Casinos have always been about excitement, risk, and the allure of potentially big payouts. But behind the glamour of neon lights and spinning wheels, there lies a complex world of strategy and mathematics. Casino floor management involves a delicate balance of optimizing space for maximum revenue while providing a diverse array of games that cater to different player preferences.
The Value of Low-Revenue Games
Low-revenue casino games, such as penny slots, keno, and low-stakes blackjack, may not be the biggest money-makers for casinos, but they play a crucial role in the overall casino ecosystem. These games serve as an entry point for new players who may be hesitant to jump into higher-risk, higher-reward games. They create a welcoming environment for beginners, offering them a taste of the casino experience without the intimidation factor of higher stakes.
Additionally, low-revenue games drive traffic. The presence of these games on the casino floor contributes to a bustling atmosphere that is essential for maintaining a high-energy vibe. A lively casino floor attracts more patrons, creating a positive feedback loop that enhances the overall guest experience.
Moreover, low-revenue games provide opportunities for upselling. A player who starts with a low-stakes game and experiences a win may be more inclined to try their luck at higher-stakes games. This gradual progression from low-risk to higher-risk games is a common strategy that casinos use to maximize player engagement and revenue.
Despite their benefits, low-revenue games face challenges when it comes to casino floor optimization. From a purely mathematical perspective, these games often occupy valuable floor space without generating substantial direct revenue, leading to their gradual decline on many modern casino floors.
The Changing Casino Floor Landscape
The layout and offerings of casino floors have evolved significantly over the decades. For long-time visitors to Las Vegas, the changes are evident when reflecting on the casinos of the past. A prime example of this evolution is the original MGM Grand, which opened in 1973. At the time, the MGM Grand featured a massive and relatively elegant keno pit located in the center of the casino.
This keno pit was a spectacle in itself. Players sat in a large, orchestra-style tiered ring of upholstered seating, facing a multi-tiered bank of keno writers and their supervisors. Players would mark their favorite numbers with a black keno crayon, then submit their cards, cash, and chips to the keno writers. These writers would meticulously record the numbers using brushes dipped in permanent India ink, creating a visual experience that was both unique and engaging.
Keno runners circulated through bars and restaurants, collecting bets and tickets, and returning them to players before the next drawing. The keno operation at the MGM Grand was labor-intensive, yet it attracted a dedicated following. The game had a high house edge—between 25% and 40% depending on the types of bets—making it profitable for the casino, provided they had enough staff to manage it.
However, after the infamous fire at the MGM Grand on November 21, 1980, which resulted in a devastating loss, the casino was forced to reconsider its layout and offerings. When the MGM Grand reopened on July 31, 1981, the once-sprawling keno pit had been significantly downsized. The new keno operation was housed in a space comparable to the size of an average Las Vegas living room, reflecting a shift in focus from labor-intensive games to more streamlined, automated offerings.
The Cost of Player-Friendly Games
While the labor-intensive games like live keno gradually disappeared from casino floors, other player-friendly games, such as the single-deck 3:2 blackjack, also faced challenges. Single-deck blackjack was a favorite among players due to its relatively low house edge, ranging from 0.15% to 0.5%, depending on the specific rules in play.
From the casino’s perspective, however, single-deck blackjack was not as attractive. The slim house edge meant that the casino’s profit margins were tight. For instance, even with a table full of six players each betting the minimum $5.00, the table would only generate about $11.25 per hour. Considering the labor cost of $16.20 per hour for a blackjack dealer (base pay of $12 per hour plus a 35% payroll burden), the table would effectively lose $4.95 per hour purely on labor costs, not to mention other overheads and opportunity costs associated with maintaining the game.
Due to these economic considerations, casinos began phasing out single-deck 3:2 blackjack in favor of games with a higher house edge and better profit margins. On April 28, 2024, the El Cortez Hotel and Casino in Las Vegas made headlines by converting the last live 3:2 single-deck blackjack game in the city to a double-deck version. The double-deck blackjack game has a slightly higher house edge of 0.4% to 0.6% and requires less frequent reshuffling, making it more profitable for the casino.
Embracing Technology: A New Era for Casino Games
As the casino industry continues to evolve, technology has become an essential tool for optimizing operations and maximizing revenue. One of the most significant advancements in recent years is the introduction of live dealer systems. These systems allow a single dealer to manage a game for an unlimited number of players within a given jurisdiction, effectively scaling up the game without a proportional increase in labor costs.
For example, consider the scenario of a low-margin game that traditionally loses money with six players at a table. With live dealer technology, the same game can now accommodate eight players without additional labor costs, breaking even in the process. As the number of players continues to grow, the game transitions from breaking even to generating pure incremental revenue for the casino.
Live dealer systems also enhance the player experience by combining the social aspects of traditional table games with the convenience of digital interfaces. Players can enjoy the thrill of a live game from the comfort of their homes or mobile devices, making it easier for casinos to reach a broader audience and attract new players.
The Future of Casino Floor Management
The evolution of casino floors is a testament to the industry’s ability to adapt to changing market dynamics and technological advancements. While low-revenue games may no longer occupy the prominent positions they once did, they remain an essential part of the casino ecosystem, driving traffic, enhancing the guest experience, and providing opportunities for upselling.
As technology continues to reshape the casino landscape, operators must balance the need for revenue optimization with the desire to offer a diverse range of games that cater to different player preferences. By embracing innovations such as live dealer systems, casinos can create a more dynamic and engaging experience for players while maximizing their revenue potential.
Ultimately, the success of a casino depends on its ability to provide a compelling experience that keeps players coming back for more. Whether through traditional low-stakes games, high-tech live dealer systems, or a combination of both, the future of casino gaming lies in offering a well-rounded, engaging experience that appeals to a broad spectrum of players.