Cirque du Soleil and similar spectaculars

• retail shopping: several casinos have shopping esplanades or even attached malls (Caesars palace, the Venetian, planet hollywood)

• Convention facilities, ranging from a few small rooms to the 2.25-million- square-foot Sands expo and Convention Center connected to the Venetian and palazzo hotels

• Nightclubs, which are an increasingly lucrative part of the casino resort package

• pool and spa facilities, which may be branded as “dayclubs” with Dj enter- tainment and bottle service available in cabanas

Casino resorts in other jurisdictions may have some, but not all, of these fea- tures. For example, outside of Nevada, sports betting is currently illegal, so those casinos will have, at most, a race book. Most casinos outside of Las Vegas, with a few notable exceptions, have smaller hotel and entertainment components.

LearNING OBjeCtIVe 2 Describe the various components of modern casino hotels.

Gamblers playing poker at the Foxwoods Resort Casino in Mashantucket, Connecticut.

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evolution of Gambling and Casinos Gambling is among the oldest of human behaviors; archaeological evidence of gambling stretches back into prehistory, and purpose-built dice have been discovered at sites dating back to 7,000 years before the present. Gambling developed in nearly every ancient civilization of consequence and has been part of Western life since the days of ancient Greece.

Casino resorts, as they are currently operated, are much younger, dating back only to 1941, though the casino industry has its antecedents in several earlier developments, both legal and illegal. Legal public gambling in casi- nos dates back to 1638, when the Great Council of Venice awarded a fran- chise for a single legal casino in that city. though that casino was closed in 1774, other european states—mostly small, resource-poor jurisdictions— also permitted gambling, usually as part of a larger spa complex; spas were europe’s first true tourist destination, and gambling was considered an essential part of many european spa communities. By 1872, however, casino-style gambling had been banned in all european countries except in the tiny Mediterranean enclave of Monaco, whose Monte Carlo would grow wealthy on a decades-long monopoly.

In the United States, public gambling at cards and dice was legal inter- mittently during the nineteenth century in several states, including Louisiana, California, and Nevada, but by 1910 this kind of gambling—and playing at slot machines—had been outlawed everywhere in the United States. Both before and after the criminalization of all casino-style gambling, illegal gam- bling halls flourished in most of the major american cities.

Yet the tide soon turned toward legalization, at least in Nevada. When legislators authorized “wide open” commercial gambling there in 1931, the state was in the throes of the Great Depression. By allowing taverns and hotels to conduct games of chance, they hoped to increase tourism slightly. there was initially no state tax on gambling, and the economic impact was thought to be negligible. reno and Las Vegas soon developed thriving downtown gambling districts, with small clubs offering slot machines and table games. these were usually simple, storefront operations with no real amenities.

the real creation of the modern casino came in 1941, with the opening of the El Rancho Vegas, the first casino resort on what would become the Las Vegas Strip. as a spa-like, self-contained destination with fine dining, entertainment, and gambling, the el rancho Vegas appealed to casual tour- ists in a way that the smoky downtown gambling halls did not. Within a decade, a half-dozen other resorts joined the el rancho Vegas, and the Las Vegas Strip was becoming a force.

these casinos were superior to gambling halls because, with rooms and a full range of amenities, they offered a diverse set of options for travelers– gamblers and nongamblers alike—and because they allowed casinos to keep visitors near the casino. although in the short run the players might get lucky thanks to volatility, the longer they remained near the tables and slots, the more likely the casino was to end up with their money. Casinos in resorts therefore proved more profitable than stand-alone casinos, and they soon proliferated, particularly along the Strip.

LearNING OBjeCtIVe 3 Explain how casinos have been integrated into larger hospitality operations.

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500 Part iii tourism, recreation, attractions, Clubs, and Gaming

By the mid-1950s, the casino resorts of the Las Vegas Strip had changed Nevada. Now numbering more than a dozen, they became an integral part of the state’s economy. the legislature created a regulatory body, the Gaming Control Board, to oversee the industry, and the state began to rely on taxes extracted from casinos. With other development options failing to pan out, Nevada’s casinos became the only game in town. the industry grew, and with the entrance of publicly traded corporations in the 1970s, it became more integrated into the national economic mainstream. the bulk of casinos were in Las Vegas. though reno and Lake tahoe remained key attractions in the north of the state, they failed to reinvent themselves, as Las Vegas did, in the face of new competition. as a result, by 2000, Las Vegas Strip casinos accounted for well over half of all state gambling revenues.

Others soon became interested in the potential of casino resorts for eco- nomic revitalization. In 1976, New jersey voters legalized casino gambling in atlantic City by referendum, and two years later the first legal casino on the east Coast opened. Within a few years, 10 casinos were thriving in the city, helping to provide jobs, augment state revenues, and revitalize a formerly desolate resort town. Other states began exploring the possibilities of legal- ization, though they did so in far more restricted ways.

riverboat gaming, which permitted games of chance only on boats, debuted in Iowa and Illinois in 1991, and soon spread throughout the Midwest and South, with a particularly robust presence in Mississippi. States like Colorado and South Dakota turned to limited gambling, meaning casi- nos were confined to specific towns and maximum bet sizes were capped.

