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The Incredible Shrinking Sportsbook

April 3, 2013 at 4:01 PM | by | Comments (0)

It's not new information that sportsbooks aren't major revenue generators for casinos. Sportsbooks only generate about 1-2% of gaming revenue, but in the past, they had a purpose for gaming business. Sportsbooks have always been seen as an amenity by casinos to keep people on the property with hopes that they'll play more profitable games in the casino. That was a different day.

Today's casinos aren't run by gaming revenue. Nightclub, food and beverage revenue are equal (or greater) generators of revenue for a casino. Casinos aren't mom & pop shops, they're run by major corporations who have to report earnings every three months. They have to explain where every penny of revenue and profit comes from and they have to find more money every quarter. If more money is being made by selling overpriced nachos then a casino will focus their efforts on getting that revenue. Revenue for a hotel and casino are broken down by how much every square foot generates. We shouldn't be surprised to see sportsbooks shrinking when they are only providing 1-2% of revenue of overall gaming.

Last week, it was rumored that The Quad may be moving its sportsbook and adding a club and it wouldn't surprise us to see the sportsbook taking up less space in the casino when/if it's moved. After all, Caesars Entertainment cut the magnificently large sportsbook at the Flamingo by about three quarters when making room for Carlos and Charlies.

Shrinking sportsbooks aren't exclusive to Caesars properties. The Cosmopolitan, Palms, Silverton and Hard Rock sportsbooks are all very small. Last night, we were at the awesome and giant Red Rock sportsbook watching a few games and, even though it was a quiet sports night, the head count was about 20 people. The space has room for 500 or so and is often packed during football season. If the casino was lucky, half of those people at the sportsbook had $50 riding on the games. The revenue generated from that game was probably enough to keep the lights on, but not profit. Aside from major sporting events, many days and nights at the sportsbooks are like this. That's also a major reason we love the sportsbook. It's a nice respite from the rest of the casino.

While sportsbooks may be shrinking, we see casinos building up their viewing parties for major sports events. Between the Big Game, March Madness and Kentucky Derby, there are hundreds of parties at restaurants and ballrooms that charge a fee for the privilege of watching the games. Some of the parties add food and drink to soften the charge for a chair that used to be free, but these parties are becoming popular enough that the number of them may continue to grow.

Last year Cantor Gaming introduced walk-up betting windows to the casino floor at Palazzo and Palms. In both of these hotels, the sportsbook is out of the way from the action so these are really a matter of convenience. If you want to walk downstairs at The Palazzo to watch the games at Lagasse's Stadium or across the casino at the Palms to the sportsbook, you can watch and bet on the games. If you want to just hang out and play blackjack or slot machines or even hit a restaurant, you can easily do that while quickly getting your bet in on the game. These windows seem like they may be perfect for the audience with a six-second attention span.

Sportsbooks aren't going away any time soon (note the large renovations by The Mirage and The Plaza), but many are shrinking. We love the opulent space allowed for watching games at sportsbooks like Venetian and The Mirage, but at its current growth, it wouldn't be surprising to see our beloved sportsbooks continue to shrink.

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