Is Baccarat Reviving Las Vegas’ Stumbling Gaming Revenues?
Las Vegas, aided in no small part by the Baccarat tables, has begun to show positive growth in revenues following the industry wide slump after the Global Financial Crisis hit in 2007.
In 2012, Baccarat overtook Blackjack to become the biggest lure in American casinos with up to $100 000 being wagered per hand at high stakes tables frequented by high rolling Asian businessmen. It’s become so big that nearly 60% of the MGM Grand’s table revenue and nearly half of all Las Vegas strip revenue is generated by the Baccarat tables, particularly high rollers and VIP tables. In May of 2014, the Floyd Mayweather , Marcos Maidana fight happened to coincide with the Chinese labour day celebrations which saw Las Vegas revenue jump by a massive 8.1% from the previous year.
“It was a Baccarat month” said Senior Research Analyst for the Nevada Gaming Board “The welterweight championship fight between Floyd Mayweather Jr. and Marcos Maidana at the MGM grand helped draw big-time gamblers to Las Vegas. There was also a notable uptick in horse-race betting with the Kentucky Derby and the Preakness”.
In 2012 revenue jumped by 28% from the last year and in 2013 it jumped again, this time by 4.8% up to $11 Billion and the first half of 2014 has seen a steady rise with an 8.1% rise in revenues. Today, Baccarat has become the highest grossing casino game, both at the bigger land based casinos as well as at the various online casinos that operate around the world and under the jurisdiction of the Nevada Gaming Control Board which began offering licenses to online casinos in February 2014.
In Nevada, Baccarat revenue has tripled since 2002, but not at the expense of the other casino games. In the past, the likes of Slots and Blackjack were the big draws for locals and tourists alike. Now, with the help of Baccarat, a new breed of gambler has begun to flock to the bright lights of Vegas. Baccarat players, largely Asians who are enjoying China’s economic boom, have begun to flock to Vegas to experience the many offerings the city can provide, including Baccarat.
Union Gaming Group Analyst, Robert Shore said: “Baccarat play continues to grow and be an important factor in the overall Strip performance”. Talking about the recent upward movement, he went on to add: “Of course, the activity only really benefits a few casinos that cater to that audience” naming Strip casinos operated by the Las Vegas heavyweights like MGM Resorts International, Wynn Resorts Ltd. and the Las Vegas Sands Corp as the locations with the healthiest Baccarat business.
This new market, coupled with the allure of Vegas itself, is one of the biggest reasons Las Vegas has managed to avoid the struggle that the US casino industry has been immersed in for the past six years. The slump has seen widespread casino closures, plummeting revenues and thousands of casino employees being given pink slips. All that is, except Nevada and more importantly Las Vegas, which has managed to adapt.
Michael Goldsmith, Vice-President of Las Vegas Convention and Visitors Authority said in an interview: “The attraction of the city is that it offers visitors more than just gambling, including convention, tech shows, music shows, lavish Cirque du Soleil productions, top quality restaurants and health spas”.
MGM Resorts director, Bill Grounds agreed with Goldsmith and went on to add: “Gambling now makes up only 36 percent of the revenue of Las Vegas Hotel-Casino operators, down from almost 60 percent in the 80’s”. The average age of visitors to Las Vegas has reduced, with more attention on nightclubs, restaurants and music festivals. “Vegas adapts to shifting trends pretty well” Ground says. “It is now known as the nightclub capital of the world. You can make pretty good money out of nightclubs and dayclubs”.
As important as this adaption was, Las Vegas has something that other gambling meccas lack, that indescribable quality that only the likes of Las Vegas and Macau have. In fact, following the new and much stricter regulations placed on tourists, legislations that make it harder for tourists to bring large amounts of money into Macau, players began to leave. Las Vegas opened its doors to the thousands of wealthy businessmen who they flew over in new private jets and supplied them with Asian themed attractions, private villas and private Baccarat tables to enjoy.
Even though Las Vegas can never hope to reach the levels Macau has reached, wealthy Chinese have pumped massive amounts of money into Las Vegas leading to a balloon in Baccarat revenues which have increased 16.2% to a massive $1.6 billion, numbers not seen in Vegas since before the GFC and a new record.
Senior Vice-President of Operations at the MGM Grand Hotel-Casino, Debra Nutton said: “For us to make money in gaming today without Baccarat is almost impossible, we need the big whales to make money”. The ‘whales’ are typically wealthy Chinese who have turned to Vegas for the excitement and are well known to spend more in a hand of Baccarat than most American families make in a year.
Such is the massive role Baccarat has played in the revival of the slumping industry, if the Baccarat revenues remained flat, the industry would only have grown by 0.6%. Instead, due to Baccarat revenues and other similar influences, the industry grew by 2.9%. In fact, Baccarat has become bigger than Blackjack, Craps and Poker combined at $1.4 billion in 2012 and is enjoying a steady growth to this day.
So, is Baccarat reviving Las Vegas? Yes and no. Las Vegas, when compared to other gambling meccas, really didn’t need that much reviving to begin with. But, Baccarat has been helping it stay well afloat, along with the obvious and elusive charms of Vegas herself and the instinctual entrepreneurial endeavours of the Las Vegas casino bosses.
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