Over the past 24 years, the number of casinos in the United States has skyrocketed, as gambling halls on Indian reservations also became common.

Casino developer Stephen A. Wynn is widely credited with transforming Las Vegas from a gambling venue for adults into a world-renowned resort and convention destination. As chairman of the board, president, and chief executive­officer­of­Mirage­Resorts,­Mr.­Wynn­envisioned­and­built­The­Mirage,­Treasure­Island,­and­Bellagio— boldly conceived resorts that set progressively higher standards for quality, luxury, and entertainment. As chair- man of the board and chief executive officer of Wynn Resorts, Limited, Mr. Wynn developed Wynn Las Vegas, among the world’s preeminent luxury hotel resorts. Mr. Wynn also developed the Wynn Macau, a flagship Asian casino resort in Macau, where his company has been awarded a twenty-year concession by the Macau government.

Mr. Wynn began his career in 1967 as part owner, slot manager, and assistant credit manager of the Frontier Hotel­and­Casino.­Between­1968­and­1972,­he­also­owned­and­operated­a­wine­and­liquor­importing­company.­ But­it­was­an­entrepreneurial­real­estate­deal­with­Howard­Hughes­in­1971­that­produced­sufficient­profits­for­a­ major investment in the landmark Golden Nugget Las Vegas. Once known only as a “gambling joint,” he trans- formed­the­Golden­Nugget­into­a­Four-Diamond­resort­known­for­elegance­and­personal­service.­By­1973,­at­ age thirty-one, Mr. Wynn controlled the property and began developing the Golden Nugget as a complete resort

i n t r O d U c i n g s t e P H e n a . W y n n

Chairman of the Board and CeO, Wynn resorts

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hotel.­In­1978,­Mr.­Wynn­used­the­profits­from­the­Golden­Nugget­in­Las­Vegas­to­build­the­Golden­Nugget­ Atlantic City in Atlantic City, New Jersey. The resort became known for its elegant facilities, television ads featur- ing Frank Sinatra, and its impressive line-up of superstar entertainment. From its opening in 1979 until its sale in 1987,­the­Atlantic­City­property­dominated­the­market­in­revenues­and­profits­despite­its­smaller­size.­In­1987,­ Mr.­Wynn­sold­the­Golden­Nugget­Atlantic­City,­which­had­cost­$160­million,­to­Bally­Manufacturing­for­$450­ million­and­turned­his­creativity­to­developing­The­Mirage,­which­opened­in­1989.­With­its­imaginative­erupt- ing volcano and South Seas theme, the Mirage ignited a $12 billion building boom that catapulted Las Vegas to America’s number-one tourist destination and fastest-growing city. In 1991, Golden Nugget, Incorporated was renamed Mirage Resorts, Incorporated. Following­his­staggering­success­at­The­Mirage,­in­1993­Wynn­opened­Treasure­Island­Hotel­and­Casino,­a­

Four-Diamond property with a romantic tropical theme indoors and a full-size pirate ship used in the daily reen- actment­of­the­Battle­of­Buccaneer­Bay­outdoors.­He­raised­the­bar­again­in­1998,­when­he­opened­the­opulent­ $1.6­billion­Bellagio,­one­of­the­world’s­most­spectacular­hotels.­Visitors­line­the­street­in­front­of­the­hotel­ to­watch­the­“Fountains­of­Bellagio,”­shooting­water­fountains­choreographed­to­music­that­“dance”­on­the­ hotel’s­8.5-acre­manmade­lake.­He­then­brought­Mirage­Resorts’­standard­of­style­to­historic­Biloxi,­Mississippi,­ with­the­1,835-room­Beau­Rivage,­which­blends­Mediterranean­beauty­and­Southern­hospitality.

In June 2000, Mr. Wynn sold Mirage Resorts, Incorporated, to MGM Grand Inc. for $6.6 billion and purchased Las Vegas’s legendary Desert Inn. The Desert Inn was closed in August 2000 and on that site Mr. Wynn began developing Wynn Las Vegas, a 2,716-room luxury destination resort that has inspired yet another wave of devel- opment on the Strip.

For every property he develops, Wynn is known for assembling a dream team of highly motivated employees who keep guestrooms and public spaces impeccable. His properties are always exceptional, drawing a com- manding share of a demanding market and maintaining an exceptionally high occupancy. He is confident that both his projects and Las Vegas will continue to thrive. In­October­2006,­President­George­W.­Bush­appointed­Mr.­Wynn­to­serve­on­the­Board­of­Trustees­for­the­

world-renowned John F. Kennedy Center for the Performing Arts in Washington, D.C., and in November 2006 he was inducted into the American Gaming Association’s (AGA) Hall of Fame. Mr. Wynn is a member of the International Advisory Council for the Moran Eye Center and has received honorary doctoral degrees from the University of Pennsylvania, University of Nevada, Las Vegas, Siena College, The Culinary Institute of America, and Johnson & Wales. Stephen­A.­Wynn­was­born­in­New­Haven,­Connecticut­on­January­27,­1942.­He­graduated­with­a­Bachelor­

of Arts degree in English Literature from the University of Pennsylvania and. He and his ex-wife, Elaine Farrell Pascal, have two daughters, Kevyn and Gillian. The Wynn family has created a foundation that engages in wide- spread­philanthropic­efforts.­In­addition­to­supporting­eye­research­and­the­Foundation­for­Fighting­Blindness,­ the Wynns are known for their involvement in educational programs, specifically those dealing with disadvan- taged children who are at risk for dropping out of school.

