Casino Game Changer: Steve Wynn-ing means Players Losing More
Casinos are big business all over the world, but the market in Macau suffered a devastating crash in 2014 that several operators are still trying to recover from. For Steve Wynn, CEO of Wynn Resorts, his idea of recovery – as admitted in a conference call with investors – was the alter the casino games rules so that player’s lose even more money.
“We changed the layout of the floor,” Wynn explained to investors on Thursday. “We put our higher-yield games in more prominent locations. We put destination-type games like craps in secondary locations.”
Now casino game placement is one thing, helping to attract more players to higher limit tables due to their centralized location, but Wynn took it a few steps further than that.
Read the Full Transcript here.
Craps Odds Turn Crappy
“We changed the amount of free odds that we gave at dice games from what was commonly referred to as the three-four-five game,” he said. “And that had to do with the amount of free odds you’d get if you made line bet to double odds.”
It’s no secret that the majority of Wynn’s success has come from his extensive knowledge of the business – inside and out and everything miniscule detail in between. That fact was proven in his following statements, wherein he explained exactly how the alteration in free odds can significantly affect the operator’s bottom line.
“Now, to give you an example, when someone has a three-four-five crap game, the house advantage is 37 basis points, 38 basis points. When you go to double odds, the house advantage is 58 basis points or 57 basis points,” he explained.
“Now, that doesn’t sound like a lot. That’s a very narrow margin of a house advantage mathematically. However, 20 basis points is a 60% or 70% increase in the margin of a dice game, so that the outcome in terms of profitability was based upon a rather granular analysis of each game,” he continued.
“We made a bunch of changes. And in so doing, we were able to overcome in terms of profitability what would ordinarily have been a massive loss of top line revenue. So the gaming industry is a little deceptive in many respects.”
A little deceptive, he calls it. Did Wynn realize that such conference calls are public knowledge, at least for those with enough knowledge to read the transcripts?
Steve Wynn-ing, Everyone Else Losing
Most of us can surely understand that he’s doing what he feels appropriate in order to generate much needed revenue and regain the respect of investors. Inflation exists in all industries to offset rising costs. Raising hotel and restaurant prices, charging for parking, these are common tactics, but what Steve Wynn is doing goes beyond deceptive, at least from a player’s standpoint.
In order to keep clientele moving through the doors, he’s maintaining what appears to be a level cost for customers, while covertly ensuring that they lose more money at casino games. He neatly explained that aspect to investors, as well.
“It takes a very sharp analysis and very high degree of self awareness because when you take rooms away from the casino block and you can sell them for cash, our margins in the hotel rooms are very high as they are in slot machines. Casino table games in Las Vegas, if you were to do an analysis, would have a profit margin in the teens at best,” he said.
“We were able to take our profit margins in table games up into the 40s which I think is unique in our industry,” said the CEO.
He’s Smart, But So Are We
Now he’s obviously a very smart businessman, finding a way to make casino games that traditionally pay low margins just as profitable as slot machines. But we can be smart gamblers too. There are casinos all over Las Vegas, and Macau as well, and as smart players of casino games, we can choose to play at destinations where the odds – which we know very well aren’t in our favor to begin with – are at least decent enough to give us a chance.
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