Baccarat Blues
Baccarat Blues
Solutions: Operators hope to ride out a downturn in baccarat play with better domestic marketing and new game types
In the 1995 movie Casino, a brief story line narrated by Robert De Niro's character, Ace Rothenstein, told how a Japanese high roller, playing baccarat for $30,000 a hand, took the fictional casino for $2 million before boarding a plane bound for Japan. One problem-the plane had a "mechanical malfunction" and couldn't take off. All commercial flights to Japan had departed so the only place the gambler could return was to the casino.
Naturally, the player couldn't stay away from the baccarat tables and he subsequently lost the $2 million he had won, plus another $1 million of his own money.
"In the casino, the cardinal rule is to keep them playing and to keep them coming back. The longer they play, the more they lose, and in the end, we get it all," summed up De Niro's alter ego.
The account carries some semblance of the real life pertaining to baccarat.
Table games have become a growth vehicle for the casino industry thanks in large part to the overwhelming popularity of poker and an influx of newer players that are younger, affluent and enjoy the social interaction found in the casino pit area.
Baccarat, however, hasn't won over this particular crowd of customers (see chart, page 24).
The game is still favored heavily by big spending foreign gamblers, predominately from the Asian countries. When travel from the Pacific Rim and Asia dropped significantly in the months following the terrorist attacks of September 11, 2001, downturns in the Asian financial markets, and the outbreak of the SARS virus in 2003, play in the baccarat pits in Las Vegas nearly went dormant.
Only a few casinos on the Las Vegas Strip and the Atlantic City Boardwalk market baccarat to the foreign customer-the American gambler has little interest in the game. A new challenge is being faced by those American casinos still attempting to attract baccarat play as gaming facilities in Macau and other jurisdictions in closer proximity to the Far East gambler attempt to siphon off the big money players.
"International travel has really slowed over the last few years and the crowd we're seeing in the table game area is much younger and they want to play poker," said Vince Mascio, senior vice president of table games at the Trump Taj Mahal in Atlantic City who has been with the property since its opening in 1989. "We have just a few players in that $500,000 to $1 million credit line range that want to bet $15,000 to $50,000 a hand on baccarat. The demand for baccarat isn't what it used to be, but for that particular customer, it's a game we'll always have."
A make or break game
Still, for the few resorts in Las Vegas and Atlantic City that continue to market the game, a single customer can change the balance sheet for a property-and its corporate parent."With baccarat, it's always possible that one player can make or break your quarter," said Bill Bingham, vice president of table games at the Bellagio in Las Vegas. "Of our players with $1 million credit lines, I'd say they are predominately foreign customers and baccarat is the game they want to play."
Like the story from the movie Casino, the Trump Taj Mahal had a similar experience with a pair of baccarat players a few years ago when a snowstorm locked in much of Atlantic City. Two Chinese customers found themselves stuck at the casino with no way to leave. Naturally, they remained at the baccarat table.
"One player had a $2 million line of credit and the other had a $500,000 line," Mascio recalled. "No one else up and down the Boardwalk had any players because of the snowstorm. We were fortunate because we were able to beat these guys."
Indeed, keeping high-end customers playing, and hopefully losing big, is vital to long-term baccarat success, especially considering the cost-intensive nature of the game for the casino. Most of the major properties catering to baccarat players have dedicated large areas of the casino floor for the game, and some also offer private gaming salons. Four dealers are assigned to each baccarat table and casino marketing personnel, such as a host and even a language translator, are often times nearby when a preferred customer is playing. Another cost associated with baccarat are the marketing offices certain companies, such as MGM Mirage and Caesars Entertainment, maintain in foreign jurisdictions, such as Hong Kong and Taiwan.
However, the costs are overridden by the potential revenues the game can has the potential of producing.
"It's a game that appeals to just a certain demographic of customers," said Jimmy Wike, vice president of table games for Caesars Palace who has more than 30 years on the Las Vegas Strip. "Baccarat has a lot of similarities to other casino games enjoyed by the Asian customer. The highest limits in any casino are on baccarat. Yes, there can be costs associated with maintaining the game, but they are relative when you look at the amounts wagered by certain baccarat players."
Asian interest
The Borgata Casino Hotel in Atlantic City normally operates two baccarat tables. On weekends, however, the casino adds a third baccarat table to mix because of a large Asian-American customer base from the East Coast. The resort isn't marketing internationally but there is enough clientele attracted to the game."In the major cities on the East Coast there are pockets of Americans of Asian decent," said Jim Rigot, vice president of casino operations for the Borgata. "The game predominately attracts an Asian customer, thus we need to add a third table on weekends. We have also grown our number of mini-baccarat tables from four to five. Baccarat is a game that is very cyclical in nature in regards to the world economy. There are many peaks and valleys in tracking this game."
