Casino Journal — June2010
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The ‘Carnivalized’ Casino
The year 1990 suffices as the starting point for the carnival game revolution in the modern casino.The only significant carnival games at the time were Caribbean Stud and Pai Gow poker. More importantly, that’s when the state of Nevada began keeping statistics about table game distribution in their casinos.
The easiest way to define traditional versus carnival is to just give a list. For the purpose of this discussion, the traditional table games are baccarat, blackjack, craps, Pai Gow tiles, roulette and the Big 6 wheel. Games like Sic Bo,War, Red Dog and Chuck a Luck are open to debate as to their classification, but I am considering them to be carnival games. I will not include bingo, keno, poker, slots, sports or video poker in this discussion: they are not considered table games in any sense.
When speaking of trends it is obvious that this question is geocentric. What’s going on in Macau is different than what is going on in Canada, which is different than Atlantic City, which is different than Las Vegas. Each market is evolving on its own and doing its own thing. The local gaming culture places different demands on the game mix, layout and features. Simply put, it is not possible to succinctly summarize the world table game market. What I can do is to present some research about some markets and state reasonable conclusions that may be more widely applicable. Ultimately, the value of this information is in its synthesis by the reader to the challenges of his specific market.
One trend appears clear in North America: the “carnivalization” of the casino. Just as slot machines have filtered into every nostalgic niche, so too has the array of carnival games expanded on the casino floor. From the early 1990s, when there may have been one or two carnival games in some casinos, to 2000, when Three Card Poker burst onto the scene, to 2003, when Chris Moneymaker won theWorld Series of Poker, to 2006, when the clone and side bet expansion was in full bloom, to 2009, when the transformation has reached some kind of maturity, the push towards more carnival games has been tireless.
This trend is not worldwide; newer markets are finding their way. For example, in Macau, records from 2005 through 2008 indicate that gaming revenue has dramatically increased every year for roulette, blackjack and baccarat. Roulette is up more than 400 percent. Baccarat is up more than 200 percent. Blackjack is up more than 100 percent. Craps and CasinoWar are new to the market and taking off quickly. On the other hand,Three Card Poker revenue is down more than 50 percent from its high in 2005.The number of table games in Macau increased from approximately 1,400 in 2005 to more than 4,000 in 2009. According to one executive from an internationally known casino corporation, Macau is about a decade behind the United States market in terms of the acceptance and saturation of carnival games.Traditional table games appear more than adequate for the Asian market.
The seismic shift toward a carnivalized casino in North America has created a tsunami. As late as 2006 some casinos resisted the transition, holding fast to the traditional games. In June 2006 the Luxor in Las Vegas had three carnival games. In September 2009 it had 10, including five different poker clones. Today the major Strip casino with the least number of different carnival games is the Tropicana, with seven. Encore, one of the most upscale casinos on the Strip, has 12. Many of the largest casinos have 14 or more different carnival games and side bets.
To begin with, we give a base line: the total number of table games in Nevada casinos (Figure 1).There is a common understanding that the table games area is being overrun by slots. Slots have better returns, don’t require staffing, don’t requiring constant surveillance and are often more popular than if the same real estate was devoted to a table game. It turns out that there is real evidence for the shrinking pit, at least in Nevada.
Given the ever growing number of Nevada casinos, the expectation is that the total number of table games should have grown significantly in the period 1990 to 2009. However, the data presented in Figure 1 confirms the “in the trenches” analysis. Even with the addition of several mega casinos, the overall number of table games has declined since its peak of 5,712 in 2000 to 5,501 in 2009.
Figure 2 shows the explosive growth of carnival games, not including side bets, in Nevada. The number of tables hosting a carnival game in Nevada went from 187 in 1990 to 955 in 2009, after hitting a high of 1,008 games in 2007. Toward the end of 2009 the number of side bets in the Las Vegas area on blackjack alone was 411 and growing daily.
Compare the graph for Carnival Games to the same for traditional games. There you will see the slow decline of traditional games, even in the face of the widespread expansion of casinos and the huge increase in casino visitors. Many of the new table game players and some of the old are moving toward the carnival games.
