Francisco “TJ” Tejeda and Robin Powell of Palace Station developed EZ Baccarat, which includes a 40:1 side bet.
Casinos on the Las Vegas Strip reported a decline in baccarat revenues of 23.2% from year-to-year in November 2105. The casinos reported a win of $84.2 million overall.
The baccarat figures were part of a general decline in November 2016. The table games overall saw a 4.2% decrease, though most of that decline was attributable to baccarat.
The month’s figures are another indication of how important baccarat gambling is becoming to Las Vegas casinos.
Slot Machine Numbers Declined
Slot wins were also down 2.7%. Total slots revenue for the month was $258 million. Total revenues from all gaming was $571 million, which represents a 3.5% decrease.
Two major factors appear to be responsible for the decline in baccarat numbers. November 2016 had one less weekend than November 2015, so there were fewer days with peak activity.
Also, the Las Vegas Strip casinos appear to have had worse luck with the high roller segment of their gamblers.
Hold Rate Down 13.65%
Christopher Jones, an analyst for Buckingham Research Group Inc., said the hold rate for baccarat in November 2016 was 13.65%. Hold rate indicates the amount of the gambling turnover (money wagered) is held. The hold rate is affected by one of several major factors: a decline in mass market gambling, a decline in hold rate for mass market gambling, a decline in VIP gaming, or a decline in the hold rate for VIP gaming.
The hold rate for mass market gambling is going to be steadier, because it represents a vast bulk of smaller bets. The more bets which are made, the more times players must beat the house edge. Thus, results are more likely to resemble the casino’s theoretical advantage.
The hold rate for VIP gaming is more volatile, because it represents fewer players and thus fewer overall bets. The wagers are worth a great deal more, so a relative handful of wagers can spike or crater the revenues for a casino. Some casinos have been known to include a high roller’s wins or losses in their itemized list of revenues. The 13.65% is likely to be a result of a handful of VIP gamblers having a good month.
Gambling Volume Down 16%
John DeCree of Union Gaming Securities LLC noted that the month had one less weekend of gaming, accounting for the 16% decline in gambling volume. While it is concerning to have a large dip in gaming volume, that dip was predictable, given the fewer weekend days.
Baccarat is popular with the Asian and Asian-American demographics. The only other possible explanation for the dip is a decline in the interest level of Asian gamblers in the Las Vegas Strip. The Lucky Dragon Casino in downtown Las Vegas is meant to tap into a growing Chinese mass market gambling demographic. The opening of the Lucky Dragon was in early December, when direct flights from Beijing to Las Vegas were expected to take place for the first time.
There are signs of a slow-down in the Chinese economy. With Xi Jinping’s crackdown on gambling in Macau and attempts to stem the flow of credit card traffic in the Chinese gambling industry, it is possible that an overall decline in Asian gambling numbers occurred in November 2016. If so, that decline would be minimal, given the other factors weighing on the statistics.
Nevada Gambling Revenues in 2016
Without the baccarat numbers, the year-on-year revenues for November 2016 for table games and slot machines were up 1.6%. That is more in keeping with the expected growth in the Las Vegas gambling industry. Gaming win across the state is $930.4 million, according to Deutsche Bank Securities Inc. That represents a decline of 1.5% throughout the year.
Las Vegas casino owners have tried various ways to pique interest in baccarat. TJ Tejeda of Palace Station developed a version of the game called EZ Baccarat, which includes the traditional game with a 40 to 1 side bet. Nearly twenty after its creation, there are said to be 700 EZ Baccarat tables in the world, with tables in casinos in Las Vegas, Macau, and even far-flung gaming destination like Nova Scotia.
While the game was designed to make baccarat more popular for mass market American and Canadian gamblers, it has its appeal with Chinese gamblers in Macau, too. The game required Tejeda and co-creator Robin Powell long hours of calculation to figure out a formula which would allow the casino and the state to get its commission, while also giving players the big payouts they want.