Special thanks to Wynn Las Vegas

Indian gaming has its roots in the concept of tribal sovereignty, meaning that a tribe is not subject to the commercial restrictions of the state in which it is located. 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. the following year, the

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Indian Gaming regulatory act codified the rules under which Indian tribes could open Las Vegas–style casinos with slot machines and bank games: to do so, the tribes needed to sign a compact, or treaty, with the state in whose land the reservation sat. Frequently, these compacts specified fees that tribes would remit to state governments, often pegged to slot machine revenues, but states had no power to tax tribes; these payments were instead the result of negotiation. as of 2010, over 200 tribes in more than 30 states have some form of gambling operation, with combined annual revenues of more than $25 billion.

Casinos opened elsewhere, as well. Major cities like Detroit (in 1996) legalized a limited number of casinos within their borders, partly to spur tourism, partly to prevent the outflow of gambling dollars to neighboring jurisdictions. States like West Virginia and Delaware balked at authorizing new casino development but legalized slot machines at racetracks, busi- nesses that came to be known as racinos. the horseracing industry, which began to decline as track attendance fell in the 1970s, embraced the racino concept, and slot machines helped to stave off the demise of live racing in several states. In 2004, pennsylvania authorized slot machines at racetracks, destination resorts, and urban slot parlors, signaling a further expansion of slot gaming. Gambling has proven to be a growth industry, even in areas of the country that have experienced an overall economic decline.

In addition, american-run casino operators have found that asia is an even more lucrative market for casinos than the United States. Both Macau (concession awarded in 2002; first U.S.-owned casino opened in 2004) and Singapore (franchises awarded 2006; first U.S.-owned casino opened in 2010) have become casino powerhouses; since 2008, Macau’s casino industry has become a leading gaming center with increasing revenues. In 2012, the total revenue from gambling at commercial casinos in the United States was $37.3 billion, not the highest it has been over the past 10 years, but a number that has risen almost $10 billion over a 10-year period.12

▶ check your Knowledge

1. Define the following:

a. handle

b. Win

c. house edge

d. hold percentage

e. Volatility

2. Briefly describe why casino resorts are superior to stand-alone operations.

3. explain the growth in casino gaming since the 1970s.

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Working in a Casino resort Students of the industry who understand the multidisciplinary needs of the casino business find five initial career tracks in hotel operations, food and beverage operations, casino operations, retail operations, and entertainment operations.

Hotel Operations the career opportunities in gaming entertainment hotel operations are 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. the rooms and guest services departments offer the most opportunities for students of hospitality management. Because gaming entertainment properties have hotels that are much larger than nongaming hotels, department heads have a larger number of supervisors reporting to them and more responsibilities. reservations, front desk, house- keeping, valet parking, and guest services can all be very large departments with many employees.

food and beverage Operations Gaming entertainment has a foundation of 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. there are many career opportunities in restaurant management and the culinary arts. as with hotel operations, gaming entertainment prop- erties are typically very large and contain numerous food and beverage out- lets, including a number of restaurants, hotel room service, banquets and conventions, and retail outlets. Many establishments support gourmet, high- end signature restaurants. It is not unusual to find many more executive- level management positions in both front- and back-of-the-house food and beverage operations in gaming entertainment operations than in nongaming properties.

casino Operations Casino operations jobs fall into five functional areas. Gaming operations staff includes slot machine technicians (approximately one technician for 40 machines), table-game dealers (approximately four dealers for each table game), and table-game supervisors. Casino service staff includes secu- rity, purchasing, and maintenance and facilities engineers. Marketing staff includes public relations, market research, and advertising professionals. human resources staff includes employee relations, compensation, staffing, and training specialists. Finance and administration staff includes lawyers, accounts payable, audit, payroll, and income control specialists.13

LearNING OBjeCtIVe 4 Understand the basic principles of casino operations.

LearNING OBjeCtIVe 5 Discuss the different positions within the gaming industry.

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504 Part iii tourism, recreation, attractions, Clubs, and Gaming

the explosive growth of the gaming industry has increased the need for trained dealers skilled at working a variety of table games, including black- jack, craps, roulette, poker, and baccarat. through the use of textbooks and videotapes combined with hands-on training at a mock casino, future dealers learn the techniques and fine points of dealing at classes offered by both colleges and private schools.

retail Operations the increased emphasis on nongaming sources of revenues in gaming entertain- ment demands an expertise in all phases of retail operations, from store design and layout to product selection, merchandising, and sales control. Negotiating with concession subcontractors may also be a part of the overall retail activities. retail operations often support the overall theme of the property and can often be a major source of revenue; however, retail management careers are often an overlooked career path in the gaming entertainment industry.

entertainment Operations Because of the increased competition, gaming entertainment companies are creating bigger and better production shows to turn their properties into destination attractions. Some production shows have climbed in the million of dollars range and require professional entertainment staffs to produce and manage them. Gaming entertainment properties often present live entertain- ment of all sorts, with headline acts drawing huge audiences.