Another view of this trend is seen in the percentage of total Nevada table games that are carnival games. Figure 3 shows this percentage, not including side bets. The boom through 1995 was due to Caribbean Stud. The boom from 2002 to 2005 largely owes to Three Card Poker. Overall, the average number of table games in each Nevada casino is decreasing as the percentage of them that are carnival games steadily increases.
Although craps, roulette and blackjack are persisting in the market, the new generation of carnival games show distinct life cycle features. Unfortunately, the sample size is simply too small and the time frame too short to be able to draw widespread conclusions. Different geographical areas, both domestically and internationally, have their own life cycle characteristics.
We chart some sample games over their life cycles in the Nevada market, based on the available data, from 1990 through 2009. To get a better idea of the story these numbers are telling, one could take the “number of tables per tourist casino hour”. Tourism increased dramatically during the period. The Las Vegas Strip exploded with growth in the 1990s. The housing boom from 2002 to 2006 increased discretionary income, leading to unprecedented growth in gambling revenues during the period. These factors should be normalized out in any academically correct consideration of life cycle.
Presented in Figure 4 are the total visitor statistics for Las Vegas from 1990 through 2009.A table game that performed “at market” would have a graph similar to that given in Figure 5.
Another statistic that can be used to normalize the number of expected table games is the total gaming revenue for the state of Nevada. Figure 5 gives these values from 1994 through 2009, with the vertical axes in thousands (thus the top number is $14 billion, not $14 million).This data is not inflation adjusted but still serves as a growth curve similar to the number of visitors given in Figure 4.This graph again suggests an “at market” performance for a table game.
The graph for blackjack appears in Figure 6.The growth of blackjack up to 1999 corresponds to the LasVegas Strip megaresort building boom and a dearth of viable alternative carnival games.The steady decline since indicates the increasing penetration of the carnival game segment into the traditional games market, as well as economic factors.This decline is in the face of a growing number of visitors as well as myriad side bets designed to prop up the blackjack market.Without these side bets the decline might be considerably more significant. Looking forward, it is clear that blackjack will continue its decline in popularity.
If blackjack shows this pattern then the same pattern should hold for craps.As can be seen in Figure 7, this is the case. Note that craps only has few a few popular side bets. Only the “Fire Bet” is popular in LasVegas, as of this writing.There has been no attempt to prop up the craps market, and its continued decline seems inevitable.
Combined, blackjack and craps comprise the bulk of the table games in Nevada casinos. It is no wonder that the overall growth and decline of table games as given in Figure 1 is a direct reflection of the curves in figures 6 and 7.
The boom/bust pattern should also hold for roulette. Surprisingly, it does not. Figure 7 shows that roulette grew much faster than craps or blackjack through 1999, and has continued to grow, although at a slower pace.The growth of roulette follows the same growth rate as the number of overall tourist visitors to LasVegas.This demonstrates that there is a fixed fraction of players who want to play roulette and that this fraction is not changing over time. Roulette has no side bets; they are not necessary. Figure 8 also illustrates why roulette clone games are not needed: the main game is healthy and growing.
There are two other games besides roulette that have shown steady growth.Their success can be attributed to the extensive marketing that many Nevada casinos have done in Asia.These games are baccarat and mini baccarat.Their total is combined in Figure 7. The conclusion drawn from Figure 6 and Figure 7 is that with the notable exception of roulette and baccarat traditional table games are either in active decline or are flat with respect to the visitor count.
For carnival games, see Figure 8. Pai Gow poker showed a steady increase up through 2000.This growth was an indicator of the hunger for non traditional table games as well as a reflection of the increasing visitor count. Growth has been flat or in slow decline since in spite of a wealth of new side bets.These side bets can be viewed as necessary to keep Pai Gow poker performing at a flat level.
There are two other games that have been around since the beginning.Those are Caribbean Stud and Let it Ride. Both of these games peaked around 1995 and both have been in steady decline since.Where once it was a game with market dominance alongside Pai Gow poker, the popularity of Caribbean Stud has declined precipitously.The game has an extremely high house edge (more than 5 percent) and a progressive jackpot with even a higher house edge.The player should play only slightly more than 50 percent of the hands using perfect strategy.This makes the game boring for the player who looks at junk hand after junk hand. Players who play too many hands lose at even a faster rate. Caribbean Stud has simply burned too many people. If this game were introduced today it would probably not last through its trial. The fate of Caribbean Stud appears sealed in the Nevada market.
