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Source link: http://archive.mises.org/16057/the-penny-slot-economic-indicator/

The Penny Slot Economic Indicator

March 16, 2011 by

Those at the Fed and in the financial press are telling us that the economy is turning around. Corporate America is ginning up profits so prosperity on main street can’t be far away.

However, if gaming trends in Nevada are any indication the middle class is hurting. Tourism and gaming peaked in 2007, with middle America making the trek to the gambling city to sit down and play a little blackjack (or 21). Latest figures have blackjack revenue down 31 percent from 2007, the Las Vegas Sun reports.

Last year was the first time baccarat, a game favored by Chinese high-rollers, generated more revenue than blackjack. But the $1.2 billion in baccarat revenue pales next to the $2 billion that penny slot machines generated.

“Penny slots are viewed by the industry as the latest evolution in gambling as mainstream entertainment, attracting casual bettors with carnival themes,” writes Sun reporter Liz Benston. “Baccarat is a world apart, typically played in hushed salons by people who consider themselves serious gamblers.”

So Las Vegas is limping along dependent on high rollers from China and low rollers playing penny slots. “This is why Vegas got hammered,” Anthony Curtis, publisher of Las Vegas Advisor says. “It needs the middle market.”

As hot as penny slots are, overall slot machine wagering is down 22 percent from 2007 and the games are not as profitable as operators compete for the increasingly tighter gambling budgets.

But maybe Sin City’s hot hand is about to come back. Celine Dion has returned. The Canadian songstress sold out 700 consecutive shows from 2003 to 2007, “bringing in more than $400 million at the box office, more greenbacks than the Rat Pack, Liberace, and Elvis combined. This time around, she’s being touted as a one-woman stimulus bill—worth at least $114 million a year and thousands of jobs, according to UNLV,” write Tony Dokoupil and Ramin Setoodeh for Newsweek.

Las Vegas Mayor Oscar Goodman couldn’t be happier, “I was just praying that she would come back. Thank God she did.”

Tickets for tonight’s performance range from $182 to $517 each on TicketsNow.

That doesn’t leave much money to play the penny slots.


J. Murray March 16, 2011 at 10:45 am

Vegas would like the slots to be the first to pick up. No labor and a near guaranteed 72% return (last time I looked, Nevada mandated an 18% payout rate on slots, and slots are computerized, so they’ll spit out almost exactly 18% of what is fed into them).

FreedomGuy May 3, 2011 at 9:46 pm

Different slots have different methods of payouts. Some are guaranteed payouts and other operate on pure probabilities or number streams. I don’t know the laws in Vegas but both machine types are sold.

Horst Muhlmann March 16, 2011 at 11:07 am

Tickets for tonight’s [Celine Dion] performance range from $182 to $517 each on TicketsNow.

This isn’t going to bring people to Vegas. You’re going to have to pay me a lot more than $517 to sit through a Celine Dion concert.

jon March 16, 2011 at 11:14 am

bringing in more than $400 million at the box office, more greenbacks than the Rat Pack, Liberace, and Elvis combined.

haha. gee, no comment about what $400 million would have bought sinatra and friends back in 1963? can’t imagine why.

J. Murray March 16, 2011 at 11:46 am

$400 million today is $55 million in 1963 money. I’m not sure what the Vegas gross of Sinatra was, so I can’t compare it to see if the statement is true.

Shay March 16, 2011 at 11:29 am

Latest figures have blackjack revenue down 31 percent from 2007

Maybe we’ve just decided to let the government do the gambling for us, using much higher dollar amounts.

Horst Muhlmann March 16, 2011 at 1:10 pm

Buy a 30 year Treasury. THAT’S what call gambling.

juvanya March 16, 2011 at 2:37 pm

With all those Chinese gamblers, youd think theyd have direct flights from Beijing, Hong Kong, and Shanghai, or at least one of the three.

Michael A. Clem March 16, 2011 at 2:58 pm

Like it or not, lots of people like Celine Dion, even if she is the Barry Manilow of a new generation. And she does have at least a few good songs, although I doubt she still performs “If There Was Any Other Way” on a regular basis.

Hedgehog March 16, 2011 at 3:32 pm

an observation from a Blackjack player ….2007 also marked the start of casino’s move to 6-5 Blackjack games. Smart players avoid them. Many BJ players moved to poker which is played against other players and the casino takes a fixed rake, as opposed to the “sucker rule” 6-5 BJ games. That might ALSO account for a bit of the dive in the 21 take.

FreedomGuy May 3, 2011 at 9:43 pm

I just returned from Vegas where I combined business and pleasure. I take many trips there and I normally enjoy the slots. However, my personal experience and observation is that the middle games that the casinos favor are not paying out much at all. Even when I am losing I look around to see if other people are winning. I look for the flashing lights, the yell of someone who just hit it, or the staff coming up to do another W-2G. In about six days of gambling in several casinos I saw not one W2 and only one player who had a substantial win. I played some blackjack variants and saw the odds were stacked toward the casino with 22=a push, etc. As my bankroll relentlessly evaporated I migrated to the pennies where an occassional car was the top prize. I usually don’t care for them because the payouts are too low and frankly I cannot figure out when I win unlike the traditional machines where 7-7-7 is an obvious good thing. I found the pennies were entertaining, elaborate and played a very long time for little cash. They were the most popular. However, the payouts were still low but a much higher percentage walked away in the win column. My thought was that if the larger denominations played more like the pennies they would attract and hold more people. My observation was that when anyone got even a small win/hit for a couple hundred ($1 machines) they ran. Traditionally, they would play it back trying for something much larger. Very small wins were left visible on the screens as people left after winning anything which is a sign of no confidence. Personally, I am giving up the (Vegas) slots as they seem universally tight and will go to my other favorites like craps and roulette where the odds still stand and the action is good. I will study my Phil Helmuth and take up poker again which is the only rational game in the casino. I hope Vegas will not implode itself for short term gain. There are lots of other places to go these days.

I go back in two weeks for a car rally. I will be doing the car events and only very limited gaming.

Celine Tickets July 12, 2011 at 12:47 pm

Celine Tickets can be had cheaper than $182. I’m seeing $89 for the cheap tickets but you still have to like her music

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