Casino management is hierarchical. at the top of the management struc- ture, a property president or general manager is in charge of day-to-day operations. Internal audit and surveillance departments report directly to the president or to the casino’s board of directors, bypassing the management hierarchy because of their role in maintaining controls over cash and proce- dures in the casino.

Below the casino president are the vice presidents (sometimes called directors) of different divisions of the casino: the casino itself; hotel; food and beverage; entertainment; marketing (for casino guests); sales (typically directed toward business travel and group sales); retail; various support functions, including finance, which include all casino cashiering operations; and security.

Within the casino, the vice president of gaming operations oversees a casino manager, who in turn oversees shift managers, one for each shift (day, swing, grave) of the casino’s 24-hour day. the shift manager, in return, has authority over the managers on duty of each of the casino’s departments, which may include slots, poker, keno, race and sports book, and casino hosts and marketing representatives, who work directly with high-value players, arranging comps and generally keeping them happy.

the slot department includes customer service representatives, who sign up players for the casino’s loyalty program and technicians who keep the slot machines operational. table games are organized into pits—clusters of about a dozen games—each run by a pit boss who reports directly to the

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casino shift manager. Below the pit boss, a floor person oversees between two and four games, while one or more dealers staff each table. the casino may have a high-limit room (also called a baccarat room) where high-stakes bets—as high as $50,000 per hand—are taken. the baccarat room frequently has its own manager who reports to the casino shift manager as well.

Other departments are managed similarly, with directors in charge of shift managers, who in turn oversee supervisors, who are then responsible for the performance of line employees.

the mirage effect Since the 1990s, casino resorts on the Las Vegas Strip have seen their non- gaming operations become much more central to their bottom line. In 1993, Strip casinos earned nearly 60 percent of their revenues from the casino itself; by 2008, that number had fallen below 40 percent.14 In the 1990s, operators enlarged and upgraded their room accommodations. Originally merely places for gamblers to seek respite from gambling, rooms became attractions in and of themselves, at least partially because convention travel- ers were willing to pay higher premiums for better and more comfortable accommodations. as a consequence, room accommodations have become a major revenue center.

the rooms aren’t the only part of the Strip that’s become a money gen- erator. this is because in addition to paying more for higher thread-count sheets and designer finishes, Strip visitors have eagerly opened their wallets for gourmet cuisine, delivered to them in celebrity chef eateries.

In 1992, Wolfgang puck opened Spago in the Forum Shops at Caesars. puck, who had become famous with his restaurant of the same name in Los angeles, brought a different sensibility to Las Vegas eating. Spago at Caesars proved successful, and a cohort of established chefs from paris, New York, and San Francisco followed puck to Las Vegas, leading to an explosion of both gourmet-dining opportunities for patrons and an increase in restaurant revenues for casinos.

the cost of entertainment has gone up, too, as headliner concerts and installed shows (Cirque du Soleil alone has eight) raised their production values and their prices. and with the growth of full-fledged shopping malls inside casinos, ranging from the Grand Canal Shoppes at the Venetian to the Miracle Mile Shops at planet hollywood, retail spending has climbed as well.

the ascendancy of nightclubs, ultra-lounges, and day clubs will further amplify the Mirage effect. the nightclub trade, which skews to a demo- graphic of 20- and 30-year-olds, represents a departure for Strip casinos, which traditionally considered 45-year-olds to be youngsters. here, bottle service is the way of the future. Under this model, select patrons bypass the line and receive reserved tables along the dance floor in exchange for purchasing several bottles of liquor, at charges of up to $500 per bottle. By opening clubs and lounges along these lines, operators meet two objectives: they capture an extremely lucrative business, and they effectively orient new patrons to the casino.

Figure 11–1 shows the revenues generated by various aspects of casino resort operations.

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506 Part iii tourism, recreation, attractions, Clubs, and Gaming

Sustainability in Gaming entertainment Sustainable initiatives are constantly gaining in popularity and prestige across the gaming industry. 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 estab- lish sustainable initiatives as the standard practice in the industry, including Caesars entertainment Corporation, which operates harrah’s, Caesars, and horseshoe brands, along with Delaware North and Dover Downs hotel & Casino.

Slots detail

Table games detail

(rake only; no direct win)

Game

Slot Machine

5 Cent

25 Cent

1 Dollar

Multi-Denom

Twenty-one

Baccarat

Craps

Roulette

3-Card Poker

Mini-Bacc

Let It Ride

Pai Gow

Pai Gow Poker

Keno

Bingo

Race Book

Sports Book

Poker tables

1 Cent

Table Games

Total Win

Game

Game

811,419

1,489,682

257,177

292,715

104,588

71,876

25,172

13,526

65,081

4,295

1,921

21,683

107,370

76,598

1,074,748

26,056

156,241

286,281

1,190,174

2,911,323

3,384,579

6,372,500

Win Amount

Win Amount

Win Amount

7,149,066

11,869,976

1,945,363

1,628,909

328,686

815,846

100,809

72,681

286,700

19,373

22,363

135,434

2,105,294

9,217,393

330,241

1,827,380

4,473,141

20,379,691

39,342,203

26,947,285

63,852,705

Handle

Handle

Handle

44,584

15,704

1,378

308

188

259

138

94

43

16

104

15

3

28

36

369

579

2,666

3,454

20,611

2,781

# of Units

# of Units

# of Units

11.35

12.55

13.22

17.97

31.82

8.81

24.97

18.61

22.70

22.17

8.59

16.01

5.10

11.66

7.89

8.55

6.40

5.84

7.40

12.56

9.98

Win %

Win %

Win %

figure 11–1 • The Average Strip Casino: Daily Revenues.