The easiest way to define traditional versus carnival is to just give a list. For the purpose of this discussion, the traditional table games are baccarat, blackjack, craps, Pai Gow tiles, roulette and the Big 6 wheel. Games like Sic Bo,War, Red Dog and Chuck a Luck are open to debate as to their classification, but I am considering them to be carnival games. I will not include bingo, keno, poker, slots, sports or video poker in this discussion: they are not considered table games in any sense.
When speaking of trends it is obvious that this question is geocentric. What’s going on in Macau is different than what is going on in Canada, which is different than Atlantic City, which is different than Las Vegas. Each market is evolving on its own and doing its own thing. The local gaming culture places different demands on the game mix, layout and features. Simply put, it is not possible to succinctly summarize the world table game market. What I can do is to present some research about some markets and state reasonable conclusions that may be more widely applicable. Ultimately, the value of this information is in its synthesis by the reader to the challenges of his specific market.
One trend appears clear in North America: the “carnivalization” of the casino. Just as slot machines have filtered into every nostalgic niche, so too has the array of carnival games expanded on the casino floor. From the early 1990s, when there may have been one or two carnival games in some casinos, to 2000, when Three Card Poker burst onto the scene, to 2003, when Chris Moneymaker won theWorld Series of Poker, to 2006, when the clone and side bet expansion was in full bloom, to 2009, when the transformation has reached some kind of maturity, the push towards more carnival games has been tireless.
This trend is not worldwide; newer markets are finding their way. For example, in Macau, records from 2005 through 2008 indicate that gaming revenue has dramatically increased every year for roulette, blackjack and baccarat. Roulette is up more than 400 percent. Baccarat is up more than 200 percent. Blackjack is up more than 100 percent. Craps and CasinoWar are new to the market and taking off quickly. On the other hand,Three Card Poker revenue is down more than 50 percent from its high in 2005.The number of table games in Macau increased from approximately 1,400 in 2005 to more than 4,000 in 2009. According to one executive from an internationally known casino corporation, Macau is about a decade behind the United States market in terms of the acceptance and saturation of carnival games.Traditional table games appear more than adequate for the Asian market.
The seismic shift toward a carnivalized casino in North America has created a tsunami. As late as 2006 some casinos resisted the transition, holding fast to the traditional games. In June 2006 the Luxor in Las Vegas had three carnival games. In September 2009 it had 10, including five different poker clones. Today the major Strip casino with the least number of different carnival games is the Tropicana, with seven. Encore, one of the most upscale casinos on the Strip, has 12. Many of the largest casinos have 14 or more different carnival games and side bets.
To begin with, we give a base line: the total number of table games in Nevada casinos (Figure 1).There is a common understanding that the table games area is being overrun by slots. Slots have better returns, don’t require staffing, don’t requiring constant surveillance and are often more popular than if the same real estate was devoted to a table game. It turns out that there is real evidence for the shrinking pit, at least in Nevada.
Given the ever growing number of Nevada casinos, the expectation is that the total number of table games should have grown significantly in the period 1990 to 2009. However, the data presented in Figure 1 confirms the “in the trenches” analysis. Even with the addition of several mega casinos, the overall number of table games has declined since its peak of 5,712 in 2000 to 5,501 in 2009.
Figure 2 shows the explosive growth of carnival games, not including side bets, in Nevada. The number of tables hosting a carnival game in Nevada went from 187 in 1990 to 955 in 2009, after hitting a high of 1,008 games in 2007. Toward the end of 2009 the number of side bets in the Las Vegas area on blackjack alone was 411 and growing daily.
Compare the graph for Carnival Games to the same for traditional games. There you will see the slow decline of traditional games, even in the face of the widespread expansion of casinos and the huge increase in casino visitors. Many of the new table game players and some of the old are moving toward the carnival games.
Another view of this trend is seen in the percentage of total Nevada table games that are carnival games. Figure 3 shows this percentage, not including side bets. The boom through 1995 was due to Caribbean Stud. The boom from 2002 to 2005 largely owes to Three Card Poker. Overall, the average number of table games in each Nevada casino is decreasing as the percentage of them that are carnival games steadily increases.
