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ECONOMIC TRENDS IN NEVADA. Lecture #3 Bill Eadington Doyle Andrews September 4, 2012. ADDITIONAL INFORMATION FROM GAMING REVENUE DATA. Tables: WIN/DROP; Slots: WIN/HANDLE PRICE = WIN/HANDLE Pricing strategy: Las Vegas Strip: High Pricing strategy: Reno: Low
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ECONOMIC TRENDS IN NEVADA Lecture #3 Bill Eadington Doyle Andrews September 4, 2012
ADDITIONAL INFORMATION FROM GAMING REVENUE DATA • Tables: WIN/DROP; Slots: WIN/HANDLE • PRICE = WIN/HANDLE • Pricing strategy: Las Vegas Strip: High • Pricing strategy: Reno: Low • Important metrics: Net Income (Loss); Win per Unit per Day
CATEGORIES OF CASINOS • Integrated Resort Destination Casinos • Limited Offering Destination Casinos; Remote Casinos • Commercial Casinos v. Tribal Casinos • Urban Casinos • Locals’ Casinos • Race Track Casinos (Racinos) • Convenience Gaming
FINANCIAL PERFORMANCE OF MARINA BAY SANDS: Q3, 2011 • Marina Bay Sands: • Revenues: • Casino: $651.9 m • Net Revenues: $792.4 m • EBITDA: $413.9 m • EBITDA margin: 52.2% • Operating Income: $315.4 m
RESORTS WORLD AT SENTOSA Overhead view of the RWS site 10
MOHEGAN SUN, UNCASVILLE, CONNECTICUT 1,176 hotel rooms; 6,780 slot machines, 392 table games, 22 restaurants
LEGAL DEFINITION: GAMBLING • A gamble must include: Prize, consideration, and chance • Prize: Something of value to be won • Consideration: Something of value put at risk • Chance: Outcome is determined by an unpredictable event • A gamble must be associated with an incidental or discretionary activity • Negative expected value (?) • The risk inherent in a gamble is the prerogative of the gambler
CLASSIFYING GAMES • Characteristics of games: • Alea (chance) • Agon (skill, adversarial competition) • Mimicry (play-acting) • Vertigo (dizziness) • Structure of games: • Paeda (unstructured, creative) • Ludens (highly structured, driven by rules)
How would you categorize the following games or situations? Football; Jeopardy; Improv Theater; Hearts; Bridge; Slot machines; Charades; Poker; Golf; Sky Diving; taking drugs
APPLYING THE ATTRIBUTES AND STRUCTURES TO CASINO GAMES AND OTHER WAGERING OPPORTUNITIES • Blackjack • Poker • Craps • Slot machines • Backgammon • Baccarat • Slapjack
DEFINITIONS OF GAMES • An activity providing entertainment or amusement; a pastime => A game of cards • A competitive activity or sport in which players contend with each other according to a set of rules => golf • An organized athletic program or contest => football • Mathematics. A model of a competitive situation that identifies interested parties and stipulates rules governing all aspects of the competition, used in game theory to determine the optimal course of action for an interested party. => Zero-sum sequential games
Children’s and simple games: Examples • Tic-Tac-Toe • Hangman • Hide and Seek • Tag • Laser Tag • Paint-ball • Doctor • Submarine races • Spin the Bottle • Daisies
Social Card Games • Hearts, Bridge • Gin, Gin rummy, Rummy • Fish, Crazy Eights, War • Cribbage, Casino • Solitaire • Concentration • Nertz, Oh Hell • Poker
DEFINITION OF GAMBLING • To bet on an uncertain outcome, as of a contest. • To play a game of chance for stakes. • To take a risk in the hope of gaining an advantage or a benefit. • To engage in reckless or hazardous behavior: You are gambling with your health by continuing to smoke. • To put up as a stake in gambling; wager. • To expose to hazard; risk: gambled their lives in a dangerous rescue mission. • An act or undertaking of uncertain outcome; a risk: I took a gamble that stock prices would rise.
RISK TAKING THAT HAS SIMILARITIES WITH GAMBLING • Speeding on the highway • Challenging a driver that cut you off on the highway => Will there be road rage? • Driving when drunk; Riding with a drunk driver • Drug use (for the first time) i.e. MJ, coke, H • Extreme skiing, rock climbing, paragliding • Unsafe sex (pregnancy, AIDS, STDs) • Cheating on a spouse, girlfriend/boyfriend, or significant other • Cheating on an exam • Smoking
MOTIVATIONS FOR GAMBLING AND RISK TAKING • Adrenaline rush • Pleasure-pain anticipation • Recapture the euphoria of prior experiences • Controlling the moment • “Asking the Oracle” • Financial, prestige, one-upmanship • Importance of the prize • Beating the system • Finding the Edge, the Overlay, positive expectation • Entertainment value • Utility of the positive reinforcement of winning versus the costs of participation