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One of the leading corporations in the gaming industry, Caesars entertainment Corporation has undertaken a sustainable initiative in sev- eral areas of operation, including energy, waste and water conservation, as well as climate control. Caesars executives have urged their management teams to embrace a sustainable approach to their daily practices, designated “CodeGreen.” this sustainable initiative involves the exchange of traditional incandescent lighting to a more resourceful energy conservative lighting, as well as ventilation controls in guest rooms, and throughout hotel and casino space in some of their larger properties. Select properties feature subsidized public transportation, habitat preservation fundraisers, recycling used oil, and composting waste products. Caesars plans to continue the future implementa- tion of sustainable practices in select properties throughout the country.15

recently, gaming entertainment companies have begun implementing sustainable initiatives into the initial construction and development of new properties. Delaware North, a well-known player in gaming industry opera- tions has recently built a new property in Daytona Beach, Florida, which complies with all the necessary standards required to be a Leadership in energy and environmental Design (LeeD) certified property. LeeD employs a four-tier rating system for buildings, based on the level of sustainability applied during property development, and maintained upon completion. the level of certification is based on the areas of “sustainable site develop- ment, water savings, energy efficiency, materials selection, and indoor envi- ronmental quality.” the Daytona property received silver certification, which is the second tier of the rating system, which followed in the footsteps of their previous sustainable site developed in West Memphis, arkansas, in 2006.16

hospitalityGreen LLC, an environmental consulting firm, has taken on the task of creating a model for “green” standards that will set precedents for which existing and future initiatives will be measured. the company directed a property-wide assessment of Dover Downs hotel & Casino’s sustainable business practices in order to collect the necessary data required to pro- vide an appropriate model. Dover Downs hotel & Casino is one of the most noteworthy gaming and entertainment resorts in the Mid-atlantic region. this aaa-rated Four Diamond property accepted the Silver tier Certification Green Concierge (GC) award from hospitalityGreen in 2013.17

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. the industry also has many opportunities for employees to learn new skills, which lead to growth and advancement in their careers.

employees in the gaming industry may receive many tangible benefits. Most careers include impressive benefits packages and offer many career advancement opportunities. Casinos are known to hire from within, which

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gives current employees a greater chance to move into better positions over time. Because the gaming industry’s positions are so varied, many educational and experiential backgrounds can be adapted to a specific casino’s policies.

a variety of careers are specific to the gaming industry including dealer, slot attendant, marketing director, and casino surveillance. More opportuni- ties are becoming available every day as new technology creates more open- ings. For example, systems such as Mindplay’s table games management system and IGt’s eZ pay technology and the introduction of advanced guest service technology will surely create new and exciting technical employment opportunities within the industry.

although it may appear as if many gaming jobs have very specific quali- fications, it is important not to focus too narrowly on one sector. Knowledge of all areas of the industry is essential for advancement. For example, today’s casinos now rely on entertainment as well as gaming to bring in patrons. therefore, an employee at such a casino also needs to have knowledge of the entertainment industry and of how casinos operate such events.

to get a job in the gaming industry, one must have very thorough knowl- edge of the legal, regulatory, and compliance issues related to daily opera- tions in the casino. Broken laws can result in lawsuits and cost the company large sums of money. this can be avoided if all employees have the proper background knowledge.

even though observing daily activity in a casino provides invaluable work experience, obtaining a college or graduate degree is also crucial. It is true that much of the necessary education can take place on the job; how- ever, applicants who have received an outside education, as well as attended gaming certification programs, have a much better chance of standing out from their competition.

a general manager in the gaming industry can earn a starting average annual salary of $49,000. a casino operator averages about $40,000, and marketing directors can average about $70,000. positions typically include full health ben- efits, yearly bonuses, and other compensation, depending on the casino.18

Courtesy of Nicholas Thomas, assistant professor and Director of the Depaul Center for research and education in hospitality Leadership

Currently­23­U.S.­states­allow­commercial­casinos,­yet­this­hasn’t­stopped­the­industry­from­embracing,­devel- oping, and implementing new technology for use in their operations. According to the American Gaming Association, the leading trade group representing the casino industry, “the commercial casino industry contin- ues to introduce new technologies that improve the overall customer experience and the efficiency of casino operations.”

t e c H n O L O g y s P O t L i g H t

technology Use in the Casino Industry

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Management careers can be very different, depending on your focus. If your interest is gaming management, it is important that you take courses in finance, law, human resources, management, and gambling. You also need to work in the gaming industry while in college, so that you can open doors for yourself through networking. Casinos still believe in promoting from within, and so you will have to work your way up the corporate ladder.