Although craps, roulette and blackjack are persisting in the market, the new generation of carnival games show distinct life cycle features. Unfortunately, the sample size is simply too small and the time frame too short to be able to draw widespread conclusions. Different geographical areas, both domestically and internationally, have their own life cycle characteristics.
We chart some sample games over their life cycles in the Nevada market, based on the available data, from 1990 through 2009. To get a better idea of the story these numbers are telling, one could take the “number of tables per tourist casino hour”. Tourism increased dramatically during the period. The Las Vegas Strip exploded with growth in the 1990s. The housing boom from 2002 to 2006 increased discretionary income, leading to unprecedented growth in gambling revenues during the period. These factors should be normalized out in any academically correct consideration of life cycle.
Presented in Figure 4 are the total visitor statistics for Las Vegas from 1990 through 2009.A table game that performed “at market” would have a graph similar to that given in Figure 5.
Another statistic that can be used to normalize the number of expected table games is the total gaming revenue for the state of Nevada. Figure 5 gives these values from 1994 through 2009, with the vertical axes in thousands (thus the top number is $14 billion, not $14 million).This data is not inflation adjusted but still serves as a growth curve similar to the number of visitors given in Figure 4.This graph again suggests an “at market” performance for a table game.
The graph for blackjack appears in Figure 6.The growth of blackjack up to 1999 corresponds to the LasVegas Strip megaresort building boom and a dearth of viable alternative carnival games.The steady decline since indicates the increasing penetration of the carnival game segment into the traditional games market, as well as economic factors.This decline is in the face of a growing number of visitors as well as myriad side bets designed to prop up the blackjack market.Without these side bets the decline might be considerably more significant. Looking forward, it is clear that blackjack will continue its decline in popularity.
If blackjack shows this pattern then the same pattern should hold for craps.As can be seen in Figure 7, this is the case. Note that craps only has few a few popular side bets. Only the “Fire Bet” is popular in LasVegas, as of this writing.There has been no attempt to prop up the craps market, and its continued decline seems inevitable.
Combined, blackjack and craps comprise the bulk of the table games in Nevada casinos. It is no wonder that the overall growth and decline of table games as given in Figure 1 is a direct reflection of the curves in figures 6 and 7.
The boom/bust pattern should also hold for roulette. Surprisingly, it does not. Figure 7 shows that roulette grew much faster than craps or blackjack through 1999, and has continued to grow, although at a slower pace.The growth of roulette follows the same growth rate as the number of overall tourist visitors to LasVegas.This demonstrates that there is a fixed fraction of players who want to play roulette and that this fraction is not changing over time. Roulette has no side bets; they are not necessary. Figure 8 also illustrates why roulette clone games are not needed: the main game is healthy and growing.
There are two other games besides roulette that have shown steady growth.Their success can be attributed to the extensive marketing that many Nevada casinos have done in Asia.These games are baccarat and mini baccarat.Their total is combined in Figure 7. The conclusion drawn from Figure 6 and Figure 7 is that with the notable exception of roulette and baccarat traditional table games are either in active decline or are flat with respect to the visitor count.
For carnival games, see Figure 8. Pai Gow poker showed a steady increase up through 2000.This growth was an indicator of the hunger for non traditional table games as well as a reflection of the increasing visitor count. Growth has been flat or in slow decline since in spite of a wealth of new side bets.These side bets can be viewed as necessary to keep Pai Gow poker performing at a flat level.
There are two other games that have been around since the beginning.Those are Caribbean Stud and Let it Ride. Both of these games peaked around 1995 and both have been in steady decline since.Where once it was a game with market dominance alongside Pai Gow poker, the popularity of Caribbean Stud has declined precipitously.The game has an extremely high house edge (more than 5 percent) and a progressive jackpot with even a higher house edge.The player should play only slightly more than 50 percent of the hands using perfect strategy.This makes the game boring for the player who looks at junk hand after junk hand. Players who play too many hands lose at even a faster rate. Caribbean Stud has simply burned too many people. If this game were introduced today it would probably not last through its trial. The fate of Caribbean Stud appears sealed in the Nevada market.
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