There are certain times annually where baccarat is extremely active. Chinese New Year, which falls between January and March, will bring in enough customers that the casinos need to add tables. Caesars Palace, for example, will grow from seven to 12 baccarat tables during that period; the Bellagio will have up to 18 baccarat tables going.
"We make special arrangements during Chinese New Year, but another popular time for Asian players to come is prior to Christmas," Bingham said. "We'll have events around that time. We'll see a high influx of Latin players during Mexican Independence Day and certain events, such as K-1 Boxing. The game is somewhat labor intensive, but our margins are so much higher."
Losing streak
While baccarat is still active on the Las Vegas Strip, the games' numbers have spiraled steadily downward. Statewide, according the figures published by the Nevada Gaming Control Board, there were 91 baccarat tables statewide in 2003, with casinos posting a win of $365.8 million on a drop of $1.13 billion. Comparatively, in 1999, there were 95 tables that posted a win of $554.4 million on a drop of $1.14 billion.Casinos in 1995 reported the highest win total in the past 10 years for baccarat, with 67 tables statewide winning $622.7 million from customers on a drop of $4.12 billion. At that time, only a few gaming jurisdictions were operating and the worldwide financial markets were soaring.
Frank Streshley, the senior research specialist for the Nevada Gaming Control Board said the Asian economy began to collapse following 1995, which took away a segment of Strip casino customers. When an influx in new Las Vegas Strip properties opened, such as Mandalay Bay and Bellagio in 1999, baccarat numbers spiked upward.
"After September 11, we saw a huge drop-off in the foreign visitor," Streshley said. "That customer wasn't traveling to the United States. The Pacific Rim brings Nevada its largest segment of baccarat customers."
Atlantic City is no different. In 2003, there were 25 baccarat tables as compared to 22 in 2002. However, the 12 casinos won $51.1 million from baccarat players in 2003, as compared to $59.1 million in 2002.
Despite the diminished interest in baccarat, the game could see a rebound.
Wike said the expansion of legalized gaming into Macau-namely properties operated by Wynn Resorts and Las Vegas Sands Inc.-could also be viewed as opportunities for growth on the Las Vegas Strip. With Wynn Las Vegas planning an opening next April and a new Venetian project in the development phases, foreign baccarat players may be enticed away from Macao.
"No matter what, we believe the high-end player wants to come to Las Vegas," Wike said. "That's why certain properties will always have baccarat and cater to that market."
Mini-baccarat has grown in popularity on casino floors
One area where baccarat is growing is in "mini-baccarat" (or "midi-baccarat" as it's called in some markets). Played exactly under the same rules as traditional baccarat, the game is housed on a smaller table, uses just one dealer, and is conducted at a faster pace than the normal set-up, allowing for more hands within a certain time frame.
In Nevada, 2003 saw 139 mini-baccarat tables reporting a win of $181.9 million on a drop of $1.31 billion. Atlantic City reported 25 mini-baccarat tables in 2003 but the jurisdiction reports the revenues from the game combined within the segment titled, "Other Games."
One of the largest jurisdictions where mini-baccarat is experiencing a growth is in Canada, which has a high-end clientele of Asian customers. Brooke Dunn, senior vice president of Shuffle Master Gaming, said the company is supplying various products to mini-baccarat tables, such as continuous shufflers, the MD-2 shufflers that identifies cards in six to eight decks, and the Smart Shoe, a product that identifies and records the cards dealt to each position.
"Mini-baccarat has been a very strong growth vehicle in some jurisdictions and has a great amount of potential," Dunn said.
SIDEBAR 2:
Perhaps best known as the card game the fictional British super spy James Bond usually plays while attending swank casinos, baccarat is a card game first developed in Europe that has since made its way through Latin America and Asia.The objective of baccarat is to bet on either the bank or the player having the hand that is closer or equal to nine. Alternatively, a player can also bet on both hands being equal (a tie). Regardless of the number of players at the table, only two hands are dealt, the "banker" hand and the "player" hand. Players wager prior to the deal-any amount from the table minimum to the table maximum.
Baccarat is played with six or eight complete decks of cards. Face cards and tens count as zero and aces count as one. All other cards count as face value. The cards are shuffled by the dealer, and then placed in the "shoe," which rotates among the players counterclockwise. The player with the shoe represents the banker-hand, although the player takes no additional risk and the casino remains the banker.
If the point value of the first two cards drawn for either hand is eight or nine, that is known as a "Natural" and no additional cards will be drawn. The hand with the highest point total closest to nine is the winner.