The past few decades have seen some critical advances in technology within commercial casinos. Early on, technological advances seemed minor to the average casino player, but they drastically improved operations. These advancements included the introduction of the bill validator on slot machines, a feature that enabled slot machines to accept paper currency in addition to coins, while simultaneously determining the value of the currency and ensuring it wasn’t counterfeit.

More recently, the development of ticket-in/ticket-out (TITO) technology allowed commercial casinos to oper- ate in coinless environments. While patrons can still put paper bills into the slot machines, the winnings are not paid out in actual currency. When a slot patron decides to no longer play a particular machine, the player will cash out and receive a printed ticket with a barcode indicating the amount of winnings. This ticket can then be redeemed at the casino cage for the cash value or it can immediately be placed into another TITO machine. Other modern day advancements focus on the use of radio frequency identification (RFID) chips placed inside table games’ chips to prevent theft and counterfeiting. The majority of gaming operations also encourage players to sign up and use their loyalty cards loaded with account balances. Most facilities prefer that gamers use cards as it eliminates the need to carry cash and change, reduces the need for change personnel on the casino floor, and makes it easier to track player participation and preferences for rewards and marketing purposes. While most players have adopted the card technology, others still like to hear the sound of coins flowing through the chutes on a winning pull of a slot machine or video terminal.

There are traditionally two main computer systems in place to run casino operations. These are in addition to the systems used to run traditional functions, such as human resources and finance. The primary system used is the slot accounting system. The catalyst for such a system stems from the individual state regulatory body requirements for such technology to ensure that casino operators are conducting their business in an appropri- ate manner and are able to account for all slot transactions. Requirements of these systems include accounting, player tracking, and specific information on machine performance. Nevada was one of the first states to man- date the use of such systems; other states where casinos operate soon followed suit.

The second system is the casino management system, which allows operators to track table game play, man- age casino cage functions, and process casino patron data (dollar amount played, demographic data, and so on). These systems interact with each other in real time and allow casino operators to get a holistic perspective of their casino operations.

According to Trent Dang, gaming industry executive, “there has been a lot of advancement in casino tech- nology over the last few decades, but there is still room to grow.” Dang notes that while casino management systems and slot accounting systems may work well together, there are limitations. Since these systems are predominately accounting and property management systems, they frequently lack the functionality needed by casino operators to facilitate strategic decision-making, such as in the areas of database marketing. Due to these limitations, casino operators are spending money to implement add-on systems for casino data warehousing, customer­relationship­management­(CRM),­campaign­management,­business­intelligence­(BI),­and­data­visual- ization products so that operators can maximize the use of the data stored in their casino management and slot accounting systems.

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You also need to understand that because of the continuous operation of a casino, your work schedule will vary. It is not uncommon to work several straight 12-hour days, but the rewards for dedication and hard work can be very worthwhile: Casinos have many opportunities for advancement. Figure 11–2 shows an example of a career path in the gaming industry.

to see more of the types of jobs that are available in the gaming enter- tainment industry, go to www.casinocareers.com, where you can look up potential employers, available jobs, and areas of employment.

Casino Manager

Assistant Section Manager

Gain Experience at All Tables

Section Supervisor

Floor Manager

Game Manager

Croupier

figure 11–2 • A Career Path in the Gaming Industry.

Harrah’s­Entertainment­was­founded­in­1937­by­William­F.­Harrah­as­a­small­bingo­parlor­ in Reno, Nevada. The name changed to Caesars Entertainment Corporation in 2010. Today, Caesars is one of the largest gaming companies in the world, with a portfolio of nearly 40 casinos,­which­it­owns­or­manages­in­three­continents­under­the­Harrah’s,­Caesars,­and­ Horseshoe brand names.1 Caesars has riverboat or dockside casinos, golf courses, and combi- nation racetrack and casinos in several states, including Arizona, California, Illinois, Indiana, Iowa, Nevada, Louisiana, New Jersey, Mississippi, North Carolina, Ohio, Pennsylvania, and Missouri. Caesars grew by new property development, expansions, and acquisitions, and it now­employs­some­68,000­people,­with­a­vision­“to­ensure­Caesars­is­a­respected­leader­in­ our industry and a trusted corporate citizen in the communities” where they operate.2 Caesars is focused on building loyalty and value with its customers through a unique combination of guest service, excellent products, unsurpassed distribution, operational excellence, and tech-

nology leadership. The marketing strategy is designed to appeal to those who are avid players, especially those who play in more than one market.

1Caesars Entertainment, About Caesars, http://caesarscorporate.com/about-caesars/

2Caesars Corporate Citizenship Report, http://cetmeetings.com/corporate/wp-content/uploads/2014/10/CCR_Combined.04.pdf

c O r P O r a t e P r O f i L e

Caesars entertainment Corporation

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trends in the Gaming entertainment Industry Courtesy of Dr. Greg Dunn, Senior Lecturer & Managing Director, University of Florida, eric Friedheim tourism Institute

• Loyalty Player Smartcards. More casinos want players to use a ticket- voucher system, or a smartcard. Some of these systems are already in place for slot machines and video poker. a guest’s winnings are not given in coins or tokens, but in a ticket that can then be inserted and played in other machines or redeemed for cash. this technology has become a way for casinos to reduce their cash inventories. the majority of gaming operations encourage all players to sign up and use their loyalty cards. Casinos can then track player participation and preferences for rewards and marketing purposes.

• Universal Gaming Machines. Major slot machine and video terminal manufacturers continue to develop more universally configurable game machines that can download several types of gaming software or play from a cloud configuration. Multiple types and varieties of games may be available, and players can choose from an assortment of gaming options to match their preferences. the universal gaming machines allow for more games to be available on a gaming floor, provides more options for players, and eliminates the need to constantly bring in new machines and get rid of the less popular machines since operators can just swap out game software when warranted.

• New Generation of Gamblers. Millennial and Generation X gamblers are much different than Baby Boomer and mature gamblers. the latest generations are known to seek higher levels of entertainment, are technologically savvy, less casino-brand loyal, and enjoy more complex games to enhance their entertainment value. Social media is also helping to shape the gaming landscape and guest experience. Millennials and Gen Xers have grown up with innovative gaming technology through connectivity—Facebook, twitter, and Instagram allow for gaming experiences that can be personalized as well as socially interactive.

• Candid Sky Camera Technology. the “eye in the sky” is already in place and programmed to identify cheaters. however, as digital facial recognition technology becomes more and more advanced and sophis- ticated, these eye-in-the-sky cameras will be able to recognize, specifi- cally, everyone from criminals to high rollers to regular gamblers. With the need for increased security, this opens doors for another pool of marketing data for the casino to analyze.

• Emerging Markets. as Las Vegas continues to develop into a hyper- entertainment destination and atlantic City struggles to redefine itself from a gaming-only destination, casino operators are heavily pursuing emerging markets such as asia. the potential growth stems from changes in consumer demographics, disposable income, and relaxation of gov- ernment regulation on travel and in the gaming industry. even though the Chinese government has been discouraging visitation of casinos and encouraging the Macau region to build new forms of entertainment for

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tourism, Macau still remains one of the most popular gambling destina- tions in the world. japan is also getting closer to legalizing casinos.

• More Than Just Gambling. Gaming entertainment is depending less on casino revenue and more on room, food and beverage, retail, and enter- tainment revenues for its profitability and growth. the gaming enter- tainment industry and lodging industry are converging as hotel room inventory is rapidly expanding in gaming entertainment properties.

Your convention sales department receives a call from a trip director for a large convention group. The group will use many function rooms for meetings during the day and will generate a substantial amount of convention services revenue. Likewise, the group’s food and beverage needs are quite elaborate, so this will be good for the food and beverage department budget. However, the group is very sensitive concerning room price and is willing to negotiate the time of week for its three-night stay.

discussion Question 1. What are the considerations that a gaming entertainment property must take into ac-

count when determining room rates for convention groups?

c a s e s t U d y

Negotiating with Convention Groups

A frequent guest of the casino makes a last-minute decision to travel to your property for a weekend stay. The guest enjoys gambling as a leisure activity and is one of the casino’s better customers. When he arrives at the casino, he is usually met by a casino host and is treated as a VIP due to his level of wagering at the blackjack tables. This guest is worth approximately $500,000 in casino win per year to the hotel. Due to his last-minute arrangements, however, the guest cannot notify a casino host that he is on his way to the hotel. Upon arriving, he finds a very busy registration desk. He must wait in line for 20 minutes, and when he tries to check in, he is told that the hotel is full. The front-desk clerk acts impatient when the guest says that he is a frequent customer. In a fit of frustration, the would-be guest leaves the hotel and makes a mental note that all casinos have similar odds at the blackjack table and that maybe another property will give him the respect he deserves.

discussion Question 1. What systems or procedures could you institute to make sure this type of oversight does

not happen in your property?

c a s e s t U d y

VIp

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Summary

1. Gambling dates back to as far as 2300 b.c.e. 2. the first public gambling house was legal-

ized for the first time in 1626 in Venice, Italy.

3. the gaming entertainment business in the United States has its roots in Las Vegas.

4. the Casino Control act legalized gambling in New jersey in 1976. this act led to the creation of the Casino Control Commission. the notion of gaming entertainment grew as states started to legalize other forms of non-land-based casino gambling.

5. In 1987, the Supreme Court decided that once a state had legalized any form of gam- bling, the Native americans in that state had the right to offer and self-regulate the same games without government restrictions. Following that decision, Congress then passed the Indian Gaming regulatory act of 1988 (IGra) in order to balance the rights of sovereign tribal nations with the rights of the federal and state governments.

6. there are three different classes of Native american gaming activities: Class I (games played solely for prizes of minimum value or traditional Native american activities), Class II (bingo or games similar to bingo), and Class III (all forms of gambling that do not fall under Class I or Class II).

7. Native american gaming has become one of the fastest growing sectors of gaming in the United States.

8. Many casino resort presidents and key executives have come up through the lodging or food and beverage side of operations.

9. Casino resorts include slots, table games, keno, race and sports books, and poker rooms as well as lodging, food and bever- age outlets, entertainment venues, retail

shopping, convention facilities, nightclubs, and pool and spa facilities.

10. the real creation of the modern resort casino came in 1941 with the opening of the el rancho Vegas in Las Vegas.

11. the Gaming Control Board was created in the 1950s to regulate gambling as its popu- larity grew in Nevada. Different forms of casino gambling have since then opened in different states throughout the United States.

12. the casino industry is a growing interna- tional force that includes both gambling and more traditional hospitality elements. Large casino companies have started to expand their reach into the asian market.

13. to manage a casino resort, it is necessary to understand the relationship between the casino and other departments in the operation, as well as ways that casinos are different from other businesses.

14. Casino gambling is strictly regulated by state governments, and the integrity devel- oped over time by these regulations is necessary for the survival of the industry.

15. Nongaming revenue is increasing as a percentage of total casino resort revenue, and nongaming parts of casino resorts are gaining in prominence.

16. as Las Vegas continues to develop into a hyper-entertainment destination and atlantic City struggles to redefine itself from a gaming only destination, casino operators are heavily pursuing emerging markets such as asia. the potential growth stems from changes in consumer demo- graphics, disposable income, and relaxation of government regulation on travel and in the gaming industry.

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514 Part iii tourism, recreation, attractions, Clubs, and Gaming

Key Words and Concepts

baccarat blackjack casino resort comps craps el rancho Vegas

gambling handle hold percentage house edge Las Vegas Strip loyalty programs

mercantile poker roulette social win

review Questions

1. Describe the origins of the gaming industry.

2. What defines a gaming entertainment business?

3. explain the attraction of gaming entertain- ment as a tourist.

4. Why is it necessary for strict regulations to be in force on the casino floor?

5. how are hotel operations in a gaming entertainment business different from hotel operations in a nongaming environment?

Internet exercises

1. Organization: Gaming Inspection and Coordination Bureau Summary: the Gaming Inspection and Coordination Bureau oversees and regulates gaming activities in Macau, a powerhouse for the gaming industry.

(a) What are the responsibilities of the Gaming Inspection and Coordination Bureau?

(b) What statistical information is com- piled by the Bureau that allows Macau to track its monetary gains from the gaming industry?

2. Choose a casino in Macau that you would be interested in managing. Compare this casino to three other casinos, one from Macau and two from other countries, and describe what sets it apart.

apply Your Knowledge

1. Describe the skills needed to work in the marketing team of a casino.

2. Describe how nongaming activities add value to a gaming establishment.

3. explain five environmental practices the gaming industry has implemented in order to become more sustainable.

Suggested activity

1. research careers in the gaming entertain- ment industry. are there more opportuni-

ties than you realized? What careers in the industry interest you the most?

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endnotes 1. history extra, “how did the romans celebrate

‘Christmas’?” http://www.historyextra.com. Search for “Saturnalia” (accessed on May 1, 2015).

2. One for Gambling, Complete History of Gaming: Casinos in Europe, www.14g.com. Click on Casino, and then click on Casinos in europe (accessed on May 1, 2015).

3. Wikipedia, Bugsy Siegel, http://en.wikipedia.org. Search for “Bugsy Siegel” (accessed on May 1, 2015).

4. Wikipedia, Atlantic City, New Jersey, http:// en.wikipedia.org. Search for “atlantic City” (accessed on May 1, 2015).

5. Ibid. 6. julia Glick, “Cabazon Indian Leader Who pursued

Gaming rights Dies,” the press-enterprise, january 4, 2007 and Gaming tribe report National Indian Gaming Commission, july 6, 2011.

7. National Indian Gaming Commission, http://www .nigc.gov. Click on Laws & regulations, and then click on Indian Gaming regulatory act (accessed on May 1, 2015).

8. Ibid. 9. Op.cit.

10. Library Index, “Casinos: Native american tribal Casinos - the Story of Native american Casinos in two States,” http://www.libraryindex.com. Search for “Connecticut tribal Casinos” (accessed on january 21, 2014).

11. Insider Viewpoint of Las Vegas, 20 Largest Hotels in the World, http://www.insidervlv.com. Click on

hotels – 20 Largest in World (accessed November 18, 2011).

12. “Casino Industry & Revenue Statistics,” 2014 Statistic Brain Research Institute, publishing as Statistic Brain, research Date: april 8, 2015, http://www.statisticbrain.com/casino-market-and- revenue-statistics/ (accessed on april 10, 2015).

13. Wikipedia, The Venetian Macao, http:// en.wikipedia.org. Search for “Venetian Macao” (accessed November 18, 2011).

14. american Gaming association, “Facts at Your Fingertips: U.S. Commercial Casino Industry,” http://www.americangaming.org/. Go to Industry resource, click on research, and then click on Facts at Your Fingertips (accessed june 3, 2015).

15. Caesars entertainment, Caesars Entertainment Corporation, http://caesarscorporate.com (accessed November 18, 2014).

16. Delaware North, Southland Park Gaming & Racing, http://www.delawarenorth.com/. Search for “Southland park” (accessed on November 16, 2014).

17. Dover Downs hotel & Casino, “press release: Dover Downs hotel & Casino awarded Green Concierge Silver tier Certification,” http://www .doverdowns.com. Click on press releases to view this article (accessed on November 16, 2014).

18. Simplyhired, http://www.simplyhired.com. Go to Salary estimator and search for jobs (accessed june 3, 2015).

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